- IBM has made a major change to its go-to-market strategy, focusing on developing its partner ecosystem and deploying its direct sales resources to engage the largest accounts looking for integrated solutions from IBM.
- This move is likely to result in more partners building specialization and expertise around IBM solutions.
IBM held its Think Summit Australia & New Zealand in February 2021. While hybrid cloud, AI, and digital transformation remained the key themes, the company also shed some light on the changes to its go-to-market strategy, particularly its investment in developing the partner ecosystem known as PartnerWorld. IBM recently announced an investment of USD 1 billion in its partner ecosystem, with the aim of driving more sales through channel partners. The investment is part of IBM’s new go-to-market strategy. The company is simplifying its sales model by reducing the number of customer groups from 50 to just two. IBM direct sales will utilize the IBM Garage to engage top-tier customers. The rest of the IBM client base will be served by channel partners, which means significant opportunities for these partners.
The change in strategy is aligned with the October 2020 announcement on the formation of a new public company, NewCo, by separating its Managed Infrastructure Services unit from its Global Technology Services (GTS) division. With this separation, IBM is moving most of its managed services business to NewCo while it focuses on high-value cloud platform, software, and business consulting services. This move removes the conflict with many partners which see IBM Services as a competitor, especially when partners attempt to offer managed services around IBM technology. For NewCo, while there are challenges during the transition, the separation allows the business to become leaner and more responsive to customer demand. It also allows NewCo to broaden and deepen its relationships with technology partners.
With NewCo in progress (the CEO for NewCo has been appointed), IBM is sending clear signals to the industry that it will treat NewCo the same as other partners. The company has already formed stronger partnerships with global system integrators in recent months. Tech Mahindra recently deepened its partnership with IBM to collaborate on areas including 5G, hybrid cloud, automation, and cybersecurity. For example, Tech Mahindra will both launch its Blue Marble (a platform for microservices development) on IBM Cloud for telecommunications customers to drive 5G and expand its cybersecurity business with IBM Cloud Pak for Security. More services partners may start to develop dedicated IBM practices. For example, Wipro’s IBM Novus Lounge in India is a dedicated innovation center to foster innovation leveraging IBM and Red Hat solutions.
Part of IBM’s partner investment goes into the creation of the specialized Hybrid Cloud Build Team announced on February 4, 2021. This team will support the migration and modernization of ecosystem partner products, services, and other offerings across open hybrid cloud environments. The team currently has over 100 cloud architects, cloud developers, data scientists, and security experts to co-create solutions for partners with their customers. The headcount of the team will increase to more than 200 in 2021. With the greater reliance on partners, there is a need for IBM to invest in its partners and ensure they transform their business while trying to help enterprise customers with hybrid cloud implementation. IBM’s Hybrid Cloud Build Team will play a key role in helping partners to build their IP on IBM Cloud and Red Hat. The company is also helping partners to develop capabilities in implementing and providing managed services, including application modernization, cloud migration, and digital transformation for various industries.
For many IBM reseller partners, they should consider enhancing their ability to sell and implement solutions instead of sticking to the simple reselling business. Partners can also look into industry specialization as IBM develops cloud solutions tailored to different industry requirements (e.g., financial services and telecommunications). With a strong partner ecosystem, IBM’s solutions will become more accessible to mid-market customers.