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Volume 15, Number 43 -- October 30, 2006

VP of System i Marketing Talks Strategy

Published: October 30, 2006

by Dan Burger and Alex Woodie

Elaine Lennox is happy and excited to have a job that comes with a uniform. It's red and white with concentric circles and a big blue bull's eye in the middle of her back. Most people would describe it as a target. But Lennox, who also wears the title of vice president of marketing for the System i division at IBM, isn't hiding from anyone. She's used to the rock throwers, the outspoken critics with pointy sticks, and the heat about below average marketing of the platform.

Lennox has a marketing budget that a lot of us believe is too small and a marketing plan that gets criticized for being too heavy on preaching to the choir and educating and training the independent software vendors (ISVs) and other business partners instead of focusing on creating a greater awareness and an improved perception of the System i among the non believers.

Last week in The Four Hundred, we published an article about the System i print advertising campaign that Lennox and her marketing team have created to increase awareness and generate new business. This week, we're presenting you with a Q&A interview with Lennox. The interview took place at the fall COMMON Conference and Expo in Miami Beach in mid-September. Alex Woodie and I were tossing out the questions from the IT Jungle side of the table. We started out with the topic of iSociety because that was clearly the number one priority at the COMMON conference, and then went deeper into the overall marketing effort.

Alex Woodie: Making iSociety known to COMMON attendees is one thing, but how do you get the iSociety idea out to the majority of iSeries users who are not involved in COMMON?

Elaine Lennox: First of all, iSociety is not an IBM-invented thing. COMMON is one of the elements. This is not a COMMON-owned or IBM-owned thing. IBM will help communicate it to the installed base. You'll see iSociety featured on the IBM Web site, in IBM e-mail communications, in outbound collateral communications--but we are not going to communicate it as an IBM thing. We are going to be clear that this is a user-generated thing.

People talk about user-generated media. We are going to be doing everything we can to communicate this to the installed base because if you can strengthen the community, it benefits everybody. It benefits IBM to have this thing succeed.

The outreach effort will include e-mail, other forms of communication, the sales reps, the business partners, and the channel. We will also be communicating through The Truth Web site.

AW: How will you reach those who are not on the platform and aren't in the existing channels of communication?

EL: We are going to invest a decent amount of money to drive people to The Truth Web site. It's designed to be an experience for people who don't know the platform. We are going to be doing Web advertising to drive people there.

AW: How will your efforts with promoting iSociety and The Truth site pay off in terms of selling more iSeries boxes?

EL: At IBM, we think about it as an awareness stage where people have to be aware of the platform and have a good perception of the platform. Then there is the pipeline stage, which involves creating and closing an opportunity. The Truth Web site is more of an awareness Web site--and it links to the next phase--but the awareness phase is "Have I heard of this? Do I know what it is?"

There are a lot of people in the world who don't know what the System i is--have never heard of it. Or even worse, have heard of the AS/400 and think it is an old thing that might be going away one day. That's even worse than not knowing what it is. It's challenging to change someone's opinion.

The pipeline is where we generate an opportunity. That's done in partnership with our application vendors. Most of our new opportunities come because application vendors are selling a new application to a client and they recommend it on the System i. When that vendor says "You know for this application you really ought to put it on a System i," and the client says "What's a System i?" That's where the ISV can point to The Truth Web site and say "Go have a look at this and you'll see what other people think of this system because that's where they come together."

We will continue to do co-marketing with our application partners. We co-invest with them in running demand-generation campaigns for their applications based on the agreement that they are going to lead with the System i when they get that sales prospect.

Dan Burger: How big of an investment are you making in iSociety?

EL: The unique thing about iSociety is that it is not IBM-driven. We are trying really hard to let people know that IBM won't be controlling iSociety. An IBMer's first question will be "How will I stop stuff I don't like from going up on iSociety?" and the answer is "You won't." It is a community-generated and community-run thing.

