Dell Greenlights $26 Million To Make Channel-Focused IT Improvements

Dell is investing $26 million in channel-focused IT changes designed to improve the online and offline order experience and enable selling through distribution.

The decision to make the investment was approved on the spot by Founder and CEO Michael Dell and other members of the executive leadership team when top channel executives at the Round Rock, Texas-based company approached him with a plan to improve its internal channel business processes.

"The commitment is only increasing," said Dell in an interview when asked about how much the company is investing in the channel. "When we look at additional investments and resources we're applying, the range of solutions we're developing, the opportunities for partners are fantastic and we want to continue to grow together."

[Related: CRN Exclusive: Michael Dell On Being A Disruptor And The Impact On Cisco, HP, IBM, EMC]

Dell boasted that the company's channel sales growth is unprecedented. "I don't think there's been a channel program that has grown as fast as and as large as ours has ever," he said. "I think what we've done in the last four to five years is unprecedented. Yet, when I look at what we're planning to do in the next few years with continued growth with the channel, with our distribution partners Ingram, Tech Data, Synnex and many regional distributors, our OEM business, we're quite bullish on our prospects for growth here. We're investing in innovation. We're playing a long-term game."

The $26 million is part of a broader $125 million channel investment Dell announced last fall, and it's the first part of that big investment being used specifically to accelerate the direct sales and PC powerhouse's evolution as a major enterprise player with the reach and wherewithal to take on industry stalwarts like Cisco and HP.

"We're not shy about it; we want to be No. 1," Jim DeFoe, vice president of channel sales, told a packed house at Dell's recent strategic partner summit in Austin, Texas. "We want to maximize profitability. We want to be sure you're making money with Dell."

Steve Brown, the company's executive director of channel enablement, told partners at the strategic summit that the company is working hard to provide process improvements that put Dell in the same league as longtime channel players. "Positive changes are coming to you with enhancements we are making in the next quarter," he said. "We have got a lot of work under way."

In the coming months, Dell intends to make several improvements to its channel program, including deal registration automation; price and quote automation; partner order tracking; increased services capabilities; and improved warranty terms in its ProSupport program, and an automated, integrated line-card landing page, Brown said. Dell also plans to upgrade and expand its "Find-a-Partner" tool later this year, he said.

Dell told CRN editors at the company's headquarters that fast, deep enterprise growth will require more and more investment in the channel as the company tries to outpace the market and anticipate broad industry trends like software-defined and hyper-converged infrastructure.

Dell executives said the company is listening to partners and responding with process and product improvements designed for the channel. For example, Dell said he heard loud and clear from partners that simply providing a reference architecture was not good enough.

"What we found with reference architecture is when the customer has a requirement for SAP HANA or Oracle, Cloudera, Microsoft, VDI, whatever solution, the reference architecture proved to be insufficient," Dell said. "Many partners said, 'I need more than a reference architecture and a bunch of white papers, can you actually bring a solution?' So we have T-shirt-size versions of these. Small, medium, large, extra-large, double-extra-large, and here is the ready, tested solution, and partners seem to love that."

Listening and responding meaningfully to partner wants and concerns will help Dell break into a variety of vertical markets. Asked if there were particular markets in which the channel could have better market share, Dell said, "I'd like to have all of them."

Dell has aggressive market share goals in security, storage and other business lines, and Dell said partners will play a key role in hitting those goals, and the company is reaching out to partners to discuss how they can do more with Dell.

"Security, software, storage, networking, servers -- those are all areas where our partners play a very big role for us," Dell said. "We're having a lot of success, making sure that success continues, that we've created a win-win with the partners, that they're utilizing all of Dell's capabilities. We're having a lot of growth this year with Dell Financial Services, but not all the partners are utilizing that and that's a great resource. Our GeoPartner program, we have many partners involved in that. Our ProSupport Plus, these are all things we get into discussions with our partners about how do we do more together.

About 40 percent of Dell's global revenue comes through the channel, and while Dell executives wouldn't complain about boosting that total, they're more focused on using partners to drive "share of wallet," said Cheryl Cook, Dell's vice president of global channels and alliances.

"We've got 4,300 certified partners that's not all-exclusive Dell. I'm not desperate that that needs to double or be bigger," Cook told CRN. "I would like more wallet share, share of wallet expansion in those partners that have made enough of a commitment with us, but are still carrying the other lines, primarily in the enterprise space."

Cook said Dell is making a concerted effort to recruit Cisco and HP partners, and it's hyping its free training, boosted incentive programs and a willingness to credit partners for competitors' certifications so they don't have to start at square one with Dell.

The point, Cook said, is to position Dell to win business from Cisco and HP over time by demonstrating that its technology can co-exist in the enterprise with whatever competing solutions customers have in place, rather than demanding that customers rip out competitors' products and replace them with Dell's.

Partners interviewed by CRN said the company is hitting the right notes.

"They've got it right at this point. There's certainly a willingness to engage from a direct perspective," said Robert Braceland, president of Springfield, Mass.-based Entre Computer.

"The other guys, unless it's your SMB customers, their channel programs work fine with that," Braceland said. "They're more about working direct with the existing customer base than they are about working with the channel. HP is not engaging channel partners proactively, or their reseller partners proactively. We're seeing more engagement from the Dell folks than we are from the other folks. They've been very candid about opportunities and where they believe our fit can be in those opportunities. If I'm waiting for the other guys to call, I'd be waiting a long time. With the other guys, it's 100 percent driven by us rather than a partnership."

"At the end of the day, the portfolio is pretty damn good," said Scott Winslow, president of Winslow Technology Group in Waltham, Mass. "They wrap it up with the 'Do More' program that keeps you really loyal with rebates and incentives," he said.

The support from Dell gives him the confidence to punch above its weight, Winslow said.

"As a small VAR -- 22 people -- we want to be important to somebody," Winslow said. "We want to be really good at a few things, and I would put us up against anybody in the country as far as deploying enterprise products. We can look the customer in the eye and say, 'This is going to work, it's going to work really well in your environment, we can deploy it for you, and we can teach you how to use it, and you're going to have a good experience.'"

PUBLISHED JUNE 12, 2015