IBM Exec: Partners Fueled Big Growth In SMB Consulting Services

“We grew our piece of the midmarket business over 20 percent last year,” Mitchell said at IBM’s PartnerWorld 2006 conference in Las Vegas. The initiative, launched at last year’s PartnerWorld, called for BCS to target U.S. regional systems integrators and tap business partners’ services capabilities to jointly pursue SMB opportunities.

“Without using the business partners, it would have been in the low single digits,” Mitchell said. “Last year, 15 percent of all the work we did was attributable to business partner skills and resources. And this year, we hope it will be 30 percent.”

Mitchell acknowledged that a year ago, BCS didn’t have much of a presence with partners, but now the IBM unit has allied with 25 U.S. business partners. BCS primarily uses business partner skills and staff to augment IBM projects in midmarket accounts, he said.

“The one benefit we thought we’d see is them [business partners] bringing us leads, which has not worked as well,” MItchell said.

Last year, BCS had a lead-pass fee in which business partners were paid 5 percent of the value of a contract if they brought the deal to IBM and BCS closed the business. “This year, we are going to more of a co-selling arrangement,” Mitchell said.

Jim Corgel, general manager of SMB for IBM Global Services (IGS), admitted that some business partners might be reluctant to bring IGS or BCS into their deals. “But if [the business partner] gets to certain point where his growth isn’t where he wants it, then I would suggest we could do more on the front end to go to market together,” he said. “And I think that’s going to happen.”

Business partners said IGS has improved its channel relationships over the past year. “There is still work to be done, but they are listening,” said Fred Cuen, Americas president at Avnet Technology Solutions, an IBM distributor based in Tempe, Ariz.

Eric Williams, executive vice president of Arrow Enterprise Computing Solutions’ IBM Group in Indianapolis, said IGS was the fastest-growing piece of the distributor’s business last year, with sales up more than 70 percent year over year. However, most of the IGS business is prepackaged service contracts resold by solution providers, he said, adding that higher-end professional services engagements between IGS and business partners tend to be “one off.”

“An area that we think is going to be key to our success in the future is how we work with IBM and our business partner community to bring IGS professional-type services to the channel,” Williams said.

Arrow Enterprise Computing Solutions now has a dedicated person to figure out how the distributor and its solution providers can work with IGS to create more professional-services opportunities for business partners, according to Williams. “We want to make sure we do something that is scalable. There is nothing wrong with one-off success, but if you want to see continued fast growth over a long period of time, it has to be something that’s repeatable,” he said.