Part 1 of final year dissertation, focussing on the IBM PowerNet UKI marketing strategy.

1. Placement Based Research Project
Research Project Section
BA (Hons) International Business
William Scott - 07083290
Date of Submission –18th October 2010

2. This project is submitted in part fulfilment of the requirements for the Degree of BA
with Honours in International Business at the Manchester Metropolitan University
Business School.
Title: The number of ISVs involved in the PowerNet Programme has recently
declined. This project aims to assess this from a marketing perspective and produce
a suitable piece of marketing material aimed at resolving this issue.
Name: William Scott
Date of Submission: 18th October 2010
Statement of Originality and Authenticity:
This Project is an original and authentic piece of work by myself. I have fully
acknowledged and referenced all secondary sources used. It has not been
presented in whole or in part for assessment elsewhere. I have read the
Examination Regulations, and am fully aware of the potential consequences of any
breach of them.
Signed ……………………………………… Date …………………………
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3. Table of Contents
1 Executive Summary ................................................................................. 4
2 Organisational Context ............................................................................ 6
2.1 An Introduction to IBM ...................................................................................................................... 6
2.2 Organisational Analysis – The PowerNet Programme ..................................................... 7
2.3 SWOT Analysis .................................................................................................................................... 7
2.4 PEST Analysis ...................................................................................................................................... 8
3 Project Report........................................................................................... 9
3.1 Problem/Opportunity .......................................................................................................................... 9
3.2 Aims, Objectives & Outcomes ...................................................................................................... 9
3.3 Project Process ................................................................................................................................. 10
3.4 Findings & Analysis ......................................................................................................................... 12
3.5 Deliverables......................................................................................................................................... 16
3.6 Evaluations/Limitations/Future Development ..................................................................... 17
4 Project Commentary .............................................................................. 19
5 Appendix ................................................................................................. 20
5.1 Appendix A – The PowerNet Flyer .......................................................................................... 20
5.2 Appendix B – GANTT Chart showing the flyer production process ........................ 22
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4. 1 Executive Summary
The aim of this report is to identify a problem or opportunity within IBM, and more
specifically the PowerNet Programme. The problem identified is a lack of marketing
material within the PowerNet Programme, which has lead to a decline in new ISVs.
This problem will be looked at from various angles and analysed in as many ways as
possible. The main focus of the report will be on the PowerNet programme, however
in order to fully understand issues that could arise, it will also focus on related areas
of IBM. A SWOT and PEST analysis in Section 1 of this report will help give a
clearer understanding about the PowerNet Programme and what problems and
opportunities there are.
The primary objective to the problem identified is to produce a single piece of
marketing material, which can be easily distributed and can be used as a platform for
larger, more detailed marketing campaigns. This will be in the form of a flyer, which
can be used both electronically and in printed formats. The project will map out the
processes undertaken to produce this material, looking at issues which arose during
the process, and the specific steps taken to ensure what was being achieved was
both suitable and feasible.
Findings and analysis of the opportunity are then looked at, and the full extent and
cause of the problem is examined in detail. This is done to fully understand where
the problem has stemmed from, and how the solution can help to rectify the situation.
This includes looking at numbers of ISVs working with the PowerNet Programme,
and critically analyses the number of new ISVs joining. It also attempts to analyse
events in which PowerNet marketing material has not be present, and see how
effective it could be.
Following on from the findings and analysis, are the deliverables, which is primarily
the PowerNet marketing material that has been produced. This looks at the outcome
of the project, and the effects it hopes to have on the identified problem. The
evaluation and further developments section looks at how successful the project was,
and how IBM can look to build on what has been achieved.
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5. A project commentary at the end of the report details all limitations and issues that
arose whilst undertaking the project, and examines the effects these had on the
outcome. It also examines the value of the report to IBM, and whether or not the
topic chosen to focus on was appropriate, and if the methods undertake to achieve
the end result the right ones. Finally it looks at whether or not the project has been
deemed a success, and what has been learned from what has been achieved.
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6. 2 Organisational Context
2.1 An Introduction to IBM
IBM is the abbreviation for International Business Machines Corporation, which is the
worlds fourth largest technology company and second most valuable brand.
Founded in 1896 as the Tabulating Machine Company, and later becoming IBM in
1917, it has a proud history in the technology and computing market and has fast
become the world’s biggest provider of IT services and consulting, alongside
manufacturing and selling both hardware and software. With 2009 revenue of
$103.630 billion, as well as operating in over 170 countries world wide, and with
nearly 400,000 employees, it is clear to see why IBM is a leader in the Information
Technology Services market place.
