IBM Commits $100 Million To Midmarket Cause

Big Blue on Tuesday unveiled plans to sharpen its midmarket channel focus via a $100 million marketing blitz for 2008 combined with new incentives for channel partners to increase their commitment to the vendor, said Steve Solazzo, general manager for general business for the Armonk, NY-based company.

Under the plan, IBM has renamed its Small and Midsize Business Group and divided it into two new business units: the Enterprise Business Unit to focus on developing potential enterprise customers, and the Mid-Market Business Unit to focus on developing midrange customers.

In the past, both types of customers were handled by the same set of channel resources within the Small and Midsize Business Group, which going forward is known as the General Business Group, Solazzo said.

That led to problems with IBM sales reps and marketing resources being spread between the two types of customers, he said. While the largest enterprise customers are covered by other teams within IBM, Solazzo said his group covered enterprise customers who either had yet to become IBM customers, or who were smaller than the customers typically handled by those other teams.

As a result, a sales rep in a certain territory might be covering about 15 large customers, who if they place an order would be shifted to other enterprise teams, while at the same time working to develop a few hundred mid-market customers. Solazzo said.

There's an obvious limitation to such an arrangement, Solazzo said. "Any time one of those very large customers has a big opportunity, the attention of not only my face-to-face sellers but also some of [our] business partners goes to those large enterprise customers," he said. "As a result, sort of like the ebb and flow of the tide, the attention goes away from those 200 to 300 mid-market customers that are covered in the territory as well."

Starting early last year, IBM studied its potential customer base an learned that there are very real differences between its enterprise and its midmarket customers, Solazzo said. Enterprise customers have 1,000 or more employees, and maybe up to 30,000 employees, as well as a complex IT environment and a large IT staff. They may often pick apart a potential solution to price each part in order to squeeze costs out.

Midmarket companies, on the other hand, prefer to focus on complete solutions, and are more likely to work with solution providers to develop those solutions.

Therefore, IBM is bifurcating its focus to recognize the different wants and needs and buying behaviors of these two sets of customers, Solazzo said.

For enterprise customers, IBM will cluster its face-to-face resources with brand resources, he said. Sales reps will in this case focus on their 10 to 15 enterprise customers along with the solution providers who serve those customers, but not the 200 or 300 midmarket customers they also previously covered.

For the midmarket segment, IBM will skew its marketing resources towards developing midmarket customers, Solazzo said. This includes increasing marketing dollars targeting such customers to $100 million worldwide, up about 25 percent over last year.

IBM will also shift its telecoverage resources to focus on midmarket customers, Solazzo said. Such customers will have a defined relationship with an existing and stable telecoverage individual, he said. Each telecoverage individual will have his or her own defined set of 100 to 125 accounts.

In addition, IBM is also creating a new role, the midmarket territory sales rep, who is focused exclusively on midrange accounts, Solazzo said. They will work as a team with the telecoverage reps to develop midrange opportunities for IBM, all or nearly all of which will be handed to solution providers, he said.

"Partners, while they certainly have a big role in the enterprise segment of my business, they're gonna be the fulfillment vehicle for us for all the demand generated in the midmarket," he said.

IBM is also appointing vice presidents to handle midmarket sales in specific geographies. For North America, that role is handled by Judy Smolski, vice president of midmarket sales in the Americas. Smolski was until recently IBM's vice president of small and midsize business marketing.

In addition to the reorganization and the increase in marketing resources, IBM has also revamped its partner compensation, said Ravi Marwaha, general manager of global business partners for the vendor.

This includes incentives for opening new business, winning competitive midmarket business for IBM, selling specific infrastructure solutions, and increasing the amount of storage and software attached to server sales, Marwaha said.

In keeping with the changes, IBM is also renaming and refocusing its annual PartnerWorld conference.

Starting this year, the conference will be known as the Business Partner Leadership Conference, Marwaha said. Unlike PartnerWorld in the past, which attempted to cater to the needs of solution provider executives and non-executive employees, the Business Partner Leadership Conference will be open to a smaller group of "C-level" executives. Solution provider sales and technical personnel will have their own specific training opportunities, he said.

"We did get a lot of people who came to PartnerWorld who were not C-level executives from our partners, and we do have a place for them in other events," he said. "We have thought about what would be the right events for them to go to. We will have suitable events for them."

This year's Business Partner Leadership Conference will be held from April 30 to May 2 in Los Angeles.

Rick Whiting and Robert DeMarzo contributed to this article.