You are just 60 days into your job. How do you see IBM's channel at the moment?
I'm very pleased and encouraged by the current state of our partnerships. We have had the good fortune of having great relationships with our partners over a number of years. I think that is supported additionally by the fact that our product line is currently in as good a shape as it has ever been from a competitiveness point of view.
I think our strategies as a company are really coming together around the whole on-demand strategy, but then underneath that from a solution perspective, with industry specific solutions. What complements it so well is that every one of those strategies embraces and relies upon a variety of partners, so it's a natural synergy whether it be our resellers or solution providers, our ISVs, either global or regional, as well as the systems integrators.
I've never seen a time where there was such good alignment across all strategies of the company with the real importance it places on having tight relationships with our partners. The other thing that again I'm hearing is the ability to pull it all together in a country. So for IBM UK to pull together this ecosystem of partners and our own people into a culmination is amazing.
If you think about the breadth of our product line, combined with our partner capabilities, it really provides a set of capabilities that we think is unmatched in the industry. That's a positive situation that I want to build on.
In terms of partner structure, how do you see a quality versus quantity issue? Do you want thousands of partners selling IBM or would you rather have a smaller number of partners forming a quality channel?
Whether it's quantity or not, I want quality. So I would potentially structure my response to be that it's going to be driven by what the marketplace values. I think value is an important concept here, and inside of that thought the answer revolves around deep product expertise and broad solutions capabilities.
Some partners will have the ability to pull together a broader portfolio of capabilities in response to a customer's specific requirements, and then the other situation would be where a single partner may not have all the capabilities but by combining their skills with the skills of other partners they can again work together.
We find that the marketplace selection that says: 'Is there ample opportunity to justify having a certain number of partners?' is really self-selecting. The other thing you have to be sensitive to is just from a distributions capability, we want to be sensitive to the fact that we do not want to create an over-distribution situation.
We have worked very closely with our partners to ensure that we don't have that kind of conflict, but I will tell you that we see opportunities to expand our presence into spaces where we currently don't have presence.
We see opportunities to work with partners who may be currently working with other manufacturers that, because of our value proposition, have expressed an interest in joining IBM.
Can you give me an example of this?
If you look at the statistics from a partner penetration perspective, even though we'd like to have it, not all partners work with IBM, so the there are partners that are working with manufacturers right now that we have an active focus on providing the IBM value proposition.
There are partners today that are servicing customers with competitive solutions that we are shifting to IBM solutions. So that really allows us to reach places where we're not today, and it does not cause a conflict with our existing partners. We are demonstrating the value proposition and we are finding partners very receptive to that opportunity.
Is there any company in particular that you are targeting, in terms of either vendor or reseller?
I don't want to single out any one particular company, because I think there are good solutions out there in the marketplace and rather than talk about someone else's shortcomings what I have been focusing on is talking about the opportunity that we deliver.
I have found that whether it be a hardware partner, a services partner, a software partner or an ISV, we've found good receptivity across the board to shift their position into IBM and we are going to continue to have a very strong focus, because we think from a timing perspective the marketplace is receptive to our value proposition.
What do you mean because of timing?
Right now we have an active programme to attract new partners into IBM and this will be an ongoing approach that we will continue as far as we can see into the future.
One main concern I have experienced from UK partners is this: how does IBM intend to make its partners consistently profitable?
First of all, our partners need to know that our programmes are going to be consistent and predictable. We know that over time any programme needs to adjust itself to the marketplace. But one of the promises we've made to our partners is that, as marketplace conditions dictate adjustments to our programmes, we'll do that with sufficient interaction, collaboration and advance notice as we adjust our programmes on an ongoing basis.
That's an important commitment to our partners. Partners tell me that they understand that from time to time you adjust programmes and respond to marketplace opportunities, but to give them advance notice is the key.
Second, it's important that we protect the margins of partners making investments in solutions capability. We focus on certification of capabilities and ensuring that, when a partner makes the investments in adding value, it gets the proper margins that allows it to be competitive in bidding for business.
