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Mike Vizard:We’ve been talking about the notion of trying to leverage channel echo systems for a long time now. It’s the whole concept of how do I get the traditional solution providers to hook up with ISVs and in turn maybe also connect them back to consultants and the influencers so that we can just drive more business and make the whole demand-gen process more efficient. Where are we in that process right now? What’s your sense of, you know, how far do we still have to go?

Jim Corgel:I think we’re making progress in a couple of areas. Inside of IBM, when you look at the mid-marketplace for what I’ll call a package set of capabilities from our consulting team and our global business services wrapped around helping customers select an Oracle application, an SAP module, something from Lawson or some of the major ISVs, and then connecting them with the labor force that you need from our systems integrators around the world — that troika — putting that together and packaging that and putting it in front of key decision makers, in the last 24 months we’ve made some enormous progress around the world.

Vizard: Is there something that a solution provider needs to do to kind of make their organization more open to actually partnering with ISVs? Because it feels like everybody nods their head and says they want to work more aggressively with ISVs, but I’m just wondering if there are some steps that the solution provider needs to take or that the ISV needs to take to actually make that happen in practice?

Corgel: Well, first of all, if you’re an ISV and you’re not part of IBM’s PartnerWorld Industry Networks, I would join today. You know, we’ve got 6,000 companies around the world that have let us know they exist. But if you’re part of PartnerWorld Industry Networks, you begin to get exposed to IBM’s technical capabilities so that we can either build your awareness or help train you on some of our products. Many small ISVs are struggling to extend their sales capability. You know, I told a bunch the other day, don’t spend any more money on market intelligence. We’ve spent all we can, and we’ll share it with you. And that leads to more effective value propositions for their salespeople. And then we also work with a lot of small solution providers, ISVs if you will, on just building the awareness through some very straightforward marketing campaigns that combine our brand along with theirs.

Vizard: One of the things I notice when I look at ISVs in particular, though, is that a lot of them grow up with trying to get their, at least their first major accounts, by going direct. And they don’t really have a strong channel chief or even a channel organization within their organization to connect back into the solution-provider community. Is that something you guys are coaching ISVs about, how to go build an indirect approach to the market?

Corgel: There’s a half-step in there. First of all, it’s to get together people with like minds around like geographies or industry values. So we’ve got a thing we simply call IBM Sales Connections, where we put business partners together where it makes sense. Three weeks ago, there were 14 firms in one of our Chicago Innovation Centers all focusing around the market opportunity for Tivoli and Tivoli’s capabilities. But when you looked at the 14 firms, you had some ISVs, you had some systems integrators, you had some local technology services firms that are helping customers stay connected and stay secure, all of them aggregating and sharing each other’s capabilities. Because you know, Mike, some people come with strong capabilities in one area and others are fairly weak, and they like to know that they can aggregate themselves together with their fellow IBMers in front of a client. So that’s sort of step one: knowing where it make sense immediately for a client to put them together. And then after that, you know, we spent a great deal of time working with them individually to decide whether they are a local provider that needs to stay local or are they ones that are saying, “I want to go from China to Singapore,” or “I want to go from New York to California.” Nobody better than us — because of the resources we have spread around the world — knows how to help them expand beyond what I’ll call their domestic sweet spot.

Vizard: Are you also reaching out to create more vertically oriented echo systems? Because it feels to me like the focus has always been around horizontal product sets versus vertical solutions. But once you start bringing an ISV into the play, can that change?

Corgel: It’s the heart and soul of what we call the PartnerWorld Industry Networks. And the emphasis needs to be on the word industry there. Whether it be healthcare, banking — you know, there are 17 different industries — and whether it be retail or wholesale, again, depending on how the ISV wants to portray their capability, where they would like to share with us their sweet spot of credibility, I’ll call it, based upon where they’ve sold before and where the acceptance rate is. A lot of it’ll come from the intellectual property around their original offering in the market to fix a certain industry problem. And initially they’ll look to somebody like IBM and say, “What are the complementary things that go with an industrial sector kind of offering?” Or even a broad CRM or a broad supply chain kind of offering. But we’ve always, for decades, gone to market the way our customers sort themselves out, and that’s by industry. We try to show our partners that we’ve got capability to influence clients. And if they’ve got intellectual property and applications that meet the needs of that business issue within that industry, we’re a good way to get that match made.

Exploring IBM’s Channel Ecosystem.

