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

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DQC News Bureau
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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.

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Anil Sethi, Country Manager - Channels, Personal Computing Division, IBM India

IBM was inclined to do more direct business earlier. But currently, 85% of PCD business is done through channels

Anil

Sethi

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.

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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.

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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.

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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.

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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

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