It's not going too far to say that 2009 has been a watershed year for IBM hardware partners. More than a few of them have seen a significant drop in their sales and profits and have actively sought out IBM competitors. Not surprising given the 21 percent sales decline in IBM's Systems &Technology Group sales in the first nine months of this year to $11 billion compared with $13.8 billion in the year ago period.

The decision to embrace a competing vendor used to be viewed as heresy in the IBM partner community. Not anymore. That has been a tough pill to swallow for those once-proud partners, who bled IBM Blue, that decided to make that move. But they felt they had no choice given the state of the IBM channel. Call it the Season of the Witch.

That is the stormy channel environment that Rod Adkins, a highly respected 28-year IBM veteran, is stepping into as he takes over as Senior Vice President of IBM's $19 billion Systems & Technology Group.

Adkins' appointment came after IBM informed employees on Friday October 30 in a missive on its corporate intranet that Robert Moffat Jr., who had headed up the IBM hardware business before he was arrested in the largest alleged hedge fund insider trading case in high tech history, is no longer an employee of the company. Adkins had been named on October 19 as a temporary replacement for Moffat.

Now, to the cheers of IBM partners, Adkins, viewed as a channel advocate, is officially in the hardware driver's seat. IBM solution provider partners say they are hopeful that Adkins will address channel shortcomings that marked Moffat's 14 month tenure.

The biggest issue is what some IBM partners call a change in IBM's complex direct sales channel compensation focused on profit that effectively incented IBM's direct sales force to take some deals direct.

But there is more than that. At the heart of that direct sales profit compensation change is what one top IBM partner calls a shift that views the hardware channel as a cost center that needs to be cut rather than a sales ally that is on equal footing with the IBM direct sales force. Moffat, a one-time close confidant of IBM Chairman Sam Palmisano, was viewed as Palmisano's go-to guy in tough cost-cutting situations. Remember it was Moffat, who sold off IBM's PC business and IBM's printer business and reengineered the IBM supply chain to save the company billions of dollars.

There was certainly a lot of fear, uncertainty and doubt in the hardware partner community with regard to what direction Moffat would take IBM's hardware partners. More than once, Moffat was forced to deny that IBM would exit the hardware business.  Moffat did cut Synnex as a distributor of IBM hardware and software. "Frankly, channel participation rates declined under Moffat," said one IBM solution provider partner, who is considering bringing on a competing vendor. "A lot of people thought he was brought in to do cost-cutting in TSG."

Part of the issue for IBM's hardware partners is the service giant's refusal to talk hardware for fear that it will drive down IBM's stock price. "You might want to position yourself on Wall Street as a software and services company, but the reality is operating systems are still a big, big piece of the software number, and all that is hardware driven," said one IBM partner. "And a large portion of services is typically based on integrating hardware and managing hardware." 

To his credit, partners say that Adkins has already reached out to them. "That's a good sign of commitment," said Rick Hamada, chief operating officer for Avnet Inc., an IBM hardware distributor based in Tempe, Arizona, who is looking forward to a mid-November sit-down with Adkins. "I am very happy about Avnet and IBM getting together to talk about how we can succeed for 2010."

That optimistic view is shared by a number of IBM partners who are hopeful that Adkins will make some much needed channel changes for 2010. The danger, of course, is that Adkins might not take on those tough IBM hardware channel issues and things could get worse.

"IBM is losing mind share as [IBM partners] bring on other manufacturers' products," said one IBM partner. "They need to fix this."

Hewlett Packard Americas Channel Chief Adrian Jones' tight relationship with HP CEO Mark Hurd made him an outstanding advocate for solution provider partners.

It also meant he was under constant scrutiny being pushed and prodded by Hurd every step of the way to make sure the channel was delivering.

ChannelWeb reported Monday that HP has promoted Jones to a new post running HP's Enterprise Storage and Servers (ESS) business in Asia-Pacific and Japan effective Nov. 1.

That close  working relationship between Hurd and Jones paved the way for a dramatic increase in the number of joint sales calls that Hurd and other HP executives made with HP partners. That's where the rubber meets the road. It's all about closing deals hand in hand with partners. No other executive team in this business makes as many joint sales calls as Hurd and his team.

Through the first six months of 2009, Hurd and other top-level HP executives met with more than 300 customers and 100 solution providers, according to HP's Jones.

My ChannelWeb Challenge to any and all vendors is come clean and answer this simple question: How many joint sales calls have your CEO and top executives made with channel partners this year? My bet is that challenge is met by nothing but the sound of crickets.

The fact is Hurd is the most channel-engaged CEO in this business. There are few executives that have his unique mix of sales and operations experience. That sales/operations savvy has transformed HP into the No. 1 IT company in the world. No other company has as big and as broad a technology portfolio and channel to go with it. And no other IT company has as bright a future for sales growth.

