IBM to Move MSPs, ISVs to Center Stage in Retooled Mid-market Channel Strategy
Vendor also has reallocated millions of marketing dollars to online social business sites to reach IT decision-makers in mid-sized organizations, top exec says.
IBM Corp. is broadening its mid-market channel strategy to elevate partners whose solutions are tied to specific applications, such as managed services providers (MSPs) and independent software vendors (ISVs), as part of a two-prong plan to grab more of the $260 billion spent on IT annually by mid-sized businesses worldwide, said Andy Monshaw, IBM general manager, global small and medium-sized businesses, in an IT ChannelPlanet interview.
Our growth in the small and mid-market space is there but we still have low share, he said.
The vendor reasons that it can boost its presence in the segment by modernizing its marketing efforts to reach IT decision makers and by building moreand multi-layered--relationships with ISVs and MSPs sporting applications and solutions for the vast number of niches available in the market.
More and more partners are delivering the solution experience tied to the application in this space, Monshaw said. Accordingly, MSPs, ISVs and even telecommunications companies (telcos) are becoming key trusted advisors to mid-market decision-makers, he said.
Data from IBMs recent study of mid-market chief information officers (CIOs) indicated continuing interest in four key application areas--business analytics, customer relationship management (CRM), security and collaboration--delivered by local trusted advisors, Monshaw said.
When you ask clients in the mid-market what theyre buying theyll tell you they want the best application experience they can get, he said. They dont break it down by technology or even brandthey want to know how to get their applications to perform the best to drive business, he said.
Theres a role [in the mid-market] for every kind of partner we work with, he said. No vendor works consistently with five or ten thousand partners in a concentrated way but to best serve the mid-market we have to invest in working with thousands of smaller partners that deliver very specific applications and solutions, he said.
When you have a market that is 80 percent services, those are the people you have to reach, he said.
Monshaw said that IBM also sees an expanded role for value-added distributors (VADs) and integrators to connect with greater numbers of mid-market focused ISVs and MSPs.
Finding ISVs that resonate heavily in our space and working with them is important to us, he said. You can touch a lot of MSPs by working with the right ISVs, he said. Well start looking at ISVs differently, perhaps more like we do IBM resellers now.
One way IBM is helping its existing pool of traditional midmarket hardware and software resellers move towards a services-based business model is with co-marketing support, specifically reimbursement of 75 cents for every marketing dollar spent, Monshaw said. The co-marketing provision is good even on consultations that involve other vendors in addition to IBM, he said.
Rather than using the co-marketing funds for events, seminars or road shows centered around new product releases or updates as in the past, some channel partners now are accessing the money to underwrite costs associated with attending industry- or solution-specific conferences or events, Monshaw said.
Partners that are evolving from a transactional to consultative model are seeing healthy margins, he said. If they dont move their business models in the next two or three years, they wont be in step with the market, he said.
Millions in marketing dollars reallocated to online social business sites
Since January, IBM has shifted millions from its estimated $100 million advertising budget to social business sites such as LinkedIn, Twitter and Facebook to reach mid-market decision makers and boost its recognition with that audience, Monshaw said.
We realized that to reach mid-market decision makers we had to change our marketing, he said. This space is a wild set of fragmentation in terms of the buying process, he said. How do you talk to and relate to small insurance companies, retailers, grocery store owners--all outside of major metropolitan areas? Monshaw said. Their way of getting information doesnt lend itself to vertical advertising.
At IBMs PartnerWorld Leadership conference held earlier this year in Orlando, FL, Monshaw told attendees that the vendor needed to alter its marketing to reach IT decision-makers at mid-sized businesses with a new paid/owned/earned social media advertising campaign.
Paid refers to advertising such as online ads; owned means company pages on social media sites; and, earned refers to mentions and chatter made by press, bloggers, industry influencers and others of similar standing. In other words, what others say about you, said Monshaw.
Connecting to IBM Smarter Planet in this market segment has been harder than we understood, he said. Everybody knows IBM, just about everybody knows Smarter Planet, but a mid-sized client does not see their relevance to that, he said.
Weve invested in and paid and owned in a specific way to drive earned, he said. Weve shifted millions of dollars to the earned space to drive recognition, he said.
So far, IBM is finding up to 100 times more effectiveness in reaching mid-market decision makers when the information is delivered through the earned channel, Monshaw said.
He said IBM wants to reach mid-sized companies to help them figure out how to utilize and leverage their IT capabilities because they are going to be the ones that lead the pack in a recovering economy.