IBM PartnerWorld to Undergo Modernization, Managed Services Expansion
IBM channel chief David La Rose discusses how the spinoff of Kyndryl will impact IBM’s engagement with partners.
February 8, 2022
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Channel Furutres: Are these new partners or existing partners that have shifted to that focus?
IBM’s David La Rose: Both. And that includes activating and reactivating many of the partners that we already had as part of our ecosystem. We started last year with a very aggressive recruitment effort of what we call marquee partners, those that we don’t do any business with, to come on board, understand the portfolio, and build with or on our platform as we go forward. And we’re doubling that investment this year in terms of resources that we are putting behind our recruitment efforts.
CF: To what extent are those partners focused on or delivering managed services as their key go-to-market these days?
DLR: The majority of what we would call our traditional partner base that grew their businesses on the back of the IBM portfolio are now seeing more than 40% of their business dependent on integrating solutions in some sort of managed services environment.
CF: And now you can focus on that more since the spinoff of IBM’s managed infrastructure services business [Kyndryl]?
DLR: As soon as we did that, it was inevitable that our go-to-market strategy was going to be dependent on having a channel and ecosystem at the heart of IBM’s growth going forward. The message to the channel and to our partners is that you are now an essential part of IBM’s growth strategy. Now that Kyndryl has been spun off, it offers us and our partners an opportunity to really tap into the managed services and systems integration portfolio. And we’re looking at that as an opportunity for both us and them on how we reactivate many of our traditional partners, in an area of business that we haven’t typically done before.
CF: Spinning off Kyndryl of course would seem to make IBM less of a competitor to your partners. Are you getting the signals from them that they see that as well?
DLR: We are getting signals, but we’re also getting the message which says: “OK, so how do we leverage that? How do we play with IBM differently than we have before, and activate our managed services businesses to really help you land the platform?” We are doing a couple of things differently this year. We’re investing across the globe with more than 500 client-facing individuals in our channel organization. They are specialized in brands including data, automation, security and our infrastructure brands, and they are measured completely on the success of our partner community. In addition, we’ve got a number of initiatives around our PartnerWorld program, which we will continue to modernize through 2022.
CF: How do you plan to modernize the PartnerWorld program?
DLR: We are focusing on skills, on activating this managed services element of our partners, to help build on and integrate the IBM platform into our clients. But also, they have elements of their services business, which can help influence client technology decisions on the IBM platform. Again, there are areas that we can expand our incentive stack to both the front end, where partners are able to influence on the technology decisions, and at the back end where they are deploying our software products and are integrating our infrastructure products in clients’ environments that we haven’t tapped into before.
CF: Can you elaborate on what those efforts and incentives will translate to?
DLR: We haven’t defined this completely, but I’ll give some direction on where we’re heading. Today, we pay our partners when they transact with us on hardware or software portfolio. We are still one of the most profitable vendors in the industry, and our partners continue to tell us that. What they’ve also told us though, is we are missing out on helping them to differentiate our portfolio at the early stages of when a client is making critical decisions around their cloud, around their security portfolio and around their data portfolio. That’s one of the things we’re looking at doing when we talk about modernizing the program. They’ve also said, “We’ve competed with your GTS [IBM Global Technology Services, now Kyndryl] or your managed services business for years and so we no longer have that competitive threat. How can we help land your platform and ensure that it’s sticky with your clients and our clients?” Focusing on the deployment of our platform is an important area we are looking at.
CF: Are these like planning and deployment tools that you’re looking at?
DLR: We announced last summer, the new IBM partner portal, which is based around Salesforce, and we are now rolling out functionality to our partners on that platform. So far, we’ve got opportunity management functionality that comes standard with Salesforce. But as we go into this year, very soon we’ll upgrade our deal registration and lead generation toolkit. We will streamline it, making it more simple and easier to accept deals with our partners. And then we’ll continue to expand functionality as we go forward into the balance of the year. One of the really important elements is this simplification of how they engage with us on a day-to-day basis. And our partner portal will be at the center of that simplification.
CF: What are you seeing in terms of the shift in the role of the reseller model?
