Before the US economy went into meltdown, and before we knew officially that it had been in recession for a year, common thinking was that IT spending growth at small and medium businesses was going to be significantly higher than at larger enterprises, which spend lots more per company but which tend to tighten their belts first when the economy hits the skids.
It is hard to say if the SMB space is going to be able to take up the slack and help prop up IT spending, but vendors and resellers are surely motivated to go after the belly of the SMB area - the midrange, or what is now commonly called the mid-market - to try to scare up a little business. IBM pegs the global IT sales opportunity in the mid-market at around $253bn, and according to Denyse Cromwell-Mackey, director of software channels for North America at IBM, the expectation is that the midrange will still see IT spending growth on the order of twice that among larger companies. So you can see why IBM and others are looking for the midrange to save their financial cookies in 2009.
Last week, IBM announced a marketing program aimed at helping its business partners get their feet into more doors among midrange shops to push the portfolio of IBM software. The Business Partner Software Mid-Market Value Initiative Program is available to qualified partners who peddle IBM's Lotus groupware, DB2 and related database management, Tivoli systems management, Rational application development, and WebSphere middleware software.
The idea behind the program, says Cromwell-Mackey, is to reduce the sales cycle for software sales and pump up the transaction volume. The marketing program was piloted in the second half of 2008, and it worked well enough that IBM is now rolling it out in a dozen US cities, which Cromwell-Mackey says represents a big piece of the midrange sales opportunity.
Those cities include Atlanta, Cleveland, Indianapolis, Baltimore, Dallas, Pittsburgh, Charlotte, Denver, Portland, Chicago and St Louis. As the BP software program gets some traction, it is likely that IBM will roll it out in other geographies, since midrange shops pepper the globe. (By some metrics, there is a higher concentration of midrange customers in Europe and Asia.)
To qualify for this mid-market program, resellers have to be part of IBM's existing Value Advantage Plus sales and marketing program, which has hundreds of partners today according to Cromwell-Mackey. Companies obviously have to be formal members of IBM's PartnerWorld channel organization and they also have to have their company registered on an Express Advantage social networking community, which includes Facebook, LinkedIn, Twitter, YouTube and SlideShare.
If partners meet all of those qualifications, then IBM will pass all of the leads it creates and stores in its Lead Pass Decision Engine as part of its own sales and marketing efforts on to participants in the midrange software promotion effort. (The LPDE system is part of a $100m mid-market drive that IBM announced last spring.) IBM will also give those participating in the program quarterly lists of prospective customers in their regions to chase, and they are allowed to do demand generation based on these lists three times a year.
Along with this, IBM is giving partners access to a slew of benchmarking and best practise information for its software stack to help make it easier for partners to sell. For the first year of the mid-market BP effort in the States, IBM will toss in freebie benefits that partners normally have to earn through reaching certain sales quotas. These benefits include the making of a customer testimonial video, help with marketing for six months to generate leads (what IBM calls a "virtual marketing resource"), assistance with planning a marketing campaign, providing incremental marketing funds (how much, IBM did not say), and help getting prospective clients to events of the vendor's choosing.
The launch of the mid-market program in those 12 cities is a big part of the budget that Big Blue is bringing to bear, but Cromwell-Mackey says another $2m has been committed so far to the follow-on benefits that partners can get a piece of. "Partners always need to invest in sales, technical skills, and marketing," he explains. "But in this economic environment, it is really hard to do all three."
Which is why IBM is kicking in some assistance. Because let's face it - if IBM's partners don't push the software, Big Blue can't make its numbers.
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