IBM Chairman and Chief Executive Officer Sam Palmisano used one of his rare conference keynote appearances Monday to exhort the company's business partners to adopt IBM's on-demand vision of standards-based IT flexibility.
"You have to commit to our point of view. You have to commit to open standards. If you do that we will invest with you, to help you become more successful," Palmisano said in the opening address of IBM's PartnerWorld conference in Las Vegas.
Palmisano focused his speech on reiterating the on-demand vision that has formed the foundation of IBM's strategy for the past two years, and on emphasizing the critical role business partners play in IBM's market approach. Partners accounted for US$29 billion in IBM revenue last year, around one-third of the company's total, Palmisano said. In some segments, including servers and sales to small and midsize businesses, he pegged resellers' contributions at more than half IBM's total.
When IBM first unveiled its on-demand strategy, it was met with widespread confusion and misunderstanding, Palmisano acknowledged. That's because "on-demand computing" isn't one thing, he said; it's a combination of approaches to address what IBM sees as a fundamental change in how the IT industry operates.
"The value proposition of the past decade has failed," Palmisano said, criticizing the best-of-breed approach to building an IT infrastructure. "The client is forcing us to focus on solutions. They do not want to be the assemblers of piece parts. ... That was a different era, and the world has changed."
Also gone is the "invent and project, proclaim and thrust" model IT vendors had of creating technologies and throwing them into the marketplace to see what would stick, according to Palmisano. That approach led to some successes, but also to "incredible failures," like the paperless office and the dot-com bubble, he said.
Palmisano cited open standards as the critical element in the new approach needed by IT vendors.
"Every industry that's matured has adopted standards. The IT industry is a young industry maturing into adopting standards," he said. "You have to have standards. You have to. It's the only way to solve the very great, very important, complex problems."
IBM estimates this year's PartnerWorld attendance at 5,400. After Palmisano's keynote, IBM's general manager of business partners, Mike Borman, took the stage to speak to the amassed attendees about the company's plans for the coming year for improving its partner relations initiatives.
IBM will streamline its promotions process and reduce the bureaucracy involved in working with the company, Borman said. He also spoke of IBM's plans to use the Siebel Systems Inc. CRM (customer relationship management) OnDemand technology it sells to help in its interactions with partners, and of IBM's intention to implement an automated system for sharing information on leads.
Targeting small and midsize businesses will remain one of IBM's priorities in the coming year, Borman said, citing the dramatic results the company achieved last year: With $350 million in additional spending on small and midsize businesses initiatives, IBM reaped $4.5 billion in additional partner-driven revenue. By the end of March, IBM will have 50 offerings in its small and midsize businesses-aimed Express portfolio of bundled and customized products, according to Borman.
Linux is another area where the company forecasts growth. Partners drove $500 million in Linux-related revenue last year, and IBM expects that number to hit $1 billion this year, Borman said.