IBM Beefs Up System X Channel Program

Looking to broaden its mid-market presence for its System X line of storage servers, IBM in 2006 invested $100 million to recruit 5,000 partners around the world.

IBM embarked on this mission to improve its market share with one of the fastest growing segments—SMBs. The company's market share in the space was not as high as it was in some larger customers, according to Patrice Mitchell, vice president of the global distribution channel for Big Blue.

"We had an opportunity and a performance gap," she said. "We needed to align resources and have an initiative that is focused on gaining share with tier 2 partners—those who buy from distributors—and increase the amount of business they do with IBM."

The program was also focused specifically on recruiting new partners in emerging markets for IBM such as China and India. But the people on the ground in those emerging geographies told the home office that the process of enrolling new partners was too cumbersome.

To fix that IBM simplified some forms, Mitchell said, and "greased the schedule, changing the process from days to 20 minutes of data entry."

The initiative also beefed up marketing and sales investment for partners selling System X to SMBs. IBM committed $100 million to marketing and people resources, according to Mitchell, and it doubled its sales resources.

And the strategy is paying off. In China alone the company has recruited 1,300 partners, expanding its reach from 40 cities to 320 cities. Those on the ground in that country dubbed the project "Blue Sky" and put their focus on cities beyond the "tier 1" cities where the company already had a presence.

"We recruited the partners that we needed, and this year we are fine-tuning the program," Mitchell said. Specifically IBM is targeting "high double-digit" revenue growth from this new set of partners in 2007.

"Last year's focus was on recruitment," said Mitchell. "This year, the focus is on engaging those new partners."