Still Work To Be Done

Joe Vaught, COO of PCPC, an IBM Business Partner in Houston, said on several occasions an IBM sales manager has called into his accounts and tried to take some deals direct. "That poisons the business," he said.

And despite much needed rules of engagement, which were published earlier this year to ease conflict with IBM Global Services, Josh Greenbaum, principal at Enterprise Applications Consulting, Daly City, Calif., noted that there is no one IGS doesn't compete against.

Still, in a global IT market trying to find its legs, IBM's Business Partner sales surged 16 percent in 2003. Business Partners either sold or influenced the sale of $29 billion in IBM products and services during the year, up from $25 billion in 2002, the company said. This compares with overall IBM revenue growth of 10 percent for 2003.

Fueling those numbers are a consistent channel strategy and a clear message to Business Partners that the small- and midsize-business market is their exclusive domain, some partners say.

"The biggest plus for IBM is that they are consistent and predictable," said Don McDowell, vice president of server solutions at Forsythe Solutions, a Skokie, Ill., solution provider. "We know what IBM is going to do and that makes it easier to do business planning, which is a key component to our profitability."

Added Eric Williams, executive vice president of Support Net, the IBM division of Arrow Electronics, Melville, N.Y.: "IBM has a clear and consistent channel strategy, and they don't take right turns. When they are considering making changes, they take a lot of input."

That consistency is borne out in CRN's Channel Satisfaction Survey. Over the past year, the percentage of solution providers satisfied with IBM's channel programs for hardware and software has stayed in the 42 percent to 48 percent range. Those dissatisfied have held steady in the 12 percent to 15 percent range. Business Partners say much of this consistency comes from IBM Chairman and CEO Sam Palmisano.

"He makes us feel that we are a key part of his team," said Simpson. He noted that he was invited to attend IBM's on-demand rollout in New York a year ago and that Business Partners are now regularly consulted for their input on new on-demand technologies.

This allows them to influence product development earlier in the cycle, he said.

"Palmisano has handed an opportunity to the channel to show some leadership in this on-demand world," Simpson said. "He's not going to tell people, 'This is how you do it.' But for those partners that show leadership in on-demand, he's not only going to let you run with it, he's going to enable it."

Channel executives also gave IBM high marks for branding its entire server line as eServers. Fred Cuen, senior vice president and general manager of Avnet Hall-Mark's IBM business unit, said the branding strategy sends a solutions,rather than a product,message to the market. That's allowed IBM, among other things, to bring its Intel-based xSeries more into the enterprise space. "Our xSeries business is up 98 percent year over year," Cuen said.

Simpson notes, however, that IBM still needs to do a better job of protecting margins for Business Partners that have invested heavily in IBM solutions. "Our pSeries revenues were up 89 percent last year, yet our margins stayed flat," he said. "We've lost deals to customers who have shopped the hardware. IBM is very attuned to this problem, but they need to fix it faster."