On one hand, you'll always be telling the official IBM story on the IBM Web site, for example. Part of our role is to make sure we are actually answering the needs coming out of iSociety. iSociety is invaluable for us because it is another way for us to hear what people need. It will give us feedback on what will make us successful going forward. And we are definitely going to invest in answering each of those requirements.

A lot of the investment will be in "iSociety says we need such and such" and IBM will invest in whatever that requirement was.

DB: So does that money come out of your marketing budget?

EL: It depends. Here's an example: We have a requirement, via COMMON, and we have a local user group requirement. Both of those formally create a prioritized list of things they want. It can be product things, like we want this feature in i5/OS; it can be marketing related to collateral pieces to succeed. It can be a suggestion like "don't change your name again." [Smiles all around the room]

Most things tend to be product-based or solution-based because clients are worried about trying to do things with the system. But we also get technical support requirements. It could be development tools they are looking for. We can answer requirements through our product development process if it's an IBM thing. Also, we will answer them through the Initiative for Innovation. For example, a requirement might come in for biometrics on the platform. We might say that is not going to be IBM developed; we will find the biometric partner through the tools initiative.

In terms of marketing the platform, I wish we could meet all the marketing requirements that everyone has. The most common one I get is "Can we be on the TV everyday." I can't meet those types of requirements.

AW: But can you be specific about how much the iSociety will be afforded in terms of a line item on your marketing budget?

EL: I don't know yet. It's too early.

DB: You mentioned in the general session and Town Hall meeting that you were investing $10 million in a print advertising campaign. What was the timeframe of that expenditure?

EL: That is a full year's worth of print advertising. We changed our print ads starting in June. We have been running pretty consistently since the beginning of the year. It's pretty even from month to month. What will be new is when we begin the banner advertising and the online stuff around The Truth Web site. That will be incrementally new.

All of our advertising is done in a consolidated way. It's not done by individual platform. IBM looks at it at the beginning of the year and decides how much it will spend on advertising. Then the company determines where it is going to spend it. Where do we most need to spend it? We lobby for increased spending on System i, but the decision is made on a corporate scale. IBM looks to the business needs and says System i is where we need to push our advertising.

The amount of ad dollars spent on System i is flat compared to last year. Last year, there was a huge bump compared to the historical amount. This year we were able to keep it at last year's level.

We are spending on iSociety, the Truth site, print and Web advertising. We also have ISV co-marketing--demand generation with ISVs.

It's not always smart for us to do advertising separate from the application partners. We got feedback that we were doing "technology marketing" and that was the wrong approach. Client feedback was that they don't really care about technology. They care about whether it is the right solution along with the application they are buying. We are trying to redirect our focus over to solutions.

For the last two years, we liked to talk about the fact that we support AIX and Linux. The reality is that no one actually cares. They care about whether the particular application they need--which happens to run on AIX or Linux and can run on the System i. But our message was technology centric rather than solution centric.

We spend marketing money on awareness, the big things are print advertising, Web advertising, and press coverage. We spend money on creating new offerings, such as the Solutions Edition for JDE that was designed to break through and get press coverage because it was so price aggressive. We are working on other Solution Editions. We did one on collaboration with Lotus and we will do some others coming up in the fourth quarter. We did the Capacity BackUp editions. Doing these editions that fit specific customer needs is part of what we spend our marketing money on--the collateral marketing that goes with these, includes training the business partners. For instance, there is a category called seller enablement. It is marketing money that trains the IBM and business partner sales forces to tell the story.

AW: Do you see any changes ahead in the way you do marketing?

EL: One involves the changes to be more solution oriented rather than technology centric.

We need more focus on acquiring new clients. We wouldn't need The Truth Web site if we were only going to sell to our installed base. We need to make advancements. You'll see we are going to make changes across the board. We need to get new clients. That means putting money out there with the ISVs to get new clients on the platform and that means the ISVs sell an application for the first time. It also means making sure your sales force isn't just deployed over the installed base. Actually taking pieces of your sales force, the IBM sellers, and saying you are responsible for getting new business.

