0911207-b2b-project

8/8/2019 0911207-B2B-Project

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A PROJECT STUDY

ON

IBMS B2B PRACTICES

done

Under the guidance of

Prof. DVR Seshadri

S ubmitted by

Vijay Kumar (0911207)

on

04th Sept ember, 2010

Word Count: 2387

(excluding execut ive summary)

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Executive Summary

With development of the world economy, great changes are t aking place in business and

significant ly in dynamics of exist ence of businesses or the part thereof. Considering the

import ance of change in business dynamics in this era of evolving business world, this

project aims at st udying the B2B pract ices of IBM and how t o make these pract ices more

effect ive. IBM is world's largest business & t echnology services consult ancy, the world's

largest hardware provider, IT rent al and financing company. IBM is also the No.1 B2B

Brand in the world and second most admired brand after Coca Cola (No.1 B2C Brand) .

IBM develops and manufact ures advanced informat ion t echnologies, including

comput er syst ems, sof t ware, net working syst ems, st orage devices and microelect ronics.

IBM operat es through five operat ing segment s: Global Technology Services, Global

business services, Syst ems and Technology group, Sof t ware, and Global financing.

The market st rat egy used by IBM t o market it s product s is go-to-market strategy. It

aims t o drive bett er business out comes through smart er collaborat ion which reduces

cost s, maximizes employee pot ent ial, st rengthens part ner relat ionships and accelerat e

business processes. This market st rat egy goes parallel with the companys various

market ing programs.

Company is discovering various ways t o market it s product s and services and t o acquire

new cust omers due t o compet it ive pressure. The number of compet it ors in IT space is

increasing day by day. Every firm is t rying new concept s t o generat e sales leads. IBM is

using social media as a Leads generat ion t ool which is proving successful. This is one

of many t ools used by IBM t o generat e the sales leads however process is very new t o

market st ill very successful. There can be issues which will affect sust ainable growth of

lead generat ion through this medium in long t erm, so new ways of prospect ing new

business should be invent ed. One of the alt ernat ives is use of User Communit y for the

prospect ing of new business relat ionships. A well est ablished communit y can help

companies t o get ideas about the new leads, new product development , andadvancement s in exist ing offering (product s and services).

User communit ies help companies t o est ablish a loyal customer bases, generation of

publicity & awareness of product, strong synergy with end User and ideas for newer

versions of product from Users Group discussions.

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Table of Contents

Execut ive Summary ................................ ................................ ................................ ................................ .............. 2

1. Company and indust ry background ................................ ................................ ................................ ....4

2. Market segment s, Offerings and working relat ionship st rat egy ................................ ........... 52.1 Business Segment s ................................ ................................ ................................ ............................. 5

2.2 Product s & Services ................................ ................................ ................................ ........................... 6

2.3 Market s/Sales St rat egy ................................ ................................ ................................ .................... 7

2.4 Prospect ing for New Business relat ionships ................................ ................................ ......... 8

3. Working relat ionship problems ................................ ................................ ................................ ............ 9

4. Alt ernat ives and analysis ................................ ................................ ................................ ...................... 10

5. Recommended act ions ................................ ................................ ................................ ........................... 12

6. Appendices ................................ ................................ ................................ ................................ ................... 14

6.1 The prospect ing funnel ................................ ................................ ................................ ................. 14

6.2 SWOT Analysis of IBM ................................ ................................ ................................ ................... 15

6.3 References ................................ ................................ ................................ ................................ ........... 15

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1. Company and industry back ground

IBM Corporat ion is the world's IT Company. It is the world's largest business &

t echnology services consult ancy, world's largest hardware provider, IT rent al and

financing company. IBM is also the No.1 B2B Brand in the world and second most admired

brand after Coca Cola (No.1 B2C Brand) . IBM develops and manufact ures advanced

informat ion t echnologies, including comput er syst ems, sof t ware, net working syst ems,

st orage devices and microelect ronics. IBMs worldwide net work of solut ions and

service professionals provide implement at ion services and support . The company has

it s headquart ers in Armonk, NY and it employs more than 400,000 people.

IBM offers hardware and host ed services built around and complement ary t o it s

collaborat ion sof t ware; and it wields a large cust omer base (for example, over 140

million Lot us Not es/Domino cust omers) through which the vendor can int roduce

emerging collaborat ion t ools and services including social net working, mobile device

applicat ions and mashup t ools. The company operat es in over 170 count ries across North

America, Lat in America, Europe, Middle East , Africa and Asia Pacific. IBMhas eight research

laborat ories worldwide and holds the most number of pat ent s by any US based Technology

Company.

