ANALYSIS: Does IBM Love Its BP's?

By Sam Albert

It's by no means a surprise to learn that IBM places great importance on its business partners. But the resounding success of BPEC 1999, IBM's Business Partner Executive Conference held this past February in New Orleans, proved to me that IBM's relationship with this vital group continues to take root.

In 1998, a full 40 percent of IBM's revenue came from what we call "non-blue suit" channels and it's network of 45,000 business partners contributed 30 billion dollars of IBM's 80 billion dollars of total Corporate revenue. Those partners continue to represent IBM's best bet for effectively reaching small and medium businesses (SMBs) – which are the fastest growing segment of the IT marketplace.

Simply put, business partners are the keys to connecting with that vital market. So is IBM a business partner-oriented technology company? I answer that one with a resounding 'Yes'.

Conservatively, about 4,000 IBM business partners were on hand at BPEC. IBM's Lou Gerstner,. and MIT Media Laboratory founder Dr. Nicholas Negroponte, were guest speakers for an event that's shaping up to be IBM's annual showcase for partners. IBM used that week to show off all that's new in products and services, and all that its channel partners can capitalize on for their own success.

While this sounds like a happy marriage all around, remember that there is another consideration; it is the whole concept of account ownership, or account control. Throughout its history, IBM has been a proprietary company – focused on retaining ownership of its customers at every step of the way (and proud of it), from initial customer contact, to sale, to delivery and service.

It's easy to see that those dynamics have changed. IBM's executives – and its sales force -- have come around to the notion of shared account control and open systems. At the very minimum, an outside consultant is thrown into the mix in most account sales these days. Sales scenario not considered years ago now represent opportunities to pursue.

Sharing accounts is a tricky maneuver, but one that IBM can, and should play as a win-win. IBM's business returns can be shared with its key stakeholder groups, and look at the numbers at stake. E-business alone represents a multi-billion dollar market opportunity going into the new millennium. I'd say there's enough there to go around.

Now please don't read my message as a "love-in" to IBM's business partners. Instead, I'm acknowledging that they've gone beyond just another channel. They've become the most vital channel to IBM's customers. And because IBM's leadership position in e-business and IT can be used to create opportunities and value for its channel partners, it finds itself in a unique position to dispense such rewards in the name of sound business strategy.

Think about it. Internet commerce is expected to reach close to $95 billion just within the next 12 months, according to IDC. IBM can help move its business partners' customers to the Web through its Web-enabled products and services – things like data management, systems management and transaction processing.

Aside from e-commerce, don't forget IBM's Business Partner charter, adopted back in November 1995. At BPEC, IBM reiterated its commitment to that charter as well.

A smart business partner will leverage IBM's good fortunes – an unprecedented number of new patents, technology breakthroughs, muscle in the marketplace -- for its own growth.

I'm told there's more that's new on IBM's horizon, but I won't detail the specifics. Big Blue can speak for itself. My point is this – every possible sales scenario has now become fair game. IBM needed to come around to that mindset to ensure its own success, and it has done so. Played right, however, this is a game that IBM and its business partners can win together. IBM's competitors will not be standing still. From what I saw at BPEC '99, IBM will certainly be a tough opponent in the relationship equation.

Sam Albert is president of Sam Albert Associates (Scarsdale, N.Y.), a consulting firm that specializes in developing strategic corporate relationships.

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