EMC Compensates Some Solution Providers For Deals Lost To Dell, EMC

The stealth channel protection moves are a marked departure from the EMC of two years ago when the vendor was widely acknowledged to have the industry's most aggressive direct-sales force. "EMC has had a bad rap for taking the deal direct," said one solution provider. "But how many manufacturers compensate resellers for helping on the deal?"

EMC is already offering its channel partners what Pat Sherman, co-owner and vice president of sales at eServ, a Peoria, Ill.-based EMC partner, called influencer fees. "It's a gray topic, and not a formalized plan," Sherman said. "It's something you have to ask for."

Several solution providers said they have heard that EMC is offering such compensation, calling it an agent's fee or finder's fee, but not all of them have taken advantage of the fees.

The first solution provider said EMC is also providing another stealth benefit to partners by paying for their help in closing a direct deal.

"Sometimes, when EMC wants to demonstrate products, they will take the products and customer to a reseller," the solution provider said. "Even if the customer closed direct with EMC, EMC will compensate the reseller for the help, compensate the company doing the heavy lifting."

Sherman said solution providers often provide a lot of free system engineering time to work a deal only to see the purchasing manager give it to someone else.

"We do the work, then at the eleventh hour the purchaser pulls the rug out from under our feet . . . . Most customers today can't afford to pay or won't pay for proof of concept," Sherman said.

Dell is by far the biggest culprit for grabbing a sale after a solution provider did all the design and other footwork with the customer, several channel sources said.

Joe Cunningham, general manager of Computer Professionals International, an Albany, N.Y.-based solution provider that recently re-engaged with EMC as a vendor, said that the Dell relationship has always been an area of contention for EMC's channel partners, and one that EMC admits to.

"My EMC channel rep told me that if we go into an account and see a lot of Dell servers and Dell storage, that is probably not a place to be sniffing around," Cunningham said.

A second solution provider who requested anonymity said Cunningham's case is not unique. "EMC says if you do the work, they will protect you," the solution provider said. "They said Dell will undercut you."

The other culprit is legacy EMC direct-sales people, said Kevin Reith, manager of strategic technology at Info Systems, Wilmington, Del.

EMC still has legacy sales reps with four or five accounts where they "camp out," Reith said, despite the practice being frowned upon by EMC. "These are older, wiser people who recognize that whoever pulls the deal down feeds for four to five years," he said. "Bringing in a channel partner does not sit well with them."

Steve Krauss, business operations manager for enterprise storage at GTSI, a Chantilly, Va.-based solution provider, said EMC is taking steps in the right direction. For example, he said EMC has a deal registration process, but it protects the vendor as much as it does the solution provider.

"You can only register if it means incremental revenue to EMC," Krauss said. "EMC states that if EMC takes the deal direct, its sales rep gets no commission, and the solution provider gets a 12 percent finder's fee. But take a step backward and ask why EMC would need to write a process for what happens if EMC takes it direct."

As a result, Sherman and his peers have brought up the issue with EMC at advisory council meetings, and have been told that EMC will address those issues in July or August in a new channel program, one part of which is expected to involve compensation for such situations, as well as improved certification opportunities for sales and technical personnel.

An EMC spokesperson confirmed that a new channel program was in the works but would not provide details of the program nor discuss EMC's practice of compensating solution providers for deals lost at the last moment to Dell or EMC direct sales.

Reith said he appreciates the fact that EMC is helping its solution provider partners that have put in a lot of work on a deal that gets taken away. Even so, it does not fully compensate for losing the deal, he said.

"The bottom line is, a one-time agent fee is not as good as a sale because whoever gets the deal benefits in the future," he said. "An agent fee is better than a stick in the eye. But with an agent fee, the client does not recognize our value."