IBM Reaches Out to Midmarket Business Partners

July 28, 2008 Timothy Prickett Morgan

As I explained in last week’s issue when I tried to suss out how the midrange market continues to evolve, all the big IT players and plenty of small ones have set their sights on the small and medium business (SMB) market as a means of trying to grow their own businesses. And the reason is simple: the S and M portions of the economy are growing their IT spending at a substantially higher pace than the E, or enterprise, portion of the economy. But to succeed in the midrange, you can’t just concentrate on customers. You also have to concentrate on partners.

The reason is simple here, too. All the IT vendors guard their large accounts ferociously, like a lioness ensuring that her kill on the savannah remains just that–her kill. But since the dawn of the information technology market, back when it used to be called “data processing” and the word “midrange” actually meant something less vague, it has been partners–resellers and other third parties–who have been the means through which system makers and application software makers not only interacted with customers, but also how they got the sales. When you add it all up, the vast majority of minicomputer and midrange sales over the three decades of that businesses have been consuming such iron have gone from the IT vendor to through the reseller channel and into the end users’ IT shops.

So the relationship an IT vendor has with its channel really matters in the midrange. And IT vendors have to compete for channel partners through the products they sell, the incentives they give, and lead generation they provide–every bit as much as they have to compete based on price, performance, and features in the abstract comparisons between their systems or application software. And, in the final analysis, it is hard to say what matters more, channel enthusiasm for a product and the trust between a reseller and an end user or the raw feeds and speeds and value for the buck of a piece of iron or code. That would be very tough to quantify, really, but I can assure you of this. Of the remaining midrange players, if you messed up their channels, as Hewlett-Packard did six years ago as it merged with Compaq, it can really short-circuit the revenue stream.

Having made so many changes in its product lines in the past year and wanting to jazz up its reseller channel, IBM‘s PartnerWorld organization, which manages the 100,000-strong global partner channel for Big Blue’s hardware, software, and services products, is launching a new midmarket partner community and a companion advertising campaign to explain what IBM has to offer midmarket partners and they, in turn, to their respective customers.

According to Chris MacLaughlin, vice president of marketing for the global PartnerWorld program at IBM, the advertising campaign aimed at midmarket partners will be focused on a Website called Voice of the Business Partner, which is located at www.voicebp.com. The Voice of the BP effort, says MacLaughlin, comes in the wake of two questions IBM gets all the time from partners:

How are you going to help me grow my business profitably?
How are you going to make it easier to deal with you?

The first question can be answered by the revamped Power Systems and Modular Systems product lines, which IBM has been transforming since last fall with new hardware and software, and will be tweaked further as IBM rolls out its Blue Business platform later in 2008 for delivery probably in early 2009. PartnerWorld has lots of demand generation and lead sharing tools already, which also help to drive business. Answering the second question is a bit more tricky, which is why the Voice of the BP initiative is being billed as a two-way street. For its part, IBM has streamlined the PartnerWorld library of information about its various products, which makes it easier to figure out what to sell. But what IBM is looking for is input from the business partner community to try to improve how it supports them. Hence the idea of a community, where people are supposed to share ideas, rather than the way IBM has always done it, which is tell business partners how it is gonna be.

I have been to plenty of PartnerWorld conferences where IBM said things like “we need you to take your sales up X percent this year” or “you need to sell what’s on the truck,” like it is an order, an ultimatum. And I can recall IBM’s former chairman and chief executive officer, Lou Gerstner, saying that there were too many partners chasing too few deals at the end of the dot-com boom, and intimating that he was perfectly happy for the channel to consolidate.

Anyway, the Voice of the BP effort is supposed to allow partners to exchange ideas and figure out how to collaborate, but from what little I know of the midrange reseller community, these companies that have access to customers pretty fiercely protect their customer accounts and they are not really all that into sharing. Moreover, with the Power Systems merger of the formerly independent System i and System p product lines, you can bet that each side of the IBM channel is looking at poaching some business. And I would be surprised if there hasn’t been some altercations out there, particularly considering the tightness of the economy in the United States.

To get the word of about Voice of the Business Partner, IBM will be running three-page, fold-out ads in the front of CRN, VAR Business, and ChannelPro magazines. Specifically, ads are going into CRN for the weeks of July 28, August 4, and November 10 and 17; and into VAR Business and ChannelPro in the months of September and October. These publications will also get IBM dough to run banner ads for the Voice of the Business Partner effort throughout the third and fourth quarter on their respective Websites. The effort is thus far concentrated on the United States, with some spillover from Canada probably inevitably happening, according to MacLaughlin. Of those 100,000 partners in PartnerWorld, 26,000 of them are located in the United States, and a subset of these peddle products to midrange shops. It is probably safe to guess that between 15,000 to 20,000 of these could participate in the Voice of the Business Partner community if it is restricted to those in the United States who do midmarket business. (That last number is my guess, not an IBM number.)

You make be asking yourself why such an effort is necessary. I certainly did, and I asked MacLaughlin the question, too. “We have to make sure channel partners are aware of all we have to offer,” she explains. “While we have a lot of talented and skilled partners that know our products really well, there are those who do not know the products as well and there is always the potential to attract new partners in the midmarket, too.”

Of course, having set up such a community for business partners–the resellers, system integrators, and software vendors that push Power Systems and Modular Systems into midmarket sites–IBM will be asked the next inevitable question: Where is the Voice of the Customer community? Luckily for MacLaughlin, that is not her problem. But it surely is the problem of the top brass over at the Business Systems division, which markets what IBM makes to SMB customers. My hunch is we will see such a thing soon, and that it might even be part of the Blue Business platform we are hearing bits and pieces about, here and there.

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