IBM’s Mid-Market Push: Posting Notable Progress with Industry Solutions and Business Partner Engagement

Beth Vanni – Director, Market Intelligence – Amazon   Consulting

IBM is hell-bent on become the preferred technology and services provider for mid-market customers – Globally. And in true big-Blue form, they‘ve got thousands of people and a lot of money focused on getting there. With nearly 25% marketshare across their broad portfolio in the mid-market globally, they’re starting to gain meaningfully broad traction in the sub 1000-user customer space. Fundamental to their route to market approach will, of course, be their broad business partner community. But can IBM truly create the simple product solutions, services offerings and local field engagement to act as one, integrated technology provider in this space? And, do they really have the right profile of partner to represent complete industry-focused solutions to mid-market customers?

Steve Solazzo, IBM’s General Manager of the General Business Unit, himself admits that “IBM has a long way to go in the General Business space” to truly dominate. “But, we’re the only company who has it all, and that is our key competitive differentiator,” Solazzo also stated. Clearly, IBM has the broad resources and pedigree to dominate in this market. Their massive product portfolio of systems, storage and infrastructure software has continually been reconfigured, repriced and repackaged to be tuned to the down-markets. Aside from their many “Express” and “Express Advantage” offerings of past years, they’ve accumulated another 22 horizontal solutions built on their leading ISVs’ applications, designed and tuned specifically for the mid-market. Their industry-specific expertise is well-known, yielding product + services combinations targeted at very specific micro-vertical segments, e.g., Food and Beverage Wholesaling, Retail Merchandising. And, they have plans here to roll out another 10-15 such industry solutions in 2010. Lastly, their professional service sales and delivery capabilities and IP are legendary, albeit historically very enterprise focused.

So, assets have never been their concern. The real risks to widespread mid-market share gains remains the breadth of their product portfolio and level of integration between product families, their complex business processes and the ability of their business partners to harness all their sales and market resources to fully represent the “total IBM brand experience” to customers.
Despite the successes IBM has experienced in the past with business partners in this market (remember the AS400 platform and all of its vertical ISV mid-market solutions?), the company has worked hard to come to terms with where it has gaps in their partner coverage and capabilities model; gaps in product competencies (Business Intelligence, SOA application development, virtualization), gaps in industry expertise and gaps in service delivery capabilities. They are actively recruiting partners to fill those gaps, with 5000 partners recruited in 2009 just to address the 140 countries represented by their emerging markets focus alone. Several IBM execs I met with admitted that partners which have been firmly entrenched in delivering industry solutions and IT services to the mid-markets have not necessarily been their traditional hardware integrators, in many markets.

As IBM anticipates the celebration of its centennial birthday, most company execs admit that their legacy enterprise-level sales and market approaches has made them very difficult to do business with. They continue to focus on a myriad of ways to be simpler, and their “Extreme Simplification” initiative seems to be gaining momentum internally. Taking quarterly incentives for business partners from 36 product sales targets down to 6, making growth incentives “recession proof” by paying out from dollar-one and changing pricing approval turnaround times from days to hours are just a couple of examples of work being done to streamline IBM’s operations. But, making a mid-market solution easy to get trained on, configure, price, quote, transact and service for a VAR servicing a $100m 6-store electronics retailer, for example, will require IBM to continue to exhaustively evaluate their business processes and channel program structures for simplicity. There is definitely ongoing work to be done.

The last major risk IBM is facing in broad mid-market traction through business partners is competition with its own, large services unit(s). There is still a dollar-for-dollar quota for every IBM field rep (partner facing or direct) to sell the entire product and services portfolio. Despite the fact that I was strongly encouraged by the level of unique assets and software being made available by the Global Technology Services (GTS) and Global Business Services (GBS) teams, partners still have to overcome their fear and any past points of conflict around a labor to labor deployment battle with IBM G.S. IBM doesn’t monetize services unless they license some IP, acts as prime or act as sub to the business partner in services delivery. In their most recent financial earnings announcements, 57% of total revenues came from services, 22% from software and 21% from servers. In a world were partners are increasingly trying to create annuity revenue streams and differentiate themselves based on unique services, I fear it will be some time before the core of IBM’s business partner community is fully engaging across the GTS services portfolio in a truly collaborative fashion.

As Steve Solazzo so eloquently stated, “It takes a long time to build credibility in a market, and even longer to change it.” IBM is more internally aligned and committed to long-term success in this market than I’ve ever seen them be. And, the resources being poured into sustainable marketshare gains here is enviable for any manufacturer, including HP, Cisco and Oracle/Sun. It will be interesting to watch if all the stars can align this time to finally bring the “IBM brand experience” to this space – and through a partner community who truly believes they can wade through the maze of products, solutions, services, programs and incentives to confidently represent IBM as a mid-market friendly company.