Vizard: In the last couple of years, we’ve seen this massive wave of merger and acquisition activity in the ISV community leading to, you know, fewer players and fewer people to partner with. You mentioned global and worldwide. Is part of the plan for IBM to try to bring more of the software vendors that were in Europe or Asia into the U.S. marketplace, and how do you think that happened?

Corgel: Well, let me make a comment. First of all, I’m not totally buying the fact that this consolidation thing is really, really having an impact. I understand the media. I understand some big players buying some others. But I’ll tell you, I don’t see that in my workweek. Despite the headlines that run around consolidation and some of the speculation that there’ll only be a few key players, the reality to me is the total marketplace is expanding. It may be highly fragmented today and we probably need to work with all the new people we’re meeting to get their positioning properly in place, but we’ve had an influx of hundreds of new software companies, particularly through a lot of the relationships we have with a lot of the venture community. So I read the headlines and I look at what I’m working on all week. I’ll give you an example. I’m in Amsterdam two weeks ago. Over 100 ISVs from the Nordic area, the U.K., Ireland, Belgium and Netherlands communities, some from France — 120 firms all talking about the reality or the non-reality of software as a service. Where are they today? What should they be looking to invest? How do I get out of my comfort zone in Western Europe to the U.S. or to China? So, we’re pretty busy. And consolidation seems — it makes me think that there’ll be fewer places I have to call on, and I’m just not seeing it yet.

Vizard: You mentioned software, the service. Do you see that as a vehicle for bringing different ISVs across different geographic regions? Because the boundary now starts to drop, right? I don’t need to necessarily shift software directly to a region. I can service it from wherever.

Corgel: Oh, absolutely. I think that’s the attractiveness of the market opportunity. You know, there are a lot of pundits that say 25 percent of software in three or four years will come through this model. You know, billions and billions in market opportunity could materialize in the next four or five years. I happen to think a lot of that has high potential. And you’ve hit the important point — people no longer have to set up physical infrastructure all around the world. If they’ve got an answer to a business problem and, I think, more importantly, if they are committed to moving away from just an application provider license by license into the world of actually delivering solutions and playing the role, either with a partner like us or on their own as a service delivery company — that’s really the issue that we wrestle with most of the time with people. It’s not the intent that they want to go beyond their domestic market. They’re pretty committed to that when they show up. But it’s, “How do I become a service provider,” which changes a lot of business models. So, you know, today we build a community, Mike. You know, everything starts today with a community. And I counted a week ago there’s 2,300 individual firms that have joined this SaaS community of ours, or Software as a Service community.

Vizard: So given all that, as I sit back and think about it for a minute, is IBM’s real play here, then, trying to become the hub for the delivery of all that software, and then on the back end you’ll connect that out to all your solution-provider partners, who will provide the local touch for all that software?

Corgel: Well, in a certain way, you know, I’d say you’re right. We have an awful lot to offer when people say, “If something breaks or goes down, my image goes down.” And we’ve all read about national or global-branded companies who have a glitch, all the way back to early AOL. You know, when you and I were kids, we said, “Oh my gosh, will this ever work?” One fateful night Bob Pittman had to tell the entire world that he was going to get their telephone lines back up and running. That’s ancient history today because of the security capability that we’ve built around IBM’s infrastructure — the global reach of our service centers around the world, the fact that we’ve got resources, both technical and sales, planted in 170 different countries, we can prove that, you know, you hit the button in the Netherlands and it’s OK to start counting on an extension of your market halfway around the world. So first of all, we want to convince people we’ve got all the technology and the security so they can feel like the brand won’t be damaged, and then we’ve got a lot of training where we can help them move from a company that just sold licenses to where they have a lot more accountability to their end-user clients as a service provider. And last but not least, they say, “OK, who on the ground can be part of my channel?”

Vizard: How do you think IBM today differentiates itself vis-à-vis Microsoft in this world? Because, historically, Microsoft was always the place that, you know, is a house developers built. So how do you kind of crack that and change the perception?

Corgel: I think our customers tell us what they want us to do. When you go to IBM’s developerWorks site, 60 percent of the content on the developerWorks site comes from outside of IBM. The vast majority of the authors that are on there don’t work for IBM. The number one topic on everyone’s mind is open-source technologies. How do I use the services oriented architecture flexibility to take what I’ve invested in over the last five years and go further and further with it? So as much respect as we have for Microsoft, you know, as a partner and a friendly competitor, we’re being driven toward an enormous amount of investments in service-oriented architecture, everything grounded on open-source technologies, because that’s what our clients are telling us they want. And it’s proved in our developerWorks site. It’s now number one, you know, the open standards phenomenon makes the developerWorks site number one in China — one of the hot, fastest-growing marketplaces for IT businesses.

