Dell EMC Playing Matchmaker In Partner M&A Power Play

Dell EMC executives are playing channel matchmaker as they actively encourage well-suited partners to merge. Why? Dell EMC is gunning for growth, and the company is aware that not all solution providers will be able to meet the aggressive targets of its new partner program,

The strategy not only helps channel partners grow and maintain or advance tier status within the new Dell EMC partner program, it helps Dell EMC consolidate channel power as it boosts incentives for partners that work with the vendor exclusively and sets aggressive tier revenue goals as part of the new channel program being rolled out today.

"We are absolutely encouraging" M&A among channel partners, Dell EMC Channel Chief John Byrne told CRN. "We are already talking with other partners … As we look at our partner ecosystem to sell more of our portfolio with a full suite of services, you are going to see more and more of that. Partners are actively asking us to partner them with other partners in the community which we are doing when appropriate."

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Byrne, Chief Commercial Officer Marius Haas and their team orchestrated their first partner M&A love connection last week when Atlanta, Ga.-based storage, virtualization and back-up solution provider Data Blue acquired Nashville, Tenn.-based cloud and data center service provider LPS.

"Byrne is on record saying one of the key things that motivates M&A is being able to grab status, so if you buy Titanium, you are Titanium," said a top executive at a solution provider that works with Dell EMC. "We're a $10 million to $12 million company, and we're Titanium," the executive said. "Dell could've just said you will re-level in 12 months, but they're encouraging M&A. They're facilitating it. If you're used to being on top, and you won't be in the new program, there's a way to get there."

The new Dell EMC program is split into Gold, Platinum and Titanium tiers. Partners have been "status matched" into the new program. That is, top-tier partners from the legacy Dell and EMC programs are automatically Titanium partners in the new program, and so on.

For now, the tiers are based on broad revenue ranges. Byrne's team intends to lock into more specific revenue requirements sometime around August. Partners will have until Dec. 31 to complete necessary competency requirements and until Feb. 2 of next year to reach the tiers' revenue requirements. This puts some partners, especially legacy Dell solution providers who could be top-tier partners with as little as $5 million in revenue, under considerable pressure to grow to simply maintain the tier status they've been assigned.

"If you're an EMC partner, and going into this year you were status matched and were leveled Gold, and one of your biggest competitors who is a little guy is Titanium and you can jump to the head of the line by acquiring them, the status itself has a valuation," the executive said.

A top executive at an East Coast solution provider and legacy Dell partner said the M&A push makes sense, but he'll skip it. "It makes a hell of a lot of sense if you can take a strong legacy EMC partner and combine them with a legacy Dell partner," he said. "They'd rather deal with a lot fewer partners, and by encouraging that kind of behavior, it's a great way of infusing Dell talent into EMC. They've said things to me, like, 'you'd be a great match with so-and-so,' but we want to do it ourselves. We're having too much fun."