IBM Partner Logicalis: Deal Registration Can Impede Growth

Mike Cox, CEO of Logicalis, an IBM Premier Business Partner in Bloomfield Hills, Mich., said earlier this year that the company had grown its IBM business by more than 100 percent in fiscal 2003. "But it's not as easy to grow organically as we had thought because of their compliance program."

As a result, he said Logicalis was looking at acquiring "strong regional IBM partners that are complementary [to Logicalis]."

Logicalis COO Brian Nogar said even if the solution provider has reached an agreement with a customer to sell IBM products, it still must figure out how to meet IBM's value-add requirements.

Added Brandon Harris, Logicalis' director of IBM solutions: "In IBM's deal- registration process, it's the value-add that determines which partner gets the protection."

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IBM has four categories of value-add that partners can qualify for, including applications; technical expertise such as high-availability or business continuity; services; and public sector, according to Harris. "The ones that are most challenging are those with geographic-based requirements because there are only a certain amount [of solution providers] per geography and you can apply for a new [value-add authorization] only once per year," he said.

The services value-add, which is fairly generic, allows the Business Partner to sell IBM hardware within 150 miles of a specific location. And without getting Logicalis' two dozen or more field offices services-certified, the company is precluded from going after some IBM deals in its own backyard.

Logicalis, one of Hewlett-Packard's largest enterprise partners, signed up as an IBM Business Partner slightly more than a year ago. At the time, Logicalis vowed it would quickly become one of IBM's largest partners as well. But the value-add requirements have tempered some of those plans. "The value-add requirements are widely praised by longtime IBM Business Partners, and a year and a half from now we may say the same thing," said Nogar. "But as you are trying to grow your business from zero, it provides some challenges."

By contrast, he said HP has value-add rules but enforces them only if a solution provider complains. "Cisco [Systems] has [no value-add requirement]; whoever gets the business, good luck," he added. "You have to give IBM credit. They have the best intentions."