The worst situation is if you have a partner that builds the skills and does the investment with a particular customer, then we want to protect this partner from having another partner come in at the very end and sell at a discounted price. Even though we're experiencing good feedback from partners, I've made a major priority of continuing to simplify doing business with IBM.
One of our great advantages is the breadth of our product line, and one of the things we have to do is bring that together into a more unified view, reducing the number of systems, reducing the number of interactions to represent our entire portfolio.
One of the things that we promised at PartnerWorld last year and we're just concluding here right now is the transformation of our four PartnerWorld tracks into one. This is so that partners will be able to access all the PartnerWorld capabilities with a single sign-on, and we're bringing the programmes together from a consistency perspective.
We are combining the qualifications for PartnerWorld designations, whether it be premier or advanced categories, so that they can get credit. This is happening right now round the world. We'll continue to drive this simplification.
The thing that drives profitability is to drive simplicity. Rather than having a separate track for PC, server software and developers, we brought that together into a single track, so if you have a partner that had focus in multiple areas, it would be able to gain credit for its investment in those areas. And have a single access point, and a single area for registration.
Something else that was mentioned at PartnerWorld was your SME push. How is this strategy going?
It's going quite well, and partners play a key role. We stated in our Business Partner Charter that partners are our primary go-to-market strategy and vehicle to the SME space, and that's playing out quite well. One of the key elements of that strategy was our Express packaging, which has been a continual flow and has been very well accepted.
It started two years ago with our Express software, DB2, and it's grown across our entire portfolio of products and services. Again, the reaction from partners has been good, and part of the reason is that it's been well received by customers. By virtue of the simplification of product packaging and ease of installation, there is a good receptivity.
Even though we've made good progress we continue to focus on ensuring that the new Express offerings all have the necessary enablement and support so that they are channel-ready and partner-ready on the day of announcement so they can be incorporated into partner solutions. That really applies to the range of our partners too.
Lots of partners feel that some parts of the SME sector are closed off to the channel. They seem to be very IBM-led and not partners-led.
I know that there are always instances, but that is not our strategy. Our strategy is to lead with partners, and the fact is that our resources are focused on assisting partners, not competing with them.
Our entire field deployment model is centred around our territory alignment and a territory partner manager, whose sole responsibility is to co-ordinate IBM's resources in support of our partners and not in competition with them.
You would worry if we built our systems in such a way that encouraged that competition. There have been times in our past where we have engineered some amount of channel contention in there. We have taken that out. The reality is that our focus for go-to-market in SME is partners.
What do you see as your biggest challenge when hitting the SME?
The challenge that I see is creating this ecosystem of partner capability that is responsive to the opportunity in a particular part of the world or territory. I'm completely confident that inside our IBM universe we have all the pieces necessary to complete and satisfy any customer.
My biggest challenge is orchestrating that ecosystem so that we can bring together the necessary capabilities to respond to customers' needs. The exciting part of that for me is that I know when we do that our partners win. I always talk about this vision, or the requirements to match capabilities in the marketplace. If you do that it does not create conflict.
Because of the way IBM's channel programme grew up it was very product-focused. So we have great partners with specialties in iSeries or pSeries x or storage, and we don't always have a situation where they have the entire breadth.
And what we find is customers who have a need to marry those technologies, and very seldom will you find a situation where there is going to be an overlap. It's just a matter of connecting the right capabilities. This interaction is non-competitive. We're not talking about putting two iSeries together, we're talking about marrying the difference together.
One of the things I'm thinking of from a PartnerWorld perspective this year is focusing more on this. About 6,000 people will be there, and I'm going to add more focus on identifying and facilitating this kind of match-making. I do believe this will extend the value of IBM's partnering.
What changes do you think partners need to make to hit this lucrative SME space?
I think it's a matter of continuing to use the kind of best-practices marketing and go-to-market strategies. Through PartnerWorld we're providing market support, pre-packaged campaigns and campaign builder capabilities. These are a natural part of PartnerWorld so that the partners can easily get access to marketing collateral and marketing support to run campaigns.
I think it all revolves around the solution orientation. The broader the set of capabilities that a partner, or importantly a group of partners, has the greater the chance and weight in the marketplace they have.
Click here for part two of this interview.
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