Hardware and software together means more cash for partners

NEW ORLEANS – Cloud computing and integrated solutions were among the focuses on the first day of IBM Corp.’s (NYSE: IBM) PartnerWorld Leadership Conference, with new incentives introduced to encourage solution selling, plus several new tools and an offering launched to help bring cloud computing to the SMB space.

Saying customers increasingly want to buy software and hardware together in integrated solutions rather than separately, IBM launched its Solution Accelerator program to encourage partners to go deeper with IBM and sell more of Big Blue’s stack. The Software and Systems Reward provides a five per cent incremental rebate when selling eligible IBM systems and another 15 per cent for selling eligible software together to a single client. Also new is the Business Solutions Reward, which provides another 10 per cent rebate on the software content of a solution that is aimed at one of IBM’s key IT challenges, such as managing risk or social business.

Related story: How IBM sold business analytics by relying solely on partners

“It addresses a need partners have told us has existed for a long time: the ability to more effectively bring together IBM products and services to build a solution,” said Ed Abrams, vice-president of marketing for midmarket at IBM. “These are not hard bundles; partners and customers don’t want that. It’s the ability to bring together the right hardware and software for the marketplace and make significantly more money.”

The incentive program will make it a little easier to bring integrated solutions to market said Mark Wyllie, CEO of IBM partner Flagship Solutions Group of Boca Raton, Fla.

“This kind of program puts some meaning into the word solution because it does give some incentive to the customer and the partner to integrate these solutions,” said Wyllie.

Some of the rebate may be passed on to customers as a front-end discount, particularly for the first few deals with a new offering, but Wyllie said it will still be beneficial to his bottom line.

Looking at IBM’s channel base, the traditional systems resellers will have a harder time making the leap to solution-based selling than the newer software ISVs will because the latter are already having the business conversations with clients said James Alexander, senior vice-president with the London. Ont.-based Info-Tech Research Group.

IBM will need to address the needs of both groups beyond just fiscal incentives, said Alexander. There’s the need for training and certification in software solutions for hardware partners, while software partners may not have access to the credit needed to buy hardware or the integration facilities needed to equip it.

“If you can make it really easy for them to be able to integrate and deliver those solutions into the marketplace though, then why wouldn’t they take advantage of that?” said Alexander.

On the cloud computing front, IBM launched Ready for IBM SmartCloud Services, an online directory that encourages partner to partner collaboration by bringing partners with complementary cloud skills and opportunities together. There’s also a training initiative called Tech Talk for Cloud Computing, a Social Business Tool Kit to help partners integrate custom applications with IBM SmartCloud for Social Business services, and for SMB-focused partners a new offering, the SmartCloud Entry on IBM System x. It’s a reference configuration to help partners deploy a private cloud more quickly and profitably for customers.

“We expect by the middle of this year 80 per cent of our business partners will be working with us on one form of IBM’s cloud or another,” said Mark Hennessy, general manager of global business partners for IBM.

Abrams added cloud computing is a critical element of the marketplace, and IBM wants to make sure partners have the right tools and programs to take advantage of the opportunity.

“We want to put in front of customers key certified partners that can deliver certified cloud solutions that are focused on customer business needs,” said Abrams.

Mark Hanny, vice-president of worldwide ISV alliances with IBM, added they’re seeing two types of cloud opportunity. There’s customers that want help building their own private cloud, and customers that want to buy a hosted private cloud offering, which IBM offers under the IBM SmartCloud Enterprise brand, with partner-build apps plugging into that cloud.

“It’s hosted by IBM and often that IBM name makes clients feel more comfortable,” said Hanny. “We’ve got incentives for partners that bring clients to IBM SmartCloud. What we’re seeing is that as IBM evolves to become a more solutions-oriented company delivering those solutions either on-premise or in the cloud, our partners are moving with us.”

Info-Tech’s Alexander said a key cloud challenge IBM still needs to do more to address is how to make it profitable for partners, and how to incent partner sales staff that are used to pursuing major one-time deals instead of working within a recurring revenue model.

“The average sales guy is driven by bottom-line dollars, and they can get more today with on-premise than they can with cloud,” said Alexander. “IBM has addressed some of the technical needs and the sales skills but it’s still not addressing the overall issue of how do I make money as a cloud provider.”

Follow Jeff Jedras on Twitter: @JeffJedrasCDN.

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Jeff Jedras
Jeff Jedras
A veteran technology and business journalist, Jeff Jedras began his career in technology journalism in the late 1990s, covering the booming (and later busting) Ottawa technology sector for Silicon Valley North and the Ottawa Business Journal, as well as everything from municipal politics to real estate. He later covered the technology scene in Vancouver before joining IT World Canada in Toronto in 2005, covering enterprise IT for ComputerWorld Canada. He would go on to cover the channel as an assistant editor with CDN. His writing has appeared in the Vancouver Sun, the Ottawa Citizen and a wide range of industry trade publications.

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