IBM is cultivating increasingly specialized software resellers as part of a broader effort to grow its software business.
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Those authorized products include IBM Tivoli Identity Manager, WebSphere Process Server and DB2. The latest addition to the program, announced last month, encourages resellers to pursue authorizations within industry segments and in the IT security space. For partners that meet the criteria, IBM provides sales leads and education in areas such as cloud computing.
The new certification and authorization track gives partners a degree of differentiation in the market, according to industry executives. But it may also serve to weed out resellers unwilling or unable to make the investment in product and industry expertise.
Certifications as investments in channel partnerships
Top partners tend to welcome IBM's steeper channel requirements, said Darren Bibby, program director, IDC Software Channels Research.
"They feel it raises the bar," he said. "It's the kind of investment they would make anyway and it gives them an additional badge or stamp they can show to their customers."
Indeed, some partners' plans are converging with IBM's channel effort. Avnet Technology Solutions has found that its vertical market plans mesh well with IBM's industry thrust.
Fred Cuen, general manager and senior vice president, Avnet Technology Solutions, Americas, IBM Solutions group, cited his company's SolutionsPath program, which helps partners specialize in certain markets. Programs in government and healthcare have been around for a few years. The distributor in October launched three more verticals: banking, retail and energy.
"We're working with IBM on a very specific initiative focused on these five areas," Cuen said.
That initiative, IBM's Smarter Planet program, aims to tackle tough IT challenges across a range of industries.
Avnet also plans to pursue IBM mastery certification within the five industries it currently targets. Mastery tests are among the requirements for the Software Value Plus program's industry authorization.
Acknowledging vertical partners
Steven Gerhardt, chief executive officer of Ixion LLC, an IBM Premier Business Partner in Houston that focuses on Web content management and portal solutions, noted that his company specializes in such markets as energy and utilities. He said IBM's move to cultivate vertical partners reflects a recognition that IBM software, overall, needs to be more industry oriented. That's particularly the case in the midmarket and below, he added, noting that IBM's direct sales force and distributors tend to be more generalized in those sectors.
"That is where they have been vertically challenged," Gerhardt said.
Roger Finney, director of IBM storage, software and System z at Logicalis Inc., an IT and communications solutions integrator and IBM Premier Business Partner, said IBM's industry specializations make sense, noting that his company also focuses on particular markets.
In general, Finney said he believes Software Value Plus has created a closer calibration between a partner's areas of expertise and the software they provide customers. "Overall, I think it did some of what it was intended to do," he said of IBM's program. "It's created competency alignment between what partners are skilled at and the solutions they are presenting."
Partner identification strategy
Software Value Plus makes for a stronger partner ecosystem, Gerhardt said. But the more stringent requirements have caused some companies to cease carrying IBM's software. A couple of IBM hardware partners have contacted Ixion for partnering opportunities after dropping their IBM software business.
"They have decided not to play in the software space," said Gerhardt. "They don't want to manage that side of the business."
IBM doesn't dispute that it's focusing on its most committed partners these days. The company analyzed its partner base prior to launching Software Value Plus and found that many of the 120,000 companies claiming to be partners used the IBM software brand to open doors but sold customers other vendors' software, noted Sandy Carter, vice president of software business partners and midmarket at IBM. Others sold IBM software but had customer satisfaction issues.
Now, 5,000 software resellers worldwide are approved to sell IBM's authorized portfolio. In addition, 40,000 resellers have been okayed for IBM's open portfolio, which includes the company's Express-branded solutions for midmarket customers. The open portfolio products don't require a lot of training to sell, Carter noted.
Despite the winnowing, Software Value Plus has also brought in new resellers to IBM.
Carter noted that 200 ex-Sun partners have come to IBM's software portfolio. IBM also plans to build a channel for Netezza Corp., a business analytics software company IBM acquired last month. She said Netezza has never had a partner channel before.
And the partners joining IBM, Carter said, now have an opportunity to compete on skill in the authorized ecosystem.
"They ... don't have the bottom feeders and those competing on price," she said.
The bigger IBM partner picture
IBM's partner moves come as the company seeks to expand its software operation. In an investor presentation, IBM said its software business is positioned to deliver 49% of the company's profit in 2015. In 2000, software contributed 25% of IBM's pretax income.
"If you look at ... where they are trying to take their business in 2015, software plays a big part of it," Avnet's Cuen said.
While IBM's partner strategy supports its overall software push, it also lines up with broader economic trends. Steve White, program director, Software Alliances Leadership Council, IDC, said the difficult economy over the past couple of years has compelled vendors like IBM to take stock of the partner base.
"They don't have infinite resources," he said. "All vendors want to focus on the best partners."
John Moore is a Syracuse, N.Y.-based freelance writer, reachable at email@example.com.