Channel Simplicity Is Hard

IBM is streamlining paths to becoming a business partner – just ‘click and sell.’ The open question: Will it produce SMB and midmarket returns?

By Damon Poeter

IBM once again wants to make it easier for solution providers to become IBM business partners, promising a “simplified reselling” program at its annual PartnerWorld Leadership Conference in Las Vegas last week.

Big Blue’s new channel slogan: “click and sell.” It represents what IBM is billing as a streamlined path to becoming a business partner.

The upshot is that some of the time-consuming validation processes for becoming an IBM business partner have been scaled back considerably, theoretically making it simpler to start selling IBM. Want to sell the vendor’s offerings? Just click on the “Become a Partner” button and be on your way.

Like other vendors, IBM has been down this road before.

The reality of IBM’s channel simplification initiative is likely to be a bit more complicated. It’s one thing to start selling IBM on a whim and quite another to sell IBM the way it’s meant to be sold, with a deep understanding of the technology and all of its powerful applications. Conducting one-off opportunistic transactions is a far cry from mastering the sales and technical acumen needed to persuade buyers and implement solutions.

Knowing that simplifying the application and approval process isn’t enough to attract new partners, IBM is dangling new programs in partner financing, cloud video, continuous engineering, Watson Internet of Things (IoT), and a few other specializations as incentives for signing up. A new deal with VMware announced at PartnerWorld gives IBM channel partners authorization to sell VMware bundles, including Cloud Foundation solutions, on the IBM cloud. IBM is also aggressively courting ISVs as it grows its Bluemix cloud platform as-a-service (PaaS) ecosystem.

For would-be IBM partners, whether they’re small solution providers or software start-ups, a faster track to working with the company is surely a tempting offer.

Marc Dupaquier, general manager of IBM Global Business Partners, even made a pretty bullish promise to potential partners that serve mainly SMB and midmarket clients. He said that sales of IBM products and services to commercial customers will deliver the “maximum return” to resellers – greater even than sales to enterprise clients, Fortune 500 firms, and the largest public-sector buyers of IBM technology.

What that means, according to folks at PartnerWorld, is that IBM doesn’t mind offering higher margins on deals in which it doesn’t have to invest a lot of resources. Sales to SMBs of software-defined storage, for example, are led and wholly implemented by the partner.

Like other large vendors, IBM frequently sees great opportunity in the broad, multibillion-dollar SMB and midmarket segments. Enterprises account for 60 percent of IT spending, leaving as much as $500 billion on the table in SMB and midmarket accounts. The problem is that the down-market sales are just as lengthy and complicated as the enterprise ones, but smaller in value. This translates into lower comparable profitability and return on channel investment for vendors such as IBM.

By amplifying channel margins on SMB and midmarket sales, IBM is looking to spur volume selling activity. The per-deal sales value and profit may be lower, but the volume could make up the difference. Moreover, accelerated channel sales could help IBM capture market share and create a barrier to entry for would-be rivals.

Simplifying the partnership process to “click and sell” is a novel idea by IBM. What remains to be seen is whether this approach results in sustained engagements or a series of one-off transactions. Here at The 2112 Group, we believe vendors should watch and wait before adopting similar strategies.

Damon Poeter is a Senior Analyst at The 2112 Group. Follow him on social media channels: Twitter | LinkedIn.