Gerstner promises rewards for loyalty

Hardware IBM chief executive pledges cash injection for resellers.

IBM has reinforced last year's message to its channel - no loyalty and value add - no rewards.

Lou Gerstner, chief executive of IBM, told 4,000 assembled business partners at the recent IBM Business Partner Executive Conference in New Orleans: 'We will be the world's best partner. We will transfer investment to those who lead on IBM products.'

The rewards IBM is offering could come in the form of co-operative marketing funds for demand generation ($40 million in 1998); financial investment in partners working capital ($1.5 billion last year); lead generation (63,000 leads averaging $29,000 in 1998). The e-business campaign is the biggest contributor of leads and also the biggest marketing campaign ever undertaken by IBM.

The call for loyalty was a strong theme at the same event last year.

IBM's ambitions to become the number one vendor in e-business means that it is looking for partners that have development or integration services.

But it believes there is no margin for hardware specialists in the channel.

The vendor wants resellers to justify their model to ensure investment, which would be followed up with compliance testing.

Bill Etherington, vice president of sales at IBM, said: 'We will ask partners, how good are your sales staff? Are they fully certified?' He gave an example of a reseller that was ready to tell IBM what it should be doing, but when asked about high performance selling, 'it was a very short conversation'.

But Janet Waxman, program director systems at IDC, claimed resellers were more likely to go to HP for quality of service.

She condemmed vendors that continually lacked continuity in their channel policy. She claimed that, on the one hand, IBM gave the incremental business from global services to selected resellers, while on the other, it dropped its channel-only policy for the personal systems group.

'This goes for all vendors, not just IBM - you can't just keep changing your channel strategy and expect the channel to follow you. My rule for the channel is - for every action there is a reaction. The question vendors have to ask is will the reaction be equal and opposite - this the assessment vendors have to make.'