IBM is practically synonymous with IT. The company that celebrated 50 years in Ireland in 2006, started it’s Irish adventure in the Shelbourne Hotel and went on to become, arguably, the number one IT company in the country.
Twenty-five years ago it delved into the channel business which was, at the time, PC centric. In the years since the, the company’s portfolio has widened to enable its partners to resell its hardware, software and services products.
IBM sells directly, as well as through the channel. According to Anne Sheehan, IBM’s channel manager for Ireland, hardware is probably reaching 90% of its business through the channel, with software at 60% and services in the mid 20% bracket. “When I came into the job three years ago we would have been at 55% for hardware and services. We have gone from single digit numbers to mid 20s in the past few years. Our strategy is to do as much business through the channel as we can.”
More customers
While IBM is a huge company with an extended contact into the market, Sheehan said the key factor in using the channel was its reach and coverage, which goes beyond what even IBM can logistically manage. “We have a certain amount of resources and we want to use them efficiently, so we build the relationships with our partners and see them as an extended IBM team.”
Sheehan said the company puts a lot of investment into the business partners and works closely with sales and technical people. This means IBM can get to a lot more customers through the channel and give it plenty of flexibility with the services it offers and the value add it gives. “This is especially true in the SMB market place,” said Sheehan. “Depending on the solution we’re putting together, a local business partner in a particular geography can provide excellent service to a customer. And what we want to do is slot in the value add that we bring and pass that on to the client. So it’s really, genuinely, about reaching more customers.”
IBM has one distributor in Ireland – Sharptext. After that, it has numerous resellers all banging the IBM drum. So relationships are imperative if the company is to retain its market share and profile.
“The relationships are vital. If the trust isn’t there then it’s difficult for the reseller. They have to trust that we’re providing the best technology and that our products will do what we say they’ll do.”
Total portfolio
Sheehan said the distribution model is key to IBM but the company also works closely with resellers because they become the face f IBM. “We’re looking to drive the recruitment of tier two resellers up by 30% and to add 80 to 100 companies into the fold this year. We like to penetrate directly into the resellers. We now have a team of people who are going to the tier twos and understanding what they want and ensure we’re providing the right service for them.”
‘No one ever got fired for buying IBM’ is one of Big Blue’s most famous slogans. But does the company still lean on its reputation, or has it some unique selling point, other than the brand itself, that attracts customers?
“I think what’s unique about IBM is that it has the total portfolio – hardware, software, and services. That’s really key. It’s not just about providing hardware; it’s about the other two areas as well. IBM services such as disaster recovery are very important. We are now telling our resellers that they can buy that from IBM and resell it themselves . I think that is what’s unique about IBM.”
Sheehan said the company is opening up a lot more to the business partners in terms of the array of products it has. “The reason we have a lot of resellers looking to work with us is because the portfolio is so extensive. And I think they’re genuinely excited about the fact that we’re opening up more of our software and services to be resold. So it’s not just about the brand names; it’s about what we deliver to the channel.”
Main aim
With so many products and partners across numerous disciplines, IBM has an extensive training programme in place to make sure its partners are certified in what they’re selling, thus making their job easier. “We take the training and the certifications very seriously and we build that into the reward packages that we give to the channel,” said Sheehan.
“Partners training their staff on our products is a big investment, and it cements the relationship. But it is absolutely critical for us that our partners are certified and trained, and we try to make it as easy as possible for them to do that.”
Sheehan said the main aim of its channel operation is to maintain a healthy trade operation so that everyone makes money. Further to this, the company works on business development plans with it partners, especially if it is targeting a certain number of accounts to sell a particular product. “We reward the business partner if we get the sale into those accounts. “It’s about margin, proper development plans and rebate structures,” she said.
There was plenty of activity around IBM’s product set in 2006. Among those which have Sheehan most excited are disaster recovery and SOA. “The availability of infrastructure services such as disaster recover has been very exciting for our partners. I don’t think any other vendor is coming to market with those services as quickly as IBM is,” she claimed. “It’s a great opportunity for the partners to get the products into SMBs.”
Higher sales
On the software side of the business Sheehan noted that 2006 saw IBM making several of acquisitions and developing products, such as SOA, which it is also pushing through the channel.
Another important area was blade technology, especially in the Intel space, and around Unix. “Many of our business partners are leading with these products. Blade technology is very hot at the moment,” claimed Sheehan. “We also invested in a demo centre so our partners can bring their customers to it. Last year also saw us pouring a lot of money into the channel, which was good news for our resellers and distributor.”
The big news stories for IBM last year were mainly based around numbers. According to Sheehan, IBM increased its channel sales by 25% in 2006. It also increased the number for resellers, bringing in just under 100 new companies.
Its plans for the rest of this year are similarly focussed on numbers. Sheehan said IBM wants to grow it sales numbers in the channel by 28%. And increase its SMB sales by 30%. In addition, the IT giant also plans to recruit another 100 tier two resellers.
“Another key initiative is the work we’re going to be doing with integrators such as Deloitte. We’re putting local resources into working with these people around the software products. I suppose the main thing will be to drive sales, bring the resellers more channel-ready services, and add another 10% to the bottom line,” said Sheehan.
Ltd
