Are IBM Business Partners making too much money?

by Volker Weber

Last week I received this mail from a partner:

As a 10 year IBM partner I have become very disallusioned with IBM and the way it treats its partners. Its like they feel that they are doing us a favour by letting us be partners. Just the other day I wanted to quote a very large customer on some Lotus software only to discover that my allowed mark up was 2%. Basically I wont sell IBM software any more and we have largely moved all development to open source platforms and libraries.

Now I am reading on Adam Osborne's site:

Effective 1 June,

- All renewal margins will ONLY be available through certified Business Partners. i.e. If a partner is not certified in an IBM brand, they will not be able to fulfil the renewal.

- A Business Partner can ONLY fulfil renewals in the IBM brands where they are certified.

- Renewal margins have been reduced for all brands.

Is IBM thinking their partners are making too much money? Or what is going on there?


Oh boo hoo on the 2% margins!

Given that we're talking about, at most by my experience, a bit of paper changing hands here, I think 2% on Lotus Software licenses is plenty of $$$ thank you very much. Its not like the partners have a product sitting on their shelves for goodness sake.

If the risk and effort is minimal then I'm pleased to learn our lazy BPs aren't lining their pockets at my expense (ie, the one doing the real selling to our Org).

Colin Williams, 2008-04-07

Didn't IBMs recent results, show software division operating at 85% gross profit? And you ask if partners are making too much money?

Carl Tyler, 2008-04-07

2% is a sure way to make people sell services instead of software.

Flemming Riis, 2008-04-07

There are much easier ways to make money that the IBM Business Partner model.

When you put in the mix that company directors of Business Partner often secure their business finances with their home, the BP is not making a whole lot and carrying significant risk.

I think this is forgotten with the whole Workplace discussion - for many IBMers, the failure of Workplace means they lose their job/career options, but for many directors of Business Partners, they have the likelihood of losing their family home as well.

This is not a problem faced by Mike Rhodin, I am sure.

Peter Ellenby, 2008-04-07

Peter, I have seen many managers enter and leave Lotus during the Workplace fiasco. It has been a great career opportunity for them. Others kept the light on at Lotus by sticking to Notes.

Volker Weber, 2008-04-07

Wow, are people really crazy enough to stake their home on the success / failure of IBM technologies? Yikes!

Ben Poole, 2008-04-07

Comment by instant message:

its a hard one to publicly answerwe make NO markup (or very little) from license salesyou only go to the effort to keep ibm happy

Volker Weber, 2008-04-07

Undoubtedly there are times when renewals are an easy buck - Mr Customer your maintenance is about to expire, that will be ¢20k please (same as last year plus inflation), thank you very much.

But after 12 years+ in the IBM SWG game, I can tell you that these opportunities are very very rare. There are usually complications - changes of licence models (CPU -> VPU, users -> authorised users etc.), product renames, reworking of bundles, licence audits - plus procurement departments that are desperate to shave off a few percent to make their bonus, competition between partners, threats from competitors etc. etc.

2% barely covers the cost of the cashflow involved, let alone the meetings, the IBM paperwork, the credit checks and so on. If IBM drops the margin as this suggests they are, then they can have the renewals business to themselves, and a heck of a number of unhappy partners and customers.

Stuart McIntyre, 2008-04-07

Same old song and dance from IBM. The best way to make money from IBM anymore is simply not to play.
I'm sitting here wondering about a SMB customer that needs to evaluate a new email system. I could show them Notes 8.01, ST, and QuickR and then spend a lot of time convincing them it's worth their while to invest in it. And then spend more time convincing their management that it's a good choice.

And then we could spend time trying to figure out Lotus licensing. And then selling it. And then wonder how we're going to do renewals.

Or I could spend about 15 minutes showing them Exchange 2007 and an Outlook client, then make more money in the long run off the service it will require.

Gee, which is the path of least resistance for the both of us - the customer and me?

Jon Johnston, 2008-04-09

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