IBM Pulls Sales Force From Mid-market Accounts, Relies Solely On Channel Partners

By D.H. Kass

January 21, 2010

IBM Corp. said that it is pulling its direct sales team off mid-market accounts and ceding the entire segment to its channel partners as part of a $130 million sales and marketing initiative aimed at galvanizing revenue opportunities for qualified resellers.

In the past year, the vendor noticeably stepped up its concentration on the mid-market, a segment it pegs in excess of $150 billion in potential sales, not only talking about it in earnest but also coming out with new solutions, certifications, cloud applications and product bundles.

Company officials said that the vendor believes that it can best address mid-sized business customers through a co-marketing coverage model under which channel partners exert more control over sales opportunities, backed by IBM-supplied support and supplemented with solution packs specifically tuned to the IT needs of the segment.

“We decided that the mid-market will be a fully Business Partner-led segment,” said Marc Dupaquier, IBM general manager, global mid-market.

“We have identified mid-market accounts where Business Partners have the relationships and necessary skills and on those accounts we have moved IBM sellers to other opportunities,” he said. “Where we had IBM sales resources we will now redirect them to help Business Partners with lead creation and sales development.”

IBM’s re-configured mid-market push includes a series of “solution-building blocks,” or pre-assembled, modular, technology combinations of hardware, software and services packaged as one offering, reserved for Business Partners and targeted at mid-sized businesses.

Last July, IBM prepped for this move when it set up a small team of specialists to build multi-product solutions aimed at mid-market customers—a stepping stone to increasing the number of product collections it builds for mid-sized businesses--and consulted with channel partners to develop effective sales and marketing strategies.

The goal now is to provide channel partners with technology blocks aimed at specific solution areas--such as business analytics, data protection and dynamic infrastructure--that span IBM hardware, software and services, are channel-friendly, and will help boost mid-market sales, Dupaquier said.

The first entry is a re-launch of IBM’s Comprehensive Data Protection solution, already included in its Express Advantage portfolio, comprised of Tivoli Storage Manager, System x servers, System Storage DS3200, financing options from IBM’s Global Financing arm, and implementation and installation services.

Dupaquier said that CDPS, which he offered “did okay,” will be re-formatted to fit the updated mid-market solution block format and will include customizing options and add-ons.

A second solution-building block, slated for delivery in the first quarter of this year, will feature Cognos business analytics. An additional four to six offerings are on the table for rollout later this year, Dupaquier said.

“Right now we have about 20 people involved in bring solutions together from different product groups,” he said.

New role for sales force

In what amounts to a restructuring of its sales coverage in mid-sized accounts, IBM will expand its co-marketing efforts, dispensing with passing leads from the field to channel partners--in what Dupaquier conceded was a cumbersome and complex process--in favor of helping partners to get the most out of their own leads.

“Partners told us that they want to find their own leads rather than getting them from us,” Dupaquier said.

Accordingly, the vendor said that it will double its co-marketing budget for Business Partners, reallocating funds away from marketing promotions and toward endeavors that reinforce its relationships with partners.

For example, the vendor has shaved its lineup of marketing promotions meant to stir up mid-market leads from nearly 60 last year to less than 10 now, Dupaquier said.

In re-orienting its sales force to operate in a channel supporting role by driving sales, developing additional solutions and optimizing customer satisfaction, the vendor has sprung some 70 Territory Business Partner representatives, apportioned by city, state and major market, to back channel partners and work with IBM product groups.

“Territory reps will manage the Business Partner relationship at the territory level,” he said. “We want to make sure that in driving the business we have enough partners for account coverage.”

IBM believes that mid-sized businesses look favorably on offerings designed and priced for their needs, skilled local partners who support them and vendors that understand their business and work in concert with the channel, said Tim McChristian, IBM vice president of sales, global business partners, Systems and Technology Group.

“Last year we worked on bringing the totality of IBM together for our partners,” he said. “This year, we’re focusing on simplification, growth, profitability, competitive issues and sales opportunities in the mid-market, particularly with security, virtualization and storage.”

Clay Hales, president of Infosystems, an IBM Business Partner, suggested that the vendor’s “emphasis on marketing services,” will result in his company being able to close sales more quickly.

“We have more end-to-end control of our marketing initiatives and opportunity pipeline with full support from IBM,” Hales said.