IBM continues to transform itself by going after higher-value opportunities, and Big Blue is moving into these new spaces with its ecosystem of business partners in tow.
The company is looking at three primary imperatives: to lead in the new era of computing, to reach new kinds of clients and to demonstrate new types of expertise, Bruno Di Leo, senior vice president of sales and distribution at IBM, said at the IBM PartnerWorld Leadership Conference 2013 held in Las Vegas from Feb. 25 to 28.
The new kinds of clients include customers in growth markets.
IBM generates about 65 percent of its revenue from major markets and 35 percent from growth markets, Di Leo said. Now IBM is present in 24 African nations, he noted, adding that although the company has had a presence in Africa for more than 60 years, up until four years ago the majority of its efforts were in just a handful of countries.
“It’s not only a geographic statement, but the move toward new clients is also about making IT relevant for the CMO [Chief Marketing Officer], the chief of police” and others, Di Leo said. “Last year, the CMO was responsible for deciding on $38 billion of IT investments, and in a few years, they will be responsible for $80 billion in IT spending.”
Regarding the new type of expertise IBM is looking to deliver, Di Leo said IBM has to get better at knowing its clients’ business. “We want to be the most essential company in the industry,” he said, noting that business partners come in on all three of these imperatives, and IBM cannot do everything on its own.
IBM is offering $4 billion in financing to its business partners to help them along. “We are willing to support you; we are willing to finance you,” Di Leo said. “Thirty-six percent of our partners had a higher win rate using financing,” he added.
“IGF [IBM Global Financing] has made a commitment around making $4 billion available to partners,” said Mark Hennessy, general manager of global business partners at IBM. “Then there is the new mobile technology that takes our rapid finance application and moves it to mobile.”
IBM’s new Rapid Financing mobile app enables IBM partners to include financing options in their client deals quickly and easily while on the road, said Tom Higgins, director of global financing at IBM. The app is available on Android, iOS, BlackBerry and Windows Phone platform and is rolling out in more than 30 countries in 2013.
“We made all this money available, and we also want to make it more accessible with an app that’s easy to use,” Higgins told eWEEK. “The response we’ve gotten from partners is this is not just another tool, but one that gets to the heart of how they do business.”
IBM partners can use the mobile app to get financing for their clients, and once the application for financing has been submitted, they can get an approval within minutes, Higgins said. One shortcut to winning business and gaining approval for financing is to “lead with a monthly payment; you do more business and get bigger deals,” he said.
Deals that involve competitive displacements—in which a partner is displacing an IBM competitor’s technology with IBM’s—tend to get approved for financing quicker than other deals, Higgins said.
Big Data, Mobile, Social Drive IBM, Partners to New Opportunity
IBM announced the availability of $4 billion in financing in November 2012. However, 18 months prior to that, Big Blue made $1 billion in financing available to partners. “We expected the burn rate to be 18 to 24 months for that, but it turned out that it was done in only nine months,” said Ed Abrams, vice president of midmarket business at IBM. “Given how quickly we went through that, we knew we needed to make more financing available.”
Meanwhile, Steve Mills, senior vice president and group executive for Software & Systems at IBM, said it’s all about the Benjamins for him. “Above all, I want to talk about money,” Mills said. “Whenever I’m involved with IBM’s business partners, I move the conversation very quickly to money—not IBM’s money, the business partner’s money and how they can make more of it.”
IBM is intensely working on its lead-generation processes.
“Business partners are a key route to market for IBM, and IBM is passing you more leads,” Mills said.
IBM is making incremental payouts for competitive displacements, and there is a 3 to 20 percent incremental payout opportunity for approved clients when displacing technology from Microsoft, Oracle, Sybase and HP, in particular, Mills said. “Displace the competition and earn more,” he said.
For his part, Jon Iwata, senior vice president of marketing and communications at IBM, spoke about the new challenges and opportunities for IBM.
With all the instrumentation of the environment and the pervasiveness of mobile broadband, we have only seen just the beginning of big data, Iwata said. “The instrumentation of the planet is pervasive, with cameras and sensors everywhere,” he said. “Mobile broadband is expected to reach 85 percent of the world’s population in a few years.”
That means more and more big data challenges, and much of that data will be unstructured, which presents different opportunities for IBM and others.
The CMO is a ripe opportunity for IBM and its thousands of business partners, Iwata said, noting that although the average tenure of a CMO in the U.S. is about 20 months, $1.5 trillion was spent on marketing and communications in 2011.
Marketing budgets are expected to grow about 8 percent in the next 12 months, which is two to three times that of IT budgets, and CMOs owned or influenced $148 billion in IT-related spending in 2012, Iwata said.
IBM aims to tap these opportunities.
“We’re teaming with an ecosystem of 132,000 partners to deliver value solutions around big data, analytics, cloud, social and mobile,” Hennessy said. In 2012, 13,000 new business partners joined the IBM ecosystem, he said. “Half of IBM’s Smarter Planet references came from partners,” he said.
On the hardware side, IBM’s Systems and Technology Group (STG) is increasing the number of personnel in the field available to partners by 50 percent.
In the cloud space, IBM has seen 80 percent growth in its cloud business during the last year, Hennessy said. “Another element of the cloud is that many of our partners are transitioning in the managed-service provider (MSP) space,” he said.
Indeed, IBM has 4,000 MSP partners, Abrams said. “Two-thirds of our MSP partners have evolved from traditional reseller partners and one-third is net new business—new companies born as MSPs.”