Dell Channel Unflappable Amid Buyout Drama

Greg Davis, vice president of channels, Dell

Greg Davis, vice president of channels, Dell

No channel program is perfect, and Dell Inc.’s PartnerDirect has its fair share of challenges. Among them, though, isn’t the drawn-out leveraged buyout that has the technology company in limbo. In fact, channel chief Greg Davis remains resolute in his goal to improve partner relationships and channel performance.

Performance and ease of doing business is what Davis and his channel manager top priority. As Dell transforms into a next-generation technology portfolio company, it will need systems, processes and control points to ensure partners can build solutions based on the company’s hardware, software and services.

While Dell has many of the components for systems and solution building — management software, storage, security, networking and cloud — it doesn’t have the infrastructure to provide partners the ability to buy and resell products across its portfolio.

“We want to keep our team manically focused on improving ease of doing business,” says Davis, in an interview with Channelnomics. “We don’t want partners having to deal with multiple order systems. We want them to have seamless interaction with Dell.”

Dell is sometimes criticized for the lack of integration of its acquisitions. Since 2007, Dell has spent billions acquiring technology companies such as EqualLogic and Compellent in storage, SonicWall in security, Quest Software in systems management, and Force10 Networks in data networking — all to diversify away from its core PC business. Dell has a strategy for how it wants partners and customers to consume these offerings, the back-end systems remain a work in progress.

“It doesn’t come in one giant step. It comes in a series of steps,” Davis said of the evolving capabilities in the Dell channel.

How important is the channel to Dell? Very. In 2007, after Dell saw the first signs of its famed direct sales model faltering, it raced to embrace resellers to replicate the success of other channel-centric rivals, such as Hewlett-Packard Co. and IBM Corp. Today, Dell earns as much as 40 percent of its revenue through channel partner sales, and its channel revenue continues to climb. As Dell’s general revenues contract, the channel is providing much needed replacement revenue.

The goal for Davis and his team is to not just have the channel provide replacement revenue, but drive incremental growth. Dell Software, under the leadership of John Swainson, is rolling out a strategy that provides a roadmap for partners to leverage the various aspects of Dell Software’s capabilities to build value-add systems.

“The market is changing. Competition is changing. So we have to listen to our partners and react. And not just react, but anticipate and plan for the future,” Davis says.

Dell’s channel is well-established with more than 130,000 partners worldwide and 4,500 certified in specialty systems. While it has all the hallmarks of a traditional channel program, solution providers say it continues to suffer from certain weaknesses. Most significant among them, channel conflict. In The 2112 Group’s 2nd Annual Channel Conflict Report, Dell is ranked by solution providers as the worst for managing channel conflict.

When it comes to sales, Dell hasn’t completely abandoned its direct ways. The company’s philosophy is the customer should be able to choose who they buy from. What sometimes happens is the customer will get a better price going direct to Dell than working through their reseller.

Case in point: A Midwest VAR (who wishes to remain nameless) was working on a SonicWall firewall renewal. The customer contacted Dell direct and found the same product at a better price. The direct sale went through even though the Dell partner had deal registration approved on the opportunity. Net result: The partner lost a $15,000 sale.

Such scenarios shouldn’t happen, says Davis, particularly if deal registration is approved. The partner in this case had to escalate the conflict beyond his channel account manager and regional channel manager. After several meetings, Dell agreed to pay a commission on the sale and revert the account to the partner.

Continual improvement is the mantra of Davis and his team. While outsiders watch with fascination and skepticism about the outcome of the Dell leverage buyout, the Dell channel and product teams are steadfast on building plans and executing strategies. Regardless of what happens with the buyout, Dell’s channel team is determined to move forward.

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