Two years ago, IBM abruptly pulled its direct sales team off midmarket accounts—a segment it previously had been unable to crack—and ceded the entire business to its channel partners as part of a $130 million sales and marketing initiative to galvanize revenue opportunities for qualified solution providers.
IBM's strategic about-face—which yielded 2011 midmarket sales that outpaced the company's overall growth and bested performances in some key business units—now has blossomed as a cornerstone of the vendor's three-year plan to boost sales in other sectors and emerging markets.
Equally important, the all-in, channel-centric blueprint also serves as a C-suite door-opener for the vendor's Smarter Planet solutions and new PureSystems technology, says Mark Hennessy, IBM's new general manager, Global Business Partners and Midmarket.
"Midmarket growth serves as an example to our other brands that it makes sense to have a set of partners to lead in a territory or segment," Hennessy says. "Our brand teams leverage partners in their go-to-market strategies and our geography leaders understand the importance of partners for client familiarity and productivity."
IBM Augmenting Channel with More Analytics, Cloud Partners
On the channel chief job just four months, Hennessy, a 32-year company veteran and former IBM CIO responsible for global integration initiatives and technology operations worldwide, has no plans to radically alter the company's strategic sales direction.
"Everywhere, I've seen the value that our business partner community brings to IBM," he says. "Partners want consistency and predictability. We're not planning any sweeping changes, but it's important to be clear on our strategy and stick to it."
The goal, at its most basic, is to substantially lift partner participation across hardware, software and services brands and in certain geographic regions by 2015.
"For IBM, there comes a point at which you just can't scale into different nooks and crannies by yourself," she says. "From IBM's perspective, to break new ground, expand and take advantage of new business opportunities, channel partners are going to be more and more critical to their success."
Hennessy points to partner involvement in half of the vendor's 1,000 Smarter Planet client engagements to date, with similar participation rates for its Smarter Cities and Smarter Commerce initiatives, cloud computing and business analytics technologies. "Smarter Planet isn't just an IBM play," he says.
More Channel Involvement, More Business for Big Blue and Friends
For example, earlier this year, Flagship Solutions Group of Boca Raton, Fla. worked with IBM and the Miami Dolphins to integrate analytics into Sun Life Stadium, leveraging IBM's Intelligent Operations Center (IOC) to help manage and view interconnected operations across the stadium:
"The Dolphins wanted to expand the capabilities of Sun Life Stadium to make it 'smarter,'" says Mark Wyllie, Flagship's chief executive. "We came up with five different use cases that might be beneficial using the IOC."
Flagship's proximity to Miami Gardens (the suburb where Sun Life Stadium is located) and its close relationship with IBM "made the biggest difference" on the job, Wyllie says. Developing solutions around IBM's IOC has catapulted Flagship into an entirely new market, he adds.
"I'm on a call a day now with other stadiums from all over, and IBM has asked us to branch out to other cities," Wyllie says. "I know way more about stadiums than I ever imagined I would, which helps us to bring the right solutions to bear."
IBM's involvement in the Sun Life Stadium process—providing assessment tools, underwriting associated costs and offering input into the project's direction, with the partner firmly in the lead—is the sales and consulting equation Hennessy intends to deploy to seed new markets and geographies.
"Our field teams have become a lot more knowledgeable and open with regard to the value partners can bring around these solutions," Hennessy says.
To up the channel involvement ratios, Hennessy will augment partners' capabilities with skill-level adders, including new certifications and training, while pumping up field assistance and sales support. Doing so, he says, will play particularly well with CIO, CTOs and CMOs trying to cut maintenance costs while improving value.
"We're building a set of enablement resources and certifications tied to solution areas and rewarding partners for skills in areas such as cloud computing and analytics," he says.
In the last year, IBM's number of certified partners for its business analytics technology alone grew by 50 percent, to 15,000 individuals from 1,100 companies, while its accredited cloud partners ticked up to about 1,000, he adds.
"As IBM CIO, I got to see how partners can help CIOs by leveraging their knowledge of the business, specific skills and solutions they bring to the market, to help CIOs bring more value to their constituencies quicker."
PureSystems a Difference Maker for IBM Channel Partners
Where Hennessy's predecessors offered clients and channel partners industry-specific solutions—crafted, in some cases, by business segment—he has a bigger hammer in IBM's new PureSystems platform, an integrated system design with built-in software, automated management capabilities and cloud capabilities out of the box.
The technology, Hennessy says, was designed with heavy partner involvement in mind, despite the hefty $100,000 entry price tag and IBM direct sales' intention to command half of the system's mid-sized and large account sales.
PureSystems' key element is, perhaps, what IBM calls patterns of expertise, or embedded technology and industry expertise. Some is supplied by IBM's Industry Frameworks with the remainder from 125 ISV applications. All are intended to automatically handle foundational, time-consuming tasks such as configurations, upgrades and application requirements.
In contending that cost inefficiency and lack of innovation unduly beset business computing, IBM believes that PureSystems not only will provide an alternative to conventional enterprise IT, but also offer channel partners a vehicle with which to supply truly integrated systems—and, accordingly, higher value—to IT clients.
"It's critically important that we have a system less expensive to deploy and maintain and also optimized for partners' solutions for CIOs to realize value more quickly," Hennessey says. "We are most interested in helping partners move to higher value spaces to drive more value to their clients. PureSystems implementation is quick and the ROI is good, which opens up new opportunities for partners."
Hennessy notes that some channel partners are reaching out to city mayors and leaders in the water, healthcare and education industries, while other partners are approaching CMOs or CTOs interested in the technology's analytics dash board capabilities.
With an expected influx of skill-certified partners, there will be more solutions-based installations headed by partners with IBM-supplied field support, he says, adding that, by the end of this year, IBM expects the number of solution providers prepped to sell PureSystems to jump from the initial set of 500 into the thousands.
Business Partners Key to Growth Markets
In 2011, IBM added 1,200 business partners and some 500 managed service providers. The MSPs, a channel segment previously ignored, came as part of a recruitment effort to reach smaller application and service-specific partners that target certain business segments.
Hennessy says IBM 2015 roadmap linkage with channel partners extends the framework initiated two years ago with the midmarket not only to other business segments but also to growth markets such as Africa and India.
"Last year, we focused on the midmarket with partners—on recruitment, enablement and incentives—and now we want to establish more partner-led territories with the brands and continue to invest in and expand growth markets," he says.
Accordingly, IBM has more than doubled the number of branch offices it operates in emerging markets from 100 in 2010 to 250 this year, with plans to have 550 in place by 2015.
"Business partners are the critical element in growth markets. They have the local client connections, the appropriate skills and solutions," Hennessy says. "As we grow our business in new markets, we will leverage partners to make that a reality."
Putting partners at the forefront in new markets, says SMB Group's McCabe, will require "a lot of forethought and execution on exactly who's doing what for it to work."
It's going to be an "iterative process," she adds. "Partners may identify new opportunities, work with IBM to get into the account, play a role as the front face to the customer and with the solution—but on the back end expect IBM to be very involved."
Ultimately, McCabe says, "involving the channel really is the only way to grow. If [IBM] can figure out the right formulas in different geographies, it can really work."