Exploring IBM’s Channel Ecosystem.

Vizard: So one of the things people talk a lot about is how difficult the perception is, at least, that it’s difficult to work with IBM in terms of finding my way through the maze of players, and everybody’s trying to get to the regional channel sales manager. What have you guys done lately to kind of make it easier for both ISVs and solution-provider partners to come together through IBM?

Corgel: Well, you know, you’re right. People tell us that we need to improve every single day on how we focus on their particular problems and not just the massive numbers around the industry. For instance, a number of our clients have come to us formally saying they’d like to have a relationship that has one goal in mind: getting them from their domestic marketplace today to another country. Two weeks ago, I was in Shanghai. I met with three firms. It would be nirvana if they could get on the ground and healthy in Singapore. So again, I had a naïve impression that everybody wants to come to a Western market. Well, not necessarily. And so we have a program that we’ve merely called Going Global. Whether you’re a United States firm sitting in Boston that wants to go to the U.K., or whether you’re in the U.K. and want to go to Latin America, if you’ve got something in common, as a Spanish-speaking country, a favorite for a particular business issue, we’re formalizing and focusing a lot of our capability around just that act of taking an ISV from its domestic marketplace to another market that they can begin to do business in. So we’re finding that we need to listen more and more to our clients if they tell us, “I’m a little lost.” And we try to, you know, put as many resources as we can either online through our PartnerWorld portal, through some of our specialties around developerWorks, because I’ll tell you, Mike, I learn more and more from IT professionals telling us what’s going on in their industry and we’re able to translate that back to coaching and counseling that we provide to ISVs. And we’ve got dedicated sales experts and marketing experts just trying to intuitively figure out how we can be where ISVs and IT professionals are comfortable in being. Can our capability show up there?

Vizard: You also mentioned earlier on that you’re trying to reach out to the influencer community. What are you guys trying to do there, and how does that bridge back to the ISVs and the solution providers?

Corgel: Well, you know, when I think of the influencer community, I mean, that runs from members of the press, from, you know, IT analysts who coach and counsel our clients. Next week, I’ll be with 50 IT analysts in New York City talking about something very simple to understand but difficult to solve and that’s the future of IT skills around our zSeries. We know the zSeries is going to live forever. We know the market consolidation around the capability of that particular product family. Yet our analysts, we’re going to spend time on, “How do you grow IT skills in universities and colleges and around the country, here in the U.S. in particular, when we know more and more of our young men and women are not choosing mathematics or science or IT curriculum like they used to.” And I’m going to talk at length about a thing that we have in my team called the Academic Initiative, where we’re going to focus on influencing students in our technical universities and in our campuses — we have an IBM volunteer army of 2,500 ambassadors. I haven’t met an IBMer yet that didn’t think their alma mater was special. And so that’s one bit of influencing that a lot of people don’t focus on as much as we want to, and that’s the student base for the future of IT. Then we move up the food chain into some natural places where we deployed a lot more resources, and that’s on getting systems integration firms to understand that their expertise in an industry matches nicely with some of our PartnerWorld Industry Networks people that are ISVs by definition and trying to map out game plans in their particular geography, whether it be Ohio, or across Canada or China.

Vizard: How are you bringing IBM Global Services to play inside of this equation when some of the partners worry about what their agenda is, some of the ISVs like to do their own custom work around their application and other developers want to build the applications themselves? There are some competing agendas in that mix somewhere.

Corgel: Well, you know, I understand a little bit of the history, but I’d say more importantly, there’s very rarely a win-loss here for IBM. Oftentimes, a systems-integration firm will provide the kind of labor and skills in a particular geography that even Global Services, as large as it is, just doesn’t have. So when you think of our mid-market consulting business, most of the labor on the ground with the client is made up of some very strong relationships with systems integrations firms. There are about 40 of them that are in the family in the United States. There are 14 that are really active, and they are actually planning ahead to hire skills just for the IBM pipeline that we’re building in the geography where they feel comfortable in employing people. It’s a very big win for those folks. Then there are some other people who, you know, as they’re building their own individual business, which occasionally will compete with some IBM capability, there’s a huge marketplace for us in just helping them, consulting with them to build their business, consulting with them to use IBM’s set of hardware and software capabilities. So rarely anymore is there what we would call, you know, somebody wins and somebody loses. It’s getting better and better.