IBM Charts Course For Growth In 2005

Donn Atkins, IBM's general manager of Global Business Partners, spoke with Industry Editor Craig Zarley about IBM's evolving channel strategy.

CRN: Last year you introduced an account certification program for Business Partners selling pSeries in an effort to shore up margins for partners who did most of the work on new business opportunities. Do you plan to extend that to other brands?

ATKINS: We did have good success with that and we are looking at rolling that [out] on the iSeries as well. The thing it does for us is [it] gives us a chance to protect the partner who makes the investment and does the solution work with the customer. We think it's a more equitable way to reward partners for doing what we want, which is to create value for customers.

CRN: Will you extend this to the xSeries?

ATKINS: I'm not ready to commit to that right now. But we are looking at that. We want to make sure we can adequately define the space. I'm working on some back-office systems to streamline the certifications. I want to make it easier for the partners to do the certification process as we ramp this up to volume. So I have some things I'm trying to get finalized to make that more straightforward and to automate some things in the certification process. Partners have told me that even though it's costing them a little more in overhead to do the certification, the margin is well worth it. But I want to do both, to fix the stacking problem [multiple Business Partners competing for the same deal] but at the same time cut down on the administrative burden. That's one of the gating factors. I want to get that fixed before I put it out to too much volume.

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CRN: Do you plan to include software in the certification process?

ATKINS: What I would say is one of the things I've done in my time on the job is pool together the senior channel leaders of all of our businesses into an oversight board that works with me. That is really working well. What I now have is a team of leaders of every one of our businesses looking at these types of issues. We focused together on looking at everything we do from the partners' eyes. This is clearly one of the issues that we are looking at. We want to go and extend the PartnerWorld tracks from an attach rate and a packaging perspective. There is a lot of work going on on how we bring combinations of our products into solutions and make that easier for partners. The answer is that the software group is actively participating in those discussions. And we've all kind of taken a common focus, which is, 'What do we need to do with everything we do at IBM to make it a more attractive value proposition for partners?'

CRN: On the software side of the house, partners still complain that compensation isn't equal between a direct and a channel sale.

ATKINS: That was primarily in the SMB space and they have fixed that in the 2005 sales plan.

CRN: So beginning Jan. 1, you made compensation neutral between direct and indirect?

ATKINS: Right.

CRN: Some Business Partners are concerned that while they sell all other eServers into an account, IBM continues to sell zSeries direct into those same accounts. Are there any plans to shift more zSeries sales to the channel?

ATKINS: I don't want you going away thinking I've got a major change in the zSeries. What we are doing is around the world we are working with the zSeries brand to look at their coverage strategy and have a balance where they put direct investment in resources and where we have partners. It's hard to generalize because it's a localized discussion. It starts with the customer. We have some ongoing direct relationships that we want to protect. Conversely, we've had partner involvement in some accounts for many years. We don't want to break those kinds of working relationship with partners. We are not talking about a high-volume situation like we have with other servers. We manage zSeries transactions on a focused individual basis, and there will be roles for partners where they have relationships where they are adding value. The zSeries brand team works closely with the partners and it's not programmatic; it's individual.

CRN: How much more will IBM spend on the channel in 2005 vs. 2004?

ATKINS: I don't have that at my fingertips. The reason I'm hesitating is that I look at a portion of the budget the way IBM runs this thing. Then the brands and the geographies have a separate part. I will tell you that our investment in the channel is up over last year. We have specific investments in a number of areas [where] we are focusing incremental dollars on improving our administration and back-office support. We are looking at growing the amount of business that [goes] through the channel. That then flows back through marketing and demand generation and advertising. We have very aggressive growth plans for the channel equal to or in excess of the growth through the direct-sales force.

CRN: What growth goals do you have for the channel in 2005?

ATKINS: We are going for double-digit revenue growth for the channel around the world.

CRN: High or low double digits?

ATKINS: Low double digits.

CRN: Has the pending Lenovo deal caused any disruption in your PC business?

ATKINS: Whether you are talking to partners or customers, we are getting good support for this alliance. It makes sense for everybody. And the way we are doing it makes it very transparent to customers and partners. The people that they are working with today are for all [intents and] purposes the same people they will be working with tomorrow. From a partner perspective, Lenovo will continue to be a part of PartnerWorld. Our partners will get PartnerWorld credits through their PC business with Lenovo. Lenovo will continue to be part of the management team in terms of how [we] work together from a programmatic basis. I know some of the competitors are looking to make it an event, but partners and customers see it as continuing on a solutions approach that makes sense to them.

CRN: What is your message going to be to PartnerWorld 2005 attendees?

ATKINS: The message is going to be that we've got great feedback and it's not about big change. This is about enhancing what we are doing and continuing to build the relationship and value between our partners and ourselves.