Glad I bought IBM at $95........IBM Becomes the E-Business
By Robert DeMarzo, Mark Kindley VARBusiness
10:02 AM EST Mon., Jan. 10, 2000
Few jobs are as challenging as the one Buell
Duncan has at IBM Corp. As general manager,
IBM Global Business Partners, Duncan oversees
strategic and tactical efforts to engage tens of
thousands of companies ranging in size from
one-man consultancies to multibillion-dollar
global integration giants. A year into the job,
Duncan says everything he does today is tied to
e-business. Last month, VARBusiness
dispatched editorial director Robert DeMarzo and
editor/features Mark Kindley to get a progress update. Here's what they learned.
VARBusiness: What's foremost on your agenda for 2000?
Duncan: We are obsessed with transforming IBM from traditional computing to
e-business computing because the growth in e-business is on average four times faster.
Compounded out over five years, that's pretty significant.
VB: You've been in this position for a year. When you look back, what would you say
have been your biggest accomplishments? And at the end of next year, what do you
want to be able to say you've accomplished?
Duncan: I think we've done three things that are significant. One is rather mundane: We
have dramatically stepped up the whole sales management process working with our
business partners. And our partners have said, "Thanks. Boy, we needed this." Where
that goes to value is that the currency of working with business partners is leads. To
take better care of that currency with our partners is essential. That's very tactical, and
we've made some very good progress there. We've got a simple approach: The better
you are at closing leads, the more you get. And that's fair.
We've also accomplished raising the awareness and level of importance of investing in
e-business by our existing partners. And third, we launched that initiative with the new
partners.
So, what do I say about this coming year? I say we've laid the foundation. [The year
2000] is executing and leveraging off of that.
VB: What's the biggest challenge to IBM?
Duncan: It's to take this wake-up call that we have been given that says we have
moved too slowly to go to this new e-business space. The good news is, this isn't just
a new idea. We're not saying, "Well, maybe if we just did this or that." This has been a
long drumbeat, and it goes back to things like spending at least half of our R&D on
enabling our products and offerings for e-business. That's not something we're saying
maybe we'll do next year. We've been doing this for years. [This year] is the year we
have to deliver.
VB: So where do your partners fit in?
Duncan: We made a conscious shift three years ago. We said business partners are a
cornerstone of our go-to-market strategy, and we are deadly serious about our success
being tied to our partners. This year, $30 billion will go through the channel. The
challenge we face is our business partner revenue is growing faster than IBM's
revenue.
VB: So you are saying the channel is not bringing in incremental sales?
Duncan: It can't possibly be. Not all of it. If they grew 100 percent, we didn't grow 100
percent. But that's OK. A significant amount of it is incremental business that we
couldn't have gotten to, and there's significant cost savings as we rely on our partners
and investments they are making. But we have to ensure going forward that we grow
together.
About one-third of total revenue is covered by our business partners. Going forward,
for us both to succeed, we have to do two things. One, we have to work with and
enable our existing partners to transform themselves and be able to deliver IBM
e-business solutions%85Our e-business certification's initiative is essential to this. We
have to take our existing partners who are loyal to IBM and to whom we are very loyal
and help them position themselves in the space of e-commerce, business intelligence,
CRM, ERP/supply chain and product design management,the four major solution areas.
Our second objective is to recruit this emerging business partner; that is, the Web
integrator, ISP and ASP. We need to establish a relationship with them. And we do that
through technical support, by providing loaner and demo equipment, and by linking
them with our existing partners where it's a win-win with everybody.
VB: You can't attract those people with margin?
Duncan: No, you can't; they don't sell anything. But let me give you an example of how
it can work. In one sense, this partner is a traditional partner, but it's also a
born-on-the-Web partner. This is a company called NetVendor Inc. What they have is
an e-commerce solution that ties into back-end ERP systems and runs on Netfinity or
RS/6000. Now the play here is that they build this solution on IBM middleware and IBM
hardware. They may even host it in an ASP sense. Or we may hook them up with one of
our partners, like Interliant, to do the hosting. Now the point is, these guys have a
business solution they have created. We want to support the heck out of them in terms
of technical support, leads, attractive terms and conditions, and business partner
connections. And in turn, they say, "We think we can generate X millions of dollars of
IBM revenue by doing this."
VB: What about other initiatives?
Duncan: Well, there is the stuff Ian Bonner [vice president, global business partner
marketing] and Mark Hanny [vice president, Web integrator initiative] are doing in
recruiting the Razorfishes and the iXLs. And then there's Conxion, which is an
incubator program involving a Silicon Valley bank and UCLA. We have a center where
we bring in 25 start-ups, and we do the same thing: Here's your technical support,
here's your equipment.
VB: Is it your intention to take equity positions in these new companies?
Duncan: In some cases, but there are 500 U.S. dot com companies that are born every
month, and you cannot take an equity interest in every one. What we are trying to do is
refocus our sales force and reprioritize our resources to make sure we are covering this
space because, by every measure, you have to be honest and acknowledge that we are
late compared to others. But we are in the midst of a pretty massive transformation
within our company.
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