IBM to move to controlled distribution model by Oct, 2009

Mumbai: By October 2009, IBM will transition its software partners from the prevalent open distribution model to controlled distribution. The existing open distribution is open to all software partners who can simply register with IBM and start selling its solutions. But the company wants to ensure that its middleware solutions are sold only by a pool of well-skilled partners who are certified and authorized.

Some of these middleware solutions include WebSphere, Information Management, Tivoli, Lotus and Rational. Partners who want to continue offering solutions around these will have to share their business roadmap with IBM and also their investment plans to build technical, marketing and sales skills to be able to offer innovative solutions around it.

“We will certify them and authorize only these set of partners to sell these products. The movement to a controlled distribution model will ensure that we will support only those partners who have greater commitment to our software portfolio and with whom we can jointly address customers through this Growth Through Skills (GTS) initiative,” said Anil Menon, Country Manager-SWG Channels and Marketing, IBM India/South Asia.

Talking about the benefits a partner would derive from the GTS initiative he added that since IBM will work with a limited channel base this will eliminate a lot of competition, especially those who were earlier involved in price undercutting to bag projects. This will result in improved margins for the certified partners, stronger co-selling relationships and ability to leverage the investments they have made in developing technical and sales skills around IBM's product portfolio.

This aside, IBM will be rolling out a global initiative called Software Value Incentives (SVI) starting with India and South Asia. “Through SVI we will enable partners to increase their profits by delivering higher value software solutions to their customer base. It also recognizes partners who invest time in identifying opportunities early on in the sales cycle and help drive them to completion,” added Menon.

By bringing together companies at various stages of the sales cycle, the SVI program also enables businesses to expand their ecosystem and identify partners with complementary skills, services, business models and distribution channels. Additionally, SVI offers incremental incentives for partners who sell solutions into the high-growth SMB customer segment.

The reason IBM is initiating these changes in its partner ecosystem is because it believes that customers today are demanding greater return on their software system investments with smarter implementations. Often customers are not sure about how they can deploy the existing software resources better and therefore want to work with solution providers who understand their business domain and its pain areas well.

“We want to gear solution providers to predict the technologies which will suit their environment and business needs, based on our understanding of how that particular customer vertical functions and their real world problems which can be addressed by IT, based on our experience with other clients in that segment. To be able to do this they need certain skill sets and defined commitment, which is not something that all partners might wish to invest in. Our GTS and SVI initiatives will together upscale those partners who make that commitment and investment and reward them for the same,” added Menon.

IBM has already started conducting training programs on both these initiatives, where it has briefed partners about the movement to the controlled distribution model and its rationale. Partners who are offering mission critical middleware solutions can get into the program. It has however decided to exclude partners selling technology like Lotus Dominos, TSM Fast Track, Web application server, etc because it believes that there are enough partners trained on this in the market.

According to the company, in 2008, IBM's middleware software including WebSphere, Information Management, Tivoli, Lotus and Rational, helped propel the company's software revenue to $22.1 billion globally.