CRN Interview: Peter Rowley

Industry Editor Craig Zarley spoke last week with Peter Rowley, IBM's outgoing general manager of global business partners, who retired last week after 37 years. Rowley, the author of the IBM Business Partner Charter,the vendor's manifesto for how it treats the channel,talked about the state of the channel and his biggest challenges as a partner advocate within IBM.

CRN: What is the biggest challenge facing business partners today?

ROWLEY: Partnering is the biggest challenge. The margins on hardware are harder and harder to hold. So [the channel players] find themselves going into services and software to complement the hardware. None of them believe they can move away from hardware because that's what generates the demand for the other products and services they can offer. When you've got to sell hardware every day, you're pretty bloody aggressive. You've got no backlog of software license revenue; you've got no backlog of services contracts to rely on for revenue. When people take their focus off hardware, the organization loses its edge. We've seen that around the world in IBM, and I've seen that in some business partner organizations as well.

When business partners move into software and services, they can't do everything themselves. They need to partner with systems integrators or software vendors in order to capture the opportunities.

CRN: Many IBM business partners are IBM-only. Is that single-vendor model viable going forward?

ROWLEY: Let me draw this analogy for you. If you're a small application software vendor, you have to decide what platform to put it on. You have to decide to put it on the IBM platform, the Sun [Microsystems] platform [or] the Microsoft platform. And if you're small, you probably can't afford to put it on all three platforms because you don't have the skills. Every time Sun, IBM or Microsoft comes out with a new release of the platform, you have to upgrade the interfaces between your application and the new platform. You can't afford to do that, so you probably choose one platform.

The larger they are, the more they're going to consider spreading their risks between vendors. The smaller they are, the [more they're] going to choose a vendor and stay with that vendor.

CRN: How difficult was it for you to be an advocate for business partners within IBM?

ROWLEY: The biggest battle we fought was back in 1995 when we put the Business Partner Charter together. While people might say it's just a piece of paper, it's been a guidance more internally than externally so that the business partner community [within IBM] can hold it up to the other [groups] and say, 'Here's what we've committed to.'

The second-biggest challenge was educating people who have not spent time with the business partner community. They look at the 32 [percent] to 33 percent discount on an iSeries to the channel, and a person who's never run their own business and doesn't understand rent or payroll or taxes will say, 'My God, 33 percent. They're making a fortune out there.' We've spent a lot of time educating the IBM people in the field on the economics of the channel.

CRN: How was it working with Louis Gerstner, former IBM chairman and CEO, as far as getting your channel agenda adopted vs. working now with Sam Palmisano, current chairman and CEO?

ROWLEY: Because Lou came from an industry where partners were important, it was a natural thing for him [to support partners]. I remember we had a little bit of a blip on business partner satisfaction [with IBM] one quarter. He was all over us, saying, 'Guys, you've got to fix this. You can't afford to lose the loyalty of your business partners.' We fixed it, but my point is that he didn't let any part of the business get out of his view. When we were putting the charter together, I was not on the World Management Council [the top 40 executives at IBM]. I was invited on three occasions by [Gerstner] to go and present to the council what we were doing with the Business Partner Charter to rally support from the top 40 executives.

CRN: How is it with Sam Palmisano?

ROWLEY: From a partner point of view, he's very much committed to partners. He was on my back over how we can expand our relationship with competitive partners, how we can protect their profitability. The other day there was a proposal to change one of the terms and conditions with the partners. We didn't do it in the end. He said, 'When this industry is in tough shape, don't do anything to jeopardize the profitability of the partners. We can't do anything at this time that would put them at risk.' He's got sensitivity to partners and what makes their businesses tick.