IBM’s Software Incentive Programs Are Way Ahead of Competition

By Shantheri Mallaya Jun 22nd 2012
IBM’s Software Incentive Programs Are Way Ahead of Competition

IBM SWG, ISA Channel Head, Kalyan Sridhar speaks about IBM’s expansion plans, partner initiatives and strategies for the Indian market.

IBM Software has just announced its Business Partner Led Market (BPLM) program, besides the existing Software Value Incentive (SVI). How does it all tie back to the overall strategy?

Sridhar: IBM’s Software Value Incentive (SVI) has been around for a while and we try to make it a lot simpler and much more lucrative than what it was before for our partners. If a partner does reasonably well in closing an opportunity, he gets 20 percent of the sale value. Further, if a customer becomes a reference to a partner, the partner gets up to 40 percent. We provide for a situation wherein even if the partner helps progress the opportunity without closing it, we still reward him.

What is latest is Business Partner Led Market or BPLM. With this, we have identified 27 cities including the bigger regions of BangaloreHyderabad, Chennai, Mumbai and NCR.

The rest of the 22 cities are geographically well spread - NasikCochinTrivandrum, to name a few, are on the radar.

Under BPLM, we stipulate a few conditions. Firstly, a partner signing up for a territory should have a sales office locally. He should be able to support local clients.

Secondly, in these markets, we have fixed target size for partners based on opportunity sizes based on IDC data points and internal data to match.  So, in these markets, a partner will get an additional incentive of 8 percent on every software deal he makes, and should he achieve 100 percent of his target, an additional 7 percent more. Now, it is a lot of money that we are talking about, over and above the SVI.

Thirdly, we have picked solution areas with hardware, which still remains a substantial part of our portfolio. If a partner goes to a customer with a mix of 30 percent IBM hardware and 70 percent IBM software, we have a Software Accelerated Incentive of 20 percent. We have observed that there is no other vendor who offers anything even remotely close to this. In effect, an integration of the hardware and software will positively impact our overall focus, and bring hardware partners into the software fold.

By geo-expansion, are you referring to the recent business development activities that IBM has undertaken towards moving into smaller cities?

Sridhar: Yes, and we have ensured that we help partners choose the right portfolio to take to the customer. They have the liberty to add on to the bouquets. The partner is a key interface for the success of the bouquet. For IBM, business development activity is effectively co-marketing and all activities surrounding that. It also has to do with what we can do to help partners maximize potential.

While customer acquisition and exploring new markets is a balancing act, the middleware market is an under-tapped opportunity for vendors as well as partners. Your thoughts?

Sridhar: Yes, we are in an under penetrated market; the middleware opportunity has been estimated globally at around1 billion USD. Among the sectors in India, to date, only the BFSI has gone ahead and implemented core banking but if you observe, the surrounding apps are still nascent. Government is and will remain a huge buyer. With concepts such as Smarter Government, security and the like, middleware consumption will move in the right direction. More and more state governments are embracing sophisticated solutions. We have departments such as the police too, who are god buyers. These customers are talking about newer areas such as analysis, customer experience and also about scaling up to the next level with mature solutions in core areas such as sales and marketing. So there are a ton of opportunities with partners. Smaller cities such as SuratChandigarh and Coimbatore, among others hold some promise for expansion.

It is widely believed that IBM software partners play only in the large enterprise space. Is this true?

Sridhar: The perception has changed in the recent past. IBM software, being complex or only high-end is a thing of the past. With all these acquisitions in the last 5-6 years, we have beefed up our middleware portfolio, the most critical link between the OS and the application layers. We cater to the broader spectrum, be it with analytics, productivity, software development, application servers, databases, messaging, among many others. More so today, when there is a set of point products that is growing.

So, in that case, shouldn’t your ISV strategy be getting the larger thrust?

Sridhar: We have always been ISV-friendly. Where we don’t have apps, so we try and port it on to what we have or we help ISVs to build those apps. ISVs continue to build applications on our middleware. We have small to big complex solutions coming from a team of dedicated ISVs who work towards delivering core apps for us and our customers.

What does the middleware strategy look like for the remainder of this fiscal?

Sridhar: From a strategy standpoint, we are looking at three core areas. One, we are expanding the capabilities of partners in terms of what they can do. Secondly, we are helping them embrace newer acquisitions. Some of these partners are very skilled, but as we make acquisitions, then the strategy is to make sure they are well equipped, and they get to the market quickly, profitably. And most importantly, we are assisting partners to enter newer markets autonomously. For instance, we have the IBM Virtual University, which is an On-Demand online enablement tool built for SIs and consultants, enables them to chat with experts, attend webinars, ranging from specific product to industry enablement.

On the other hand, the IBM Software Value Plus (SVP) Program is an entry-level criterion for software partners. Anybody who wants to be a partner has to qualify for SVP with a minimum of two types of certifications. So, we are not into signing up with thousands of partners, but a strategic set of skilled partners. We believe this is a step in the right direction. What we are also seeing is that System Technology Partners (STG) partners, who are traditionally hardware partners, are moving to providing more and more value added services to customers from a software standpoint.

For IBM, business development activity is effectively co-marketing and all activities surrounding that. It also has to do with what we can do to help partners maximize potential.

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