Dell Q&A: Channel Growth, Deal Registration And The Kace Effect

Dell announced its first fiscal quarter results last week and afterward, Greg Davis, vice president and general manager, global commercial channels, and Paul Shaffer, worldwide channel marketing director, spoke with CRN’s Scott Campbell about the progress of Dell’s channel in the first quarter, including the integration of Kace and the latest numbers on deal registration. The following are excerpts from the conversation:

CRN: Let’s start with some numbers. How much business from the channel are you doing at Dell?

Greg Davis: On a global standpoint, we see good momentum from a channel basis. Channel business is now 25 percent of commercial revenue and around 20 percent of total revenue. We continue to place a strong emphasis on channel partners, and we see good growth globally.

In the U.S., [channel sales] growth was over 25 percent year over year. We are excited about that. It validates the programs that we put in place the last two years. We have maintained a level of consistency and are committed to the channel, and we haven’t changed that. We have enhanced value to partners over the last two years on how to deal with Dell, and Dell has learned how to deal with them. That led to really strong growth in the U.S.

I measure ourselves as are we growing revenue faster than the industry. We’re growing at least two times the industry growth. That’s satisfying for our teams.

CRN: What additions to the channel did you bring during the quarter?

Davis: In February we acquired a systems management company, Kace, that offers a systems management appliance and software that deploys in a data center that is designed to be easily managed and deployed and to maintain clients and desktops across the entire enterprise. We’ve just rolled out a specialization training certification for that.

Bob Skelley [director of global enterprise, architecture, for Dell Global Commercial Channel] sent out a message to certified partners a week ago. We’ve begun to talk to partners about our Kace products. We will be very involved with systems management. We think it’s a similar opportunity to what EqualLogic was for partners. It’s a very easy product to set up and sell and deploy. It has a quick 90-day ROI for customers. There’s similar margin opportunities for partners. We set up a very similar structure, with deal registration, identifying opportunities, standard discounts.

CRN: Did Kace come with a strong partner base that could mean cross-selling opportunities for more Dell products, or is there not much opportunity to add a significant number of new VARs?

Davis: It’s a very small base of partners. We took a lot of their training, pulled it into our training and the way we deliver EqualLogic training to partners. There’s maybe one or two new partners. We’ve already developed a lot of relationships with channel partners in the U.S. Most of the large partners, medium-size partners already have a relationship with us.

The real opportunity is to take the base of partners we have and offer them a new product, new areas of solutions from Dell that offer an easy-to-sell solution, ROI that’s relatively good, and an aggressive return on investment. You’ll see us invest more in training and recruiting to systems management.

NEXT: Deal Registration, Distribution

CRN: What are your deal registration numbers looking like now?

Paul Shaffer: Globally, we had greater than 100 percent growth and had 30,000-plus total. Historically, our [registered deal] approval rate is 68 percent to 74 percent. We finished the quarter at 70 percent globally and 72 percent in the U.S. We also saw certified partners with an 81 percent approval rate. We had 1,200 deals [two weeks ago]. That’s a record.

Last October, we lowered the deal-registration minimum to $15,000, and we are lowering the public-sector deal registration from $50,000 to $25,000 in enterprise products. That’s big particularly as we move into the hot buying season in the public space.

CRN: How many certified partners do you have now?

Shaffer: At the end of the quarter, we had 780 in the U.S. and around 1,900 globally. A year ago, we had 1,288 globally and about 600 in the U.S.

CRN: How are the distribution relationships with Ingram Micro and Tech Data going? What are the plans to add more products to their portfolio?

Davis: We continue to have a strong relationship with fixed-configuration products through both partners. We’re having talks about expanding products, peripheral products and a few other things. It continues to be an area that we’re learning. It’s not a business yet that we’re operationally good at. We’re learning as we go, but we continue to have strong relationships with them.

CRN: Are you finding strong cross-selling or upselling opportunities with the partners from Ingram Micro and Tech Data to get into the EqualLogic and Kace space, or is it a different set of partners that just aren’t there, like apples and oranges?

Davis: It’s apples and oranges. We as a team have three priorities this year. One is to continue to grow and invest in the EqualLogic and systems management product lines. The second area is side investments in Asia-Pacific and Japan. Our third priority is to grow our certification programs and acceptance of certifications globally.