Dell EMC Channel Chief John Byrne On Cross Selling, Pushing Services And Breathing Life Into The Storage Portfolio

Service Economy

Dell EMC Channel Chief John Byrne is taking the channel growth the company booked in the first half of its fiscal year as a sign that the program he formulated, and the portfolio available to partners, are on the right track. Still, but he's not taking his foot off the accelerator.

Byrne says he's planning on introducing new incentives to boost storage sales and is keeping the pressure on partners to make services a part of more transactions. The company is in a good position, Byrne said, to put distance between itself and competitors like HPE.

Byrne is also considering strategies for training and incentivizing partners to sell the new Pivotal Container Service, a partnership between Pivotal, Google Cloud and VMware.

Speaking of VMware, Byrne says making Dell Technologies a distributor for VMware in August has taken almost any trace of friction out of the partner relationship with the two companies. Since that time, Byrne said, he hasn't had a single case where channel conflict has been reported.

What follows is an edited excerpt of CRN's conversation with Byrne.

How much growth have you seen in Dell EMC channel business through the first half of your fiscal year?

We have two goals, two visions: We want to be the biggest and best channel partner on the planet, and I want to be the best channel sales team on the planet also. We started the year as a $35 billion channel company. We said back in October not to let that $35 billion number fool you. We're still the dark horse, and there's still a lot of upside, and that's playing out. In the first half, our channel business grew [by] double digits. Compare that to anyone else, and what the team and the partners are doing is quite remarkable. Our disty revenue is also up double digits.

What do you need from your partners today?

There are some things we want them to do. We want them to grow the top line and the bottom line. We want them to sell more of the portfolio. We want them to attach services like crazy. We want net new, net new logos, new customers, or a new line of business within a customer with whom we haven't won that line of business before. When you look at the first half, our partners brought us 18,000 net new opportunities, which is quite remarkable.

You've made a big push to get partners to sell more of the Dell EMC portfolio. How has that panned out?

We wanted our partners to sell more lines of business. Our partners were selling on average 1.6 lines of business. Right now, they're selling close to 2.4 lines of business. It's about cross-sell and revenue synergies. Our partners can be certified, trained and to sell more of our portfolio.

In what areas do you see the most traction as far as cross-selling is concerned?

We are definitely seeing, if you are a heritage EMC partner who has sold a lot of servers, you may not have been selling Dell servers. If you look at our partner ecosystem now is selling more ISG (Infrastructure Solutions Group). If you look at our channel server business and look at HPE, their Q2 number was down 7 points. Our server channel business was up 22 percent year-over-year. We knew we were, as a company, very good at selling 1-socket and 2-socket racks and towers. We rolled out some programs around 4-sockets and blades, where our share has been less. We saw our 4-socket and blade partner business up by double digits also. It's nice to see a wider and richer portfolio being sold.

Have you been successful in convincing partners to sell more services?

If you're a partner and all you're doing is selling PCs or servers without our services, we said start attaching our services. The good news is our services growth in the channel was close to double digits. We're basically doing the carrot and the stick. We'll reward you for attaching our services, but we also said your tier threshold for next year is going to require hitting a minimum gate for services. Partners are hustling, both VARs and distribution.

Are partners buying into the flexible consumption models you introduced last spring?

In Q2, Dell Financial Services was up 90 percent year-over-year. In the first half, it was up 96 percent. It makes a lot of sense. We're seeing the partners who actually work with DFS growing one-and-a-half times faster than partners that didn't leverage it. Our pipeline for our consumption models is building really, really nicely. It's still early, but it's into the hundreds-of-millions already.

What's working in the storage business?

We still have work to do on storage, and I'm talking about arrays. Our hyper-converged business was up significant triple-digits. VxRail is killing it with more than 2,000 customers, and 14,000 nodes have been deployed to date. But we have work to do. We are still the No. 1 storage player in the world. Our external storage share is at 28 percent, and our closest competitor is at like 13 percent, but we want more.

What's the biggest challenge for the Dell EMC storage business right now?

I think in hyper-converged we're doing great. The numbers speak for themselves. As we brought the two companies together, we said if you love Unity, stay on Unity; if you love Compellent, stay on Compellent. I think our partner community was looking for us to be much more prescriptive and much more aggressive in our positioning of our products and how we win. We're being much more aggressive in our portfolio in the midrange. We're adding a lot of features and benefits to the existing portfolio. We're much more clear on why each of those win. We're providing a level of clarity, positioning and the dollars behind hit. The partners are making more money than they ever have, but I want to do even more.

Are you considering any program changes to accelerate storage sales through the channel?

When you look at our program, a lot of the benefits are on the back-end. Partners are saying they'd like to see something on the front end also. You're going to see us rolling out some promotions and programs on the front end. Not to neglect the back-end, far from it. It's just to give our partners' salespeople clarity and get more dollars to them.

Have you identified areas within your storage portfolio where the market is just moving away from those products?

No. I think you've always got to be watching the market. Unless you're sitting here with 100 percent market share, there's always share to be had. Our market share is at 28 percent. That means there's 72 percent that I want to go and get.

What are you doing to get partners into selling Pivotal Container Service?

As partners are talking about transformation, we want to be connecting those dots and making it easy. We're looking at what training, and what certs and which partners can actually offer each of the transformational technologies we're speaking to. It's important, and you've got to get ahead of it, and I think our partners can feel that.

What's the likelihood that we could see VMware folded into the wider Dell EMC Partner Program?

That is a discussion that's happening around here. I think what we've announced with Dell being a [VMware] distributor is a big thing. It's taken a lot of noise out of the ecosystem. Since we announced it, I haven't had a single escalation. Not one. The bigger thing for us isn't necessarily bringing [VMware] into the broader ecosystem. The companies are separate companies. We have to be very, very clear about that. We have to make sure we have true operational efficiency as we roll that [distribution agreement] into the six countries and next year as we go broader globally. That is all we're focused on right now.

HPE argues that its Synergy solution with containers can reduce VMware licensing costs by as much as 40 percent for customers. How can a partner counter that argument?

We have to go back to what [Dell Technologies Chairman and CEO] Michael [Dell] said, which is that it's an 'and' discussion, not an 'or' discussion. When people run containers, they run them on virtual machines.

HPE is trying to pull all its indirect sales operations into a single organization. How are you preparing to do battle with a leaner, more nimble HPE?

It doesn't really matter what I think about HPE, honestly. It's what they think, what their partners think and what their ecosystem thinks. I'm just maniacally focused on our partner ecosystem, our disty ecosystem and doing all the things that we made a big, big, big commitment to. We've made some bold commitments. We're standing up to our side of the bargain. Our partners are standing up to their side of the bargain. Our channel is growing double digits. When I look at our competitors, I don't see them growing. I don't see their business growing. We're going to keep driving the velocity with a mix of servers and client, attaching services, being super aggressive with winning net new customers with storage.