IBM Ups Rewards to Midmarket Partners

April 6, 2009

IBM Corp. (NYSE: IBM) has revitalized a commitment statement it initially made to its business partners 13 years ago, backing it with hefty incentives for midmarket sales, an expanded cross-border certification program, additional training and marketing centers, and a series of seminars on go-to-market strategies.

The vendor also has made available to business partners its huge cache of data compiled through IBM Global Services, a move that affords the channel a broader view of IBM’s overall IT strategy.

The company’s roster of 100,000 channel partners, which accounts for some 30 percent or $30 billion of the vendor’s annual revenue, recently was the beneficiary of an updated Business Partner Charter, announced and endorsed by IBM chairman and chief executive Sam Palmisano in a letter to the vendor’s entire reseller base.

Palmisano wrote that IBM’s commitment to the channel is now more important than ever, driven by the state of the economy: “Even in today’s difficult environment, businesses are willing to invest in IT solutions—if they cut costs, drive efficiency and productivity, preserve capital and create competitive advantage.”

He added that the charter “represents our commitment to what never changes about our relationship, while renewing it for a very different world.”

Responding to channel feedback

About a year ago, IBM began assessing feedback it received from channel partners about the charter, which was rewritten five years ago, as it considered how to frame it to express current and future market conditions, said Tim McChristian, IBM vice president of worldwide channel sales.

“We wanted to make a statement especially in these trying times,” McChristian said. “Partners are looking for guidance about who to trust and we have an opportunity to be vocal,” he said. “They’ve given us some feedback about what to emphasize.”

Chief among points of emphasis is the midmarket, where IBM believes the strongest opportunities reside for its partners to deliver purposeful solutions. “We want to state to partners where we see them as the lead and that’s the midmarket,” McChristian said. “We’ve made a commitment to provide training, support and incentives in that area to make sure partners can represent us to their customers.”

Accordingly, the company has upped the incentives it offers to partners selling solutions to midmarket customers by as much as 10 percent. “The midmarket represents the largest opportunity of spending,” McChristian said. “Our partners will drive at least 70 percent of demand in this area,” he said.

In addition, IBM has added an Integrated Product Export program to simplify how partners sell their products internationally, enabling channel members to develop applications in one country and sell to clients in another. Furthermore, later this year the company will add to its 43 sales and marketing-focused Innovation Centers and launch a series of 25 seminars to help partners build more value into their relationship with IBM.

The company believes that programs such as these meshed with clear evidence of its commitment to the channel will help recruit resellers to its portfolio.

“Last year, we gained more than 15,000 new partners and half of those were in growth markets,” McChristian said. “The Charter should help with recruitment.”

Next page: Six "guiding principles"

The revised Charter details six “guiding principles” that form the framework of IBM’s relationship to the channel, including statements affirming the importance of channel partners to the company’s business, defining the relationship as a “collaboration of equals,” supporting partners’ pursuit of success, providing the best and most productive working environment, taking advantage of new market opportunities, and adhering to high ethical standards.

McChristian said that the Charter’s primary business principles remain the same with the central changes related to the vendor’s Smarter Planet initiative, IBM’s play to position itself at the heart of a new, cloud-based IT world.

“These economic times play well to the timing of the release of a new charter,” McChristian said. “This isn’t just a marketing piece, it’s a commitment with our partners for mutual success. We want our partners to work with IBM as we go after the tremendous new growth opportunities the market presents.”

Through its earlier Smarter Planet and Dynamic Infrastructure initiatives, and now the Charter, the vendor appears engaged in a wholesale effort to prepare its partners to sell a vast array of emerging technologies and services to take advantage of some $3 trillion in worldwide stimulus funding. IBM has repeatedly outlined the opportunity available to its channel, pointing to the more than $30 billion allocated for IT-related efforts in President Obama’s $787 billion economic stimulus package.

One IBM partner that worked with the vendor to diagram the Dynamic Infrastructure program praised the vendor for its joint efforts with the channel and for reworking the Charter to reflect current economic conditions.

“The Charter shows that there’s real emphasis being placed on the channel,” said Bob Verola, Vicom Computer Services chief executive. “IBM brought us in to help with the design of the Dynamic Infrastructure program for the channel,” he said. “We were on the advisory council and our technical people worked with them to build the assessment tools and qualifications for the program,” he said. “It made a big difference to us.”