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Partners Say IBM's Rules Impede Their Global Growth

IBM pushed business partners to go global, but BPs attending PartnerWorld 2007 said the vendor's international sales terms and conditions conspire against their worldwide growth plans.

The hurdles faced by business partners who are trying to expand globally came to the fore at PartnerWorld on Monday as IBM sought to push partners to think and act globally.

At issue are country and geographic restrictions that make it difficult for distributors and solution providers to seamlessly conduct global business. Solution providers note that they may be authorized to sell certain IBM products in one geography but not in another.

Additionally, IBM warranty policies require that products be purchased in the geography they are sold or the warranty is void, business partners said. Solution providers say, therefore, on most global deals they are forced to work with multiple distributors.

Ravi Marwaha, IBM's general manager, global business partners, kicked off the global theme when he announced a new IBM PartnerWorld Value Net Connection program that helps partners identify and collaborate with other business partners around the world online. He noted that as mid-market customers experience global integration and seek to expand into new international markets, they demand IT solution providers that can help them grow globally.

"Russia, Brazil, India and China are a $25 billion opportunity this year," he said.

Steve Mills, IBM's senior vice president and software group executive, added that IBM does business in 170 countries and needs business partners to help SMB customers solve business problems.

But business partners say the vendor's partner terms and conditions aren't in synch with its global business plans.

Avnet Technology Solutions, IBM's largest value-added distributor with annual IBM revenue of about $2.5 billion, said it is rapidly expanding into a global distributor. John Paget, president of Avnet Technology Solutions Global noted that the company just recently purchased the largest IBM distributor in Malaysia and Singapore, building on its existing presence in Europe and Australia. "We have global scale and scope and would like to be able to role out programs globally [for IBM] and not just on a time zone basis."

He said IBM needs to tweak its terms and conditions to accommodate global distributors and to recognize that players such as Avnet have global capabilities, not just country-by-country capacity.

Jeff Teeter, executive vice president and general manager, of Logicalis's IBM division, said that Logicalis, for example, is not authorized to sell IBM's System x in Canada. "We have to struggle with different brand agreements [in different geographies]," he said. "We can sell I and P in Canada but have to get permission to sell System x."

Logicalis, Bloomfield Hills, Mich., which won the IBM Business Partner Excellence Award as IBM's top business partner in the Americas at PartnerWorld 2007, did close to $200 million in IBM business in 2006 and expects to grow that to $260 million in 2007, Logicalis president Terry Flood said.

He said that when Logicalis does a global deal, IBM has to put together a deal structure team to navigate all the in-country and cross-geography issues.

Logicalis chairman Mike Cox said his company has met with his IBM distributor Avnet and IBM to see how each can help Logicalis grow its global IBM business.

When asked if IBM was thinking about changing its global terms and conditions to make it easier for business partners to expand worldwide, IBM's Marwaha said, "I think about it every day."

Still, IBM's global message didn't resonate with all business partners attending PartnerWorld. "Global doesn't matter to me," said David Browning, president of Advanced Systems Group, an IBM regional integrator in Irvine, Calif. Instead, he said he was more concerned about expanding IBM business in Southern California.

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