IBM ent ered India with a Tat a joint-vent ure named Tat a Informat ion Syst ems Lt d. In

1999, IBM bought out Tat as st ake t o become a complet ely owned subsidiary of IBM

Corporat ion. Current ly it has facilit ies in major cit ies of India.

IBM recorded revenues of $103,630 million during the financial year ended December

2008 (FY2008), an inc rease of 4.9% over 2007. In FY2008, Americas (company's largest

geographic market ) account ed for 41.3% of the t ot al revenues. IBM generat es revenues

through five business divisions: global t echnology services (GTS) (38.2% of the t ot al

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division revenues in FY2008), sof t ware (21.5%), global business service (GBS) (19.1%),

syst ems and t echnology (18.8%) and global financing (2.5%).

The major compet it ors of IBM include Comput er Sciences Corporat ion (CSC), Hewlett-

Packard (HP), Infosys Technologies, Microsof t , Oracle, Wipro, Accent ure, Capgemini, CA

Inc, CIT Group Inc, Dell, EMC Corporat ion, General Elect ric and Sun Microsyst ems. While

there are hundreds of small firms which are compet ing with IBM on the basis of niche

market by providing small but specialized services. The indust ry is very compet it ive

and there is always downward pressure on cost /price.

2. Market segments, Offerings and working relationship strategy

2.1 Business Segments

IBM operat es through five operat ing segment s: Global Technology Services (GTS),

Global business services (GBS), Syst ems and Technology group (S&T), Sof t ware, and

Global financing as shown in figure 1.

Figure 1: IBMs Operating Segments

Operat ing

Segment s

Global

financing

Sof t wareSyst ems &

Technology

Group

(S&T)

Global

Business

Services

(GBS)

Global

Technology

Services

(GTS)

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allowing the int egrat ion of unrelat ed client applicat ions. In addit ion, sof t ware includes

product lifecycle management (PLM) sof t ware, which primarily serves the indust rial

sect or. The segment s middleware sof t ware is classified int o key branded middleware

and other middleware. Key branded middleware includes Lot us, Rat ional, Tivoli,

WebSphere and informat ion management sof t ware.

The Systems and Technology group serves client s advanced comput ing power and

st orage capabilit ies needs. The segment also provides semiconduct or t echnology and

product s, packaging solut ions and engineering t echnology services t o client s and for

IBMs own advanced t echnology needs. The segment offerings include servers, st orage

product s, microelect ronics product s, and ret ail st ore solut ions.

The Global financing segment comprises three lines of business: client financing,

commercial financing and remarket ing. Client financing provides lease and loan

financing t o end users and int ernal client s for t erms generally bet ween t wo and seven

years.

2.3 Markets/Sales Strategy

The market st rat egy used by IBM t o market it s collaborat ion product s is go-to-market

strategy. It aims t o drive bett er business out comes through smart er collaborat ion

which reduces cost s, maximizes employee pot ent ial, st rengthens part ner relat ionships

and accelerat e business processes. This market st rat egy goes parallel with the

companys various market ing programs dedicat ed t o or t ouching upon Lot us sof t ware,

Smart er Planet and newly int roduces Lot us Knows campaigns. These programs deliver

sof t ware capable of operat ing within a mult ivendor environment , while present ing

users with a highly unified user experience. IBM proposes that with it s collaborat ive

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sof t ware users can connect , collaborat e and innovat e while opt imizing the way they

work.

IBM execut e this st rat egy through global sales, dist ribut ion and professional services

organizat ions, which have a geographic reach (in the Americas, Europe/Middle

East /Africa and Asia-Pacific) coupled with a specialized, indust ry-cent ric focus. In

addit ion, these organizat ions include a global sales and dist ribut ion effort devot ed

exclusively t o small and medium-sized businesses. Company has creat ed collaborat ion

and conferencing solut ions specifically t arget ing companies with five t o 500 employees.

Product s and select services are also offered through a variet y of third-part y business

part ners, including dist ribut ors, regional syst em int egrat ors, and resellers, as well as

through direct online channels.

IBM is now pursuing more pragmat ic approach of market ing it s product s and services

as being compat ible with compet it ive product s. Consequent ly, IBMs Global Business

Services (GBS) organizat ion makes use of both IBM and non- IBM hardware and

sof t ware. GBS offers human capit al management , cust omer relat ionship management ,

supply chain management , financial management services across a very wide array of

vert ical indust ries. The company t akes the same approach in equipping it s channel

part ners with the t ools necessary t o market IBM sof t ware and hardware independent ly.

