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IBM forms dedicated SMB services group

IBM forms dedicated SMB services group

IBM is spending $300 million on initiatives to boost its partner-driven services revenue from SMB customers.

In an effort to drive more services business through partners, IBM Corp.'s Global Services group is launching an array of initiatives aimed at better targeting SMB (small and medium-sized business) customers. Adding up its investment in the new programs, IBM estimates it's spending US$300 million on the initiatives.

One major new undertaking involves creating a dedicated team within IBM's Business Consulting Services (BCS, the group formed through its acquisition of PricewaterhouseCoopers) to team with regional system integrators in the U.S. and Europe to work specifically on SMB deals. Steve Laughlin, the BCS partner in charge of midmarket business in the Americas, was unsure how many staffers would be part of the dedicated group, but he said the commitment will be "substantial." Employees will come from both outside hires and internal redeployments.

Services are underrepresented in IBM's partner network: While 60 percent of the company's non-services business is driven by outside partners, only 5 percent of its services revenue comes through partners, executives said Monday in an opening keynote at IBM's PartnerWorld show.

It's time for that to change, said IBM Global Services (IGS) General Manager for SMB, Jim Corgel: "IGS has no more excuses," he proclaimed. He sees a sweet spot of underserved demand in the services space from companies with 100 to 1,000 employees -- businesses large enough to have complex processes but too small to spend heavily on pricey consulting work.

"We cannot cover the territory as well as customers would like us to cover it," Corgel said. "So we're asking the business partners, who do cover it, 'What do you need to grow your business?'"

In addition to forming the BCS team, IBM is packaging together services offerings for partners to pass on to their customers. One major focus area will be "IBM Express Managed Services," hosted services aimed at alleviating customers' thorniest administrative problems. E-mail management will be the first product, followed later in the year by business recovery services, targeted at businesses like regional ISPs (Internet service providers).

IGS is also partnering with resellers to offer preconfigured mySAP All-in-One packages, aimed at companies that would like to run SAP's midmarket ERP (enterprise resource planning) software but lack the IT resources to customize and deploy it themselves.

Several business partners said they're eager to work with IBM more closely and welcome the overtures from IGS. Jim Torney, president of Rochelle Park, New Jersey, implementation services firm Essex Technology Group Inc., said his company runs into demands by clients for skills that are outside his firm's expertise. He plans to draw on IBM for those skills.

"We want project management -- we have the need to own it," Torney said. He's happy to subcontract with IBM, though, for networking, security and desktop management software services, areas his company doesn't want to expand into.

Pragmatek Consulting Group Ltd. Chief Executive Officer Steve Bloom sees deals running the other way for his Minneapolis implementation services company: He prefers Pragmatek to serve as a regional subcontractor for larger IBM-owned services engagements.

Pragmatek has deep expertise in its region but often encounters clients with more global challenges: It will start conversations with a local business manager in Chicago, then find that the manager's company also has operations overseas and needs a worldwide solution, Bloom said. He would like to turn those leads over to IBM, which can then take on the global project and hand the regional piece to Pragmatek.

Bloom isn't looking for packaged, managed services offerings -- "I think IBM will have to take the lead on selling those," he said -- but Essex Technology Group's Torney thinks such packages will appeal to his clients.

Houston-based networking specialist Computer Tech Inc. has been trying for some time to work more closely with IBM Global Services, and executive Tracy Barney, who heads Computer Tech's IBM business development, said she's optimistic the two companies will be able to negotiate a mutually beneficial arrangement.

"There's a lot of layers to the process you have to consider," Barney said. "You can't just say 'We're going to work with partners.' It has to be architected and rolled out in a way that works for everyone's business model. I think IBM understands that. I think there's a real commitment on the part of Global Services to work with companies like us."

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