IBM PWLC: Partners Seek Incentives, Managed Services, PureSystems Guidance

IBM channel partners are in transition, adding software and services to their hardware offerings and evolving beyond product reselling to providing managed services to customers.

Seeking guidance on those and other issues in the IBM ecosphere, more than 1,500 IBM channel partners are heading to Las Vegas to attend the vendor's annual PartnerWorld Leadership Conference (PWLC) next week.

Many, especially smaller partners, are simply seeking face time with IBM execs. "You have all the decision makers in one place at one time," said Ernie Yenke, president of Lighthouse Computer Services, a Lincoln, R.I.-based IBM premier business partner.

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"It's the one-on-one meetings with IBM execs we get the most out of," agreed Michael Gray, chief operating officer of Champion Solutions Group, a Boca Raton, Fla.-based partner. In addition to getting the low-down on what's up at IBM, Gray said those meetings provide an opportunity to introduce his company to the execs.

IBM has placed increased emphasis on managed service providers in the last year -- both recruiting new MSPs as partners and helping current reseller partners add managed services to their offerings. Some partners will be looking for more information on what this means for them.

IBM's managed services strategy, as it relates to reseller partners, has largely focused on getting them to sell more hardware and infrastructure products, said Mark Wyllie, CEO of Flagship Solutions Group, a partner that's also based in Boca Raton, Fla. Flagship has been transitioning from selling hardware infrastructure to providing managed services such as IT monitoring and service desk operations -- today the company's sales split is about 50 percent hardware and 50 percent services.

Wyllie has been talking with IBM about using the vendor's Tivoli IT management tools to assist with those services. He'd like to see IBM create more packaged, pre-integrated software products that MSPs can offer as services to their customers.

As IBM's roster of MSP partners grows, Gray at Champion Solutions Group said he'd like to hear from IBM how the company plans to bring the MSP and traditional reseller communities together. "It's the changing dynamics of the IBM partner ecosystem," he said.

Hardware remains a big part of many IBM partners' businesses, and several channel partners want to learn more about IBM's plans for its PureSystems converged infrastructure servers. "It's a great solution. On the hardware side, it's a big focus for us," said Yenke at Lighthouse, which has nine PureSystems certified employees. "IBM's bet a ton on it."

But some partners said that sales of PureSystems, introduced nearly a year ago, have been slower than IBM had hoped. "IBM's got to get its Pure message solidified and out there into the market," Gray agreed, noting tough competition from Cisco's Unified Computing System servers and NetApp's Flexpod systems.

NEXT: Mixed Reactions To CEO Virginia Rometty's PWLC Absence

IBM's hardware sales have been on a slow decline for some time. The last time the company's Systems and Technology Group (STG) reported sales growth was in the third quarter of 2011. In 2012, hardware sales plunged 13 percent in the third quarter but stabilized in the fourth quarter, dropping just 1 percent (and actually increasing 4 percent when factoring out the company's retail store systems sold to Toshiba in August).

Lighthouse Computer Services' Yenke said that while hardware once accounted for 80 percent of his company's sales, that's down to about 50 percent, with increased software and services sales accounting for the balance. Those software products include IBM's identity and access management tools, Cognos business analytics software, and middleware like the Cast Iron integration software,

IBM President and CEO Virginia Rometty is not on the agenda to address partners at this year's conference, unlike when she did so last year, shortly after having taken the chief executive reigns from Samuel Palmisano. Partners had mixed reactions to that news.

"It is a surprise to me," said Wyllie at Flagship Solutions Group -- a sentiment echoed by several other partners. But, other partners chose not to read too much into her absence, noting that historically IBM CEOs attend every other PWLC.

Channel partners interviewed for this story were generally satisfied with the current state of IBM's channel programs. Yenke, for example, praised the company's Software Value Incentive program that guarantees that partners who do the legwork to develop a deal get rewarded, even if another reseller comes along and bids lower for the contract.

IBM has been making changes in the reporting structure of its channel organization and assigning more resources to specific product brands and STG.

"As far as I'm concerned, it's probably a more efficient way of doing things," said John McCarthy, president and COO of Mainline Information Systems, one of IBM's biggest channel partners. "Simplification has been on the partner side of the agenda for years now."

McCarthy, however, is anxious for reassurance that IBM is investing the same amount of resources -- or more -- in the channel this year compared to 2012. He'd particularly like to see incentives for partners and for IBM's field sales representatives to grow sales of IBM software and services.

"We can be selling the whole spectrum of software, hardware -- everything IBM," he said, "It's all execution, right?" He noted, for example, that Mainline recently acquired a small business analytics company in a bid to expand its sale of business analytics software and services focusing on IBM Cognos.

Champion Solutions Group's Gray said he'd like to hear more at PWLC about IBM's plans to make its Smart Cloud offerings "relevant to business partners" and IBM field sales representatives.

PUBLISHED FEB. 22, 2013