Saddle Up, Pardner

March 5, 2012 Timothy Prickett Morgan

It was almost a foregone conclusion, given its application-centric nature, that among all the various systems and servers that Big Blue has sold over the decades that the AS/400 and its progeny would be the platform most dependent on the reseller and software vendor communities that sprang up around it to sell it and create application software for it. IBM does not provide statistics about its Power Systems-IBM i business any more, but these business partners are still a key component of the ecosystem. Even if their several thousand numbers are dwarfed by the overall 121,000 business partners that IBM has.

IBM hosted the PartnerWorld Leadership Conference 2012 in New Orleans last week, bringing together 1,500 senior-level people from the business partner community and from various groups and divisions within IBM to talk, well, business. Mark Hennessy, general manager for global business partners and the midmarket hosted the event, and Monday was all about the ISV community and opportunities with smarter cities, business analytics, and vertical industry solutions, and Tuesday was a deeper dive with the bigwigs in Software and Systems Group, including a talk by Jeff Jonas, the founder of a data analytics company called Systems Research & Development that IBM bought in January 2005. (I have heard Jonas speak before about big data and privacy, and he is hilarious as well as shockingly insightful.) Wednesday, IBM’s new president and CEO, Ginni Rometty took the stage to talk about the new leadership required in the modern, telemetrical, always-connected world that IBM calls Smarter Planet, and by Thursday IBM finally got around to the meat and potatoes, talking about “making money” and “taking share” in the North American channel and “transforming for growth” in the challenging European midmarket.

None of us were invited to all of this, of course. (Well, except you lucky few BPs who got to go who are reading this, of course.) And a lot of it was probably far removed from our IBM neck of the woods (not out of necessity, but more out of neglect). But IBM likes to get the word out to partners and customers that it is doing things to be competitive with other systems and software providers. To that end, IBM went public with a bunch of incentives it is giving to systems, software, and services partners.

And I also caught wind of some changes that are going on in the Power Systems channel that were not discussed publicly and which probably have some bearing on your life as an IBM i shop.

About half of IBM’s server and storage sales come from the channel, and it is probably something on the order of 85 percent or higher for the Power Systems-IBM i combination. So the channel matters. But IBM told attendees at the PartnerWorld conference that only about 15 percent of its software sales went through the channel. So you can understand why whatever IBM does, it wants to get more of its software–and less of that from Microsoft, Oracle, and others–going through its channel to entry and midrange customers that it does not cover directly.

To that end, IBM has announced a new business partner program called the Solution Accelerator, which gives partners an incremental rebate of 5 percent of a deal’s value if they peddle analytics and social business applications on “eligible IBM systems.” The PartnerWorld pages from the link above are password protected, so I can’t see what platforms IBM is supporting, but I can say this without fear: the Power Systems server running IBM i should be on that list, and all of the social media and collaboration tools that IBM wants to peddle on its boxes should be running on IBM i, too. If you sell the IBM system and application software along with the hardware to a single client, that incremental rebate rises to 15 percent. In a cut-throat channel, these are big numbers. If BPs push specific software in big data and analytics, managing risk, security and compliance, or social business, IBM throws another 10 percent rebate in to sweeten the deal, and then, if you finance the whole shebang, you get 1 percent of the fees on top of that. Solution Accelerator bennies are available now.

IBM has a whole separate set of Smarter Cities incentives aimed at BPs who peddle the company’s Intelligent Operations Center cloud product, which is a SaaS product cooked up by Big Blue to give an operational control center to cities covering all of their systems–fire, police, transportation, water, electricity. If you get city governments to run this code in IBM’s SmartCloud public cloud instead of on premise, IBM will give you 15 percent of the annual contract value of the sale. Ditto for Smarter Commerce apps–if you get customers to run then on IBM’s cloud, you get a 15 percent piece of the action.

If you are one of the 5,000 business partners that have been through the Software Value Plus certification program to show you know your stuff, then you can tap into Global Financing’s zero percent, 12-month financing to do Smarter Cities or Smarter Commerce projects. The Smarter Cities and Smarter Commerce incentives will be available to qualified partners starting in the second quarter.

IBM was bragging last week how the Miami Dolphins NFL football team has picked elements of the Intelligent Operations Center to help it run the 75,000-seat Sun Life Stadium that the Dolphins call home. The system will monitor traffic and security and will even pay attention to what you buy and when you buy it to manage your experience at the game and, presumably, to maximum profits for the Dolphins.

Change In Power Systems Channel Rules

One of the topics of conversation at the PartnerWorld Leadership Conference last week was no doubt some changes that IBM made back on December 20 regarding the Power Systems business partner reseller channel.

According to several people that I spoke with regarding the changes, which went into effect on January 23, IBM has withdrawn the value-add requirements that resellers had if they wanted to sell Power Systems. So no longer do business partners have to demonstrate that they are selling an upgrade into an existing account or a new system into a new account with some kind of approved software or services value add. Forget that. No mas.

IBM has also simplified the rules for which business partner owns an account. If a Power Systems deal is worth less than $50,000–and a number of IBM i-based system deals surely are–then any business partner can chase the opportunity and it is first come, first sold, first done, collect rebates and margin. For deals that are worth more than $50,000, there is a registration process with IBM’s PartnerWorld organization. The first business partner to register an opportunity with IBM gets to chase it for 270 days, and they have to do a bunch of things to show they are in actual contact with the customer and moving toward a sale. In some cases, when the customer’s acquisition is being held up internally, a BP can apply for a 120-day extension to the registration. After that, any business partner that catches wind of the deal can engage with the customer and chase the deal.

This is a new approach for the Power Systems channel, I am told by resellers, and one that is similar to that used in the System x and storage channels by IBM. It will also sound familiar to iSeries resellers who in early 2005 had to go through an “opportunity certification” process way back when the iSeries division was its own thing and IBM instituted similar rules for BPs.

This all sounds like a lot of paperwork to me, pardner. But that’s the way of the world in business. And it seems clear that IBM wants to know what is going on in its midrange accounts and to use the spurs a little bit on BPs to keep engaging with customers to try to solve problems or else lose their accounts.

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