IBM Reorgs Hardware, SMB Sales

From the solution provider perspective, IBM Corp. is looking very different in 2008 given the restructurings of the Small and Midsize Business Group and the Systems and Technology Group announced earlier this month. IBM says all these changes will sharpen its SMB focus and make the giant company easier—and more profitable—for channel partners to work with. But will the changes at IBM bring real benefits for solution providers, or is this just another redrawing of the corporate "org chart"?

IBM is hoping the changes will spur sales of its servers, software and storage products, particularly those within its Express Advantage portfolio. The company's server sales, in particular, could use a boost: A Gartner report in November said IBM's server sales fell 6.5 percent in the third quarter of 2007 to $1.5 billion, while IBM rivals Dell Inc. and Hewlett-Packard Co. both gained in server sales.

The reorganization of the Small and Midsize Business Group will likely have the biggest impact on channel partners. In the past, sales reps from the SMB Group, despite its name, sold to companies ranging from those with fewer than 1,000 employees up to customers with thousands, even tens of thousands of employees. The result was that sales reps, channel resources and even channel partners often spent a lot of time and effort chasing a small number of big sales opportunities within their designated sales territory and not devoting enough to hundreds of smaller opportunities, said Steve Solazzo, general manager of the SMB Group, in an interview last week at IBM's Armonk, N.Y. headquarters.

"Any time one of those very large customers has a big opportunity, the attention of not only my face-to-face sellers but also some of [our] business partners goes to those large enterprise customers," Solazzo said. "As a result ... the attention goes away from those 200 to 300 midmarket customers that are covered in the territory as well."

Now the SMB organization, renamed the General Business Group, has been divided into an Enterprise Business Unit that's focusing on enterprise customers and the Midmarket Business Unit that's concentrating on developing midrange customer opportunities. That may sound like little more than a redrawing of the IBM corporate organizational chart, but there are substantive differences that impact solution providers.

Most direct sales resources within the General Business Group will reside within the Enterprise Business Unit, focusing on the relatively small number of large-company opportunities. IBM, meanwhile, is promising to devote more resources to its midmarket efforts. That includes spending $100 million this year for lead generation and other co-marketing efforts with solution providers targeting SMBs. IBM also is shifting telecoverage resources to the midmarket efforts, including assigning channel partners to telecoverage sales reps who will help develop and qualify sales leads. Each telecoverage rep will have a defined set of 100 to 125 channel partner accounts. IBM is also creating new midmarket territory sales rep positions to work with channel partners and telecoverage personnel to identify and develop SMB sales opportunities.

IBM is also appointing vice presidents to pull together all these resources in each major geographic region where IBM operates to make sure sales opportunities are passed along to channel partners, according to Solazzo. For North America, that role will be handled by Judy Smolski, until recently IBM's vice president of small and midsize business marketing who is now vice president of midmarket sales in the Americas.

Next: Midmarket Hardware Business