Dave Boucher, IBM's former channel chief who worked closely with Palmisano, remembers one time a few days after Christmas several years ago when he was slogging away trying to hit year-end numbers. Palmisano offered to help. Boucher refused. Being the hands-on guy that he is, Palmisano said he'd call every hour to see if Boucher had changed his mind. "Sure enough, every hour it was Sam's secretary calling to say he was on hold," Boucher says. "He has a way of figuring out which buttons to push, which ones not to, which guys need to get chewed out and which guys need a joke to pick them up. He's a very savvy people person."

Under Palmisano, IBM has steered a steady financial course, unable to celebrate great gains but not suffering any deep losses. Third-quarter earnings grew slightly to $1.8 billion, compared with $1.7 billion in the year-ago quarter, and sales hit $21.5 billion versus $19.8 billion.

But Palmisano still faces major challenges, such as delivering stronger earnings, maintaining services growth and boosting IBM's flagging microelectronics business, says Steve Milunovich, global technology strategist at Merrill Lynch.

"We're in the second or third inning of the Palmisano story and IBM has not yet delivered on longer-term issues," Milunovich says. "Sam has been on track operationally."

IBM's largest gains during the third quarter were from IGS, with 17 percent growth, and 16 percent in the SMB category, the sweet spot for thousands of IBM's solution provider partners. It is in those two areas where Palmisano's team made one of its most visible moves of the year, further cementing its relationship with the channel: forging ahead with a plan that allows solution providers to partner with IGS in delivering services to SMB clients. The initiative, which started with members of Ingram Micro's VentureTech network and expanded to other distributors' services networks, is important to solution providers who are turning to services to improve margins and implement complex solutions. While the initiative was driven by IBM's channel and global services executives, few doubt it could have happened without Palmisano's support.

Channel players wish other vendors would follow his lead by taking off the gloves and putting up a stronger fight for solution providers.

"One thing that Sam has done an excellent job at is when he drives a stake in the ground, it stays there," says Bob Stegner, vice president of U.S. marketing and channel development at distributor Ingram Micro. "A major change in strategy, like the IGS deal, is always driven from the top down. If you look at what Sam's done with the company, he deserves to be the No. 1 pick. He has the channel's trust."

(From the A 14, 2003CRN)