IBM will fight them on the PCs with AAP programme
IBM is to compete head-on with the direct PC makers, not by selling direct itself but through its authorised assembler partners (AAP) programme, which it is currently introducing to Europe.
The AAP programme enables authorised assemblers to offer customers the same build-to-order flexibility as direct PC companies even to the extent of the choice of processor chip.
?Some of our competitors are considering fulfilling through the direct model, but we will do business through you,? said IBM general manager for worldwide sales and services Bill McCracken to an audience of resellers.
?The direct model is getting lots of attention now, but with AAP you are better equipped to fulfil customers? needs than direct marketers? needs.?
The AAP programme brings an a la carte flexibility to customers who previously have had to eat what IBM served. The scheme is in operation for RS/6000 servers as well as PCs, and will take order fulfilment down from 35 days to 14 ?which will match or beat direct marketers like Dell and Gateway?, said McCracken.
Recently, Michael Dell, chairman of direct PC maker Dell Computer, said the industry doesn?t need the channel and that in the future all PCs will be sold directly.
?If I were you, I?d take that personally,? said McCracken. ?I don?t believe that prediction is true. I believe our model of AAP ? flexible build-to-order PCs with applications and services wrapped around it ? is what the industry wants.?
The scheme is rolling out in Europe this quarter onwards. The first European AAP is CST Group, producing RS/6000 machines from its Leeds factory. Computacenter and Northamber are also participating in the UK.
Reward scheme gives business partners more marketing clout
IBM is introducing a reward scheme which allows one per cent of the revenue business partners make from IBM sales to be used for joint marketing for any IBM product or service.
The scheme, called Partner Reward, is in addition to the conventional brand-specific marketing development fund (MDF) schemes that Big Blue already offers. It is piloting in EMEA from this month and is scheduled for full roll-out in November.
?Some brands carry a higher MDF value, for example software at seven per cent,? said Nick Coutts, IBM vice president of global distribution strategy.
?One per cent of that will be available for cross-brand MDF, but the remaining six per cent will have to be spent on that specific brand.?
The aim of Partner Rewards is to fund business partners? marketing in new areas, for example, enabling a reseller to spend MDF money earned through established networking sales on launching a storage product business.
As well as operating cross-brand, Partner Reward is also applicable cross-territory. ?It is ideal for pan-European resellers,? said Coutts.
Gerstner promises rich channel opportunities
?We?ve chosen you,? IBM told 5,000 of its resellers last week, reconfirming its commitment to the channel at its second annual Business Partner Executive Conference in Miami.
Lou Gerstner, IBM CEO, opened the four-day conference dedicated to reviewing IBM?s channel strategy with assurances that ?rich opportunities? lie ahead for the company?s business partners.
?You increased revenue by 30 per cent in 1996. That equals an additional $1 billion of revenue,? said Mike Mawtus, general manager of IBM EMEA distribution channels.
?If you?re not growing your IBM business by 40 per cent in 1997, you?re not getting your fair share of what?s available from IBM.?
Big Blue has pledged to make the firm easier to do business with, provide channel-ready products and services and generate $1.5 billion of sales leads for the channel. Last year 30 per cent of the company?s revenue went through the channel; next year the target is 60 per cent.
UK business partners at BPEC were upbeat about IBM?s willingness to listen, but warned there are still changes to be made. ?They?re beginning to do things we?ve been nagging them about for months,? said one UK reseller. ?But it?s a vast improvement on the situation two years, or even a year ago.?
IBM first made its commitment to the reseller channel at Comdex Fall 1995, fleshed out the details in the Business Partner Charter at the first annual BPEC last year and renewed the commitment in Miami.
Global resellers raise a chorus of disapproval over lead distribution
Resellers on both sides of the Atlantic are unhappy with IBM lead distribution, it emerged at BPEC.
?IBM keeps the best leads for itself,? said one of IBM?s top six Spanish business partners. ?Or the person who gets the lead has a favourite reseller they pass it on to. As a large reseller, we get inappropriate leads, like the upgrade of a single hard disk.?
The EMEA infrastructure for lead generation is patchy, admitted Jean-Claude Malraison, EMEA general manager. One German reseller complained of having received very few of any use, but a UK partner said he had received over 40 in a month.
Jay Haladay, as US business partner, had a clear message for IBM. ?I applaud what you are doing, but right now leads are handled in a haphazard and disjointed way. So do these things you say, and do them now.?
Robin Sternbergh, IBM general manager for global general business, responded: ?If you see anything disjointed in future, tell your IBM account manager.
?We give you leads, you give us the status of those leads. Business partners who close leads quickest will be given all the more.?
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