Last year ended with IBM making a major cloud play with the acquisition of SoftLayer for $2 billion. It was a gutsy move into the market, one uncertain to prove successful.
Today, IBM's cloud business might be the company's fastest-growing asset.
SoftLayer now represents roughly seven percent of the public cloud market -- in third place and ahead of the Google Cloud Platform.
But IBM has made clear it has no interest in participating in a commodity price war.
Channel partners are thrilled to hear that Big Blue instead seeks to differentiate itself as the premier enterprise platform through performance, reliability and security. That's a recipe for healthy margins.
Central to IBM's SoftLayer push are increases in the percentage discounts paid to partners for recurring monthly SoftLayer business. IBM said it will increase discounts from between 5 percent and 15 percent for deals worth as much as $15,000 in recurring revenue to a new range of 5 percent to 20 percent for deals ranging from $15,000 to $100,000 monthly. This is in addition to SoftLayer's existing referral program, which pays 10 percent the first year, 8 percent in year two, and 6 percent thereafter.
Tom Blair, senior vice president of global sales for SoftLayer, said IBM is stepping up efforts to more effectively leverage its channel with the goal of boosting the number of channel-led accounts from 40 percent to 50 percent by the end of 2014.
A new marketing initiative, meanwhile, will increase partner access to co-marketing funds, according to IBM. For every $1,000 of monthly cloud business a partner can commit to within a six-month window, IBM said it will match that amount in co-marketing funds. For example, if a partner commits to $3,000 of new monthly cloud business in the next six months, IBM will match up to $3,000 in co-marketing dollars spent by the partner.
Robert Verola, president of Vicom Computer Services, a $118 million IBM Premier partner based in Farmingdale, N.Y., said Vicom is just now beginning to move clients to the cloud. "What we want to see are compelling services priced properly for partners to make healthy recurring revenues," he said.
"In two years from as much as 10 [percent] to 15 percent of our business will moved to the cloud. SoftLayer has been very aggressive about winning our business. But for now, we only make a move when it financially makes sense. Right now we are still just getting our feet wet," said Verola.
As part of the update, IBM also said it has combined two existing SoftLayer partner programs -- Hosted Reseller and Strategic Reseller -- into one streamlined offering called the SoftLayer Services and Solution Provider program. In addition, it will expand the number of two-day hands-on SoftLayer training sessions by the end of second quarter to 21. IBM said nine of those road show training classes will be held in North America.
"We see huge opportunities in midmarket and large enterprise," said Ed Bottini, global cloud computing ecosystem manager at IBM. "We are trying to ease cloud adoption for partners and let them tap into big opportunities to grow their business incrementally with cloud services."