Navigating the channel

For the last three days I have been a part of the buzz of activity that is IBM`s PartnerWorld conference - a collection of 4 000 partners scrambling to forums, organising meetings, and doing real business with both one another and IBM.

The largest IT company in the world has spent the last year placing much of its customer-facing business into the hands of its partners, in effect outsourcing its sales force. It intends to continue this trend, with even its high-end range of servers being promoted through the channel.

I`m not sure that the company realises that, despite its size, power and well-earned respect in the industry, it will not have absolute control over its partners.

Jason Norwood-Young, technology editor, ITWeb

The decision is fuelled by IBM`s need to find new business in a market that is becoming dramatically harder to address. Enterprise used to rely on its CIO to make decisions on IT direction - decisions that were largely based around technology. In this case, a single vendor, such as IBM, could approach the customer directly, and close the deal and fulfil the order without more parties needing to be involved.

But as IT becomes core to people`s businesses, the sales process is no longer limited to the CIO. Now the line-of-business managers from various departments are all involved in the purchasing decision, and as a result, the sale`s complexity increases by orders of magnitude. The solutions on offer also need to fulfil both vertical needs in the individual company departments, but horizontal needs too, with integration becoming a key enabler for e-business.

The only way to address these concerns, according to IBM`s strategy, is to allow multiple partners to go into various sectors of one account and address individual needs, while the systems integrator (SI) takes up the role of a project and risk manager, ensuring that all the competitors play nicely with one another. The SI will also be responsible for getting the various solutions to talk to one another - no easy task despite the alphabet-soup of standards and interconnect technologies.

Although the move is a necessary one for IBM to take, the company does pay a price for its new "outsourced" business strategy. IBM runs the risk of losing control of its own sales channel. I`m not sure that the company realises that, despite its size, power and well-earned respect in the industry, it will not have absolute control over its partners.

The company has spoken of "navigating" its friends. However, these partners have their own agendas, and their own interests to look after. It could be a hard lesson for IBM to find out that it has lost much of its control over its own marketing, sales and implementation channel.

Although not nearly as much of a potential problem, it also may come as a shock for the company to find out that it has placed its customers in the hands of business partners that may not be as good as IBM at providing service - or simple customer relations. There are always a few unscrupulous channel members, and IBM`s brand will pay the price for any unsightly incidents between these companies and IBM`s customers.

Any business strategy has its benefits and downfalls. It is reassuring to note that IBM suffers from these shortcomings in the same way that all companies do. I hope it is not too proud to see this itself.