That's because no other company has invested as much in driving channel growth. At a time when competitors are cutting channel spend, Hurd is spending more than ever. That's because he wants MORE sales coverage, not less. He is the only top executive among the major computer makers that talks about his company not having enough sales coverage.

Hurd understands channel economics and is drilling down into every nook and cranny of every bit of channel spend. He wants to make sure he is getting the maximum return on every sales touch. That's why he is pushing channel leadership directly into the business units. For example, HP announced earlier this year that Frank Rauch, vice president of HP's Enterprise Solutions Partners Organization, would report directly to ESS bosses rather than to Jones.

Having a tight relationship with Hurd is no picnic. Hurd was constantly pushing Jones on increasing channel sales, cutting costs and getting partners to sell the FULL HP product portfolio. Of all the channel chiefs in this business, my bet is no one was more aggressively challenged by his CEO than Jones. That led to channel gains for HP partners and more than a few sleepless nights for Jones.

The channel is the better for it. Under Hurd's hard driving leadership, Jones drove the HP channel to new heights. There's a lot to be learned from the relationship between Hurd and Jones. It's the kind of one-two punch that is rare in the channel these days.

Most CEO's of large companies are not as well versed in channel economics as Hurd. They just don't dig that deep into channel spend and payback. They don't get involved. It's a big MISTAKE. Nothing is more important than making sure your sales force is firing on all cylinders.

HP's biggest challenge in pushing channel responsibility directly into the business units is that the channel chiefs in those units don't have that tight working relationship with Hurd. That ability to stay deeply connected to the channel is something Hurd should be careful he does not lose as HP gives its business units more channel autonomy.

No channel chief can be successful without the strong support of the CEO. Jones had that tight relationship with Hurd. Will the top executives in each of the HP business units be able to maintain that kind of hand in hand relationship with Hurd? HP's channel future depends on it.

If you are relying on just the same old tired channel programs then you are missing what is a seismic shift in the IT landscape.

Customers are demanding Instant Return On Investment (IROI) on their technology purchases. That means they are looking for an instant return on every IT dollar they spend.

So what are IROI channel programs? Any program that allows you to play in the Software as a Service(SaaS), cloud computing or managed services with a monthly recurring revenue participation.

Salesforce.com, to its credit, has come out with a first class IROI program and has backed it up by letting the VAR own the customer relationship.

In Salesforce's IROI channel program, partners are wholly responsible for annual customer renewals. At the end of each month, Salesforce will bill partners for the number of licenses they have in production.

Cisco is also pushing forward on the IROI front by retooling its managed services channel program to accommodate a larger number of partners.

Cisco Senior Director of Programs and Strategies Surinder Brar says the updated program lowers the barrier of entry for partners and also opens the door for more partners to join and reap the financial benefits of managed services offerings. He sees the market opportunity for partners continuing to grow at a rate of 16 percent to 20 percent annually.

VMware, which is hosting partners this week at its massive VMworld conference, is one of the foundation companies in the IROI movement. The virtualization market leader, in fact, was the spark behind the IROI phenomenon.

VMware this week upped the ante in its IROI assault with new IROI application initiatives including vCloud Express, a platform to provide pay-as-you-go infrastructure and VMware vCloud API, a collection of APIs that allows applications to be written so they can be easily moved between internal and external compute clouds.

There's hundreds of IROI channel programs that will get you into monthly recurring revenue rather than infrastructure or point product sales. Are you taking advantage of IROI channel programs? What vendors have best of breed IROI channel program

Would Microsoft CEO Steve Ballmer and Cisco CEO John Chambers be willing to take their valuable time to fill out a satisfaction survey from a company they buy products or services from?

It's a question that Daniel Duffy, the CEO of Valley Network Solutions, a $25 million Fresno Calif. Microsoft Gold partner and Cisco premier partner, wants the answer to.

Duffy is frustrated with what he sees as a time-consuming and costly customer satisfaction survey process that yields little useful data. Duffy has been doing these Microsoft and Cisco customer satisfaction surveys for years so he can maintain his partner status with those vendors. But he estimates that about three percent of the data or tidbits from the surveys are of value in upping customer satisfaction.

Valley Network Solutions does its own customer satisfaction surveys before a customer is billed to make sure customers are pleased with any and all products and services. "If anything is wrong we put the brakes on things and try to fix it before the invoice goes out," he says.

Among the questions that need to be answered with regard to these surveys:

*Do these surveys accurately measure customer satisfaction?

*Can the survey system be gamed by savvy solution providers? (Note:Customer names are provided by the solution providers themselves)

*Are these surveys statistically accurate? (Note: The response rates on these surveys is horrendous)

*Are these surveys the same for a small business, midsize business and a large enterprises? (Note:Would you measure satisfaction for these vastly different customers on the same scale?)