In the UK, IBM began in 1951 in Scotland, where they assembled electronic
typewriters and time recording equipment. IBM now currently has 20,000 employees
in the UK, in over 25 locations.
The area of the business focused on in this project is the PowerNet programme,
which is part of the UKI ISV business, and sits primarily under the Systems and
Technology Group (STG) division of IBM. Formed in 2004, the PowerNet
programme has grown at a rapid rate, and is now a starter platform for many other
programmes within IBM. The purpose of PowerNet is to drive new business by
working alongside a number of business partners, resellers and Independent
Software Vendors (ISVs). This new business is known within IBM as 'White Space',
meaning the customer has not bought from IBM within the past 3 years. If the
customer has bought from IBM in the past 3 years, the business is then classified as
‘IBM House’. In order to drive as much White Space business as possible, the
PowerNet programme aims to target businesses in the 'Mid Market', which is defined
as a business with less than 1,000 employees, and can be anything from a corner
shop to a hospital. There are, however, exceptions to this, as many bigger
businesses that have not bought from IBM within the past 3 years, come back to IBM
through this programme.
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7. 2.2 Organisational Analysis – The PowerNet Programme
In order to fully understand IBM and the PowerNet Programme, a SWOT and PEST
analysis are vital. These will both help show the internal and external factors
effecting PowerNet and aid the understanding of the Programme.
2.3 SWOT Analysis
Strengths:
· Long standing relationship with business partners and ISVs
· Good reputation within the market place – 6 years of business
· Specialist expertise with certain partners
· Variable locations of partners allows new, White Space customers to be
easily sourced out
· Good USPs
Competitive rebate attracts more partners and resellers
‘Custom’ packages can be built for all customers
Weaknesses:
Reliance on business partners for revenue
Many opportunities not won
Lack of marketing control
Low number of new ISVs
No relevant marketing material to hand
Opportunities:
New ISVs
New business partners
‘Power 7’ launch
Potential inclusion of ‘IBM house’ in rebate target
Future events - marketing material could be distributed and targeted at new
ISVs/business partners
Threats:
Niche market – demand could deteriorate
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8. Similar programmes from competitors, e.g. Sun, HP
Continued recession may lead to smaller companies choosing not to buy new
IT products, which would lead to a drop in customers and potential revenue
Potential over reliance on IBM house rebate by business partners. This could
lead to a lack of White Space wins
2.4 PEST Analysis
Political:
The new Coalition Government in the UK could have a possible effect on IBM;
depending on what policies they change from the Labour Government. An increase
in taxes, for example, could mean that customers may chose to go to smaller firms
for their IT products and services due to the increase in price they will have to pay for
IBM’s product.
Economic:
The current recession is having a major effect on spending, which means businesses
may decide to cut back on computing upgrades or equipment, meaning there may be
less of a demand for IBM’s products and services.
Social:
There is currently a large demand for companies to be ‘Greener’ and more
environmentally friendly. IBM have taken note of this and are using their ‘Smarter
Planet’ initiative to both increase their brand awareness but also show that they’re
focussing on trying to make the company more environmentally friendly.
Technological:
New technologies and solutions are being created everyday, and the demand for
new ideas is constantly growing. IBM is a market leader in the technology and IT
field, and this is down to them continually meeting the standards of the demand and
producing new products and services to not only rival their competitors but also
better them.
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9. 3 Project Report
3.1 Problem/Opportunity
The problem that has been identified within the IBM PowerNet Programme is the lack
of marketing material, which in turn, has lead to a lack of new Independent Software
Vendors (ISVs), working with IBM.
The PowerNet Programme runs by selling ‘solutions’, which are essentially a piece of
IBM hardware, combined with software from a selected ISV. These are sold to the
customer as a solution at a combined price, which benefits both IBM and the ISV.
The problem at the moment is that the PowerNet Programme has been working with
a number of very similar ISVs for a number of years now, and has not had the
marketing material in place to advertise the programme to other ISVs who may want
to join. As a result of this, many of the solutions on offer have remained the same
over the past few years and the number of new ISVs joining has dropped.
Having some marketing material available, such as a flyer or case study, would
mean that IBM would have something to give out to prospective business partners or
customers at business events. This should then have a positive impact on the
PowerNet Programme being able to recruit new ISVs and increase their amount of
new business, as it would an extra way of promoting the programme.
3.2 Aims, Objectives & Outcomes
The primary aim of this project is to produce a piece of marketing material for the
PowerNet Programme, which can be used to help attract new business for IBM. I will
aim to do this by working alongside my team leader, marketing manager and an
outside agency, which will produce the material.
