Dell Technologies' in-house financing company, Dell Financial Services, is now the preferred financing vehicle for VMware, and the arrangement is both fertile ground for Dell EMC's partner recruitment efforts, and the cornerstone of a strategy to stitch VMware more closely to Dell EMC while maintaining the virtualization kingpin's independence.
The arrangement with VMware means partners that aren't Dell EMC partners today will nevertheless be going through Dell Financial Services to get financing on VMware deals, said Darren Fedorowicz, Dell Financial Services' executive director of business development.
Fedorowicz said Dell Financial Services has been working with more than 100 new partners every quarter, and many of them are coming as a result of the VMware relationship. In May, the last month for which Fedorowicz had data, Dell Financial Servcies worked with about 50 partners it hadn't worked with previously.
Dell Financial Services has been in business about 20 years, and it's grown rapidly in recent years. The VMware relationship is the latest sign of the company flexing its muscle. Dell's acquisition of EMC, which also had an in-house financing arm, made Dell Financial Services a $6 billion-a-year financing company. This year, it is projected to finance about $1.5 billion through the channel in the Americas, Fedorowicz said. Five years ago, it was topping out at $200 million.
The arrangement with VMware "helps VMware because they now have a dedicated manager," Fedorowicz said. "They get a dedicated manager, and can say, 'I need these installments, here's the partner I'm working with, can you work out all the administrative logistics of it?' and they get a dedicated person who can do that."
Fedorowicz said that while there's a significant partner recruitment opportunity there, Dell Financial Services takes a low-pressure approach.
"We're signing up new partners all the time," Fedorowicz said, "and a number of new channel partners we're working with are coming directly from VMware. We're making it so if VMware brings us a partner, we're not saying,'Sorry, we can't work with you, you're not a Dell EMC partner.' We're saying, 'Let's make this simple. Let's make your cash flow beneficial'"
With products like its new Embedded Terms, which amounts to no more than a paragraph on a customer purchase order, Dell Financial Services pays solution providers up front on deals and then collects payment from customers. "The biggest reason partners are leveraging us is we're usually paying them within about 48 to 72 hours of getting the contract signed. We're saying, 'If you need us for anything else, we're here. If you don't, we're not going to pressure you into it.'"
Scott Winslow, CEO of Winslow Technology Group, a Waltham, Mass.-based solution provider that works with Dell EMC and VMware, said his company is working more and more with Dell Financial Services, and the results so far are impressive.
"Our business with [Dell Financial Services] has increased a lot," Winslow said. "We're up twofold over last year, and I do see more deals coming in that way. It's not typically just VMware. We're doing a lot as a package with server, storage, networking and VMware, and [Dell Financial Services] is a nice way for us to not have to worry about the receivables issue if the customer is a slow payer. [Dell Financial Services] pays quickly. The process is streamlined. We don't have to go scratching to collect a receivable from the customers, which sometimes can extend 45 to 60 days, so we'd have to float. We're often surprised by how quickly we get paid. It's good for our cash flow, so our CFO likes it."