IBM Pushing Partner Agenda In SMB

One of the key messages IBM channel executives will stress during the upcoming IBM PartnerWorld event in San Francisco is that the company has deemed the SMB market a "must-win battle" in 2002.

"Our focus is on growth, and clearly the small and medium business market is an opportunity for growth," says Marc Lautenbach, general manager of sales and distribution for IBM global small and medium business. "It is a typically rich, fast-growing segment where there is tremendous upside."

With PartnerWorld less than two weeks away, VARBusiness had the opportunity to sit down for a roundtable discussion this week with the three IBM executives who are joined at the hip when it comes to IBM's go-to-market strategies in the SMB space: Lautenbach; Peter Rowley, general manager of IBM's Global Business Partners; and Doug Maine, global general manager of ibm.com.

Anyone familiar with Big Blue's go-to-market strategy in recent years knows that this is certainly not the first time the company has announced plans to target the SMB sector. It has done so several times in the past, mostly with mixed results. But the difference this time around, say the executives, is that they have never had as much cooperation among IBM's different business units as they have right now.

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For the record, Lautenbach says IBM considers the SMB market to include companies with fewer than 1,000 employees, with those under 100 falling into the "small" category. While about 20 percent of IBM's total revenue comes from the SMB market, a full 70 percent of that amount is sold via business partners.

When asked about IBM's visibility among SMBs, Rowley says he thinks the company has a stronger image in the mid-market space than it does in the very small arena. It's something the executives would like to change.

"This is a very fragmented marketplace in terms of the number of enterprises you have to reach," says Lautenbach. "Profit is concentrated in a few places."

And IBM realizes that most SMB customers would rather buy from a trusted advisor, someone who's close enough to their specific business to know its distinct needs and concerns. That's why IBM is banking on business partners to increase penetration in this area.

"We need a higher level of engagement at the transaction level with the local business partners," says Rowley.

Lautenbach says the value proposition that IBM is trying to impress upon its business partners in the SMB space is twofold: First that the partnership between IBM and its partners offers customers an unmatched opportunity to get best-of-breed solutions, and two that the partners will have the opportunity to team with IBM to increase their own profitability.

To that end, Rowley says IBM recently completed a comprehensive profitability survey of its business partners to find out more about the issues affecting them when partnering with IBM. The results showed that one of the biggest concerns amongst partners is ease of doing business with IBM, which many partners feel can be improved. While Rowley agrees that there is always room for improvement, he feels that in some cases partners compare IBM's huge family of solutions to other vendors whose partner programs are based on a single product line. That usually results in an unfair comparison, he says.

Another finding from the study was that a majority of partners said their biggest pressure on price comes from fellow resellers and solution providers, not IBM direct sales. Rowley believes the statistic demonstrates that while Big Blue is doing a good job keeping channel conflict under control, the company and its business partners still have work to do to expand the overall market for their solutions.

"We need them to generate their own market of demands," says Rowley.

He says his unit is planning to invest $100 million this year in advertising and demand generation initiatives for business partners as a way of helping them do that.

Recent initiatives to help partners in the area of demand generation have included a campaign design tool unveiled at last year's PartnerWorld, and a Web-based PartnerWorld Lead Management program that helps business partners move leads through the sales cycle, and stepped-up lead generation and online support programs on ibm.com.

"Right now only 20 percent of the leads created by our people stay in ibm.com," says Mehne. "The majority of them go right to the business partners."

And this year at PartnerWorld, IBM is planning to unveil a new tool for partners and clients called the integrated Solutions Marketplace, which serves as a single location online to get all the components of an ISV solution, from business partners to hardware and software solutions.