Before this is done, however, a budget for producing the material must be agreed,
and the content discussed within the PowerNet Team. Decisions must also be made
as to what kind of marketing material needs to be produced, how it is to be done, and
who it should be aimed at.
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10. There are multiple business benefits that could come out of this project, the first one
being a range of new ISVs and/or business partners potentially working with IBM and
the PowerNet Programme as a result of this marketing material. Secondly, it will
provide IBM with a starting point, from which they can further market the PowerNet
Programme. As there is no marketing material currently in place, a low key piece of
material which is looking to be produced could lead to bigger campaigns in the
future, should it prove successful. The content of the material will also hopefully
make the process of educating people about the programme, much more simpler
and straight forward.
3.3 Project Process
In order to successfully complete the project, certain deadlines will have to be met
and time scales will have to be put in place.
The first stage of the project was to discuss what needed to be produced. This
involved meetings between myself, the PowerNet marketing manager, and team
leader. Various options were brought up, including a flyer/handout, web based
advertising and email marketing. After discussion with various people, and from
looking at past marketing attempts, a flyer was decided to be the best option. This
was down to the fact that it could be easily distributed at events, and that a digital
version could be produced which we could both send out to customers/business
partners and put on the PowerNet webpage.
Along with deciding what to material was to be produced, a budget also had to be
considered. Discussions with the STG marketing finance division took place, and a
£3,500 budget was allocated for the project. The next step was to find a suitable
agency to work with, preferably one that had worked with IBM in the past. After
discussing this with the STG and PowerNet marketing representatives, it was
decided to get in contact with an agency called Purple, who had previously worked
with IBM to produce marketing material.
Once emails had been exchanged with their project manager, who had worked with
IBM in the past, a conference call was set up so that myself, my manager, and the
Purple Agency team could discuss the project further. At first this involved simply
outlining what wanted to be done and the various routes that could be taken. The
previous marketing material the PowerNet Programme had used was A3 sized, and
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11. folded in half to form an A4 sized booklet. Whilst this allowed a large amount of
information to be printed, it had also proved fairly impractical when given out at
business functions and events as it was deemed too big to take away. In light of this
the decision was made to have an A4 tri-fold made, which contained less
information, just stating the basic outline of what the PowerNet Programme involves.
The next objective was to decide on exactly what content the hand out needed to
include. As it was discovered that PowerNet had not worked with many new ISVs
over the past few years, producing something aimed at new ISVs made perfect
sense. The obvious content that needed to be included was an outline of what
PowerNet is, how it works, how it can benefit the ISV or business partner, and finally,
how you can join. The idea of including examples of revenue made through the
programme was also discussed, however this was deemed to be too confidential to
publish. Another idea put forward was that including quotes from current or past
ISVs and business partners, to serve as an example of how the programme can
prove successful, would be a good selling point. This proved popular and so the
team set about finding suitable quotes to publish.
Once all the content was written up for the first time, it was sent off to Purple Agency
for them to convert it into it's hand out form, and to send back in a PDF file as a first
draft to be reviewed. After receiving the PDF a meeting was arranged to discuss
what changes would need to be made. The first change was to design a new
‘picture’, which represents what PowerNet is, as we felt the current 'PowerNet
Triangle' looked out-dated. The change here can be seen in the images below.
Parts of the content also needed a slight rewording; however as large amounts of
time had been spent working on what to write already, there wasn't a lot to change.
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12. Above left: The previous ‘PowerNet Triangle’
Above right: The newly designed image
This was then sent back to Purple Agency, for them to produce a second draft, which
was then edited by IBM for a second time. There was an opportunity at a
forthcoming PowerNet Team Meeting to gain any extra input, which could be used
before the sending the final draft off to be produced. The overall consensus from the
team was that it was concise and clearly explained the concept of PowerNet, which
is exactly what was being aimed for. Quotes were provided from an ISV and IBM
business partner to be used on the flyer, so all that was left was to send these to
Purple agency, to be added onto the flyer.
When the final draft had been edited and received, it was presented to the manager
in charge of the project, and a purchase order was raised from the finance
department to have the material printed.
A full GANTT Chart of the processes can be seen in Appendix B.
