'Consolidation, quality and profitability form three pillars of our channel strategy'

With a clear focus on consolidation, Anil Sethi wants to ensure that IBM has
sufficient breadth and depth among channel partners in the country. He assumed
his current role of handling the countrywide channel business for the PCD
division in 2001. In this role, Anil is responsible for strengthening channel
relationships and appointments, development and expansion. In an exclusive
interview with DQCI, he revealed PCD Group’s channel strategy, its
partnerships and programs.

What is PCD division’s channel strategy?

We have based our channel strategy on three pillars: consolidation, quality
and profitability. When I say consolidation, what we have been trying to achieve
is lot of geographical coverage. We have created a lot of breadth and depth for
IBM among channel partners. This has been done by the VFB team.

We are also trying to bring in consolidation in terms of trying to focus on
right kind of partners to increase IBM’s mindshare among users. We want to
work together with our partners on strategic accounts.

To bring quality in our work, we have started different programs for
partners, especially in terms of educating them. We have programs like
ThinkVantage wherein we certify partners on different IBM technologies. We
encourage partners to take IBM-certified courses on the Web which impart quality
education.

We also help in developing sales teams of our partners. We want to interlock
with our partners, and groom them to ensure that they become capable of handling
large accounts. This is my definition of quality.

Today the tendency among box-pushers is not to talk about technology at all.
But we groom our partners to become technology-savvy to ensure that they present
the correct picture to end-users on matters of technology.

What channel hierarchy does IBM follow?

We have distributors, systems integrators and tier-2 partners. Distributors
buy from us, SIs buy from our distributors. We have VARs as well who buy
directly from us. These are the people who may not be very big but are the
people who bring quality on to the table for us. We have only 10 VARs across the
country and thats all about it.

There is another program called Royal Blue Club which we have started very
recently. This is a program which takes about 15 partners across the country.
These 15 new partners are a part of the consolidation plan and we are taking
special measure to inculcate quality issues among these. These people have been
taken in after following an eligibility process in which certain number of their
employees are certified by IBM. These partners have brought in certain amount of
revenue for IBM.

What promotional programs are you running currently?

With distributors we are running the Century Partner Program. Each
distributor brings in a new set of 25 partners. We have four distributors,
namely, Iris, Ingram, Tech Pacific and Redington. We want all these four to
bring in 25 new partners. When these partners lock in and do business with
distributors, there is a certain rebate program which we run for the partners.
We don’t want the distributors to do only a fulfilment job. I believe they can
do much better than that. And when they do that, their profitability goes up.

What specific measures have you taken to increase profitablity of
partners?

To increase profitability of our partners, we have laid down different
incentive programs to them. Generally in our market today, the very rebate or
back-end gets discounted. So we have stopped all rebates and back-ends and
started a new system for incentives which is based on the number of competition
accounts that partner gets, the number of demonstrations conducted at end-users’
place and so on.

One of the biggest threats faced by partners today is the direct business
indulged in by vendors. IBM was famous for direct business in the past. What is
IBM doing to remove the fear of partners in this regard?

You are right in saying that we have done direct business in the past. But
currently, it is a perception issue because today my 85% business is done
through channels. You can very well see that IBM’s dependency on channels is
very high.

In fact, from the late nineties, we started very clearly defining the
percentages that we wanted to achieve through channels and direct business. We
consciously worked to increase the percentage business through channels. And the
result is that today only 15% of our business is done directly. Even our
distribtors would agree on this.

Our direct strategy is limited to only certain set of accounts. Even here, we
ensure that these are passed on to partners and shared with them. Customers
deals with us directly in most of the places, in case we have to do direct
billing because of competitive issues or pressures or such things. Otherwise, we
ensure that partners are involved in these deals and they get their margins even
though we may have billed the customer directly.

Does this policy hold good with respect to service? Is IBM looking for a
larger share of the service pie?

For our services business, we have authorized service providers all over. It
has been our policy that partners handle and maintain accounts for services. We
have not deviated from this policy and would continue to maintain this with full
force. In fact, through services business, we want patners to enhance their
profitability. We have Redington as our national service partner and Iris
Computers for the north region, besides other service partners. Any partner who
is not our ASP, can come and take service from the distributors who have offices
even at remote locations.

What is the current partner strength of PCD and how many new partners you
are planning to add in the current year?

We have close to 900 plus partners all put together at the moment across the
country. Our current plans include to add another 100 partners in C-and
D-category towns.

SYLVESTER LOBO in Mumbai