This is the case with the IBM Foundat ions family of appliances, for which the vendor has

const ruct ed a part ner enablement program that includes a free, t wo-day t raining

session offered globally and freely available ongoing support .

2.4 Prospecting for New Business relationships

Having complet ed the phase of select ing the business segment t o serve, next st ep for the

business firms is t o locat e new business opport unit ies (pot ent ial cust omers). There are

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basically three t ypes of sources that supplier firms can use for locat ing pot ent ial

opport unit ies. These are Leads, Inquires and Prospects1. The process of generat ing

Leads from pot ent ial cust omer base and then convert ing them int o profit able cust omers

is shown in Appendix 6.1.

According t o authors2 firms ut ilize following methods for prospecting:

1) Generat ing Leads from business market dat abase

2 ) Prompt ing and gathering Inquiries via int egrat ing market ing communicat ions

3 ) Qualifying Leads and Inquiries

4 ) Gett ing the sales force t o follow up with prospect s

3. Working relationship problems

The informat ion t echnology indust ry is highly int ense in t erms of compet it ion because

there is cont ract ion of end market s with the passage of t ime. St ill there are plent y of

opport unit ies in t erms of growing demand for cloud services, health care IT spending

and st eady growth in IT out sourcing. IBM can ut ilize these opport unit ies despit e of

exist ing threat s by ut ilizing it s st rengths such as st rong R&D capabilit ies and large

family of product & services (Appendix 6.2: SWOT Analysis).

Due t o the compet it ive indust ry, it is very difficult for IBM t o generat e leads and convert

them int o loyal and profit able cust omers. There are many big firms (compet it ors)

fight ing for large chunk of market share and a very large number of small firms

compet ing in niche firms. It is becoming very difficult t o increase the Lead

generat ions rat es. Firms are employing various t echniques t o att ract cust omers

1 BusinessMarke

Managemen

(B2B) by James C. Anders! n, James A. Narus, Das Narayandas and D.V.R.

Sheshadri 2

James C. Anders ! n, James A. Narus, Das Narayandas and D.V.R. Sheshadri

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t owards their product s. Next sect ions are devot ed t o the alt ernat ives/solut ions which

IBM has t aken t o overcome this problem.

4. Alternatives and analysis

IBM has successfully used social media as a t ool for the Lead generat ion. According t o

E d Linde II (leader of the t eam responsible for building Web asset s t o support the

IBM.com sales channel and organic Web visit ors) IBM has discovered millions of

dollars worth of sales leads through social media. In this sect ion the process of using

social media as a successful t ool for Lead generat ion is discussed. Main quest ion which

is answered in following sect ion is: H ow IBM is using social media marketing for Lead

generation?

In B2B sphere there are many websit es which are built by IBM for it s sales

represent at ives. Blogs and RSS feed of these reps are enabled and connect ed t o

LinkedIn, t witt er and facebook. If any sales rep have personal relat ions with cust omer,

it is easier for those cust omers t o follow these sales reps.

IBM has st art ed a program called Listening for Leads. Under this program seeker from

IBM side go t o part icular social media websit es and view/list en their conversat ions t o

det ermine any pot ent ial sales opport unit y. These seekers are mainly IBM employees of

various business unit s. Basically seekers go on a volunt ary basis t o sit es in the public

sect or. For example, government agency sit es where RFPs [request for proposals] are

post ed, and there are discussions about proposals. In the t ech space, there might be

blogs or discussion boards about the new Int el chip for servers. Seekers will generally

monit or these t ypes of conversat ions. For example, if someone says, Im looking t o

replace my old server or Does anyone have any recommendat ions on what kind of

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st orage device will work in this in t ype of sit uat ion? or Im about t o issue a RFP; does

anyone have a sample RFP I could work from? These kinds of conversat ions usually

hint t oward the pot ent ial sales opport unit y.

Now the quest ion arises that how seekers will know that which websit es t o look for.

The key thing is learning what the right keywords are so that you can sort of search the

various blogs and other venues where people are t alking about your product s.

Af t er ident ifying these t ypes of leads, next st ep is handling of these leads by Lead

development rep, which is a sales rep for qualifying and validat ing the opport unit y.

Af t er qualificat ion and validat ion process leads are passed t o the appropriat e sales

resource t o follow up.

Beside this IBM is using Integrated Marketing Communications (IMC) for the

prospecting for new business relationship.

IBM promot es cust omer event s on Twitt er, facebook and LinkedIn. Cust omers event s

like Webinars, podcast s, virt ual t rade shows or physical t rade shows are advert ised

through social media websit es. Also each IBM individual reps use Twitt er t o keep their

cust omers updat ed about int erest ing news, event s and things of that nat ure.