"We've participated in this program with Microsoft (and Cisco) for each of the last several years, and they've done nothing for us," said Duffy in a ChannelWeb Connect post. "They exasperate and bother good customers that would rather spend their time on THEIR jobs, rather than filling out lengthy surveys.  I think these surveys are a well-intentioned idea, without any consideration or respect for customer's time. "

"The vendors will tell you differently, and make any number of excuses how they don't take that long, or how customers that are happy with you will make time for this but really, that shows how far out of touch these vendors really are," continued Duffy. "See if John Chambers or Steve Balmer have time for this sort of nonsense.  If these guys would for once just live under the same mandates that they foist upon their loyal partners and customers, they'd wake up and finally "get it"."

The real big winner in the survey gambit is the third parties that conduct the surveys since they get a big fat check from the vendor.

For Duffy, vendors like Microsoft and Cisco would get a helluva lot more useful data from going back to basics by getting in a car and doing some old fashioned pavement pounding to get to know their VARs and customers.

"Stop trying to automate everything and make the computer do all the work," he says. "Ultimately a customer or VAR has to do the work and funnel the information into a database. The vendors need to go back to basics and talk to VARs and customers and find out what is going on!"

Do these surveys help the vendors get to the heart of the pain points and problems facing customers and solution providers? Would Ballmer or Chambers take the time to fill out these kind of customer satisfaction surveys?  And if they wouldn't why should their customers?

Instant Return on Investment, or IROI, is a major paradigm shift in technology purchasing that is rippling through every segment of the channel from the biggest and most respected solution providers in the world like Accenture to the local mom and pop system builder.

Customers are no longer willing to look at ROI as a long-term event. In today's tough economy, they are looking for instant returns on every IT dollar they spend.

Businesses of all kinds are looking at technology purchases through this IROI prism. It's the reason that solution providers of all kinds have got to move to cloud computing, SaaS (Software as a Service) and other services initiatives that provide instant payback for customers.

The more you are stuck in the old world technology purchasing world the greater the pain. It is the reason $23.3 billion integration giant Accenture announced this week it is cutting its senior leader ranks by seven percent.

Accenture made its mark on big, complex engagements like multiyear ERP engagements that are a thing of the past. And now it is restructuring to address the new world.

In the company's last quarterly conference call, Accenture CFO Pamela Craig said that the company sees some clients "exercising caution in launching new, large consulting commitments and instead shifting to a more phased and flexible approach to contracting work."

That phased and flexible approach translates into IROI. It's all about moving customers to low cost cloud infrastructures. IT budgets are being hammered by CEOs and CFOs asking why they need to house all those servers and network infrastructure rather than just buy it as a monthly service.

By the way, Accenture realizes they are in the midst of the IROI tornado and is moving quickly on all fronts to address it.  That's why Accenture has built new offerings around cloud computing and SaaS. It is also making a big move into public service and health service businesses.

Another sign of the IROI tornado: Accenture's consulting revenues in the most recent quarter were down 20 percent, while its more IROI-like business, outsourcing, was down only 10 percent.

In fact, Accenture itself has said it sees a major shift from consulting to outsourcing.

Outsourcing is indeed the sweet spot in the IROI model. You have got to take big budget technology costs off the table for customers.

A big part of the IROI movement is monthly recurring revenue payments for technology rather than capital expenditure or project-based purchases.

By the way, there are thousands of solution providers that are having their best years ever because they already moved to the IROI world by embracing managed services. They call themselves managed service providers. And their customers love the IROI they see from moving from major capital expenditure project-based technology purchases to monthly fees based on the services provided by these managed service providers.

The time to get with the IROI program is now! Those that embrace IROI will thrive. Those that don't will die.

Have you made the IROI transition?

There's a lot of fear, uncertainty and doubt (FUD) being spread in the wake of the cloud computing battle between technology heavyweights HP and Cisco.

That FUD, by the way, is making solution providers acting as strategic advisors, particularly for midmarket customers, more valuable.

Take the case of Benchmark Hospitality, Inc., a Woodlands, Texas headquartered hospitality management company with 30 hotels in the United States.

Jeff Blackburn, the director of information technology for Benchmark, sought out its trusted strategic advisor, GreenPages of Kittery, Maine, one of the most respected solution providers in the country, to help him make a decision that sent him down the VMware-Cisco-EMC private cloud path.

GreenPages acts as a strategic advisor and technology/business consultant to provide its customers with the biggest business bang for their technology buck. It's all about using IT to cuts costs or fuel business growth, not buying technology for technology's sake.

