Humble IBM Successfully Engages MSPs, Pursues ISV Partners

Welcome to page two of two. Here’s the conclusion to this report.

IBM’s Earlier MSP Missteps & Course Corrections

The new MSP engagements are strikingly different than IBM’s earlier missteps or incomplete efforts. Nearly a decade ago, IBM viewed thousands of MSPs mainly as customers for servers and related hardware, according to my reporting at the time. The company erroneously believed that most MSPs were set to build out massive data center infrastructures that they would own and operate for customers.

Alas, IBM overlooked the fact that most MSPs would remotely manage customer workloads (either on-premises or in public clouds) rather than move those workloads into MSP-owned data centers.

The major IBM-MSP inflection point stretched from 2013 to 2014, when IBM acquired SoftLayer for cloud services, and sold off its x86 server business to Lenovo. During a fireside chat today, Flagship Solutions Group CEO Mark Wyllie said those two events were strategically aligned with one another. If IBM hadn’t sold off the x86 server business, it would have caused conflicts with the acquired SoftLayer business in terms of sales and partner strategies.

In my mind, the dual IBM moves (acquire cloud services, exit x86 servers) are akin to Microsoft launching Office 365 in 2011 and killing Windows Small Business Server in 2012. Those Microsoft moves sent a clear message to partners that the shifts to cloud services and recurring revenues were set to accelerate.

IBM: Addressing Partner Program Basics

Amid IBM’s clear progress with sophisticated MSPs, the company also is busy working on some partner program basics. Chief among them: Making the partner portal easier to navigate, simplifying partner registration programs, and improving areas like the portal’s cross-platform browser support.

Let’s pause there for a second. It’s 2018 — more than 20 years since the browser wars started. And IBM concedes that it’s still working on proper cross-platform browser support for partners. Like I said, IBM ate some humble pie here at the conference.

Another slice of humble pie involves IBM’s compensation models. The company is finally moving toward a compensation model that ensures IBM’s direct sales force doesn’t trigger channel conflict with partners. On the one hand, that’s welcome progress. On the other hand, it’s a decade or two overdue. Rival Cisco Systems, for instance, largely solved its channel conflict issues in the late 1990s, though problems have still popped up from time to time.

Looking ahead, IBM is finally developing products and go-to-market programs with partners in mind — from the start. As a new IBM product or service comes to market, partner sales models will increasingly arrive on Day 1. At some point in the near future, it sounds like IBM’s direct sales team will no longer enjoy so-called “first mover advantage” over partners, because new products and services will have corresponding partner programs on launch day, company executives indicated here at the conferences.

IBM: Addressing ISV, SMB and Millennial Gaps

Amid all that progress, IBM realizes it faces a real generational challenge — especially compared to growing cloud rivals like Amazon Web Services (AWS) and Google Cloud Platform.

The good news: IBM is wisely moving existing partners toward cloud, MSP and cognitive business opportunities.

The challenges:

  • Many of those partner businesses are led or owned by GenX and Baby Boomer executives. Pure math and demographics suggest many of those leaders will rapidly age out of the market over the next five to 10 years.
  • Meanwhile, conferences like Amazon AWS re:Invent and Google I/O have successfully captured the hearts and minds of next-generation partners — particularly ISVs and developers. Those AWS, Google Cloud Platform and Android partners scale from the enterprise down to midmarket and SMB customers.
  • For its part, Microsoft’s partner ecosystem certainly extends across the enterprise, midmarket and SMB sectors. And CEO Satya Nadella — an engineer by trade — has made Microsoft hip again among the developer crowd, ensuring that Azure and Office 365 are finally gaining the Millennial developers that AWS and Google enjoy.

IBM needs to get hip to SMBs, ISVs and Millennials as well. But how? The answer  may already exist within IBM Cloud. The thesis goes like this: IBM doesn’t have the time, budget or staff to engage every MSP. Nor does it have the resources to engage every SMB customer.

But existing IBM Cloud ISVs could fill those gaps in a huge way. For instance, MSP platform provider Continuum runs its BDR (backup and disaster recovery) software platform in IBM’s cloud. Continuum’s partner ecosystem includes 5,000 MSPs that support SMB customers worldwide. Many of those MSPs and SMB customers are owned by — you guessed it — Millennials.

By partnering more closely with Continuum — and putting a brighter spotlight on such ISV relationships — IBM could gain thousands of MSP partners and SMB customers without having to directly recruit and support those ecosystem members.

IBM: Leadership Progress, Next Moves

Amid all those observations here at IBM Think and PartnerWorld 2018, two things are clear.

  1. IBM’s channel leadership team is making progress, understands the challenges, and is rolling out new programs to simplify partner engagement across all key partner types (MSP, ISV, reseller, etc.).
  2. That leadership team has a direct line to CEO Ginni Rometty. And Rometty is clearly tracking the partner program’s progress, especially in terms of how it aligns with the broader IBM.

Still, there’s room for even more progress on multiple fronts. And a newly humble, engaged IBM partner team knows it.

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