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IBM sales strategy enlists users as product partners

Big Blue's decision to revert to an old IBM sales strategy -- selling products and co-creating packages with users -- could better position the company in hybrid cloud and AI markets.

SAN FRANCISCO -- IBM has gravitated back to a sales method it largely abandoned over the past decade or more to help gain momentum in several key markets such as hybrid cloud, AI and DevOps.

The revised IBM sales strategy now incorporates the "reference selling" model, which matches customers that have successfully implemented a new technology or product with potential customers that are skeptical or hesitant to commit. The approach aims to convince leery customers of the technologies' value in a corporate context. Many large IT vendors provide reference customers -- it's an effective way to build credibility among prospective corporate customers and thereby increase sales.

However, in an increasing number of cases, IBM also co-creates a number of products with its users, something its top tier archrivals don't do.

IBM sales strategy revisits the '80s

IBM relied on this strategy in the 1980s and 1990s to fuel its success, but gradually reduced its emphasis because of changes in senior management, and adoption of more narrow approaches on individual technologies during a period of rapid technological advances.

But Big Blue has turned its spotlight back on reference customers, according to industry watchers and insiders. Evidence of this is the abundance of user companies IBM has featured on stage at conferences in recent months, including the massive Consumer Electronics Show in January. Here at the IBM Think 2019 event, an IBM exec confirmed that indeed the company has conducted much more reference selling, and intends to continue more of it.

Much of IBM CEO Ginni Rometty's keynote was to bring out top executives from IBM's larger accounts -- Geico, Hyundai, Kaiser Permanente, AT&T -- who detailed why they standardized on IBM's technologies and products, with step-by-step descriptions of their implementation process and IBM's contributions.

Shining the spotlight on how customers have successfully implemented IBM technologies, and less on the specific hardware and software involved, underlines IBM's long-term commitment to key markets such as hybrid cloud computing, AI and open source DevOps, said Frank Dzubeck, president of Communications Network Architects in Washington, D.C. It's also one of the reasons the company has signed several long-term contracts.

"IBM has all the hardware and software pieces in place to be successful in today's markets, but they need to sell much more of it," he said. "This could be what helps get them over the hump."

Tapping users to boost blockchain work, AI strategy

IBM isn't just using reference selling to build its credibility in the eyes of major corporate accounts, it's also partnering with large user organizations to jointly develop products to solve problems in that end user's market, added Judith Hurwitz, president of Hurwitz & Associates in Needham, Mass.

IBM has all the hardware and software pieces in place to be successful in today's markets [for hybrid cloud, AI and DevOps], but they need to sell much more of it. ... This could be what helps get them over the hump.
Frank Dzubeckpresident, Communications Network Architects

Examples include partnerships to create a cloud-based blockchain with Maersk for more secure shipping supply chains, a food safety blockchain with Walmart, and a number of long-term joint projects with Vodafone, one of Germany's largest telecommunications makers.

Harley-Davidson Motor Company, which has a long relationship with IBM, built its LiveWire H-D Connect service on the IBM Cloud to deliver a range of mobile and concierge services for riders. The service exploits IBM's AI, analytics and IoT offerings.

Marc McAllister, vice president of product planning at Harley-Davidson, said his company has partnered with IBM on the company's latest offering because he sees IBM's global presence as an asset in the voraciously competitive motorcycle market.

"We look for partners who are first reliable and global and who can differentiate themselves from other providers," McAllister said here at Think 2019. "Partners have to take you where you want to go and we think IBM has the offerings to do that down the road."

IBM's return to reference selling also may be in response to the increased competition from other large technical service providers such as Accenture and PwC.

"What I am sensing is their efforts to migrate up the stack of tech services and management consulting services hasn't worked out as well as they planned," said Geoff Woollacott, principal analyst at Technology Business Research Inc. in Hampton, N.H. "And the proliferation of open source platforms has also cut into some of that business on the technical side."

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