• Subject: Re: IBM Spin Doctors on AS/400 Marketing
  • From: DAsmussen@xxxxxxx
  • Date: Mon, 27 Oct 1997 15:02:23 -0500 (EST)

Chris,

In a message dated 97-10-26 16:23:59 EST, you write:

> Bullshit. "I want a new GL/AP system, buy me that HP I learned about in
>  school!"
>  
>  No freaking way. 

My, my.

>  Customers care about their own business. I just can't picture a VP of
>  Finance calling the MIS department and saying, "Hey, I just saw a great
>  advertisement for an AS/400. Is there some way we can get one of those to
>  do accounting with?" 

I can, and have.  Admittedly, all were businesses that started out small and
grew larger than ever anticipated but I have had:  (2) Saw an ad in an
airline magazine and wanted to know if I could support this instead of his
/36.  (3) Wanted to replace their S/36's with an "AppleTalk"-based network,
because Apple was so superior to this "IBM junk" (to which I replied that
Apple hardware of equivalent age would be a IIC with dual floppys and a
black-and-white TV for a monitor).  At _LEAST_ (5) that refused to upgrade
their S/36's to AS/400's because "when we move, we want to move to UNIX -- we
hear everyone is going that way".

>  People buy solutions. Hardware is only the solution if the problem was
>  hardware. 

True, but that solution is often only a _perceived_ one from a trade show
demo some manager saw.  You never had a manager come back from a trade show
saying "We've just _GOT TO_ do this!  It's the hottest thing since sliced
bread, and all of our competitors are doing it!"?  Did someone say "web page"
or JIT?

>  This is the whole point of the direction IBM is taking with the AS/400. It
>  is an opportunity for the AS/400 to be a solution for other people's
>  machines.
>  
>  Right now, buying an AS/400 solution is a whole package,
>  hardware/OS/software.
<<snip agreed with statements>>

>  But the issue is really: What should IBM give to schools? 
>  
>  We, as AS/400 professionals, feel like this should be AS/400s. Believe me,
>  I would LOVE to find that IBM was supplying AS/400s and support to
>  secondary and higher education. I would volunteer some of my time to
>  assist in supporting schools in my area to help implement and keep these
>  machines mainstream. 
>  
>  But is that a waste of money for IBM? Does IBM make more if you are buying
>  AS/400s than if you are buying IBM PC based servers? Is it enough more to
>  justify such a giveaway program? I think those are the factors that IBM
>  must wrestle with. That's because they are in business to sell computer
>  hardware, not necessarily AS/400 hardware.

True, and I'm not sure that any of us _OR_ IBM knows the real answer to that
question.

>  >Again, _WE_ don't buy the systems.  We need people in management excited
>  >about the AS/400.  I understand the premise, but IBM's current suite of
>  >"e-business" ads promote NOTHING.  In their attempt to remain neutral
>  between
>  
>  Wrong. They promote IBM as a vendor of e-business solutions. That is what
>  IBM is in business for. 

Perhaps, but "e-business" is another IBM catch-phrase, not something that
most people are familiar with.  Last year's "Netcentric" certainly didn't
become the de facto industry standard for referring to enterprise IS
strategy...

<<snip>>
>  That is exactly why IBM's plan has changed so much. IBM doesn't want to be
>  the guy sitting and selling to the end user. They want that to be the
>  business partner. The partner needs to be qualified with the solution
>  being offered. 

But has the qualification process really been improved?

>  There is no doubt that the change in marketing has been difficult and
>  still can use a lot of improvements. If IBM were to try to go back to the
>  "old way" there would just be a big closing of doors and a big "going out
>  of business" sale.
>  
>  >>  Rochester needs to get business partners to support IBM's midrange
>  >>  systems. That means the AS/400 and the RS/6000. If you think it is
>  >>  plausible that IBM produce all the software solutions to everyone
>  else's
>  >>  business problems you are mistaken. Since IBM must shave the margins
on
>  >>  hardware they attempt to get business partners to assist in marketing
>  the
>  >>  machines. In other words, IBM gives out a discount to you as a
business
>  >>  partner that you can either use as profit margin if you are creating
>  >>  enough of a demand by strong marketing or you can pass along to your
>  >>  customer so you can make money on your software product or support
>  >>  services. 
>  
>  >I'd like to hear what the BP's are pushing _BESIDES_ the above!  IBM has
>  been
>  >out of the (applications) software business for years, and most people
>  know
>  >that.  No offense, but don't give _ME_ that "margin shaving" business!  A
>  >(possibly) multi-million dollar Business Partner is supposed to provide
>  >advertising for a multi-BILLION dollar hardware manufacturer in hopes of
>  >selling a few copies of their software?  I don't think so!
>  
>  Then you should pay attention to the realities of the situation. 
>  
>  What are you after? A really big AS/400 ad with 10,000 business partners
>  and 100,000 software products listed? Doesn't the futility of trying to
>  advertise in that direction strike you? 

