IBM Makes Selling Software More Lucrative for Channel Partners

By Pedro Pereira  |  Posted 2006-03-09 Email Print this article Print

VARs, integrators, software developers and consultants stand to get a piece of any IBM middleware deal in which they play a role. The vendor is rolling out its partner compensation plan starting in April in the United States and several other countries, a

Selling IBM Corp. middleware is about to get a whole lot more lucrative for channel partners playing a role in any part of a deal, from identifying the opportunity to negotiating, selling and handling the delivery.

IBM next month plans to start rolling out a compensation initiative, called Software Value Incentive, through which business partners stand to make commissions of as much as 40 percent of the value of the software sold.

In addition to rewarding partners, IBM also wants to boost sales of its $15.8 billion software business through its existing 20,000 software partners and by recruiting software developers, consultants and solution providers away from competitors such as Oracle Corp. and Microsoft Corp.

"Partners can be a huge growth driver for us here," said Neil Isford, worldwide vice president of Business Partner Sales at the IBM Software Group.

The program covers partners of all types who sell to customers of all sizes and, eventually, all geographies where IBM does business, he said.

Under the new compensation plan, partners get a 20 percent commission for identifying and closing a sale. If the sale is to a customer in the small and midsize business (SMB) segment, Armonk, N.Y.-based IBM gives the partner an additional 20 percent.

For handling fulfillment, partners receive another 5 percent, but the amount increases to 10 percent for deals with SMB customers.

The program is unmatched not only in scope but also in flexibility, Isford said

Partners stand to benefit by playing a role in any phase of the sales cycle, even if someone else ultimately closes the sale, Isford said. ISVs and consultants that don't fulfill product may get commission for negotiating or selling while another partner gets compensated for the fulfillment.

The idea is to recognize the range of partners who influence a sale of IBM middleware. While in the past compensation programs have focused on fulfillment, IBM seeks to reward channel companies whose role may be limited to consulting and software development.

Isford, whose background includes a two-year stint running a services integrator, said much of the program resulted directly from advice IBM received from partners through the course of the program's year-long development.

"We spent a lot of time with the partners. We involved over 250 partners in designing this," he said.

Sal Patalano, president and CEO of IBM partner En Technologies Corp., a solution provider in Coral Gables, Fla., praised the initiative and IBM's willingness to work with partners through the development process.

"It's unlike anything I've seen in my 16 years working with IBM as a business partner," Patalano said.

While rewarding partners for their role in selling IBM middleware, the program also mandates that partners be thorough in providing information on potential deals, including customer data and what the deal will involve, Patalano said.

"The most significant piece is the fact that you have to truly qualify in order to register a lead," he said.

The registration requirements, he said, aim to minimize leads that go nowhere.

Isford said once a partner registers a lead, it goes through an approval process that includes checking if the opportunity has been registered by any other partner or by IBM itself. Even if a lead originates with IBM, he said, a partner can still qualify for a part of the deal, such as fulfillment.

IBM is introducing Software Value Incentive in April in the United States, Canada, the United Kingdom, Australia and New Zealand. The rollout will proceed in subsequent quarters until it covers the globe.

Any member of IBM's PartnerWorld network with basic technical and professional certifications can participate in the incentive program.


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