IBM Offers Resellers Bigger Share Of Midmarket Software Business

IBM will pass nearly all new midmarket software sales leads, valued up to $50,000, to its Authorized Software resellers, the company said Monday.

The changes in sales-lead practices were unveiled on the first day software resellers had to be certified by IBM to continue selling software products covered under the company's Authorized Software program. Some 5,000 solution providers, about 11 percent of all 45,000 IBM software resellers, became certified in one or more of the Authorized Software products, said Sandy Carter, vice president of the IBM Software Group Business Partners organization, in an interview.

The initiatives are part of the Software Value Plus program, an expansion of the Growth Through Skills effort the company launched in early 2009.

IBM is increasingly relying on its channel partners to sell to midmarket accounts, a market IBM values at more than $150 billion. Earlier this month the company said it would spend $130 million on marketing and demand-generation programs in 2010 to help hardware and software resellers expand their midmarket sales efforts. Some of those funds are destined to help partners design their own demand-generation programs, making them less reliant on sales leads generated by IBM, said Marc Dupaquier, general manager of IBM's Global Midmarket operation, in an interview earlier this month.

IBM also has been making organizational changes and redeploying some of its sales representatives as a result of the increased reliance on the channel for midmarket sales. The company's Global Business Partners organization, headed by General Manager Rich Hume, was recently moved from IBM's Systems & Technology Group to the company's Global Sales & Distribution organization, Carter said. And the roles of between 50 and 70 IBM sales representatives who have handled midmarket accounts are being transformed into "territory business partner representatives" " roughly one in each state and/or major city " to provide sales and marketing support for resellers.

New midmarket software sales leads valued at $50,000 or below will automatically be passed to resellers through the IBM Global Business Partner Portal. Had Software Value Plus been in place in 2009, more than 70,000 qualified leads would have been passed through to channel partners, according to an IBM spokesman.

IBM will track incoming sales leads, evaluate the leads in terms of required skills and capabilities, and notify "qualified and authorized" IBM software partners, according to the company. While a few customers might prefer to work directly with IBM, Carter said she expects "99 percent" of such leads to be passed along to the channel. "So there are definite benefits to being authorized," Carter said. "This really rewards business partners."

Next: Benefits For Certified Resellers

Some channel partners are already beginning to reap the benefits of the new sales-lead referral process. "We've already started to see some progress from this," said Devi Gupta, marketing vice president at Prolifics, an IBM channel partner in New York. She said the company, which is certified to sell a broad range of IBM Authorized Software products, has been forwarded "several pretty high-quality leads."

IBM also operates the Software Value Initiative program that provides incentives for channel partners to generate their own sales leads. Carter said IBM is dropping that program's documentation requirements for deals less than $50,000.

The Authorized Software program covers a range of IBM's software products including the WebSphere Commerce, DB2, Tivoli, Rational, Cognos, Filenet and InfoSphere product lines. Until now any solution provider could resell those products by doing little more than registering as a partner.

But now resellers must have certified sales and technical staff to do so. Carter declined to say how many previous resellers of software in the Authorized category are no longer able to carry those products. "The partner makes the decision whether to invest in the skills," she said, adding that the deadline doesn't preclude any solution provider from becoming certified going forward.

"I definitely feel this is a big thumbs-up for us, for our company," Prolifics' Gupta said. The certification requirements mean that qualified channel partners like Prolifics will have to compete less with unqualified resellers selling on price, she said. She also praised plans to turn some direct-sales midmarket accounts over to channel partners, although she said Prolifics has generally worked collaboratively with IBM sales representatives.

Value-added distributor Avnet Technology Solutions works with IBM channel partners that hold 1,300 sales certifications and 2,600 technical certifications, said Brad Wilson, vice president of software sales, IBM solutions, at the distributor. And 50 percent of all solution providers that participate in IBM's Software Value Initiative program are also Avnet partners.

The Authorized Software program "limits participation to partners that can bring value," Wilson said. "If my partner doesn't sell anything, I don't sell anything."

Other IBM software, including the company's open-source and Express product lines, is not included in the Authorized Software program and is not affected by the certification requirements.

In a survey of IBM business partners conducted for the company by Ronin Corp., 60 percent of software partners said they expect to increase profitability in 2010 and beyond through their participation in Software Value Plus, according to IBM.

IBM is also launching cloud computing training and certification programs for its software partners. The company will provide training to authorized channel partners to design public and private cloud computing solutions based on IBM software. While the certification is based on IBM's cloud computing business models and experience, Carter said the certifications would be "vendor-agnostic." IBM also will run cloud computing "camps" for partners at IBM Innovation Centers and other facilities.