Care to be taken while using social media as Lead generation tool

To creat e credibilit y in social media websit es is very useful. Firms should avoid using

their expert s (e.g. guru of rat ional product s) as a salesperson through these websit es.

Cust omers who go t o these sit es want the expert t o be like a professor and t o be as

unbiased and ant isept ic as possible. Smart market ers use the expert t o est ablish

credibilit y, t o get the conversat ion going and so forth.

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Parameters to measure the success of social media initiatives

Success of the social media as lead generat ion t ool can be measures by the number of

sales leads ident ified, monet ary value of the generat ed leads, monet ary value of the

leads convert ed int o revenue st ream and rat e of conversion. These paramet ers are

confident ial t o the organizat ion. But IBM is successful in using social media t ools as t old

by E d Linde II (Team Leader). IBM is able t o generat e millions of dollars worth of

sales Leads through social media t ools.

5. Recommended actions

IBM can use social media in more efficient manner because in long t erm Leads

generat ion using Seekers and Listening for Leads program may not be sust ainable.

IBM should use social media t ools t o creat e ext ensive user communit ies for their

product s and services. Many IT firms (giant s like Microsof t , Apple and Oracle et c.) have

successfully used social media in creat ive an ext ensive and faithful/loyal cust omer base.

These init iat ives are very successful in B2C space however it can be useful in B2B space.

In managing B2B user communit ies it should be remembered that B2B Communit y

Users have higher expect at ions than B2C Users. Recent research by agency had revealed

that visit ors go t o B2B communit ies t o solve their support problems are check and learn

about the new product s before purchasing them.

B2B Communit y survey research from mult iple client communit ies revealed that

y 35-40% of B2B communit y visit ors, visit t o gather informat ion for purchasing

decisions

y Over 60% of members were influenced t o buy based on something they read or

wat ched in the communit y

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y Senior execut ives use communit y t o build business cases for purchasing upgrades

and new solut ions and their part icipat ion result s in: Higher level of brand loyalt y

and cust omer sat isfact ion

Parameters should be used to measure the success of these initiatives are as

follows:

y T raffic : No. of visit ors, Visit s, Page views, Referrers, Post s, Uploads, et c.

y B ehaviour : Page views/Visit , Post s/Visit or, New Regist rat ions/First Time Visit ors,

Repeat Visit ors, Subscript ions, et c.

y V alue: Revenue, Leads, Lower Support Cost s, Brand Awareness, Purchase Influence,

et c.

IBM can use user communit ies t o generat e ext ensive base of loyal and profit able

cust omers, hence remain compet it ive in this IT world.

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6. Appendices

6.1 The prospecting funnel

IBM has made some improvement s in the prospect ing funnel by including some

addit ional t ools. One of the most profit able t ools used by IBM in present t imes is use of

S ocial Media as Lead generation t ool as shown in figure

Figure 3"

rospe#

ting funnel3

3 Figure taken from Business Market Management(B2B) by James C. Anderson, James A. Narus, Das

Narayandas and D.V.R. Sheshadri

Communications

Objectives

Awareness

Interests

Evaluation

Trial

Adoption

No. Of potential

customers

Target Market Segments

Leads

Prospects

Inquiries

New orders &

Customers

Established

accounts

Loyal& Prof itable

Customer base

Tools

Media advertising

Event Marketing

Publicity, Brochures

Directmails and

Social Media (used by IBM)

Catalogs, Fax Marketing

Diskette & CD Demos

WWW Sites

Videos, Trade shows

Demo Centres and

Telemarketing

Field sales calls

coordinated with inside sales calls

Strategic Account

Programs

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6.2 SWOT Analysis of IBM

6.3 References

1) Business Market Management (B2B), 3rd edit ion by James C. Anderson, James A.

Narus, Das Narayandas and D.V.R. Seshadri

2) www.ibm.com

3) www.dat amonit or.com

4) htt p://www.current analysis.com

5) IBM Smart er Planet init iat ive

6) A case st udy on IBM Execut ive int eract ion channel by Digit as B2B:

7) Case St udy: How IBM Uncovers Millions of Dollars Worth of Sales Leads with

Social Media

St rengt hs

Lea $ ing provi

$ er of IT services

Strong R&D capabilties

Continuous i%

prove% ent in

profitability

Weak nesses

Sluggish revenue growth

Low per employee cont ribut ion

Small gaps in mobilit y product port folio

Opportunities

Growing demand for cloud services Posit ive out look for health care IT

spending

St eady growth in IT out sourcing

&

'

re(

ts

Cont ract ion in end market s

Int ense compet it ion

SWOT

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