3.4 Findings & Analysis
The main issue tackled in this project, is the lack of PowerNet related marketing
material available to the programme. This problem was discovered when looking
through the figures relating to the number of ISVs PowerNet had worked with over
the past 5 years since it’s creation in 2005. This was done in the early part of 2010,
when gathering material for the annual ‘PowerNet Kick-Off’ event, to which many
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13. business partners and clients are invited. The figures showed that in the period
between 2005 – 2008, the number of ISVs working with the PowerNet Programme
increased year on year, however in 2009 this figure dropped. There also seemed to
be a correlation between the number of ISVs working with PowerNet, and the
number of new ISVs joining the programme, with the number increasing over the first
two years but dropping in 2008. Figures 1 & 2 below shows the numbers of ISVs
working with PowerNet, and the number of new ones joining each year.
Figure 1:
Year Total Number of ISVs Total New ISVs
2005 42 N/A
2006 56 25
2007 77 37
2008 94 24
2009 80 21
Figure 2:
In finding that the number of new ISVs joining the programme was declining, it was
decided to take a look at the amount of revenue made each year from new ISVs, and
make a year on year comparison to try and discover what effect this decline could
have on the PowerNet Programme. This is shown in Figures 3 & 4 below:
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14. Figure 3:
Year Total Revenue Revenue from new ISVs %
2005 $14,219,900
2006 $16,378,522 $8,439,298 52%
2007 $23,758,329 $9,619,040 40%
2008 $35,781,356 $5,206,219 15%
2009 $26,726,544 $4,635,904 17%
Figure 4:
From the above, you can see that for the years 2006 & 2007, a large proportion of
revenue was driven from new ISVs, however this figure dropped quite significantly in
2008 & 2009. This may be down to the fact that the programme was still
experiencing significant growth due to it being a new scheme and offering a new,
easy route to market for many smaller ISVs. This is not proven, however, so looking
into other explanations was necessary. Other reasons discussed, included that the
programme was now well established and the solutions offered by the current ISVs
were highly competitive, that there were a lack of new ISVs providing a sellable
solution, and that there was no material to market the PowerNet programme with.
This was believed to be a key factor in the problem, but also to be a great opportunity
to work on. Having attended a number of key business events in which PowerNet
was involved, it was decided to take a look at the kinds of people we were interacting
with and whether or not having some marketing material to distribute could have an
effect on the problem.
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15. PowerNet is involved in 6 large events over the course of a year; two ‘PowerNet
Kick-Offs’, two ‘Mid Market Conferences’ and two ‘Business Partner Organisation’
events. All of these events are targeted at educating both current and potential
business partners/clients about what IBM can offer them, and each involves a
presentation or talk by the PowerNet Programme.
The figures below are taken from the previous Mid Market Conference in October
2009.
Mid Market Conference: Attendance Numbers:
524 Registrations
441 Attendees (159 IBM’ers & 282 Business Partners – ISVs, Agencies, Clients etc.)
PowerNet Elective Session: Attendance Numbers:
77 Attendees – just over 1 in 5
22 IBM’ers
5 Current PowerNet Contract Holders represented
31 ISVs represented
11 ‘Others’– agencies, customers, business partners
When looking at the above figures, it is clear to see that there was a great interest in
the PowerNet session at this Conference, with nearly half the attendees representing
an ISV. This provided enough evidence to see that some form of marketing material
would be of significant use at events like this, as whilst a presentation on something
can give the audience some idea of the concept, this is often forgotten when they
leave the room. A handout or flyer that could be taken away would hopefully act as a
reminder to follow up for those who may be interested.
All of this material was presented to the manager in charge of the project and it was
agreed that there was an opportunity and need to produce a form of marketing
material to attract new ISVs to the programme.
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16. 3.5 Deliverables
The findings have shown key areas that need work, in order to prevent any further
decline in the PowerNet Programme, and boost the number of ISVs being worked
with. This has resulted in the piece of marketing material being produced to help
educate potential business partners about the programme, and to sell the idea to
customers.
It became clear during research that a marketing strategy was needed, as relying on
word of mouth, reputation and contacts is not enough to keep a programme growing
in the modern day business environment. The marketing strategy undertaken aimed
to target the primary business partners who make the programme what it is– the
ISVs, as without them there is no business. By having a large number of varied ISVs
working with IBM, you are able to offer a greater range of solutions in your portfolio,
which makes you more attractive to a greater number of customers.
The material has also been written in a way that customers are able to understand
what the programme can offer to them, and how it can help them work with IBM.
Having something, which can be distributed to a variety of audiences, allows IBM to
market the programme on a large scale, whilst not having to create tailored material
for specific groups.
Along with having the flyer printed, it has also been produced as a PDF file, which
has been distributed to different people within IBM to send to appropriate clients.
This will also enable IBM to ‘e-market’ the programme, again reaching out to clients
they may not have been able to reach previously.