By committing to the VMware-Cisco-EMC private cloud, Benchmark has replaced 70 servers with 10 servers and extended the life of some 500 desktops with a desktop virtualization solution. All this has saved Benchmark astronomical sums in power cost savings and new costly hardware that would have needed to be purchased without the private cloud. A big part of the deal, by the way, is VMware's VSphere, a private cloud operating system aimed at reducing IT operating costs.

The VMware-Cisco-EMC solution has also provided the hospitality management company with a computing architecture that will allow it to grow to support 50 properties by 2013 at what almost certainly has to be best in class total cost of ownership.

"I can say for sure we would not have gotten the (VMware-Cisco-EMC) deal done without GreenPages," said Blackburn. "It was very scattered until they came in. They brought in their entire design team and brought all their resources to the table. They helped us with the ROI (return on investment). They drove a lot of the cost out of it. They did a lot of negotiating with us and with the vendors to bring it down to where we could actually do it. It could not have happened without GreenPages."

Blackburn was certainly impressed by the prospects of dealing with industry leaders like VMware, Cisco and EMC. But can you imagine dealing with the hard driving direct sales reps from each of these companies with their conflicting agendas? It was not VMware CEO Paul Maritz, Cisco CEO John Chambers or EMC CEO Joe Tucci that got the deal done. It was GreenPages Chief Technology Officer John Ross and his team of IT architecture experts and engineers that pulled the deal over the goal line.

It's all about trust. Blackburn trusts GreenPages to give him solid IT advice. And he knows GreenPages will be there to support him come hell or high water. It doesn't hurt that he has a 14-year GreenPages veteran sales rep, Grace Armano, to make sure that he gets everything he needs to get the job done. Armano has worked with the hospitality company since Benchmark became a GreenPages client eight years ago.

Blackburn says he tries to buy all his products and services through GreenPages because of the tight partnership, from software licenses to security services and networking equipment. "It's been a great partnership," he says. Great partnership indeed. That's just how VMware-Cisco-EMC views GreenPages since without the solution provider the deal would never have gotten done.

What do you think of the HP-Cisco cloud war? Will it help your business?

Cisco CEO John Chambers has fashioned his company as a cut above the lumbering old giants rushing to get to the next big market opportunity in a bid to justify exorbitant margins.

That ability to move Cisco to the next high-margin opportunity has always been a source of comfort for Cisco's high priced talent looking to cash in on Cisco's lucrative stock option plan.

All of a sudden that comfort has turned into a cold shower. It all began last year when Cisco implemented a week long mandatory shutdown during the week between Christmas and New Year's Day as part of a plan to cut fiscal year 2009 expenses by $1 billion.

This year, Cisco pink slips have become a market reality. The networking giant, in fact, is eliminating some 2,000 jobs.

Suddenly Cisco finds itself in the same league as the other big lumbering giants like IBM and Microsoft. Cisco now appears to be just another face in the high tech meltdown crowd. And Cisco employees, who never would have considered leaving the security of the networking leader, are exiting stage left.

The latest executive to fly the coop: 10-year Cisco veteran Doug Dennerline, who was overseeing the company's cloud and SaaS (Software as a Service) offerings, including Webex.

Dennerline, believe it or not, went to SaaS pioneer Salesforce.com as executive vice president of sales for the Americas. Salesforce.com issued the press release earlier this week. Talk about a kick in the teeth. Dennerline is taking all of Cisco's plans to break into the next big market opportunity and taking it to the market leader.

To add insult to injury, Chambers has called the WebEx acquisition, the center piece of Dennerline's business, as "being in the top five, maybe even in the top two in terms of the long-term contribution to Cisco."

What does it say that Dennerline is leaving one of the crown jewels of the Cisco business designed to drive future sales growth? And to cut to the chase: why is Dennerline leaving Cisco for the greener pastures of SaaS leader Salesforce.com, which weighs in at a meager $1.8 billion compared to Cisco's $36.1 billion in sales?

The answer is cold hard cash in the form of lucrative Salesforce.com stock options. Dennerline simply believes that it will be easier to make those lucrative stock options at Salesforce.com rather than Cisco. Chambers is feeling the pain of the stock options express that fueled Cisco's growth.

Dennerline is not the only one leaving Cisco for what they see as greener financial pastures. One week ago, McAfee snatched away another 10 year Cisco veteran:  Alex Thurber.

Thurber, former senior director of technology go-to-market strategy for worldwide channels for Cisco, left to take a job as worldwide channel chief for McAfee, which weighs in only at $1.6 billion, once again a peanut compared to Cisco.

What these two 10 year Cisco veterans see is that Cisco is struggling to grow sales and significantly increase its stock price.

These are two ten year veterans in the last two weeks? How many other veterans or even up-and-comers have left the mother-ship for smaller, more nimble companies? 

Are there more high-level executive departure shoes to fall? What do you think of the Cisco brain-drain? And are those exorbitant Cisco margins about to take a hit?