IBM Pledges $500M To Midmarket Push

The new initiative, called SMB Advantage, is set to begin phasing in April 1. Details are expected to be disclosed later this month at IBM's PartnerWorld conference in New Orleans. Under the plan, Mike Borman, IBM's new general manager for global business partners, has pledged $500 million to support incentives and tools aimed at improving the profitability of partners selling IBM hardware, software and services into the midmarket.

The incentives include midmarket rebates on IBM eServers and storage, IBM software and the resale of IBM Global Services offerings. Money will be paid for winning new IBM accounts, activating dormant accounts and upgrading existing customers from older IBM technology.

For example, solution providers could earn an additional 20 points to 60 points on IBM's eServer under the initiative, IBM executives said. Margins on services bundles sold by solution providers and performed by IBM Global Services could increase by 2 points to 9 points, IBM said.

Solution providers said they predict an increase of 10 points to 20 points on software.

While business partners welcomed the incentives, some worried about how the program would work when solution providers find themselves locked in a special-bid war with a competing vendor.

"If a business partner does an effective job in competing against non-IBM brands, it will tip off the competition, which typically drives the transaction to special bid," said Mark Waldrep, president of Datatrend Technologies, an IBM business partner in Minnetonka, Minn. "Promotions from IBM that survive the special-bid process are worthwhile, and those that do not are hollow."

IBM plans to publish a list of 6,000 to 8,000 customers it wants the channel to win back to IBM. To avoid conflict with IBM direct salespeople, only business partners will be paid for IBM sales into these accounts, IBM executives said.

"The first thing we have got to do is make our partners more profitable," Borman said. "They have got to have a viable business that they operate."

Although IBM said it has 72 partner representatives in the United States whose compensation is tied to partner sales, some solution providers said a shortage of IBM channel field reps could hurt the implementation of SMB Advantage.

Steve Israel, executive vice president of AMC, a solution provider in New York, said he has been frustrated since IBM eliminated his channel rep last year. "IBM is losing revenue from the channel because we don't know what is going on," he said.