IBM Global Technology Services to Pump Up Channel Sales, New GM Says

Vendor plans to extend more co-selling and co-delivery service sales opportunities to the channel, alter offerings to complement partners’ own services, upgrade enablement and training, concentrate on key vertical midmarket segments.

February 11, 2011

D.H. Kass

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IBM Corp.’s Global Technology Services (GTS) wants to involve channel partners to an unprecedented degree in the co-selling and co-delivery of services in its portfolio, according to Bob Hoey, IBM GTS general manager, general business.

Hoey, a 25-year IBM veteran with highly successful executive sales stints in IBM’s mainframe and systems and technology groups, six months ago was tasked with bringing channel partners into the GTS fold to spearhead the vendor’s headlong plow into the services midmarket.

IBM intends to spice up its services pitch to partners by developing channel-friendly offerings currently not available either for co-selling or co-delivery, improve enablement—perhaps by placing dedicated IBM IT services people on site—accelerate training and skill building, and “do our homework to help partners grow,” Hoey said, in an interview.

GTS, which generated $35 billion in revenue for 2010, figures it commands no more than 10 percent of the $350 billion global market for services, a segment that the vendor believes will expand to some $450 billion worldwide by 2015, he said.

“Right now, partners drive about 10 percent of GTS’ business,” he said. “We want to expand our reach of coverage and to move the channel’s share to at least 20 percent of the business and probably more,” he said.

“We’re not just interested in this as a possibility,” Hoey said. “The reality is that our financial performance is tied to partners’ contribution in the services space.”

While IBM currently offers channels partners some services co-selling and co-delivery choices, it “hasn’t done enough in that area to really make a difference,” he said.

To move forward IBM initially has to do a better job explaining its services portfolio and the profit potential it holds for channel partners, he said.

“We need to make a short list of offerings that make sense to co-sell with channel partners, which will help them to grow their services sales,” he said. “Partners want us to do our homework, to show them how we see the market opportunity, the average transaction size and profit potential,” he said. “And then we need to send in someone who actually has sold services to help.”

Hoey said that IBM has no interest in competing with channel partners’ existing services offerings. However, the vendor does want to offer complementary options that can bump up partners’ profit lines, he said.

“We’ll bring partners a handful of offerings that they don’t sell today,” he said. “We won’t compete with their own services or get in their way at all but instead give them more choices available from co-selling or co-delivering with IBM,” he said.

Vendor to help partners kick start services business

Partners often fear the negative cash flow incurred from making an initial investment to grow service sales but IBM’s co-selling and co-delivery strategy backed by dedicated assistance, training and enablement should help to deflate channel partners’ financial concerns, Hoey said.

He said that in the last six months he’s spoken directly with about 100 IBM channel partners and examined survey data from another 300 solution providers concerning services opportunities.

“Of the larger, successful partners, 44 percent of their profits are from services,” he said. “But there are a number of partners out there who don’t yet share the same profitability sourcing but want to,” he said.

“Partners want to expand their book of business with existing customers as well as find net new sales,” he said. “Driving a richer stack of services offered to customers they already have can get them there.”

Hoey said that IBM has identified major pieces of the mid-sized business segment on which to concentrate its services sales efforts with the channel, specifically security, cloud computing and analytics.

“Customers are concerned about the security of their data once it’s in the cloud and out of the enterprise, so there are big services opportunities there,” he said. “With analytics, customers want to extract more information from their data and it’s a prime opportunity as well.”

Hoey will address attendees at IBM’s annual PartnerWorld Leadership Conference 2011 next week in Orlando, FL on how partners can drive growth and profitability with services.

TAGS: services,IBM,channel partner,midmarket,Global Technology Services

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