IBM's Monshaw: MSPs are our Next Generation Business Partners

IBM's Monshaw: MSPs are our Next Generation Business Partners

Andy Monshaw PhotoIBM continues to accelerate its partner strategy in the mid-market. The effort includes a growing push to transform VARs and resellers into managed services providers. Andy Monshaw, general manager of IBM's global and medium sized business, offered MSPmentor an update.

"The mid-market as we define it is spending $250 billion annually, and 80 percent of those companies are buying "X" as-a-Service," Monshaw said. IBM defines the mid-market as all global clients with less than 1,000 employees that are not part of a multi-national company. IBM learned from a recent study that it needs to improve its customer relationship management efforts within the mid-market. Indeed, mid-market clients, according to Monshaw, like to buy from local and trusted business partners. "The channel moves a lot of our hardware and software, but the channel is not what I'm talking about," he explained. "I'm talking about MSPs."

IBM found that the most important engagement for a mid-market company is the engagement with its MSP. "They [MSPs] are our next generation business partners," Monshaw said. The catch: IBM currently works with a large group of reseller channel partners, so in order to cater to the mid-market, the company has to try to turn those resellers into MSPs. That's exactly what IBM is trying to do.

"We are working with resellers that want to become MSPs and some regional system integrators are already becoming MSPs," Monshaw said. "They need to evolve and we are helping them by teaching them how to be cloud providers and cloud builders." For instance, the IBM Developer Relations Program connects partners with ISVs (independent software vendors) so that partners can create their own cloud experience or resell the IBM SmartCloud.

It's not as if IBM doesn't have MSP partners. One example is Maclean, which partnered with IBM in May, 2011 to bring cloud computing to the mid-sized market. But it makes sense for IBM to try to turn its large base of reseller partners into MSPs before going out and looking for new partners.

Not all IBM resellers are buying into the model. About one-third of IBM partners are moving to an MSP model, another one-third want to move but don't know how, and another one-third say they will ride out their current business strategies, according to Monshaw. Those who have switched to an MSP model are already seeing a payoff. IBM does not release specific numbers, but Monshaw said some partners who first made the switch about a year ago are making about 30 percent of their profits through their MSP model, and he expects that to continue to grow.

"I believe what's going to happen here is we're going to see the MSP business model accelerate faster than the average market," Monshaw predicted. "MSPs that deliver to the mid-market will experience a growth rate that will be higher than the actual consumption in the mid-market."

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