IBM Unveils Far Reaching SMB Overhaul
The changes include a restructuring that integrates business partner teams from IBM's Systems and Technology broad hardware portfolio, its Global Technology Services Group and its Global Business Partners organization into a single team that will present what IBM calls one unified face to business partners.
It also includes a new SMB business called the Business Systems Unit that is chartered with designing new breakthrough products for SMB focused solution providers. That unit will be led by Marc Dupaquier, currently general manager of IBM's Small and Medium Systems Business Unit. Dupaquier has promised to deliver a more ambitious SMB product road map in the fall.
Under the new streamlined channel sales coverage model, SMB systems sales managers will manage SMB sales resources for all SystemsTechnology Group (STG) brands with an assigned set of what IBM called "sales plays and objectives."
Previously, IBM had individual sales managers assigned to specific brands, meaning that multiple IBM channel sales people called on business partners. Under the new model, a single SSM will represent all IBM system brands and related services. The IBM Software Group's channel sales coverage model will remain unchanged, IBM said.
"In a way the partner now has one throat to choke," said Bob Samson, head of sales for IBM's SystemsTechnology Group. He said the sales coverage change is the "most significant realignment of sales coverage in STG in the last 15 years." IBM has been working on the changes, which impact 2,000 IBM employees, for the last year and cut over to the new coverage model effective July 1, said Samson.
Samson said the consolidation will not result in any layoffs and ultimately will result in more channel facing coverage.
Bruce Geier, president and CEO of Technology Integration Group, a solution provider in San Diego, said creating a single channel sales rep that represents all hardware brands should help the channel. "It could be a smart move," he said. "We have different [brand] people calling on us in different parts of the country and it gets confusing," he said.
Samson said too that he intends to fix IBM's internal compensation matrix that sees a large number of people compensated for a single system sale, even if they had little or nothing to do with the sale. "That's one of my pet peeves," Samson said. "One of the first orders of business for the SSM's is to destack some of this."
Geier said that plans to streamline the number of people inside IBM who get compensated for each sale should eliminate infighting within IBM and save the company a lot of money. "With the money they save they should be able to expand their channel coverage. They lost a lot of their channel when they sold the PC business to Lenovo. IBM seems to be really trying [to win the channel's favor in SMB]." The IBM changes come with growing discontent among a number of IBM partners whose IBM business as a percentage of total sales is down in the wake of IBM's decision to sell its PC business to Lenovo two years ago.
One IBM business partner executive, who asked not to be identified, said that fixing IBM's convoluted internal compensation matrix should be a top priority. "It's perfect that they are going to try to fix it,"he said, noting that IBM has so many people compensated on a single sale that it impedes the ability of the company to adequately price its products. He said, however, that IBM must work quickly to stem growing tide of business partners that are migrating to Hewlett-Packard and Sun. "People are leaving in droves because IBM has been so screwed up," he said.
IBM business partners too have complained that they are seeing growing competition from IBM direct on larger deals with IBM undercutting their prices by as much as 20 percent. Samson, however, denied that is the case. "I have never seen evidence of this in the SMB space," he said.
He added, that business partners are IBM's only route to market in the SMB space. "The only way to get to the SMB market is with channel partners," he said.
IBM said the shakeup is the result in part of an analysis led by IBM Global Business Partner Chief Ravi Marwaha that found IBM needed to integrate sales teams and processes to build more services offerings on top of hardware platforms.
IBM CEO Sam Palmisano has stressed that the SMB is the computer giant's largest single opportunity for growth. At PartnerWorld earlier this year, he said the SMB market for systems was more than a $32 billion opportunity, but IBM had only a 15 percent share -- less than half of its share in the enterprise systems segment.
Alex Gogh, who heads up channel strategy for STG, for his part, said the strategy is not the result of discontent among IBM partners or a response to HP. He said it is all aimed at simply capitalizing on the explosive SMB opportunity. "This is all about marketplace opportunity," he said. "And if HP wants to continue to sell PCs and printers and ink, then go for it."
Samson said the organizational changes will make it much easier for SMB partners to do business with IBM. "The fact is this is all goodness for the channel," he said. "It improves our consistency and ease of doing business with the channel."