U.S. Partners Can Now Earn Margins on IBM Software Sold via AWS Marketplace

Channel partners can earn margins when reselling or deploying IBM software via the Amazon Web Services (AWS) Marketplace. An initiative launched by the two companies aims to neutralize conflict between IBM channel partners and AWS.

The first phase of the program is currently available to IBM’s reseller and systems integrator partners in the U.S. While they have not actively promoted it, IBM informed partners of the new program last month. It lets channel partners sell IBM software through the AWS Marketplace and earn margins on that usage.

IBM added the incentive following criticism from partners that the major hyperscalers’ marketplaces were cutting into their revenues. Earlier this year, that became a more significant factor when IBM formed a strategic collaboration agreement with AWS. IBM said it would offer its software as a service in the Amazon cloud and ultimately in the AWS Marketplace.

David La Rose, general manager of IBM’s channel sales organization, said partners voiced their concerns. Among them was large account reseller Insight, according to La Rose. He explained that many of Insight’s clients have AWS usage commitments like IBM’s enterprise license agreements. An Insight spokesperson confirmed La Rose’s account, but officials were unavailable to comment further.

IBM’s David La Rose

“They were seeing their topline revenue being impacted by some of the hyperscalers, particularly AWS,” La Rose told Channel Futures. “When we started thinking about how we want to engage with AWS, we wanted to do it in a very collaborative way with our resellers.”

The new program aims to remove friction between channel partners and clients with enterprise commitments with AWS. Partners can “use those enterprise commitments to deploy IBM software and make margin on it in a two-tier distribution model,” La Rose said. “It’s available to partners enrolled in the IBM PartnerWorld program. La Rose didn’t specify when IBM plans to roll the program out globally.

Partners Embracing Marketplaces

IBM is not the only major IT player that sees the importance of cloud marketplaces. For example, during a partner roundtable discussion last week with media and analysts, Cisco said it is also eying them. While some of its subsidiaries, including AppDynamics, ThousandEyes, Duo and Umbrella, already have a presence in cloud marketplaces, Cisco lacks one. Cisco’s channel executives plan to put that on their road map.

Big Blue’s latest program underscores the changing dynamics of partner relationships, said Kate Woolley, general manager of the IBM ecosystem. Increasingly, channel partners understand they must embrace cloud marketplaces. According to a survey of IBM partners last year, 70% said they are considering cloud marketplaces.

IBM’s Kate Woolley

“As you look at the ecosystem, it’s no longer about an IBM relationship with a single partner,” Woolley told Channel Futures. “We’ve also got to recognize that our resellers have relationships with a lot of our strategic partners and with the hyperscalers. And we’ve got to recognize that the GSIs all have relationships with the hyperscalers and with some of the ISVs we work with. And there’s a real opportunity there to do more in terms of how we meet our clients where they’re at because all of these relationships, we can actually work together more closely to be able to do more.”