IBM Looks to Generate 80% of Software Revenues via Ecosystem Partners

IBM THINK — IBM ecosystem partners now generate 40% of the company’s software revenues, up from 15% just two years ago. Now IBM chairman and CEO Arvind Krishna would like its partners double that figure within the next three to five years, generating 80% of its revenues.

IBM’s Arvind Krishna on stage at Partner Plus Day addressing IBM ecosystem partners, May 8, ahead of IBM Think.

Krishna discussed that goal while speaking to 1,000 partners gathered on Monday in Orlando for Partner Plus Day, held on the eve of the IBM Think conference. Overall, 4,000 have registered to attend the Think event, marking IBM’s largest gathering in four years, before the outset of the pandemic.

The partner event was also the first significant gathering of partners since IBM revamped its partner program at the beginning of 2023, replacing IBM PartnerWorld with the new IBM Partner Plus program.

“Partner Plus is really important to us,” Krishna told partners.

Kate Woolley (pictured above), general manager of IBM’s ecosystem, opened Partner Plus Day by noting that many of the company’s partners have already embraced the new program.

“Since January, we have welcomed 2,000 new partners into IBM Partner Plus,” Woolley told partners. “And we’re really just getting started.”

When asked by Channel Futures, Woolley declined to say how many new partners she’d like to see by the end of the year.

“I think we have to work out how to continue to do more there,” she said.

IBM Ecosystem Partners to Add Customers

Besides aiming for 80% of revenues from its ecosystem, Woolley said IBM wants to add 100,000 new customers within that time frame.

“By definition, this is a partner play,” said Rob Thomas, IBM’s senior VP of software and chief commercial officer, who joined Woolley on stage. “When you all hear 100,000 new logos or focus on new client acquisition … to some extent, it’s our way of getting all of IBM to get behind this even faster,” Thomas added.

Noting that IBM Software today is a $25 billion business, Thomas reasoned that if IBM acquires 100,000 new customers, their first purchase will typically be in the $25,000-$50,000 range.

“If we do the right nurturing, you all provide services, you all provide customer success, that $25,000-$50,000 will grow to $250,000 over a three-to-four-year period,” Thomas said.

“It’s not something we’ve ever done successfully,” Thomas acknowledged. Why is that? It goes back to where we started. We’ve never made the investments to do it. Now we’re doing that. I don’t think we’ve ever rallied the company around this notion like we’re doing right now. I would ask all of you to think about how you can help us. How can you lead this?”

The percentage of IBM’s sales that go through the channel is below that of companies like Cisco and Dell, noted Techaisle analyst Anurag Agrawal.

“It is refreshing to hear how transparent they were,” Agrawal said.

During Tuesday’s opening session at IBM Think, Krishna will launch a new AI platform called watsonx.

“Hopefully, as many of you get your hands on it, over the next few months, you will give us feedback,” Krishna said.