DLR: We announced three sales motions that we are putting programs and incentives behind uniquely. The first is our build sales motion, which is those partners that are building on or with our platform, think ISVs in that space. Two, our services sales motion, think about the global systems integrators and consulting firms such as Wipro, HCL, Deloitte and Ernst & Young. They were new for us since we launched it in the May 2021 time frame and will continue to invest in those areas. But the resale sales motion continues to be the largest portion of our channel business and that ’s an important base for us. We’ve got to get to activating that base. Some of those partners are evolving their own businesses. But as I said, many of them have 40% of their business model around integration and managed services opportunities. It’s about tapping into that and seeing where they can help both us and their clients integrate the IBM portfolio in a better way.
CF: Last year, you announced IBM’s 3-year, $1 billion dollar investment in the partner ecosystem. Where are you with that in this current year in terms of where some of those investments are going?
DLR: Last year was all about refining our focus and our go-to-market model, which translated largely to pulling people closer to our partners around identification and progression of deals. The other piece was around investment funds to differentiate and land the cloud platform with many of our systems integrators and our ISVs. We have a cloud engagement fund. About a third of the annual investment, call it $100 million, went toward funding on behalf of our partners, modernizing applications. Obviously, we’re continuing with the cloud engagement fund; that’s an area that we’re committed to over the three years.
CF: You have said that the Red Hat program and IBM PartnerWorld are going to remain separate entities. Is that still the plan?
DLR: We’re not looking at bringing them closer together. If you look at the Red Hat partner program, the partners are largely either reselling REL [Red Hat Linux] or Ansible. There’s very little crossover with the portfolios that we have and the set of partners that we have. For the foreseeable future, there’s no plan to bring those two programs together. We think they’re complementary, but independent of each other.
CF: Will the IBM Think Conference in May be a live conference?
DLR: It’s still a little bit fluid. The intention is to try to have that as a live event, though probably smaller than what we’ve done previously. I don’t think that we’re going to have tens of thousands of clients coming into Vegas. That’s not what we’re looking at doing. The intention is to have a really impactful event.
CF: Will the IBM Think Conference in May be a live conference?
DLR: It’s still a little bit fluid. The intention is to try to have that as a live event, though probably smaller than what we’ve done previously. I don’t think that we’re going to have tens of thousands of clients coming into Vegas. That’s not what we’re looking at doing. The intention is to have a really impactful event.
Now that it is has divested its managed services business, the IBM PartnerWorld program will undergo continued modernization this year. Channel chief David La Rose plans to reveal investments in IBM’s flagship partner program at its Think conference in May.
La Rose, general manager of IBM partner ecosystem sales, shared his 2022 agenda in an interview with Channel Futures. While he didn’t provide specifics, La Rose shared key priorities for the modernization of IBM PartnerWorld.
IBM’s David La Rose
“We are focusing on skills, on activating this managed services element of our partners to help build on and integrate the IBM platform into our clients,” La Rose said. “But also, they have elements of their services business which can help influence client technology decisions on the IBM platform.”
The relationship with IBM and its partners is poised to become more symbiotic coming off the spinoff of its managed services business, Kyndryl. Partners will no longer find themselves competing with the former IBM Global Technology Services business. Without that business, IBM is signaling to partners it needs them more than ever as a key route to market.
Now that IBM has spun off Kyndryl, “it offers us and our partners an opportunity to really tap into the managed services and systems integration portfolio,” La Rose said. “There are areas that we can expand our incentive stack to both the front end, where partners are able to influence on the technology decisions, and at the backend where they are deploying our software products and are integrating our infrastructure products in clients’ environments that we haven’t tapped into before.”
La Rose shared the growth the IBM partner ecosystem generated in 2021, and other priorities for the PartnerWorld modernization. What follows is the beginning of that interview, edited for clarity. You can read the rest in the slideshow above.
Channel Futures: What is your assessment of IBM’s fourth quarter earnings report?
David La Rose: The fourth quarter was a very strong indicator of our expectations as we go through 2022 and consistent with the strategy that has been pitched, which is mid-single digit growth consistently and growth in free cash flow.
CF: What does that mean to IBM partners?
DLR: This has been a journey during the last three to five years with the declaration that we are a hybrid cloud and AI company. If you look at the $34 billion acquisition of Red Hat, and the other investments that we’ve made internally in products – about another $5 billion – and the acquisitions over the last few quarters around the automation and security portfolio, we have invested somewhere in the order of about $60 billion around the hybrid cloud and AI strategy.
CF: Are there specific data points you can share that would measure partner success?
DLR: The number of ecosystem partners that are generating revenue for our hybrid cloud platform has increased by about 80% over the last year.
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