PartnerWorld Brings New Incentives for IBM's Software Partners

Published: March 13, 2006

by Timothy Prickett Morgan

IBM hosts its annual PartnerWorld event for its vast reseller channel in Las Vegas this week, and a lot of the talk is expected to be around software. The company is rumored to be making announcements to help software companies move their applications out of the perpetual licensing world and into Software as a Service (SaaS) mode, which is just another fancy way of saying Application Service Provider. (Remember that?)

But while IBM wants partners to sell their application software as a service, Big Blue wants them to continue to sell its own software stack, including DB2, WebSphere, Lotus, Tivoli, and Rational products as well as a zillion niche tools that make up the $15.8 billion IBM software empire. To that end, IBM plans to announce the Software Value Incentive program, which will reward partners who identify software sales opportunities, close the sale, and fulfill the orders up to 40 percent of the revenue related to the sale of that IBM software.

IBM says that the SVI program is based on feedback from hundreds of key business partners, and gives partners who really push the IBM stack more money than they could have got under IBM's existing or competitor's incentive programs. In the past, software partners got most of their dough on the back end of the deal, when they fulfilled a software order, but now they will be rewarded as they make those cold calls and bang on doors. Partners can comb the market for prospects and make the sale and be paid, and let someone else do the fulfilling if they want to. The SVI program also has qualifications to keep two IBM resellers from engaging in a bidding war, which drives down sales and profits for IBM and the partners. IBM has done this same maneuver--called opportunity certification--in the iSeries and pSeries server channels, too. And this practice has boosted margins there, too, which is why it is being applied to software sales now.