It's really easy when you're installed base is so loyal and loves you so much that you spend 99 percent of your energy on your installed base. But you don't grow your installed base if that's what you do. We are trying to find the right partners who can partner with us on true new acquisition. Not every application partner is acquiring new clients at a rapid rate. Some have an installed base and are not growing it.

AW: Are you happy with the results the iSeries has had in the last four quarters?

No. We are a multibillion dollar business. That's big business. You have to invest to keep a multibillion dollar business going. That means demand generation, and pipeline, and awareness, and all these things. So it's not like you go "Gosh, we didn't grow this quarter let's throw all the money away and give up."

Did we grow as fast as we wanted? No. But you have to remember that the nature of having such a big installed base is that we go through upgrade cycles. Every three years, clients tend to upgrade, then they don't need to upgrade again for another three years. It's a very cyclical business. That's why we need more new clients. So that it's not so cyclical.

Although we had a few quarters where we were not growing as fast, it doesn't mean the sky is falling.

AW: Have you made any progress getting the word out within IBM that the System i deserves better treatment?

EL: We made good progress with IBM Software and Lotus in particular. It's one of the reasons we did the Collaboration Edition, which gives a special price on the System i if you buy certain Lotus products. That helped with awareness. The other thing is that we have included i5/OS in the incentive programs that help people migrate off of Microsoft products. It is similar to the Migrate to the Penguin program. We are positioning ourselves with Software Group as being an alternative to Microsoft. That makes us their friend.

I do not yet know a great answer to the services dilemma. This platform does not require as many services. That's one of the reasons why clients love it. It's difficult to make a services organization love you when you don't drive as many services as other product lines.

We have some great examples like high availability services where we do really well.

AW: Is that why IBM won't let you market the iSeries as strongly as you could?

EL: No. I don't think the fact that we are spending money on marketing or community or advertising would support that. If you look at this year, IBM is a balanced company with software, services, and systems. It used to be services first and then everything else. Today, there is a focus on business perspective, a profit perspective, and a business model perspective.

Last year, we spent a huge chunk of our advertising budget in the consulting portion of IBM. "The Other IBM" was the ad campaign. It raised the awareness that IBM was in the business consulting rather than just the technology consulting arena. That was not designed to help sell systems. The new campaign "What makes you special," is all about innovation and was designed to support equal parts software, systems, and services. So, if anything, the IBM advertising is shifting more toward systems.

AW: There have been IBM products that don't run on the iSeries--Tivoli products, some WebSphere products. That was a problem? And is that changing?

EL: This is a work in progress. We went about this in a specific process. We went out and understood which products clients most wanted from our software portfolio and then we took them one at a time to get them over. The ones we really care about, we have already. There are still a few out there, but the bulk is running on the iSeries.

AW: What were the results of the TV advertising that was done for System i when Peter Bingaman was running that program?

EL: TV spots go over well with the installed base because the fact that they ran gets passed around and people who didn't see the ads are still aware that they ran. New clients don't see the ads, because the number of iSeries specific ads is small and the new clients don't have people sending them e-mails saying "Did you see that ad?"

In order for TV to work, you have to have tons of coverage. It has to run a large number of times before the message breaks through. You tend to see companies do TV for their corporate brand stuff. They can afford to run those ads enough times to get the awareness level up. We are doing that with the IBM campaign "What makes you special."

We realized we could get a lot more print impressions in non-iSeries publications such as InfoWorld that aren't geared to our installed base. With print and Web, we could do a lot more impressions to people who don't know and love the system than what we could do on TV. There will be no TV ads this year.



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Editor: Timothy Prickett Morgan
Contributing Editors: Dan Burger, Joe Hertvik, Shannon O'Donnell,
Mary Lou Roberts, Victor Rozek, Kevin Vandever, Hesh Wiener, Alex Woodie
Publisher and Advertising Director: Jenny Thomas
Advertising Sales Representative: Kim Reed
Contact the Editors: To contact anyone on the IT Jungle Team
Go to our contacts page and send us a message.

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