Interview IBM has handed the bulk of its largest corporate hardware customers to channel partners – some 200 accounts – but it is retaining 23 clients who will still get the touchy-feely treatment from its direct sales reps – who comprise half of the unit's sales.
So the crown jewels remain firmly nestled in the bosom of Big Blue, so to speak. These are customers with a global footprint that simply demand to be serviced directly by the people at IBM.
This customer migration is part of a big shift in the Systems & Technology Group (STG) to rely less on its direct sales folk and oil the wheels of commerce with partners. It is funny how sliding server sales can help crystallise the mind, though we are told by an insistent IBM PR man this is "not a cost out play, it is cost neutral".
Under the new coverage and co-sell model IBM’s midmarket segment (firms with 1000 emlpoyees or less) will be channel led. For the vast majority of IBM’s remaining STG clients IBM will co-sell alongside partners, with the partners closing the deal. And in its small handful of top clients IBM will be channel neutral – much as before.
The channel has always been sidelined by the prevalent direct sales culture at IBM and the wider IT industry but that needs to change and rapidly, says Big Blue's top partner exec in EMEA David Kay, now almost eleven months into the job.
Talking to The Channel, Kay says there remains a tradition of lone salesmen and women feeling it is "big and clever" to pull in the major deals on their own.
"I think there is almost like a legacy innate sense in sales guys that they want to do things direct. It's almost 'give me some more stripes'. I still think that the channel has been thought of often in IBM as a necessary evil or almost a bolt on," he says.
"So we've flicked the switch, this co-sell model [ in STG] has got teeth, we are mandating that the channel is inclusive in the team that sells to the client. We are expecting to see behaviour change accordingly".
The message could be stronger if IBM killed off all direct sales and adopted the strategy in software and services, though we are told similar initiatives are on the way.
The server business has been a fairly dull place for salespeople, whether working in the channel or at a vendor, as revenues and shipments have fallen in six of the last seven quarters. Those holiday bonuses may have stretched only to a weekend in Blackpool rather than Las Vegas.
IBM has been hit particularly hard in the volume space, and rumours filtered through the industry – and continue to do so – that the Intel-based System X line may yet be offloaded to someone else, most likely Lenovo.
Kay – and his PR man in tow – clearly will not be drawn on this, but moves seamlessly on to another point:
"Given our challenges around growing our top line revenue in hardware the channel has been moved right to the centre of the stage. We are not going to go out there and hire 10,000 hardware sellers, that's not the model."
IBM is not alone in a channel renaissance movement, with EMC and HP also telling and showing partners they are loved. Even Dell, once the reseller's nemesis, has got in on the game. Clearly someone's got to inform the folks in Redmond of this trend; they seem headed in the opposite direction.
Kay tells us IBM is out to recruit new channel partners. It is often easier to work with someone that doesn't bring any baggage related to previous direct sales conflict or stifled engagement.
"Things like channel participation rates, and I won't quote them, but they've not been going in the right direction," says Kay. "They've not been going up as we want them to go up.
He plans to lobotomize "indoctrinate or recruit new foot soldiers to the IBM channel" and have them benefit from the internal sales shift from direct rather than handing the biggest existing Business Partners a free lunch.
Changing an internal sales culture overnight doesn't happen, just look at the example of Dell which even now more than five and a half years after jumping into bed with partners is still managing with change.
But Kay reckons the "sales plan drives behaviour" - the attitude of sales people is shaped by financial rewards. It probably helps that the STG workforce was lightened in Blighty this year too.
It is not only the internal reps where IBM wants to see change - the channel bigwig tells us that channel firms need to lock onto the shift toward services as customers consume technology in bite sized chunks rather than paying for it upfront. This is an age old argument but the impact of cloud is gradually being felt in lost revenues.
"Sometimes when you go to an IBM reseller reunion it feels like there's a lot of guys that have been with us a long time and there is a lot of desire in there but they need help in how they transform to the next model".
This is a technology change, but at the heart of it is a shift in the way channel partners talk to their customers – and the types of people inside customers they engage with.
Some 35 per cent of cash spent on IT in 2012 was splashed by non-IT people, but by 2018 the chief marketing officer will control more of their company's IT budget, while CIOs will manage just 20 per cent of the tech purse.
"It will be the lines of business [that hold the budgets], which doesn't mean to say that these guys will be wheeling in truck loads of IT, they will be buying it more and more as a service but making the choices themselves.
For years big vendors have talked about producing technology that meets a business need rather than focusing on feeds and speeds, but most haven't nailed it, IBM included.
Kay asks how relevant can a channel partner be if they are not talking to non-IT people, "you can't go in there and talk product or transaction, [but] these guys want a different dialogue, a different narrative."
"The types of skills and expertise we have now need to be adapted away from product, away from maybe even what our competitors are doing, more centred around the industry shifts and dynamics".
Industries, like technologies, are converging or "blurring" as the IBM man puts it.
"What we want are renaissance men and woman that can paint, sculpt, draw, write a play. We want people that can offer this full tapestry and capability. The thing that stops people going outside the CIO is fear. What will the CMO want to talk about?"
At the recent Canalys event in Barcelona, CEO Steve Brazier said channel partners need to employ more spiky individuals, pulling out former Apple supremo Steve Jobs and Facebook founder Mark Zuckerberg as examples of individuals who were tech visionaries without a broad business background when they became the boss.
Kay says he wants to see channel leaders on social media, blogging, providing keynotes at customer events, developing white papers, and connecting and networking with industry bodies. These are some areas that traditional IT sellers have moved away from, he suggests.
"The features of selling a solution or a service are that it is annuity based, it's predictable, by its nature it is complex but helps transform a business. It is more aligned with business outcome than just selling a single product, and it excites IBM".
There are ambulance chasers that remain in the channel, but the opportunities open to them are "rapidly diminishing," says Kay, "so it almost like natural selection". ®