IBM Prepping Channel Partners in Four Key Growth Segments, Says Top Channel Exec

IBM Corp. is preparing the core of its channel base--traditional resellers, solution providers and system integrators--to sell into four key areas the vendor staked out earlier this year in a five-year plan to maximize growth, said Rich Hume, IBM general manager, Global Business Partners, in an IT ChannelPlanet interview.

Hume said that IBM has homed in on its Smarter Planet initiative, business analytics, cloud computing and growth markets in Asia Pacific and Eastern Europe as primary growth drivers through 2015. So far this year, each of those sectors has produced measurable year-over-year sales increases, he said.

“We want to make sure that beyond our basic business that we’ve properly positioned the channel to participate across these four segments,” Hume said.

“It’s where we will get the best growth and it’s important that our partners are aligned with where IBM is going so that they can assist us to deliver the highest value proposition to clients,” he said.

Not only is IBM driving demand for channel partners with a previously-announced $100 million marketing investment, it also has added custom initiatives for business analytics and new industry certifications toting premium sales opportunities and benefits for participants, Hume said.

For example, the vendor’s cloud certification offers lucrative business development funds for properly equipped channel partners, he said.

Those investments appear to be delivering favorable results. Hume said that sales tied to its Smarter Planet initiative, in which positive business outcomes frame industry solutions, grew 50 percent year-over-year.

Channel partners participated in 45 percent of the 900 Smarter Planet engagements last year, 15 percent of which involved mid-market clients, he said.

“Partners are participating in Smarter Planet quite significantly,” he said. “Smarter Planet scales from the enterprise through smaller businesses, it’s not just an enterprise thought,” he said.

Among IBM’s other three key growth areas, business analytics sales rose about 20 percent year-over-year, cloud-based revenue doubled from last year’s totals and the vendor posted what Hume characterized as “strong double-digit increases” in the first six months of 2011 in growth markets.

While Hume declined to attach current sales levels to any of the four sectors, he said IBM expects that by 2015 its Smarter Planet business will reach about $10 billion, business analytics some $16 billion, and cloud computing at least $7 billion--$3 billion of which will be incremental new business with the remainder counted as displacement of existing IBM infrastructure with new technology. Growth markets could generate 30 percent of the vendor’s technology business by 2015 and account for about half of its overall revenue growth from 2011 through 2015, he said.

“Our partner ecosystem is key to helping IBM deliver big growth,” he said.

As evidence, Hume suggested that IBM’s jump in mid-market sales was a direct result of the vendor’s decision 18 months ago to funnel all sales from that segment through channel partners.

Mid-market makeover

“We were dissatisfied with our results in the mid-market pre-2010,” he said. “We realized that complexity was the enemy of how we had gone to market previously so we redesigned the model to make business partners the primary route to market across IBM solutions,” he said.

“With the new mid-market sales model, we’ve over-achieved our expectations, and, in the last year and a half, we’ve been very satisfied with the performance of our channel,” he said. “We’ve focused on providing solutions instead of point products to our clients in that space and the results have been robust.”

With cloud computing, Hume said that “just about any IBM business partner of any type can and should participate in the cloud.” Right now, a majority of the vendor’s channel partners either sell IBM’s public cloud services or are involved in designing and building private clouds, he said.

But going forward, the vendor intends to engage in greater numbers with managed service providers (MSPs) who can act as what IBM calls “cloud operators” that “stand up an infrastructure providing a common set of services within an industry or meet the specific cloud needs of a client,” Hume said.

He said that IBM’s North America-based channel partners currently did not command managed services capabilities at the same level as their counterparts in Europe.

“Managed service providers have a first-mover advantage in the mid-market space,” he said. “We’re going to focus on building out our relationships with MSPs,” he said.