Dell Program Has Three Problems, All Fixable

It's not groundbreaking, but it also isn't a disaster. There are three things the company needs to fix. Two are tangible and one is not.

ROBERT FALETRA Can be reached at (781) 839-1202 or via e-mail at rfaletra@cmp.com.

First, the rules of engagement as to how the direct side of the business will interact or not with the indirect side need to be clearer. Dell made a smart move with this rollout when it said it would move 1,000 accounts out of its direct business and into the hands of the channel. Solution providers are never disappointed when business falls into their laps. But Dell channel chief Greg Davis needs to make it resoundingly clear how the two sides of the organization will interact. We all want to know where the line is. In which accounts am I in with Dell where I need to worry about competing, and which accounts do I have to myself?

The other issue is compensation, and this is complicated. The reality is Michael Dell is pushing this move into indirect sales because if he doesn't, the company can't continue to grow and service the customer base—yet most business comes direct today. He also has said he expects the indirect part of the business to grow faster than the direct side. That, of course, won't be difficult given that the indirect side is growing off such a small base and the law of large numbers is making the direct side a challenge to move higher.

But to really push the company into this indirect business, Davis has to convince Michael Dell that direct-sales reps should be compensated more for pushing business through the channel than they will be if they take the business direct. Do that and we will see an accelerated indirect business and an acceptance on the part of the channel that Michael Dell is very, very serious about this move.

The final and intangible portion of the equation is momentum. Davis needs momentum now, and that is going to require raising the noise level of what is happening with Dell's indirect efforts. It means marketing, PR and a consistent drumbeat of dealing with problems head-on and pushing forward with consistent program enhancements.

Quite frankly, the easy part is behind Dell. Making an announcement that this is what the company wanted and then rolling out a plan is one thing. Executing in the market means dealing with competitive moves and making the channel increasingly comfortable that Dell has shed its horns and is listening to the indirect channel gods.

How do you think Dell can build momentum?
Make something happen. E-mail CMP Channel President Robert Faletra at rfaletra@cmp.com.