IBM STG co-selling model requires all deals to go through partners

The IBM STG division is introducing a co-selling model, in which IBM's direct sales force will get paid for a deal only if it goes through a partner.

Big change is in the air, particularly for IBM Systems & Technology Group channel partners. Today, the vendor unveiled a co-selling model that in a nutshell requires IBM’s direct sales force to work together with an IBM channel partner on most enterprise accounts -- if they want to get paid.

Sharing the news on the Executive Corner blog on IBM PartnerWorld, Dave Carlquist, IBM vice president of the Systems and Technology Group (STG), worldwide channels, outlined the company’s co-selling model as the next evolutionary step in transforming its route to market for a majority of its customers.

“This is an amplification of how we operate today with some innovation and enhancements. It’s a way to ensure that we’re doing right by our clients and our business partners to extend our reach and our coverage around servers, storage and networking technologies,” Carlquist said. “So we’re firmly establishing our business partner as our route to market for all but a very small number of our clients, worldwide.”

Why now?

Noting that there’s no time like the present, the IBM STG channel executive stated that the introduction of the co-sell model is one element of a number of investments that IBM is making around the channel to improve field engagement and drive simplification on the part of its partners but especially to capture growth, drive market share gain and drive increased sales.

“We believe that this growth will come with incremental investment by STG channel partners and the tighter collaboration between IBM direct sellers and technical specialists in support of our partners,” said Carlquist.

IBM STG rolled out its co-sell model in all of North America, France and the UK beginning on July 1, according to the company, with plans to roll it out to other geographies and growth markets over the next several quarters.

According to Tiffani Bova, vice president and distinguished analyst at Gartner for sales strategies & channel innovation, more vendors are going down this path of offering co-selling and co-delivery options for partners.

“These new programs are an effective way to help seed a market which is taking more time to develop or to kick-start investments that need to be made by the channel,” she said.

It’s also a great way for partners to learn from vendors in real-world selling scenarios and to co-sell to clients more comprehensive outcome-driven solutions that the partners may not have the capability to do right out of the gate, Bova added.

Carlquist noted that STG’s route to market coverage already has roots in a co-sell approach, particularly in its general business customer set (enterprises with 1,001 employees or more). However, the way the financial incentives have been designed are more along the lines of being channel-neutral -- meaning that the route to market is decided by the field seller based on the client’s interests and requirements.

Now, IBM wants its sellers (direct sales force) focused on the client’s interest and working collaboratively with the business partner and not being in the position of deciding whether a deal should be pursued directly or with a business partner. IBM wants it all to be co-sell.

To that end, this is where the new co-sell model really comes to light for partners. “Under co-sell, we will pay our STG sellers only when a deal is done through a partner,” Carlquist said.

For Jaime Gnach, president and owner of Evolving Solutions Inc., an 18-year-old, $75 million infrastructure services provider and 15-year IBM STG business partner, IBM’s new co-sell model is exciting.

“This has the potential to be the most significant change that IBM has made to the channel since we’ve been a partner,” he said. “Not compensating IBM direct sellers who don’t work with the channel has the greatest potential to alter behavior,” he added. In the prior model, IBM direct sellers got paid whether they worked with a partner or not.

Taking it a step further, Gnach believes that the new co-sell model combined with changes IBM is making in its business unit organization -- as of July 1, IBM announced it would move to a model that re-establishes business units, or field branch offices, in the western and eastern regions of the U.S. -- has the potential to be a game changer.

In fact, he sees it as the accumulation of many changes that IBM is deploying to create a best-of-breed channel.

From a channel partner perspective, Carlquist, who sits on five IBM advisory councils, points to a number of pros in IBM’s new strategy:

  • The biggest benefit is that it will align the right partner with the right opportunity in the right account.
  • It will drive improved communication between IBM field teams and channel partners.
  • The client experience will improve because multiple resources that previously might have been working independently will now be working together.
  • It will increase the amount of partner-on-partner collaboration within accounts.

Gartner’s Bova pointed out that co-selling models can help partners learn how to sell more advanced solutions, have business-driven conversations with new buyers and position additional service opportunities that they may not have otherwise been able to uncover.

IBM’s co-selling approach achieves a number of objectives, according to Carlquist:

  • It drives collaboration at the point of the opportunity development or the sales process.
  • There’s a skills transfer and knowledge transfer that happens naturally.
  • It clearly says to partners that IBM wants them and needs them to be engaged.
  • There’s clarity to the IBM seller that the vendor wants them to reach out to partners and serve the client opportunity.
  • It incrementally shifts the sales opportunity to the business channel partner, fueling their business and enabling them to invest further in their growth.

Excited but cautiously optimistic, channel partner Gnach knows that IBM has to perform in order for this new co-sell model to be successful. In other words, there can’t be any unknown exceptions to the co-sell process; there can’t be inconsistencies in the message or deployment; and, the new co-sell model will have to be deployed to IBM’s software and services groups -- as he reported has been discussed.

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