No, I wasn't suggesting that at all, you're confusing my gripe with your
solution to it.  I _would_ like to see a lot more co-operative advertising in
trade (and airline) magazines.  I'd like to see the smaller BP's get the same
consideration that a large one does as far as solution provider referrals for
which they're qualified.  I'd like to see those glowing AS/400 customer-sat
ratings touted somewhere other than the trade magazines read only by those
that already own one.  I'd like to see a "road show" featuring competitive
solution providers in a targeted field (e.g., IBM shows off the /400,
representatives of approved manufacturing application solution providers for
the /400 demo their products, all local manufacturers are invited).

>  A distribution software vendor should advertise their software in a
>  distribution magazine or other such distribution related areas. IBM should
>  approach that vendor and state, "We would have sold this machine under the
>  'old plan' for $100,000 out of which we would have spent $27,000 on
>  marketing. Since you are doing the marketing for us, we will give you the
>  $27,000 as a discount. You determine how much of that you can pass on to
>  the customer and how much you need to spend on ads etc."
>
>  This lowers the street price of the AS/400 hardware which benefits both
>  IBM and the software vendor. 

Now _THERE'S_ an idea!  As I said before (perhaps not clearly, but that was
the intent), the BP's obviously need some incentive because most aren't doing
this advertising.

>  You are putting the cart before the horse. Your statements (above) make it
>  appear that IBM or the business partner should sell people AS/400s as if
>  some customer is going to say, "Wow! This AS/400 ad is really great! I
>  better run out at buy one. Now, let's see if there is any software I can
>  buy for it that I want." Think about it for a minute. What is the customer
>  really buying?

No, I'd just like a modicum of brand recognition.  I agree with your solution
position, and don't think that the two are mutually exclusive (or that my
position should invoke such anger).  With the major software vendors'
solutions now running cross-platform, "the box" is getting lost in the
shuffle despite the fact that most of the cross-platform stuff still runs
best on it's platform of birth (the AS/400).  I've got one client that, after
millions of investment $ and an AS/400 implementation that was 90% complete,
has now been waiting over two years for a working UNIX version of BPCS
because their new owners are pro-UNIX.  Must be mistaken about the latter
though, as it's BS that anyone would buy something just because that's what
they know...

>  >The loss to which you refer was IBM's own fault.  They shouldn't expect
>  >Business Partners to make up for their own inadequacies, especially when
>  they
>  >treat the BP's so poorly...
>  
>  This made me choke. There are a lot of good business partners that need
>  better support and more resources. BUT. 

Then you shouldn't choke.

>  I am very familiar with business partners which play the paperwork game
>  and fill out all the right forms to qualify as BPs or affiliates just so
>  they can be "outside sales agents" and sell IBM hardware while adding zero
>  value. These parasites are the damage to the new channel. They soak up
>  IBM's resources and margins that should be going to BPs that actually DO
>  something for their customers. 

Agreed, and these should be weeded out.

>  I worked for a business partner and maybe my experience was unusual (I
>  don't know) but IBM was an awesome resource. They provided us with
>  advertising, facilities, training, and leads. All we had to bring to the
>  table was expertise and manpower. 

Perhaps BP treatment varies by region.  I've worked for three here, and none
received what I'd call "awesome" business from IBM.  The last was an Agent
firm.  IBM "snarfed the gravy" (after-the-fact peripheral sales and upgrades)
from accounts that _OUR_ salesmen sold _AND_ sourced.  Less than 10% of our
business was IBM referrals and the referrals were usually things too small
for IBM to be bothered with.  The latter were really too small for us as
well, but management feared that if they turned down anything we wouldn't get
"the big one" that never materialized.  Our hardware quotas kept going up,
while our margin on (and leads for) same kept going down.  IBM started
charging for using hardware (such as dup'ing tapes to new media that _THEY_
kept coming out with) that would have been sitting idle had we not been using
it.

To their credit, the facilities, training, and advertising were pretty good.
 But booking the facilities and training soon became a hassle, so we soon
built better facilities and did our own training.  Once the Agent program
dissolved, advertising alone wasn't much reason to continue an affiliation
with IBM.  Ah well, those were the days...and I think that this subject has
been flogged enough.

Regards,

Dean Asmussen
Enterprise Systems Consulting, Inc.
Fuquay-Varina, NC  USA
E-Mail:  DAsmussen@aol.com

"Money doesn't always buy happiness.  People with ten million dollars are no
happier than people with nine million dollars." -- Hobart Brown


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