IBM Expands Channel Partner Rewards For Software Sales

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IBM is expanding to channel partners in 122 countries its Software Value Incentive (SVI) initiative under which the company offers financial rewards to solution providers that identify and develop sales opportunities, but don't always handle product fulfillment.

IBM has already doled out "millions of dollars" in such rewards to some 2,000 participating channel partners in the nearly two years the SVI program has been operating on a pilot basis, said Chris Wong, strategy and marketing vice president with IBM's ISV and developer relations organization. The nascent program, which covers all IBM software product lines, has been running in the U.S., Canada, the U.K. and Australia.

About 60 percent of all SVI transactions have been in the SMB space, according to IBM. Incentives are a bit higher for sales to mid-market customers.

IBM has defined the stages of the sales process and channel partners can earn up to 40 percent of a deal's total value for each step, Wong said in an interview. Different stages have different values, although Wong didn't provide details. SVI funding is in addition to margins resellers earn on software sales and is separate from other marketing and demand-generation funds IBM offers its solution provider partners.

IBM will expand the SVI program to software channel partners in 122 countries, particularly those with emerging economies such as Egypt, South Africa, the United Arab Emirates and Vietnam, according to the company. It's also considering launching a similar program to cover hardware products, Wong said.

IBM launched the SVI effort to compensate channel partners who play a role in the software sales cycle, particularly in such early stages as identifying sales prospects and evaluating customer needs. Often another software reseller would handle the product fulfillment side of the deal and most traditional channel-partner incentives are focused on fulfillment, leaving the company that initiated the deal empty-handed. While a regional systems integrator may identify a software sales opportunity, for example, an ISV or an IBM server reseller may actually deliver the software product and earn all the margins on the contract, Wong said.

"We found that we needed different incentives to reflect what's actually happening out in the marketplace," Wong said. Channel partners, in turn, have been plowing the financial rewards back into growing their business, rewarding their own sales staff or expanding marketing efforts. "We're starting to see some pretty innovative uses of these incentives," Wong said.

"This provides partners with the funds and resources to invest more in opportunities that they might not have been able to pursue before," said Elizabeth Albert, marketing director with Ascendant Technology LLC, an Austin-based reseller of IBM products and an early participant in the SVI program. Ascendant has earned some $2.1 million in added sales incentives through the initiative, money the company has invested in expanding its pre-sales and software delivery services, Albert said.

IBM's PartnerWorld channel partner organization set up the SVI program mechanism, including the critical deal registration system, and operates it for the IBM Software Group which provides the funding.

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