IBM Steps Up Investment In SoftLayer Cloud Partners

As IBM tries to accelerate its SoftLayer cloud services business to offset big hardware losses that have been plaguing the company, it’s turning to channel partners to help it step up its cloud game. As part of a cloud services push, IBM will unveil updates to its SoftLayer partner program Friday that will boost margins on monthly recurring sales, dedicate more money to channel co-marketing funds, and expand in-person training opportunities for partners.

Central to IBM's SoftLayer push are increases in the percentage discounts paid to partners for recurring monthly SoftLayer business. IBM said it will increase discounts from between 5 percent and 15 percent for deals worth as much as $15,000 in recurring revenue to a new range of 5 percent to 20 percent for deals ranging from $15,000 to $100,000 monthly. This is in addition to SoftLayer's existing referral program, which pays 10 percent the first year, 8 percent in year two, and 6 percent thereafter.

Tom Blair, senior vice president of global sales for SoftLayer, said IBM is stepping up efforts to more effectively leverage its channel with the goal of boosting the number of channel-led accounts from 40 percent to 50 percent by the end of 2014. Blair said that since IBM purchased SoftLayer last year, about 120 IBM partners have joined the 1,400-strong SoftLayer partner program.

Related: IBM Sings Hardware Blues With Q1 Profit Slip

A new marketing initiative, meanwhile, will increase partner access to co-marketing funds, according to IBM. For every $1,000 of monthly cloud business a partner can commit to within a six-month window, IBM said it will match that amount in co-marketing funds. For example, if a partner commits to $3,000 of new monthly cloud business in the next six months, IBM will match up to $3,000 in co-marketing dollars spent by the partner.

Robert Verola, president of Vicom Computer Services, a $118 million IBM Premier partner based in Farmingdale, N.Y., said Vicom is just now beginning to move clients to the cloud. "What we want to see are compelling services priced properly for partners to make healthy recurring revenues," he said.

"In two years from as much as 10 [percent] to 15 percent of our business will moved to the cloud. SoftLayer has been very aggressive about winning our business. But for now, we only make a move when it financially makes sense. Right now we are still just getting our feet wet," said Verola.

As part of the update, IBM also said it has combined two existing SoftLayer partner programs -- Hosted Reseller and Strategic Reseller -- into one streamlined offering called the SoftLayer Services and Solution Provider program. In addition, it will expand the number of two-day hands-on SoftLayer training sessions by the end of second quarter to 21. IBM said nine of those road show training classes will be held in North America.

"We see huge opportunities in midmarket and large enterprise," said Ed Bottini, global cloud computing ecosystem manager at IBM. "We are trying to ease cloud adoption for partners and let them tap into big opportunities to grow their business incrementally with cloud services."

In IBM’s first-quarter earnings released Wednesday, the Armonk, N.Y.-based company said cloud revenue increased more than 50 percent vs. the previous quarter, and cloud offerings delivered as a service now represent $2.3 billion in annual revenue.

PUBLISHED APRIL 17, 2014