IBM Global Services Places $300 Million Channel Bet

First reported by CRN Feb 25, the new assault, announced Tuesday at PartnerWorld 2005 in Las Vegas, calls for the vendor to identify, train and partner with regional systems integrators to go after services in midmarket accounts with from 100 to 1,000 employees, a market IBM pegs at more than $94 billion with a 2005 growth rate of 7.4 percent.

As part of the initiative, IGS is developing a portfolio of packaged services targeted at midmarket customers that can be either sold or delivered by business partners in collaboration with IGS.

Jim Corgel, IGS' general manager, small and mid-sized business, said the process of striking alliances would be slow and deliberate. "This has to be built one systems integrator at a time," he said.

Corgel said IGS would realistically add 10 to 15 regional integrator partners this year. "We are braced [to add] hundreds, but we will take them one at a time," he said.

Additionally, he said he would like to sign "hundreds of agents" to sell IGS hosting services over the next 24 months.

Part of the strategy calls for midmarket packaged services that put services on a SKU basis rather than an hourly rate, he said. In the second quarter IGS will role out a managed security serviced to manage secure e-mail and a second one for desktop management services.

Jim Torney, president of Essex Technology Group, an IBM Business Partner in Rochelle Park, N.J., said he has significantly increased his services revenue by partnering with IGS. He said that he can't compete with IGS offerings on e-mail and desktop services and it makes sense for him to partner with the vendor to fulfill those services. "IGS virtualizes our services bench," he said of using IGS for some services opportunities. He said that his IGS partnership generated about $500,000 in services revenue for Essex in 2004 but he predicts that could grow to $2 million in 2005.

Corgel said he will spend the $300 million on marketing, business partner training, and more dedicated IGS people to strike alliances with partners.

Some Business Partners said IGS has to prove that it can effectively partner with VARs.

"They have a trust factor to overcome with me," said Joe Vaught, COO of PCPC, an IBM Business Partner in Houston, who has faced competition form IGS in the past.

Harvey Najim, president and CEO of Sirius Computer Solutions, an IBM Business Partner in San Antonio, said he has been reluctant to bring IGS into his accounts. "The problem is that their (hourly) rates are too high."

But Corgel said the new program of packaged services designed specifically for Business Partners in midmarket accounts is designed to move away from "a labor based model."