IBM Targets Midmarket, Offers VARs Faster Paybacks

IBM VP Rich Michos says the vendor is simplifying its incentive process to get money back to partners faster. Midmarket sales will move through Business Partners.

January 30, 2009

Al Senia

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A top IBM channel executive says the company intends to grow profitability for itself and its thousands of Business Partners this year by focusing on data-center transformation, providing new channel services, targeting the mid-sized market segment and simplifying financial incentives for channel partners.

Rich Michos, vice president of IBM's worldwide channel strategy, told ITChannelPlanet that "partnering with IBM (NYSE:IBM) can be a profitable endeavor" despite the current worldwide economic slowdown. He said the vendor is developing a "targeted process that provides tools, programs and resources tailored to each country's local needs. The strategy is to drive profitability b offering high-value solutions through our partners," Michos added.

An important part of the endeavor includes simplifying the incentive process so that channel partners are paid upfront instead of having to wait. "They are paid right from the first transaction," Michos explained. "This is important because we think maintaining cash flow is one of the biggest challenges partners face." Previously, channel partners had to meet specific sales targets before receiving program rebates.

Midmarket Solutions

Michos also revealed IBM is revising its "principles of engagement" with channel partners and has begun "vetting" the new document with its partner  base as part of the broader effort to make it easier for the channel to work with IBM. "We've launched a new Principles of Engagement that demonstrate to our partners that they are our principle route to market in the midmarket for IBM," he said.

IBM also intends to work more closely with Business Partners in 20 targeted emerging growth markets, including Brazil, Russia, India, China and Argentina. The aim is to have the partners in those countries and around the world deepen the skills they have and help business customers modernize by building a smarter, more efficient infrastructure.

Data-center transformation will continue to be a key element of IBM's channel strategy this year, according to Michos. "Security is becoming more important, and data is king," he explained. "It's a very profitable play. Our partners are sending more time generating more revenue in the server area."

IBM intends to accelerate growth in the midmarket, defined as business customers having between 100 and 1,000 employees. Earlier this year, IBM launched a software midmarket initiative that provides partners rewards for growing business around IBM software in the midmarket segment..

"Business Partners are IBM's primary route to the midmarket," said Michos. "We are going to provide demand generation and other resources to drive more IBM sales through the channel."

Noting the maintaining cash flow is the biggest challenge for partners in the current economic framework, Michos said IBM was focused on simplifying the incentive structure, streamlining order configuration and providing financing through IBM's Global Financing division.

(Al Senia is managing editor of ITChannelPlanet.com.)

TAGS: security,services,IBM,channel program,midmarket

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