For decades, technology has played an important role in businesses. But as we approach the peak of the present data-driven era, which is continually pushing organisations around the world to digitally transform, their reliance on technology grows exponentially.
With every company striving to become a data and tech company, how has the significance of channel partners evolved in helping IT vendors to spread awareness of what’s possible with today’s technology, as well as distribute their offerings and services?
This two-part article will take a closer look at how the relationship and dynamics between one of the oldest and biggest IT providers in the world, IBM and its partners have changed over the years.
Channelling Growth via Partners
To get our answers, DSA spoke to Jason Chen, IBM Systems Country General Manager, who explained that the technology channel has always evolved on the basis of needs, wants and problem areas that clients have.
As an example, Jason said that during the PC era, reselling was a key channel focus, which then shifted to integration and alliances when the internet era subsequently came. “And with us now in the era of data, cloud & AI, developing channel ecosystems is the key focus for each of the technology vendors”, he remarked.
Channel partners importantly bridge that gap between enterprises and vendors and have become a vital piece of the puzzle for organisations looking to create an integrated and complete IT ecosystem. Interestingly, a report by Accenture showed that 46% of executives surveyed are actively seeking ecosystems and new business models. By 2021, 50% of G2000 will form alliances with technology partners and 30% of purchasing will be driven primarily by ecosystems as per IDC.
“We have introduced many new programs to enable a thriving ecosystem. For example, given that partner IP will define partner business models, we have introduced the Embedded Solution Agreement (ESA), which allows partners to use IBM technology and build their IPs in the area of products, services and offerings”, Jason explained, adding that ESA is ideal for technology partners who are looking to sell their own solutions built with IBM technology because it allows them to benefit from lower development costs and higher profits with flexible pricing.
According to Jason, Ready for IBM Storage is another program which allows ISV and managed service provider partners to co-brand their services along with IBM and also provide market development funds to the respective partner.
He commented that the whole sales process is also changing, where those involved are now required to envision scenarios, build a sample or proof of concept and demonstrate a minimum viable product before proving value to the client. In that sense, IBM’s Garage Services were developed as a step in that direction – helping partners envision scenarios leveraging emerging technologies in areas such as AI, data analytics, security, disaster recovery, business continuity and remote office.
One interesting point Jason made was that there’s a common thread through all of these technologies, which is that they all consume storage.
Expanding Ecosystem for an Evolving IT Landscape
In the past, storage typically meant hardware that is directly coupled with intelligent software to run and manage it. But things are changing rapidly. In order to modernise and allow this foundational storage aspect of the data centre to work seamlessly with other areas of IT such as the cloud, the software-defined approach seems to be taking off in a big way. It also doesn’t hurt that it gives companies much more freedom and flexibility in terms of choosing the solutions that work best for them.
On this, Jason explained that tech companies are also evolving in line with the changing needs of customers. IBM’s channel ecosystem now consists of distributors, system integrators and independent software providers. IBM has also made it easier for them to consume storage the way they want – be it in the form of appliances or as software and on the cloud.
“Our FlashSystem portfolio, with its extremely low latency, mostly caters to on-premises workloads. Meanwhile, our Software-Defined Storage (SDS) portfolio caters to the new-age workloads and unstructured data requirements of big data, AI, analytics, cybersecurity, videos and such. All of our SDS workloads cater to a multi-cloud environment running not only on IBM Cloud but also other cloud providers like AWS”.
When it comes to the hierarchy of margins, Jason said product and project services margins are mostly one time and non-recurring. With the focus on the recurring nature of revenue and higher margins from managed services and packaged IP, IBM’s Storage Utility Consumption models are helping partners build recurring revenue models and also jointly share the risk with IBM.
Last but not least, customers are now more informed than ever, with what Jason calls “empowered” business users being pervasive across organisations. “The User Buyer is the person who will actually use your solution after the purchase decision is made”, said Jason. These empowered users harbour high standards of customer experience, are tech-savvy and demand convenience and as such, the approach channel partners make is key. They are closest to the clients and have the capability to best understand and help resolve their business and technology pain points.
“IBM’s framework – with Design Thinking stakeholder maps, empathy maps and prioritisation grids – is an example of how to understand users better. We have done many across Asia Pacific along with our partner ecosystem”.
In the second part of the interview, Jason answers whether modern businesses prefer dealing via channel partners or directly with vendors and goes into some of the biggest challenges facing channel partners in today’s post-pandemic environment.
To read “The Evolving Role of Channel Partners in the New Normal: Part 2”, click here.