Further investigations would be needed to see the full effects of the of the material on
the number of ISVs working with the PowerNet Programme, however, a test e-
marketing campaign is already underway and a number of positive responses have
already been received regarding content and suitability. This gives the impression
that at first glance, some positive effect should be visible once a large number of
flyers are distributed. Whilst there will be no immediate effect on numbers, a positive
increase in contact between IBM and ISVs will show that it has been distributed
correctly and targeted at the appropriate audience. (A full version of the flyer can be
found in Appendix A.)
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17. 3.6 Evaluations/Limitations/Future Development
The outcomes that have been achieved through this project are satisfactory in
comparison to the objective set out at the start. The marketing material produced
has proved to be well received within IBM and more specifically, the PowerNet
Programme.
A first e-marketing campaign has taken place; with the digital version of the flyer
being sent out to various distribution lists of current and past business partners, ISVs
and customers working with IBM. The response received has been of a positive
nature, and a large number of companies have requested more details about the
programme, more specifically, how they can get involved with the PowerNet
Programme.
Whilst this is not going to immediately increase revenue, it is a positive start to
recruiting more business, and increasing the solutions portfolio.
A PowerNet Kick-Off event has also been planned for the start of September, and
the first steps of marketing the event are underway. This has involved contacting a
number of parties who may have an interest in the event, and sending them an invite,
along with an electronic copy of the flyer. The event is perfect opportunity to further
market the programme using the printed handouts, and for members of the
PowerNet Programme to further discuss what it can offer, with any businesses that
may be interested.
If the PowerNet Programme can continue to distribute handouts at future events, and
set up a targeted e-marketing scheme, this could prove to be a large step in getting
new ISVs to work with IBM, driving more revenue for the programme.
Whilst the project has been deemed a success, there were some limitations
encountered. The production and creation of the marketing material took a long time
to complete, and this meant that various events took place where the material would
have been put to good use, yet it was not available. This meant that opportunities
were missed, and potential business was lost.
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18. Another drawback was that no numbers could be printed on the flyer. This could
have proved a big selling point, because it allows the reader to have an immediate
idea of what sorts of revenue and business the programme can drive for them.
In spite of these limitations, however, the material produced can easily be developed
on a larger scale should IBM wish. The content it covers is adaptable for multiple
uses, such as a web advertisement, posters or presentations. This project was set
out as a platform, and springboard for future marketing campaigns, which can now
be easily done, building on what has been produced so far.
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19. 4 Project Commentary
Whilst undertaking this project, although it was deemed successful, several issues
arose. There was some organisational change within the PowerNet Team during the
first few weeks of setting out what issue wanted to be dealt with in the project. This
particularly affected the project, as that main change was with the marketing
manager and team leader, which in turn made decision making quite difficult as they
both took time to fully adapt to and understand the role they were in.
The objectives that were set out to be achieved at the start of the project were all met
to a satisfactory standard, however, if there had been a larger time frame, and the
organisational change had not taken place, I believe that more could have been
achieved and the project could have been further developed. This could have been
either in the form of following up on the work already done, by looking further into the
results achieved, or by developing another marketing plan, based on what had been
produced.
The topic chosen was appropriate in relation to the business at the time, as a lack of
marketing material was having a clear impact on the way the programme was
running. All the methods used were researched and discussed, to ensure they were
the best possible way of doing things. I believe that the project was very valuable to
IBM, as it highlighted a missing area of the business that needed attention, and by
setting a realistic target, the project allowed us to address the highlighted issue. It
was also of great benefit to myself, as it gave me a much further, more detailed
insight as to how marketing works within a large business such as IBM, and allowed
me to get much more hands on then I would have been able to in more normal day-
to-day role.
Overall, I feel that the project has been a good success. All the objectives set out to
be achieved have been met, and whilst there were some limitations and obstacles in
the way during the project process, the end result was very satisfactory to both IBM
and myself. It has given me a much better understanding of how the business
operates, as well as a desire to get a greater insight to marketing processes within
companies, and the different effects they can have on the businesses undertaking
these processes.
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20. 5 Appendix
5.1 Appendix A – The PowerNet Flyer
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21. 21

22. 5.2
Estimated
Activity Time (Weeks) Week 1 Week 2 Week 3 Week 4 Week 5 Week 6 Week 7 Week 8 Week 9 Week 10 Week 11
Decide on material 2
Discuss budget 1
Find & confirm agency 1
Set out content 2
Produce first draft 1
Second draft 1
Final draft 2
Finalise and print 1
Appendix B – GANTT Chart showing the flyer production process
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