IBM's John Callies: Keeping 'Green' in the Channel

There are few in the channel who pay regular attention to what Federal Reserve Chairman Benjamin Bernanke has to say.

Fewer still follow the activities of the U.S. House and Senate committees hashing and rehashing the U.S. tax code.

John Callies does.

As general manager of IBM Global Finance, Big Blue's finance and lending arm, it is Callies' job to make sure the marketplace has enough money to spend on IT projects (ideally with IBM products) and, if not, to get it to them in a responsible fashion.

With an eye on tax cuts, interest rates, and spending and lending habits at private enterprises, Callies and IGF have been tireless advocates of priming the market, the channel in particular, with cash, when necessary, in the form of loans to end users through partners, including $3.4 billion from their own vault.

Programs like Rapid Online Financing, an automated Web process to expedite credit approvals, and IBM Flexible Credit, up to $500,000 for software and services, make it easier for resellers to get cash to their customers, in places where private lending and interest rates might prove prohibitive, Callies said.

"When you talk about the SMB [small and midsize business], the one major thing they have little of is access to capital," he said. "They might not be getting that at a [commercial lender] who is in the business of satisfying shareholders on the financing returns. We are in business to satisfy clients and grow business for IBM and partners. ... We want to be able to finance in a way that allows them to make investments."

Because it has a different mission—to drive IT spending rather than interest rate returns—IGF is typically able to offer more competitive rates than its commercial counterparts, partners and executives said.

IGF also considers an entire IT project, rather than tangible items (such as hardware), Callies said, enabling customers to finance more of the project (including software and services) that private lenders would avoid for lack of a recoverable asset.

But the loans remain sound, Callies said. "We're not doing this to support the channel at a financial loss," he said. "We just have a different mission and a different understanding of technology than a private lender that enables us to look at that risk differently."

This year, with flexible credit and the extension of credit to VARs at distributor Tech Data and Juniper Networks, a network infrastructure vendor, IBM began financing other vendors' products.

"Most of our competitors are providers of point solutions, so some are interested to provide liquidity only if you are selling exclusively their product," Callies said. "We focus more on their ability to serve the marketplace, and we acknowledge solutions that are a combination of IBM and non-IBM products. But that solution will ideally get IBM products out in the marketplace."