IBM looks to double its government business with the help of partners and integrated solutions
Study after study completed by IBM reveals that government customers want to buy fully integrated solutions 85 percent of the time. Considering that IBM has one of the world's largest partner ecosystems and portfolios of products and technologies in the business, increasing its market share should be simple, right?
Well, that's the view held by IBM's general manager of its public-sector business, Robert Samson. An IBM veteran and former vice president of sales for the IBM Systems Group, Samson has embarked on a mission to more than double Big Blue's government sales. A tripling or even quadrupling of the business is not out of the question, he says. But the effort will require the full involvement of the partner community.
In a recent interview with GovernmentVAR, Samson explains why he believes IBM has the unique combination of products, strategies and business partners to make its growth dreams come true.
Case in point: He points to recent initiatives to better leverage IBM's partner base. IBM launched Public Sector Edge, an IBM PartnerWorld Industry Networks program designed to make it easier for solution providers, ISVs and systems integrators to work together and with IBM. Building on IBM's existing PartnerWorld Industry Networks for ISVs in the public sector, the latest initiative connects ISVs with fellow public-sector systems integrators and solution providers. Among other things, the new offering provides more government-focused marketplace insight, teaming information, channel enablement, incentives and marketing material. That's just a sampling of what Samson believes will distinguish IBM in the market. In the QandAmp;A that follows, he outlines additional IBM strategies.
GovernmentVAR: Characterize the time and financial commitment IBM is making to business partners focused on the government.
Samson: If you look at the collective opportunity, it's enormous. And it's not a secret. But think about the opportunity: $210 billion! That's the good news. The other piece of good news is that each segment inside that space--government, education and health care--has a different challenge. The third and most important thing is that the ability to solve these problems starts with the application of new processes and new technologies. This is a sweet spot for our partners and IBM to work together. It's a perfect storm, to steal a phrase, that I don't think has come along in a long time. What's occurred is that we have gotten out of proprietary plays and gotten to the issues, and what is the best way to solve them for customers in a very practical way.
GV: So, how do you go get it?
Samson: IBM is in a perfect spot to go after government business. We have a rich portfolio of services, products, technologies and capabilities to help address the problem. But the issue is we cannot do it by ourselves. We need the insight, innovation, wisdom, creativity, relationships and market access that the partners can provide us. The other day I met an IBM Business Partner and I asked him what his company did. They do specialized emergency response systems for first-responders for hospitals, emergency rooms, etc. And I thought, "That's a huge opportunity." Do I have any capability to do that? No. Could he take some of my technology and go apply that in a unique way? You betcha. Are there assets that we are creating at the University of Pittsburgh Medical Center around bioterrorism that he could use? Absolutely. But we are never going to do that ourselves. For the first time, I'm convinced--and I am really trying to be objective here--that we have the leadership around our technology in the on-demand model, the open nature of which it's been constructed, the credibility that says this is not about IBM, etc. If you decide [you are going to enter into] an open-architected environment, which we did six years ago when we declared Linux and the open movement is what we are embracing, then what you're saying is [that] the playing field is now equal. And now you have to differentiate yourself with the capability of your products, the capability of your services, because the switching costs are far lower than they were for people to go from one platform to the other.
GV: Can you explain a bit more?
Samson: Here is the model of yesteryear, not an IBM model, but an industry model: noncompetitive, marginal products built around a proprietary model that customers had to have. That's vs. the new model, which is an open-architected model where the customers can pick and choose the best components that go into it, built in a scalable, open-architected way. That's the future. As IBM, we have a unique responsibility to provide the leadership as customers go out and create this new paradigm.
GV: Of the $210 billion market opportunity, what percent does IBM currently have, and what conceivably could you see it going to?
Samson: I'm forbidden to provide that due to the way IBM reports its numbers. I know what the share is and it needs to be more. We want to increase our share--double, triple, quadruple it--and I think we can do that. We can at least double it. It's not a bragging thing, but the way we are going to double it and reach a much stronger, market leadership position is to bring as much of the ecosystem--as many of the partners--with us that have a special capability, a unique set of relationships, a unique set of market access that's best advantaged by picking a partner. And we want that to be us. If you think about it, the industry has bifurcated. You have Dell on one hand with a high-performance distribution system, and then you have companies at the other end that have a fully integrated enterprise that can do all of this. And I think what's going to happen is the guys in the middle are going to get squeezed. I think HP is going to get squeezed because they are not a high-performance supply chain like Dell. Sun is going to get squeezed. And I think even some of the other piece-part suppliers are going to get squeezed. Because in the model that I just described and the challenges that customers have, they want to buy fully integrated systems, not piece-parts that they have to integrate. I think that's a much more simpler model than stitching together all the components, plus the partner thing, plus another service provider, plus another integrator.
GV: In your group, what percentage of the sales go through partners, or are at least influenced by partners?
Samson: If you look at the public sector's total revenue, it comes from hardware, software and services. The aggregate of those is the total...the number for the public sector is about 30 percent of revenue. In some cases, it's 75 percent. NTG, the hardware stuff, it's 60 percent. But here's the trick, which is why this is very important to us...This is about reach and getting to parts of the market that nobody is calling on. Local government is a good example, health care, education customers. As part of this, we want to be able to reach those customers much like an SMB model. So we have to enable the channel to deal with an SMB-like part of the public sector. Where do you make money? You make money by going in those niches where there is nobody today: public-safety solutions, justice solutions, local government solutions.