How Social Are Your Partners?

By Sandra Glaser Cheek – Director, Client Services

Every time I begin to blog about social media, I pause and think of how my inbox is assaulted on daily basis with invitations to attend/participate in social media events, webinars, etc. Everyone is talking about social media in the channel, but up to this point, we really haven’t seen our clients doing much about it – and especially not “with” their partners.

No doubt, social media is important in today’s marketing mix. But how much it is embraced by Channel Marketing organizations seems to be directly related to how a company embraces social media in general. And, it’s practically unheard of for vendors to include social media as reimbursable activities in their MDF or incentive funding programs.

Windows 7: The Great “White Hope” for IT Spending or Hopeful Optimism?

Microsoft Partner Conference Update

Beth Vanni

By the end of 2010 more than 20% of the U.S. IT workforce will be using Windows 7.   More than 177 million copies of Windows 7 should be in place worldwide – 60 million of that in the U.S.   These July 2009 projections from IDC align with the level of optimism and enthusiasm expressed by Steve Ballmer, Microsoft’s CEO, as he marched back and forth on stage with his customary passion and salesmanship.
Perhaps even more interesting was the number of hands that went up in the main session when Ballmer asked how many of the 9,000 some odd partners in the audience were already running or using Windows 7.  To my eye, it seemed that about 2/3 of the audience raised their hands.   Bill Veghte, SVP of the Windows Business, reported that over 16,000 hardware and software partners are currently developing on Windows 7;  Microsoft experienced nowhere near this early momentum for previous Windows releases prior to their general availability.  IDC projects that the 85,000 Microsoft partner companies in the U.S. will collectively employ nearly 700,000 people and will sell $18.51 of services and products for every $1 of Windows 7 sold.  According to their projections, the economic impact of this market should total $100 billion in products and services sold around Windows 7 into the U.S. market between now and by the end of 2010.
Surely, this year’s Microsoft partner conference is full of renewed product innovation.   As we all know, Microsoft was originally a technology innovator first, then a marketing powerhouse second.   So, back to its roots it goes.  With the disappointment realized in the market last year around Vista, Microsoft has a big promise to uphold to the breadth of its partner community.   Hence, there are major product announcements or upgrades planned for nearly every part of the Microsoft product portfolio — Windows, Office, Sharepoint, Azure, Dynamics and Windows Server, among others.
At this same conference, however, Gartner’s market projections for economic rebound were less glowing.   For the SMB section of the market (under 1,000 employees, by their definition), they showed overall software spending to still be at negative growth rates (-1.6%).  Granted, this was “less bad” than other IT product categories (desktops, servers).  But in the segment of the market where the vast majority of Microsoft partners specialize, the forecast for pure IT demand still wasn’t rosey.   This varying degree of optimism about true IT spending, regardless of the innovation offered by major product releases, still gives the channel pause.   The Gartner session was packed – partners taking pictures of the data on the screen with their smart phones.

“A good recession is a terrible thing to waste”.

done

Cisco Resolves Long-standing Field Compensation Issue

News and Commentary from the Cisco Partner Summit

Beth Vanni

Thousands of partners are in the room.  3500 partners are participating in the Virtual Summit event.   Press and analysts hang on every word from the senior executives, listening for new major investments and innovations.   These are the hallmarks of the Cisco Partner Summit, this year based in Boston, one of the oldest and most sophisticated cities in the U.S.   Many also revere Cisco’s commitment to channels and partnering among the oldest and most mature in the high tech world.   Admittedly, their programs, automation, incentives and partnering commitment from the top-down is legendary.   But, then I listened closely to the keynote speech form Keith Goodwin, Cisco’s SVP of Global Channels……

The Cisco management team announced many channel program enhancements already this week including new services offerings, further extended credit terms to partners, eliminating on-site certification audits,implementing a new limited lifetime warranty  on certain products and adding a new 15% rebate for core switching products. Much of these announcements will really help keep partners focused and profitable on core Cisco technologies and will encourage them to continue to invest in training and pre-sales work. But,the announcement that got THE loudest applause from the audience was around Cisco field sales compensation. Something so basic that it’s hard to imagine Cisco still having this issue acting as a barrier to partner field engagement.

Channel Roundtable for SaaS “Pure Plays”

Sandra Glaser Cheek

We recently held a “SaaS in the Channel” roundtable event with about 10 pure-play SaaS vendors to discuss the challenges and opportunities that they face in developing robust partner programs and ecosystems. After discussing the particular challenges that each vendor faced it became apparent that that SaaS partnering is truly a blend of the old and new. Many of the most basic partner principles are challenging to this crowd – how to train partners effectively, how to craft the best business proposition, tracking evolving partner business models, managing multi-channel strategies, etc. And some of the issues are new – how to continue to educate the market on SaaS as a business and licensing model, how to handle support and when and where to get the partner involved, etc.

