Channel Chief
“We want to grow business through partners”
 Sandy Carter, Vice President, Channels, IBM Software Group was recently in India to address partners at the annual Software Universe 2009 conference. Dhaval Valia and Tabrez Khan caught up with her to discuss Software Group’s key channel initiatives going forward
You are in India to address partners on strategic initiatives being taken by the IBM Software Group. Could you brief us about these new initiatives?
We have completely overhauled our channel strategy and that’s been the focus of this year’s partner event. We have outlined five key priorities for the future.
The first priority is to grow business incrementally through partners, and for that we have introduced a new concept termed Business Partner Led Territory (BPLT). It authorizes partners to exclusively handle certain geographic territories and product categories.
The second priority is to increase client value through partner skill enhancement. So now, for 60 percent of our product portfolio, partners need to be certified in order to sell these solutions. We are enabling them to get certified. We have introduced a new incentive model called Software Value Plus to help partners maximize profit by selling IBM software, based on clients’ needs and investment in skills.
The third priority is to bring in an industry focus to our products. This involves creating solutions frameworks for different industry verticals based on their needs. Worldwide, we have recently appointed a senior person to drive the industry frameworks initiative.
The fourth area is to help partners make money through new delivery models such as cloud computing and appliances. Appliances are boxes that combine both hardware and software. A lot of our partners sell both our hardware and software. It is a really good way to get fast value to customers.
Finally, we will focus on continuously improving our engagement with channels and enabling partners. For instance, we have recently automated our lead generation system. Any lead worth less than $50,000 is automatically passed on to partners.
How is your software channel organization structured? What are the recent changes made?
We work with a large number of partners, nearly 500 in India. We have several levels of partners; one level being the high value partners who do a significant amount of business in IBM software. We call them high-value because they do a lot of value-addition and customization around our middleware before selling it to customers. We have 80 such partners, directly managed by IBM.
Our engagement level with most of these 80 high-value partners has improved considerably over the last year or so. About 12 months ago, nearly 70 percent of these partners were focused on mere order fulfillment. But now they are focusing on creating newer skill sets and adding more value around IBM software.
The second set of partners, around 150-160, are mid-size software development companies and are managed by our distributors Avnet, Ingram, and Redington.
The third category includes hardware-centric partners, who work closely with Systems and Technology Group (STG). We do a lot of clothing revenues through these partners, which essentially means selling software that is combined with our hardware. This mostly include solutions like Tivoli, Lotus Domino etc, basically products in the area of office productivity, messaging, antivirus, web servers etc. Of the total STG partners, 92 are actively selling our software products.
Your software portfolio largely consists of middleware, while customer buying is driven by applications. So isn’t it a major challenge getting customers to buy your products?
Yes, indeed. People typically buy software applications, but we don’t sell apps. So we are predominantly a middleware company in that sense. We focus on ISVs, on having their applications built on top of our portfolio. For instance, if you buy SAP, you get DB2 with it.
But the role of middleware in a solution can’t be underestimated. Our middleware is a crucial piece in several of the important national projects that are underway. Although you don’t see the middleware, it is a critical building block.
Many partners are realizing that IBM middleware technology is a crucial piece in bringing the right kind of solutions to customers. Hence in 18 months, we have seen several large Indian companies like Wipro, HCL and Infosys closely partner with us.
What is the value proposition for tier-2 channels in partnering with IBM software group?
Over the last 12 months, we have built a strong mid-market portfolio for our tier-2 partners. Our BI portfolio, Cognos sells a lot in the mid-market segment and is a big opportunity for tier-2 partners.
Earlier this year, we introduced a range of appliances. Appliances combine our hardware and software in a single box and are easy to deploy and manage.
As you pointed out, tier-2 partners in India have a hardware heritage, so an appliance helps them get started on the software selling path. We already have Lotus Foundation and Tivoli Foundation appliances and you will see us introduce more such purpose-built appliances.
The reason we are bullish on appliances is not just because hardware partners can deploy them easily due to their hardware technology skills, but also because there is a strong value proposition for customers. They are increasingly demanding appliances for their IT needs as they are easy to deploy, configure and manage.
Also, we have recently introduced the Software Value Incentive (SVI) program aimed specifically at tier-2 partners. Several leading tier-2 partners, Lauren, Frontier Computers, Pentagon and Team Computers, are already part of this program. The SVI program helps them get better margins. In most cases, partners can make up to 20 percent higher margin if they build a solution using IBM software. This of course is over and above the margins made on selling the product. They can plough back these profits to build their business.
You recently launched Lotus Live, the SaaS variant of Lotus. Do you think it will succeed in India? Will it finally give you an opportunity to gain market share against Microsoft Exchange?
First and foremost, Lotus has seen good momentum in the Indian market over the last couple of years.
You can verify it with IDC. If you compare IDC figures from 2005 to now, the market share has improved significantly.
To your question about Lotus Live, we are excited about the SaaS offering and believe it will surely help in broadbasing our mail and messaging solution in the country.
Lotus Live will help us penetrate the small and medium business segment, where we have been traditionally weak. We are banking on our distributors to drive the adoption of Lotus Live in the country. It will also help us connect with a larger section of the channels especially in smaller cities, where presently we have a little channel connect. |