Looking To Tie The Knot

IGS has a new chief strategist in Ralph Martino, who joined Big Blue's services arm last fall as vice president of strategy and marketing after 12 years serving in various channel management positions for PCs, midrange systems, software, printers and other products. At the PartnerWorld 2002 conference in San Francisco this week, Martino aims to convey a new message to solution providers: More partnering opportunities are coming your way from IGS.

"There is an enormous opportunity to work with our partners in all the markets we serve and figure out how to selectively get into markets where we don't have coverage and our partners provide that coverage," Martino said.

That's welcome news to solution providers, some of whom complain that IGS shows apathy toward the channel by working as its own entity instead of with other IBM units and business partners.

"There are still some things at IBM that need to be made more channel-friendly,like the reselling of IGS services, because there are a lot of times we can't deliver the services and need [IGS," said Vince DeRose, president of Peak Resources, a Denver-based solution provider and IBM Premier Partner. "We need the ability to easily and efficiently get to the IGS people when we need to fall back on them. I think as we take on the task of continuing to sell and be the primary face for IBM in the midmarket, they need to be a bit more channel-friendly."

IGS already has been moving in that direction. On the eve of PartnerWorld 2001, IGS pledged to reduce conflicts with channel partners by pulling out of implementation services in the United States for customers with less than $500 million in annual revenue or fewer than 2,000 employees. Solution providers say IGS has largely lived up to that promise but still hasn't actively pursued channel partners that could provide complementary services for specific customer deals.

"IGS is a powerful force with a tremendous amount of people and a great brand," said Jeff Beall, senior vice president of professional services at Avnet Enterprise Solutions, Tempe, Ariz. "If they get a deal, we'd like to know via our sales force if it competes with our business so we can see if we can partner. I have opportunities we want to talk to IGS about. I have core competencies that IGS needs."

Martino said IBM business partners generated about $6 billion of IGS' 2001 revenue of $35 billion. The partner-related revenue stemmed from the resale of IGS services, service opportunities arising from ISV alliances and formalized teaming agreements in which partners work on a contractor/subcontractor basis.

"We have 40 [teaming agreements globally," Martino said, adding that he'd like to double that figure, which in turn would boost the number of teaming agreements in North America to 30 or 40. These agreements, which involve the sharing of sales leads and service resources, are critical to IGS' efforts to penetrate the SMB market, he said.

And solution providers agree. "The challenge that IGS has is it can't be profitable at $30,000 services engagements. That's our bread and butter," said Stewart Booden, president of Aspen Consulting, a systems integrator in Rolling Meadow, Ill.

In working with SMB partners, IGS is realizing that it must adopt more of a give-and-take approach, said Brian Hilgenfeld, vice president of software services at MSI Systems Integrators, an Omaha, Neb.-based integrator.

"Both of you want the lead, both want to control the account. You need to build trust," Hilgenfeld said, adding that until last year MSI didn't have a formal partnership with IGS. "In the midmarket, IGS said it wants to find opportunities and [if you bring IGS in, the solution provider can keep the paper," he said. "In return, IGS asks partners who get opportunities in the enterprise space to bring in IGS."

The IGS channel rapprochement reflects a broader strategy by IBM to re-emphasize solution providers in its overall marketing and demand-generation activities. This year, Big Blue plans to spend $100 million on co-marketing efforts with business partners, said Peter Rowley, IBM's general manager of global business partners.

"We recognize that we get a higher yield out of co-marketing campaigns [with solution providers than out of IBM-only campaigns," Rowley said, noting that in some cases IBM doubled its returns by co-marketing with partners focused on specific business solutions. "I want 60 percent of business partners' Partner Awards [market development funds to go into sales and marketing to generate more demand," he said.

Likewise, IGS' marketing efforts will take on a distinct channel flavor this year, according to Martino.

"I want business partners to know there is a channel-knowledgeable and channel-friendly person that is now in charge of thinking about all of our go-to-market activities in IBM Global Services," Martino said.

JEFF O'HEIR contributed to this story.