IBM is going into direct competition with its own channel, after theer's intentions. Wale Azeez reports. vendor announced that it wants distributors to sell its own maintenance packages alongside their own offerings, in a bid to raise market share within the services industry.
The manufacturer is looking for a piece of the SME action, and distributors will now be compelled to act as services brokers for the manufacturer and buy ServiceSuite offerings with their IBM hardware and software.
But distributors are already offering installation, networking and maintenance services as a means of supplementing the low margins derived from selling hardware alone.
They now face enforced restructuring of their business models in order to accommodate the vendor.
Around a third of IBM's revenue - some $30 billion - is generated through services and the company wants to raise this to 40 per cent by the end of the 1998 fiscal year.
IBM is mindful of Compaq and its inheritance of a substantial services base from its acquisition of Digital. It is also pre-empting Computer Associates as it is currently in the throes of attempting to take over services giant Computer Sciences Corporation (CSC).
Through its Global Services division, IBM has launched ServiceSuite, a set of pre-packaged services to provide support for the small and medium enterprise, as well as departments within large corporations.
The suite is intended to cover servicing of the entire range of IBM products installed within a firm, as well as non-IBM systems.
Yves Lozach, director of channels strategy for IBM Global Services, said: 'We are trying to make it easier to sell services into the SME market.' He added that the channel would be responsible for setting the price of the suite, according to which services are included.
The contract would exist between IBM and the distributor, rather than with the user. He insisted there would be no conflict between the two.
But Bill Etherington, general manager of IBM EMEA, admitted it would be problem.
'In some cases there will be a clash. Our partners will therefore have to build their offerings around our services,' he said.
285 Wale Azeez
IBM has put pressure on its channel as it prepares to clamp down on resellers that do not make what it sees as satisfactory use of leads generated by the vendor.
Jean-Claude Malraison, general manager, distribution channels for EMEA attacked resellers that he claimed sold products of rival vendors directly as a result of using leads given to them by IBM. He also warned that the issue of resellers selling other brands in general needed to be reassessed by IBM. However, it remains unclear as to what specific action the manufacturer might take on any such resellers.
'Resellers that do not follow up the leads they are given will also be penalised. 'Business partners who do not follow up on leads will no longer get them,' Malraison said. He added that IBM would electronically track leads it passes on to the channel and demand feedback from each reseller for a progress report.
However, IBM added to the confusion by admitting that the leads it did supply were not always high quality ones.
The company has just piloted PartnerLeads, an electronic-based leads generation initiative that is capable of monitoring the progress of leads taken up by resellers. It says it is part of a larger programme which will seek to generate higher-quality leads and process them in a more efficient manner. According to Bill Etherington processing of the leads is still paper-based.
IBM also intends to sell its machines on the internet in the UK, but insists that the web will be a leads generator only, and that actual sales will continue to be fulfilled via the channel. The company began selling over the Internet in the US around three years ago.
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