Passing It On

Diane Krakora

During these economic hard times, stories abound of people making a difference in their community, giving back to their social network and passing on support to the next generation. I don’t know if there are more good deeds being done now or we are so hungry for any good news that these acts of kindness are being reported more. In a way, it doesn’t matter, the awareness is being heightened. There’s the story of the chain of people paying the toll for the next car behind them, and the “free” café that serves the local homeless population fresh nutritious food (and the non-homeless who pay “what they can”) or the random man who pre-pays for the woman’s food in line at the grocery store (who can’t make the food stamps go far enough to feed her family).

I witnessed this type of selflessness this week within our channel community. The speakers at the Baptie Channel Focus event this week all passed on their knowledge, experiences and wisdom to the next generation of channel professionals. Some of the speakers were sponsors and were there selling their wares to the attendees, and some of the speakers were well respected channel leaders like Luanne Tierney of Cisco, Sheila O’Neil of Panasonic, Mike Haines with Microsoft and Stephen DiFranco from Lenovo. Talking with Maurizio Capuzzo, long time Channel Focus favorite Italian (formerly of Symbol), I discovered a giving spirit   in our channel ecosystem. Not only was he, like the rest of the speakers, willing to give two days out of the office to impart their knowledge on a relevant topic, but Maurizio also took vacation time and spent his own money to travel from New York to San Diego to participate. When my eyes twinkled with gratitude, he nonchalantly said “I enjoy passing it on”.

I am so inspired by this generous act to pass on knowledge to channel professionals, that we are dedicating our May webinar to the next generation of channel leadership. On May 14th at 11am PDT, please join me as I discuss careers in channels with four great channel chiefs:

•Allison Watson, SVP Worldwide Channels, Microsoft
•Keith Goodwin, SVP Worldwide Channels, Cisco
•Steve Houck, GM Latin America (former VP WW Channels), VMware
•Leonard Iventosch, VP Channel Sales, Isilon

Enjoy the lively discussion about their career choices, trials and joys of being a channel chief. And who knows, maybe you’ll inspired to pass on your expertise as well.

Register for Webinar

Voice of the Partner – What lessons can we learn from Starbucks?

Sandra Glaser Cheek

Starbucks is celebrating its MyStarbucksIdea.com’s first birthday. On this site, Starbucks asked “What would make your Starbucks experience perfect? We know you’ve got ideas – big ideas, little ideas, maybe even totally revolutionary ideas – and we want to hear them all.”

Starbuck’s has a dedicated team of “Idea Partners” – Starbucks employees who are experts in their respective fields. They bubble up the most popular and innovative ideas that are the best fit for Starbucks and present them to key decision makers within the company to recommend how they can execute on the new ideas. The top ideas are posted to the “Popular Ideas” section of the website and Starbucks customers can help decide which ideas are best by voting.

Dell Distribution Agreement Shock Waves

By Tim Lowe

Finally some news other than what’s going on in the economy!

DELL’s distribution agreement announcement is sending shock waves throughout the industry larger than rumors of IBM-SUN merger discussions. The availability of a subset of the DELL product line through broad line distributors Ingram Micro and Tech Data has ramifications for every value added reseller in the channel. The worst kept secret in the industry for years has been the percentage of DELL desktop and laptop business that has either been sold or influenced by the channel. I’ve never seen an accurate estimate of how many Dell desktops have been “sold” by the channel through the influence of a solution provider either for a configuration fee or simply as part of the overall solution package. And of course Dell has used broad line distributors for years to provide the logistics of their third party options. However the public announcement of a formal relationship between DELL and Ingram Micro/Tech Data legitimizes the entrance of Dell into the channel supply chain.

HELPING THE SMB CUSTOMER – NOT BUSINESS AS USUAL

Beth Vanni

How HP is using its vast Resources to Help SMB customers and Partners survive the Downturn

The fact that there 6.3m SMB customers in the U.S. and that they’re projected to grow 5x the rate of the market overall in 2009 isn’t news. The fact that the SMB market represents a $60+ billion dollar market for commercial computing products isn’t new either. But, amidst all the industry noise about how critical small business is to the US economy, what are the largest manufacturers really doing to help this customer segment, and more importantly the partners who service them, thrive and grow?

Well, sometimes bigger really can be better. With total revenues of over $120b and 8 of every 10 SMB customers already owning some HP equipment, HP is leveraging its vast resources and broad product portfolio to take a very active role in giving SMB customer and SMB-focused partners new reasons to invest in new equipment, get support and collaborate. Today, HP announced new products, new support, a new SaaS delivery model and new partner program offerings – all focused on the under-999 employee customer space.