If you say Tivoli backwards, you get 'I lov(e) it'. And that's what the European channel may soon be saying about the IBM software division as it seeks to recruit specialist resellers to attack the mid-market space dominated by rival Computer Associates (CA).
Hoping to grow its indirect business by half this year, IBM is putting in place a series of initiatives to help its business partners in the mid-market space. It is also gearing up to launch some offerings next month to enable its resellers to take advantage of the emerging application service provider (ASP) model.
At present, the systems management company's sales split is 20 per cent indirect and 80 per cent direct. But that figure is set to grow to 25 per cent by next year, according to Donna Troy, vice president of channels and alliances at Tivoli.
Although Tivoli's attempts to use resellers to crack the small and medium-sized enterprise (SME) space has had only moderate success so far, the recent addition of storage, helpdesk and security functionality to its portfolio may attract more resellers.
Speaking at the vendor's Planet Tivoli user conference in Madrid, Troy said: "In 1998 we did 16 per cent of our business through the channel. Last year we did 20 per cent of our business through the channel, moving the volume up four points and growing 52 per cent year on year."
With more than 15 years' experience in the channel, Troy, who joined Tivoli earlier in the year, has recently presided over a consolidation of all of Tivoli's channel resources into one organisation. "Our strategy is to grow our business 50 per cent in the channel again and continue to drive indirect turnover, especially in the upper-middle market space," said Troy.
"Because we are covered directly in the high-end space, where we have great market share, we really want to target a place where we can get incremental revenue and coverage from our business partners, so they can make the money with no contention to our direct channel," she added.
To help its partners this year and build loyalty in the channel, Tivoli is clearly segmenting its named and unnamed accounts, Troy said. That way, resellers know where they are expected to play and where Tivoli's direct sales force is expected to play.
This month, the vendor will also announce pre and post-sales support as a separate offering for its business partners, so resellers can get configuration support across all of Tivoli's product lines.
Resellers will also receive post-sales support and general problem handling. A series of frequently asked questions will be posted on the web to help resellers become more independent, close customer issues faster and keep customers satisfied.
"Partnerworld integration [slated for September] will give us a lot of leverage to shift IBM infrastructure and give both IBM and Tivoli partners the ability to aggregate turnover," said Troy. "It will also give us a global multilingual infrastructure very quickly."
The right mix
According to Troy, Tivoli now has a good channel mix across all its regions. Europe is the fastest growing area for its channel and contributes a substantial portion of its channel revenues.
"We really want to develop, recruit and build speciality resellers around storage, San (storage area network) skills, security and service desk capability, and probably some internet-based products," said Troy. "One, because the sell cycle is shorter on those products, and two, the resellers have an after-market revenue opportunity and we'd love them to keep, nurture and support that customer set. That gives them more longevity and more revenue in the long run."
Tivoli is also looking to its partners to add value around its service desk products and design helpdesk user administration activities. James Governor, analyst at Illuminata, said: "One of the big things I get from Tivoli this year is channel focus, because it has not really done that before. CA has been much more effective in the SME space. Tivoli has been doing a very good job in the high-end space but it hasn't been as good at the mid-market channel. That's one of the things it will try to improve."
Speaking of San adoption, Governor said it is unlikely that one company would be able to offer its customers everything. "San will be adopted by stealth through the departments, through applications," he said.
"Windows NT has characteristics that suit Sans because you want functionality like centralised back-up and restore. Resellers need to look at what value they can add to an application like SAP and Exchange running on NT, which is a very clear San opportunity and value-add to that application."
ASP is all the rage
Troy believes that the ASP model is a great opportunity for the vendor and it already has five or six contracts in that space. She said about 90 per cent of the resellers attending Planet Tivoli were looking at the model.
"For ASPs, Tivoli is a very good-value proposition because it is perhaps the only game in town that offers end-to-end security, storage and asset management and systems management," she said. "It's a huge opportunity for us and we are looking to put set offerings in place that address different business models around ASPs."
Tivoli is working on two or three offerings, which are expected in the next 30 to 45 days and are aimed at helping the vendor move into the ASP market at two different levels. The first is a traditional outsource level, with terms and conditions based on volume and aggregated volume by transaction. The other level is a subscription or rental model, which Tivoli has not used before.
"For Tivoli, the challenge is this: one, as the ASP scenario evolves, we have to capture them early; two, if you are going to build a business around essentially a pay-as-you-go fixed price, predictable cost model, you have to build your infrastructure early on and systems management has to be a key piece of that," she said.
"But we do not want to disenfranchise any of our current partners. We want to grow that business because ASPs are not going to take over the world. But at the same time, we have to do everything we can to help those resellers make the transition to an ASP model," she added.
Paul Clarke, European director for Tivoli reseller EC Soft, advises channel partners that might be thinking of selling Tivoli in the future to shed the box-shifting mentality and move towards a 'solutions approach'.
Speaking about the message that Tivoli is sending to the channel, Clarke said the storage and service desk offerings are a great channel opportunity and a good way to get a toe into business that its high-end product might not get into. He quipped that he hadn't heard Tivoli use the "F-word" - its high-end Framework software - at the Madrid user conference.
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