Michael Dell Eyes Channel Growth, Makes Grab For HP VARs

Michael Dell told a group of solution providers that he expects solution providers to soon account for 50 percent or more of Dell's total sales, and that uncertainty over HP's PC business plans is opening big opportunities for Dell's channel partners.

Dell, speaking at a lunch for solution providers at the Dell World conference, said that during the last four years his company has made big strides in embracing channel partners, but he knows that more work needs to be done.

"I visit a lot of partners," he said. "My first words often are, we come in peace."

That peace has come about in part by a reprogramming of Dell's sales team to think less about selling direct to customers and more about working with partners, Dell said. For instance, a comp neutral commission plan has helped convince the company's best sales teams that they can close their quotas faster via partners than selling direct.

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Dell's commitment to channel partners is starting to show results, as about one-third of the company's commercial business is now coming from the channel, a proportion that is on the way to growing to 50 percent or more, Dell said.

However, Dell said, there will continue to be conflicts, but that his company will work to overcome issues. "We're basically breaking ties in favor of channel partners," he said.

Several solution providers said at the lunch meeting that uncertainty over Hewlett Packard's plans for its Personal Systems Group (PSG) business is causing customers to explore alternatives, even if they have not yet switched vendors.

One partner asked Dell if he plans to utilize the channel to take advantage of that uncertainty.

"Absolutely," Dell said. "I love that question. And I think HP's troubles are not over yet."

For instance, Dell said, HP has fired several of its most recent CEOs, another cause of uncertainty.

"The door is open [for attacking HP]," he said. "We're running through the door with vigor. And we're running with you partners ... It's a great time for us, for Dell, and the channel, to go together."

Michael Kmiec, Dell sales specialist at SHI International, a Piscataway, N.J.-based solution provider whose main technology partner is HP, said customers are not sure of what to think about HP.

"Some think HP is foolish, and some think HP is ahead of the curve," Kmiec said. "So we're just waiting."

The big difference is that customers are asking about alternatives, especially those looking to refresh their IT infrastructures, Kmiec said. "It's prompted them to look at other options, not just at Dell," he said.

Dell said another big opportunity for channel partners is the move by his company to focus less on products and more on solutions, especially those where customers need help in order to take advantage of increased performance and efficiency.

A lot of customers know Dell the company but have not yet purchased Del products, often because the company did not use channel partners in the past, Dell said.

"So we need more channel partners," he said. "We're underrepresented ... There are more opportunities as we go deeper and deeper into solutions."

One concern raised by channel partners was the difficulty they experienced using the Dell partner portal to order products.

Next: Facing Remaining Issues In Dell's Channel Transformation

One solution provider, who asked to remain anonymous, said that Dell could easily get to its goal of 50 percent of revenue coming from the channel if it fixed its ordering processes.

"Dell wants partnerships, but still has their old direct sales processes," the solution provider said. "You can put as much lipstick on a pig as you want, but it's still a pig. From financing to sales, the processes are still a nightmare."

Yet despite the issues, that solution provider understands that fixing the processes takes time. "We know these problems will be fixed eventually," the solution provider said.

Dell, in response to a partner question about the ordering process, said that the company is addressing the issue, but that integration of nine new acquisitions since last year takes time. "We don't want to slow down the selling process while we're doing that," he said.

Dell's goal is to bring partners ordering process and Dell's ordering process into sync, Dell said. "We really want to link your system and our system in sort of an EDI (electronic data interchange) system," he said.

Kmiec said that hearing the channel message directly from Michael Dell was very important to him.

"It's pretty informative to hear it from the top," he said. "These things start from the top and work themselves all the way to the bottom. I know the channel message is getting delivered throughout Dell. This gives us confidence that we'll see our Dell business expand."

The most important message from Michael Dell is that he and his company understand the enormous opportunity that can be gained from working with the channel, said Paul Clifford, president of Davenport Group, a St. Paul, Minn.-based solution provider who became a Dell partner when Dell acquired storage vendor Compellent.

Dell has gathered some of the best intellectual property on Earth with its acquisitions over the last year or so, Clifford said. That makes it easy to work with Dell to sell solutions, and not just hardware, he said.

"We're talking solutions with best-of-breed technology," he said. "Dell has the two best storage platforms out there. And combined with its upcoming 12th-generation servers with built-in Flash storage, Dell is solving real customer issues."

One of the keys to success with Dell as a channel partner is to find the right people in the company with which to work, Clifford said.

"Michael (Dell) said he wants half of Dell's business to go through the channel," he said. "We like that. But some of the old-line Dell people are still focused on direct sales. So we look to work with people who work with us."

Despite a few issues, Dell is doing a great job of embracing the channel, Clifford said.

"We've got high expectations and high standards because of our work with Compellent in the past," he said. "But we're here with Dell by choice. We want this to work."