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IBM Steers Partners Toward Integrated Hardware and Software

IBM is taking new steps to motivate its partners to sell more solutions bundled with hardware and software. Big Blue hopes to make that happen through newly engineered systems and added incentives to bring those who sell hardware and software together. It's certainly not the first time we've heard that refrain from IBM or other large players, most notably Oracle.

At its annual PartnerWorld Leadership Conference in New Orleans this week, IBM is talking up the need for partners to take a more holistic approach to solutions selling. It underpins IBM's emphasis on business analytics, big data, the move toward cloud computing and providing intelligent systems that are the basis of its Smarter Planet initiative.

"We are going to shift to a higher value," said IBM President and CEO Ginni Rometty, speaking in a keynote address Wednesday at PartnerWorld.

In an effort to motivate this behavior, IBM senior VP and group executive for software and systems Steve Mills outlined what was internally known as the company's "Blue on Blue" initiative, more formally called the IBM Solution Accelerator incentive. IBM is hoping the new incentives will encourage channel partners to bundle hardware with its software solutions or vice versa, along with cloud and traditional services.

Providing so-called integrated offerings was a common theme here at PartnerWorld, not just in the form of incentives but in the company's approach to delivering IT. IBM said it will launch a new portfolio of systems on April 11 that likely will advance the notion of tightly bundled hardware and software. Senior VP Rod Adkins, who heads the company's Systems and Technology Group, offered scant details on the planned launch, code-named "Integrated Expert System."

"We need platforms that can deal with data and data growth. We need platforms optimized to the application of the workload," Adkins said.

As part of its latest bundling incentive plan, IBM is offering 5 percent rebates to partners who upsell certain hardware in a software deal and 15 percent rebates for software added to a systems deal sold to a single customer. On top of that, IBM is offering an additional 10 percent rebate that addresses specific types of solutions such as business analytics, risk management, security, compliance and social computing for business. Partners can also earn an additional 1 percent when clients finance their solutions through IBM Global Financing.

"The idea of putting hardware and software together and giving you the opportunity to participate in combined hardware software sales opportunities to deliver more margin to your business," Mills told more than 1,000 partners attending the conference. "In simple terms, it's an incremental incentive. It's above and beyond all of the incentives out there today. Nothing is taken away, reduced or eliminated, so it's entirely additive in nature."

Mark Hennessy, who took over just two months ago as GM for IBM Business Partners, said in a press briefing following the opening keynote that the launch of these new incentives was not motivated by concerns that IT spending was falling off but rather by a desire to address customer requirements.

"Customers are looking for business partners to bring to them integrated solutions that deliver real business outcomes quickly, so combining IBM hardware and software with their solutions can deliver that business outcome faster, as opposed to someone having to integrate lots of different pieces," Hennessy said. "It's a real benefit to our partners because when they combine those IBM hardware and software components and optimize and integrate those components to deliver value, they get a much more differentiated solution in the marketplace, and they get more value to the clients so they get better margins. We're just putting on top of that some additional incentives."

Diane Krakora, CEO of PartnerPath, a consultancy focused on IT partnerships, said IBM will need to ensure it can provide adequate deal registration, which won't come easy considering these are separate systems today. "That's can be hard," Krakora said, adding that the new rebates could encourage partners to step up their bundling of hardware and software. "HP, Oracle and Cisco has been trying to sell across their portfolios for years."

Fifty percent of hardware sales and 15 percent of software is sold through IBM's channel partners, said Wilfredo Sotolongo, VP of business partner and mid-market sales for IBM in North America. Even with the incentives, Sotolongo acknowledged it could be challenging to get many partners to take more holistic views to bundling hardware and software.

"To get a single customer-facing team to successfully sell an integrated solution, while some customers are ready to buy that way, many are not," Sotolongo said. "It's a call to action. It's time to dust off the skills we used to have 25 years ago and sell totally integrated solutions, and we're make it financially attractive to do that."

Posted by Jeffrey Schwartz on February 29, 2012 at 11:59 AM