CRN Interview: IBM's Mike Gerentine

IBM wants to do with security and systems management what it's accomplished with storage--up the reseller count, involve ISVs and engage the channel. In an interview with CRN Senior Editor Dan Neel, IBM's Worldwide Director of Channel Strategy for IBM Tivoli, Mike Gerentine, explained how IBM plans to achieve just that.

CRN: Is the goal this year still one of doubling the number of channel partners for the security and systems management components of Tivoli?

GERENTINE: Absolutely. Our strategy is to recruit and expand our partner base with systems-management partners and also in our enterprise security management space. We're pretty whole in the Americas with storage, so we're not out actively recruiting more storage guys. And our storage business grew 40 percent year to year from last year in the channel, so we're very happy with that. So this year we have a greater focus on automation--which is really systems management, and on the security space.

CRN: Why do you think IBM did so well in the channel with storage?

GERENTINE: We did recruitment in the storage space, so a number of the partners that we recruited were enabled, we made them more productive so we're starting to see the results of that. Also, we rolled out, in the second quarter of last year, a new program called VAP--Value Advantage Plus--which gives additional incentive margins to our partners.

Specifically for storage, there are a number of partners that we call TSSCs--Total Storage Solution Centers--and they qualify for VAP. That provides them with margins of up to 30 points on an SMB deal, and 20 points on an enterprise deal. Those are very nice margins for a second-tier partner to have.

CRN: And now the incentives for security and systems management will be the same?

GERENTINE: Yes, everything is the same.

CRN: What about channel competition from HP OpenView?

GERENTINE: We have initiatives under way in systems management heavily focused on recruiting these HP OpenView resellers. There's been a lot of management change at HP and their Partner One program. We're hearing from partners [HP] had some false starts and they have a lot of acquisitions to deal with, so I think partners are challenged with the integration of all those different products.

We're also rolling out a five-city road show in the Americas where we're going in and having half-day presentations over breakfast or lunch, and we're bringing in HP OpenView resellers from those areas. We're going to be talking to them about our portfolio, about our value prop and how we believe they can make more money working with Tivoli, and how it's easier to do business with us. And we're going to be providing them with some significant margins. We're going to provide them with free education. We're going to give them the right level of support they need and high touch and they're going to make some money.

We've actually recruited a few of them already. Some of them are a little shy because they do sell HP today and they don't want to give up that revenue stream, but they're looking to complement what they currently have and they want to add IBM and our whole IBM On Demand program. They have customers that are asking for Tivoli now and they want to expand their portfolios to support us.

CRN: Does this mean rip and replace for customers?

GERENTINE: I think there's a two-prong approach. We can complement what customers currently have in their environment and we can upsell or cross sell from where they are. Or, if there are new buying decisions being made, obviously we want them to choose Tivoli over OpenView and we think we've got a good story to tell around that.

From a technology point of view, we've got a very strong on-demand message and the specific product there that we're focusing on is the Tivoli Provisioning Manager. We did the acquisition of Think Dynamics last year. We now have orchestration and provisioning products and we can do provisioning of the middleware layer of infrastructure, networking software and of applications. And we're out recruiting a lot of ISVs to build actual workflows to support provisioning.

CRN: Do the ISVs in turn deliver customers to IBM?

GERENTINE: Yes. It's all part of the ecosystem. We're out recruiting ISVs and these ISVs will build workflows, and those same ISVs have customers. They'll tell their customers that they're integrated with IBM's Tivoli on-demand automation products and then that will drive more business for us as well.

CRN: Talk about some of the incentives IBM offers for ISVs.

GERENTINE: We have a program called OPAL--Orchestration and Provisioning Automation Library--and part of OPAL provides the software companies with a positive experience that will help them build the workflow they need to support their application. We offer them free consulting and education on how to build a workflow, a testing environment to test their workflow. We help them to validate it to make sure that it really works. And then once it's completed we have an autonomic catalog and we have an on-demand catalog. It's a portal--a worldwide portal. And we'll place the vendors' workflows in this catalog. We're going to advertise that catalog. We have over 300 of them in there today. Soon, customers will go there as well--so that becomes another channel for these software companies. It will allow them to see who's building workflows, so that helps ISVs drive more sales for themselves as well.

We also have launching initiatives for ISVs. If a software company wants to have a high-level meeting with their customer's execs, we will allow them to come into an IBM briefing center anywhere in the world and we will help host them. We've opened up our IBM briefing centers to our partners and we're allowing them to either run it on their own--come in, [and] we'll just manage the logistics for them--or we can jointly work with them on that.

CRN: A lot of OpenView partners are reading this interview. Tell them why they should get in touch with IBM if they haven't already.

GERENTINE: IBM has got a lot of demand and a lot of momentum with On-Demand automation. We've got customers that are asking for our products. We've got leads that we can pass to partners. So they should come play with us because there's an opportunity to make some serious money here.

CRN: Will IBM beat HP in price any time it's necessary?

GERENTINE: I think our margins are very aggressively priced for deep discount and we equal or beat HP in almost all cases.

CRN: How important is price, really?

GERENTINE: I think it's a key component. It's one component of many but it's not the only reason to make a choice. It's the portfolio. It's quality of the product, it's the support of the product, it's the services that they can make selling the product, and then I think price is there, but it's probably in the top five or 10. It's not number one.

CRN: Any plans to form some kind of a channel-advisory group that would strengthen IBM's communication in the channel?

GERENTINE: Good question. I would have thought not to bring that up but we actually are implementing a channel board at Tivoli: the Tivoli Business Partner Steering Committee. We're bringing in a handful of storage, automation and security partners, and we're going to use them in a validation and consulting capacity to validate our product plans during our concept stage. We want feedback just like we would go to a customer and ask them for their requirements, we are now formally doing that with partners.

CRN: When does that begin?

GERENTINE: We actually started it about three months ago.

CRN: Did you announce that?

GERENTINE: No. It's more of a private program because we're not going to do it with hundreds, but with selected partners. We are going out already and we're touching them. We're having one-on-one conference calls with them, validating specific requirements in our portfolio, and then either once or twice a year we're going to bring them in and formally do a roundtable.

CRN: How many people will be on the committee?

GERENTINE: Probably 12 or 15, representing security, automation and storage. The plan is to meet with them face-to-face at least once a year. I think we're targeting to meet with them in late September and throughout the year. [We] have one-on-one interviews and conference calls with them, and that actually has already started. The focus there is around validating pricing models, serviceability, new product concepts, any customer demand that they're hearing about that we should be more aware of.

This is not just a flash in the pan, or a 2004 initiative. It will go on for the next several years. We're clearly having a long-term strategic investment in the channel with our partners. Three-quarters of our revenue for storage comes through partners, but only about a quarter of security and automation goes through partners today. We want to really grow that.