Inside The Mind Of IBM: 10 Things We Learned At PWLC12:00 PM EST Tue. Mar. 05, 2013
More than 1,500 IBM channel partners journeyed to Las Vegas last week for IBM's annual PartnerWorld Leadership Conference to get the lowdown on where IBM sees the IT industry going and where the channel fits into its strategy. From expanded partner incentives to sell more hardware to the first disclosures about PureSystems sales to the use of IBM technology in police cars, here are 10 things we learned at the conference.
The IBM PartnerWorld ecosystem now has 132,000 members worldwide, according to Mark Hennessy, who, as general manager of IBM global business partners, is Big Blue's channel chief.
That number includes 13,000 partners that joined in 2012. Of those, 60 percent are from what IBM designates as "growth markets" -- countries like China, Brazil and Vietnam. Of the 1,500 PartnerWorld Leadership Conference partner attendees, 35 percent were from these growth markets, including 160 partners from China and 138 from Latin America.
A few weeks prior to the PWLC, IBM shifted Mark Hennessy's (pictured) channel organization to become part of the Systems & Technology Group. Hennessy, who previously reported to Bruno Di Leo, senior vice president of sales and distribution, now reports to STG senior vice president Rod Adkins.
STG sales were down 5 percent in 2012 to $17.7 billion. And, the channel's share of those sales was 53 percent, down two points from 2011. IBM is hoping that tighter links between the channel operations and STG will reverse that trend.
"The channel organization will still have a cross-brand focus. We will still be an integration point, if you will, for our partners that have relationships with hardware, software and services," Hennessy said. "I continue to have a cross-IBM focus. But, [this] also allows us to have a little more sharper focus in terms of STG."
IBM wants its channel partners to sell more hardware this year -- 57 percent of STG sales is the goal -- and it's boosting its channel resources to help. Hennessy announced that STG is increasing dedicated channel sales resources by 50 percent this year.
Those include resources for business development, opportunity identification, proactive technical support, business plan development, mentoring and complex deal support, and co-selling and joint client calls. One specific example: IBM is expanding the number of partner-dedicated sales and technical sales personnel by 400.
The company is also budgeting $900 million for rebates this year, up from $650 million in 2012, and it's promising higher margins for sellers of the company's Power servers.
IBM is investing $150 million this year specifically to improve STG sales lead generation, a move IBM executives said would provide a 4X increase in leads for partners.
"We're very intensely working on our lead generation processes, our lead validation processes," said Steve Mills (pictured), senior vice president and group executive, software and systems, in his keynote speech.
Converged infrastructure systems are a fast-growing area that most major IT vendors (Hewlett-Packard, Oracle, Dell and the Cisco-EMC alliance) have all jumped into. IBM launched its own entry, IBM PureSystems, last April, but until now the company has provided few hints about how the product line is selling.
Before the PWLC, several channel partners told CRN that PureSystems sales had gotten off to a slow start. But at the PWLC, IBM executives said IBM sold more than 2,300 PureSystems in 2012, many of them to large companies and managed service providers.
"I think we're off to a solid start," Adkins said during a keynote speech Wednesday. In an exclusive interview with CRN after his speech, Adkins said PureSystems sales appeared to gain momentum in the fourth calendar quarter. "I think that's trending and the direction we're looking for. I like the track that it's on, and we're well-positioned to leverage the momentum we created coming out of the fourth quarter into 2013."
One theme that ran throughout the PWLC was that IT purchasing decisions are no longer the sole province of the CIO -- IT buying decisions are increasingly being made by chief marketing officers and other line-of-business executives
Case in point: CMOs worldwide were responsible for $38 billion in IT spending last year, a number that will rise to $80 billion by 2015.
IBM showcased the Cheesecake Factory, a customer that uses IBM's data analytics software running on the company's Power servers to help manage its food supply chain to ensure food quality and safety. Donald Moore, the restaurant chain's chief culinary officer -- a non-IT role if there ever was one -- spoke onstage about his role in determining the Cheesecake Factory's IT needs. IBM partner N2N Global is the restaurant chain's IT service provider.
IBM executives at PWLC touted the use of IBM technology by town and city police departments in their crime fighting efforts. The technology even predicts where crimes might occur before they're committed.
One interesting statistic: 25 percent of all police cars in the U.S. have IBM software, according to the company.
IBM identified cloud computing, social business, mobile computing, and big data and analytics as the four big opportunity areas for solution providers working with IBM technologies.
Last year IBM's cloud computing-related revenue grew at an 80-percent pace and is expected to reach $7 billion by 2015, for example, while business analytics will account for $16 billion of IBM's sales by that year. And, globally the market for social business IT is now at $100 billion.
"That's a lot of new market opportunity," said Mike Rhodin, senior vice president of industry solutions, in a keynote. "That's a lot of new pools of revenue for everybody in this room to go after."
The worldwide market for what IBM calls "smarter analytics" is $200 billion, IBM executives said at PWLC. "That is a big number," Rhodin said.
At the conference Rhodin and other executives said big data and business analytics products will account for $16 billion of IBM's sales by 2015. Two days later, IBM president and CEO Ginni Rometty, speaking at IBM's annual investor's briefing, raised that forecast to $20 billion.
IBM currently has 26,000 partners that are certified in business analytics and/or currently have customer engagements that involve business analysis technology. IBM's business analytics sales grew 13 percent in 2012, and its "business partners were a big reason why," Hennessy said.
IBM has made a great deal about the company's "Smarter Planet" initiative in recent years, and this PWLC was no different. Smarter Planet is IBM speak for what Gartner calls "the Internet of things," the use of sensors, the Web and other technologies to add intelligence to everything from a consumer's refrigerator to municipal power grids and water systems.
IBM has had 26,000 smarter planet customer engagements, according to Jon Iwata, senior vice president of IBM marketing and communications, in a keynote speech. And, channel partners were responsible for about one-half of those engagements.