IBM Sets Partner Goals For Hardware Sales, Promises More Channel Resources

IBM is counting on its solution provider partners to increase the channel's share of hardware sales in 2013 after that share declined several points last year.

IBM Systems and Technology Group (STG) executives, speaking at the company's PartnerWorld Leadership Conference in Las Vegas Wednesday, outlined plans to boost partner incentives for STG sales and devote more resources to assisting partners and generating leads.

"From a financial performance standpoint, we did have a very challenging year for STG," Adkins, senior vice president of IBM's STG said in a keynote speech, noting that STG revenue in 2012 was down 5 percent to $17.7 billion. The channel accounted for only 53 percent of that revenue, down two points from 2011. And, in the fourth quarter, the channel share fell to 50 percent.

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"Frankly, that went in the wrong direction," he said. "What I'm looking for is a higher percentage of partner participation," Adkins said, setting a goal of the channel accounting for 57 percent of this year's STG sales.

The channel has traditionally accounted for nearly 60 percent of STG sales.

IBM has taken other steps to boost STG sales. Last month, the company signed distribution deals with Tech Data and Ingram Micro to carry IBM's Power line of servers and related storage systems.

In an exclusive interview with CRN following his keynote, Adkins said he believes customer engagements are becoming more complex as buyers demand more complete IT solutions with integrated hardware and software and with more built-in intelligence.

That market change was a critical factor behind the decision to move IBM's channel organization closer to STG, with Mark Hennessy, general manager of IBM Global Business Partners, reporting to Adkins instead of to IBM's top sales and distribution executive.

NEXT: Calls For Channel Partners To Invest In Skills Development For Big Data, Cloud Opportunities

The market change is also behind the move to increase the amount of resources being devoted to the STG channel in 2013. On Tuesday, IBM's Hennessy announced that STG is increasing dedicated channel sales resources by 50 percent, a vow repeated by IBM's Adkins on Wednesday.

Those include resources for business development, opportunity identification, proactive technical support, business plan development, mentoring and complex deal support, and co-selling and joint client calls, according to a presentation by Kristie Bell, STG vice president of worldwide channels, in a presentation following Adkins' speech. One specific example: IBM is expanding the number of partner-dedicated sales and technical sales personnel by 400.

IBM is investing $150 million this year specifically for STG sales-lead-generation activities, and Adkins said that would provide a 4-times increase in leads for partners. The company is budgeting $900 million for rebates this year, up from $650 million in 2012, and it is promising higher margins for sellers of the company's Power servers. In addition, Adkins promised a "significant increase in channel margins" for partners who invest in skills development and who "focus on IBM first."

"Hopefully we are doing the types of things, as we listen to you, to help enable your growth in 2013," Adkins said in his speech. "I do think this is a pretty good platform for growth in 2013."

"The 57 percent is very achievable if IBM stays focused on ensuring the field gets the message and embraces the partner model," said Michael Gray, chief operating officer for Champion Solutions Group, a Boca Raton, Fla.-based IBM partner, in an email to CRN.

"The compensation and reward systems still get in the way. Putting additional, focused resources on the channel certainly is the right move. Too much or too little? Only time will tell. IBM is making many of the right moves with regard to investment in partners, systems integrators and others. You just have to wonder what they were doing the last several years," Gray said.

Adkins touted what IBM sees as major partner opportunities to sell IBM systems for business analytics, cloud computing and IBM's "smarter computing" framework. Bell, for example, citing IDC numbers in her presentation, said big data would generate a 23.5 percent compound annual growth rate for server sales by 2016 and 53.4 percent CAGR for storage system sales.

The company is developing new partner "specialty" training and certification programs to help partners boost margins by selling higher-value products and services.

"We've concluded that a lot more specialization will be required" by partners, Adkins said in the interview. "Increasingly, our partners will have to invest in their skills to be in a better position to capture these opportunities." And putting the channel organization under STG would help there as well, he said. "We think we can accelerate the specialization part of the equation.

"There's a lot of money to be made by [partners] by leveraging all the capabilities we're putting in place," Adkins said.

PUBLISHED FEB. 27, 2013