IBM (NYSE: IBM) will no longer deal directly with customers in the mid-market, according to Marc Dupaquier, IBM’s Global Mid Market General Manager.
This announcement was part of a two-year strategic initiative to support mid-size customers through IBM business partners. It includes new product offerings that will be integrated with other IBM products and called Solution Building Blocks. IBM has also hired a New York-based marketing agency to promote business partners in the mid-market for Canada and the U.S.
The Armonk, N.Y.-based computing giant has also split up mid-market business into territories for both Canada and the U.S. to further its channel capacity efforts. In Canada, the new model covers three regions: West, Central, East along with these 11 territories: B.C., Alberta, Prairies, Toronto Finance, Toronto Distribution, Toronto Industrial, Ontario Cross Industry, Atlantic, Quebec SMB Retail, Quebec SMB Industrial, and Mid-market energy. There will be 42 territories in the U.S.
Dupaquier said that inside all of these territories there will be several partners and his plan for filling in geographical or market gaps would be to expand existing business partners first before recruiting new partners.
“We looked at who were the key business partners in the mid-market and then we went down to the number of sellers and the number of transactions. This gave us a precise (channel capacity). From there were could see the gaps. For example, in California we were short in storage in the Southern California area, but were good there with blade sales. We expanded the portfolio of existing business partners instead of recruiting. It was like adding a new aisle in a store instead of opening up a new store,” Dupaquier said.
He added that most of the newer business partners for IBM’s mid-market channel push as come from former Sun Microsystems partners, about 10 of which came from Canada.
The IBM direct sales teams will now be redeployed elsewhere. Most of these workers will become dedicated business partner account managers, but Dupaquier said there will be some nuances to this plan.
“These people are not moving away. Instead of selling directly they will work with business partners and may make calls to customers because of complex deals. There is a psychological number of $500,000 in sales. When it gets that high the customer wants to see an IBMer in that deal. When that customer is committed to this kind of hardware, software and services with a large ERP project or migration there is someone from IBM involved. So I am keeping some people there. Everyone I keep will be working with partners,” he said.
Dupaquier added that typically deals would involve more than one business partners and these Territory Business Partner Representatives will coordinate these partners along with driving opportunities, developing solutions and co-marketing activities.
IBM estimates that the mid-market sales potential through the channel to be US$152 billion and as such will invest more than $130 million into marketing and demand generation programs. According to Dupaquier, this is more than double the amount IBM spent last year on these programs.
Some of the new solution building blocks will include: data protection from Tivoli, System X servers, and System Storage DS3200. Channel partners will also be able to get financing from IBM Global Financing for these mid-market deals.
“The vision here is to help the business partner community to implement solutions faster with these solution blocks and with financing. We also understand that it will not be an IBM-only solution. We have a lot of partnerships with many other active businesses that implement SAP or Oracle ERP even though they are a competitor. This is through a co-opetition model and the same case can be made for virtualization with VMware. We have a broad scope that is driven by business partners. We do not believe in an approach that all technology will come from one vendor. Customers want an open solution and sure we try to sell as much IBM as we can, but there are various companies out there that business partners can add from,” Dupaquier said.
In the past two years, IBM has launched more than 20 mid-market solutions starting with Cognos Express for business analytics, WebSphere Application Server Express, Tivoli Foundations Application and Service Manager, Lotus Live Engage and BladeCenter Express servers.
