All The Right Moves: Michael Dell Leads The CRN 2017 Top 100 Executives Pack
Last spring, in the midst of the merger of Dell and EMC, World Wide Technology CEO Jim Kavanaugh on a whim sent a last-minute invitation to Michael Dell.
In an email, Kavanaugh reached out to invite the Dell chairman and CEO to meet with him and other members of WWT's board while they were in Austin, Texas, for another meeting.
"We said, ’Michael, you're probably swamped, but we're going to be in town for the next two days and if you're interested in coming down and spending a couple hours with us, we could chat about what you're doing and hear your thoughts,'" recounts Kavanaugh, who is also a co-founder of St. Louis-based WWT, No. 8 on the 2017 CRN Solution Provider 500.
You can imagine the board's surprise when Dell quickly accepted.
"Thirty minutes later, he responds and says, ’Happy to do it.' In Michael style, we met him down in the lobby and he came walking in all by himself, no huge entourage, just kind of strolling down the street by himself," Kavanaugh said.
That willingness to put aside his other cares to make time for a partner is just the kind of evidence that has made believers out of top solution providers like WWT, convincing them that when Dell the company shifted away from its direct-only heritage in 2007 to embrace the channel it had once eschewed, Dell the man was 100 percent committed to the shift.
"The direct business model Dell had in the early days was very innovative and entrepreneurial, but as the market morphed and changed, he changed with it," Kavanaugh said of Michael Dell. "His ability to adapt and reinvent himself and the company is just not easy to do."
Dell Technologies' channel renaissance is a testament to Michael Dell's agility and adaptability, to his passion for customers and technology, and to his deep commitment to using data to drive growth at his namesake company, solution providers said. Dell is a leader with big ideas, a clear vision and high standards. That commitment, vision and data brought him around to the channel and he's not looking back.
For partners, Dell's channel evolution is indicative of Michael Dell's willingness to change in order to benefit the business, and his commitment to going where the data leads him.
"Michael is incredibly adaptable," said Ken Lamneck, CEO of Insight, a Tempe, Ariz.-based solution provider and No. 13 on the 2017 CRN Solution Provider 500. "Dell's first foray was all about ’go direct.' That worked extremely well in the early years, and of course it was sort of anti-channel, and then he started to recognize that business models were changing and that the channel was actually a more efficient way to reach all the customers he needed to," Lamneck said.
"He was able to be pretty agile and adaptable, and he had to change the culture of his organization internally where he had preached direct to them for so long," he added. "He certainly understood what it was going to take to change the culture of his company and embrace the channel, and he took a very long view of it because it wasn't going to happen overnight, and it didn't happen overnight. He's been incredibly consistent. There were a lot of naysayers out there who remembered competing against Dell when Dell was going direct, so it's not like people [in the channel] just rolled over and said, ’This is going to be great for us.'"
Solution providers said they see Dell as a leader who's right a lot of the time, but not afraid to change tactics when he's not.
"It's exciting to see Michael evolve to the point where he puts even more value in the channel than he has in the past. Obviously, that creates enormous opportunity for everybody," said Dan Serpico, CEO of FusionStorm, a San Francisco-based solution provider and No. 46 on the 2017 CRN Solution Provider 500. "It's a testament to him, really. How long has he run that business? Thirty years? They've come through how many changes over the course of time? He's very entrepreneurial, but very focused. He's very capable of changing his mind, of reading the market, admitting that strategies aren't working, or that there are strategies that will work better. That's why his business has been around as long as it has and has grown as much as it has."
A New Channel Identity
Now, in the aftermath of the EMC acquisition last September, Dell has taken on another channel challenge over the past year: the herculean task of integrating two massive partner programs to create a new channel identity without disrupting the flow of business. By many accounts, the combined company's channel team has accomplished that quickly and successfully.
Dell EMC rolled out its unified program in early February, just five months after Dell closed its acquisition of EMC. The job required finding balance between Dell's existing program, which partners said was profitable but complex, and EMC's, which was simple for partners to navigate but had seen backend rebates cut systematically in recent years.
The result, under Channel Chief John Byrne, is a program that strives to be simple while nearly doubling rebates for mainstay EMC storage, converged and hyper-converged infrastructure products and piles on incentives that can result in 20 percent payouts for solution providers. The program also introduced aggressive rebates and incentives for partners selling server and PC lines and reworked rules of engagement for the channel by introducing "line-of-business incumbency," a system that makes accounts where partners have gained traction officially partner-led. In Dell EMC's most recent quarter, partners benefited from a double-digit increase in channel rebates and market development funds, Byrne said.
In late June, Byrne told CRN channel momentum is strong, noting that Dell EMC partners had delivered more than 6,000 net-new customers, including several hundred new enterprise accounts, during the first quarter of the company's fiscal year. And although the integration hasn't been without its rough spots, the success has allowed Byrne to embark on a plan to hire hundreds of channel sales specialists, including pre-sales enterprise reps to bolster the company's high-end data center offensive. Byrne also said the company was seeing strong increases in its deal registration pipeline, global distribution sales and in services sales.
Making The Big Bets
With the Dell-EMC integration in his rearview mirror, Michael Dell continues to focus on the future. His ability to adapt and change has helped his company through several major transitions and has made Dell a key player in today's digital transformation market while competitors from yesteryear — Compaq, Gateway and Sun Microsystems, for example — have disappeared.
For the chairman, founder and CEO, though, outlasting competitors and pulling off big bets is only the beginning. As the pace of change in the IT market hastens, Michael Dell, a Houston native who took to math, science and entrepreneurship early in life, has articulated a vision for next-generation technologies like artificial intelligence, Internet of Things and machine learning, as well as for the channel's place in how those technologies are sold.
Dell sees his company — especially cutting-edge business units like the fast-growing Pivotal and enterprise cloud juggernaut Virtustream—as being an essential provider of the infrastructure of the digital future, supplying the channel and its customers with the technology they need to make advancements in every corner of the business world and society at large.
"The number of devices and products are just creating incredible quantities of data. It's a super interesting and exciting area," Dell told CRN in a recent interview. "It's been said that software is eating the world. Well, AI and machine intelligence are eating software. All of this stuff has to run on something. AI doesn't run on AI. Software doesn't run on software. It all runs on hardware, so there's a hardware element here to all of this. It's a big area of focus for us."
Dell told CRN his company is "seeing very strong growth" in IoT. "The growth in the number of connected devices and data is absolutely happening. It's from the very, very large companies all the way down to the consumer," Dell said. "If AI is your rocket, the data is the fuel for your rocket. Now you have this explosion of data and the computing and machine intelligence power and all the innovation going on there. That creates tremendous opportunity.
"We have tons of customers that are standing up these projects related to AI, machine intelligence, machine learning, driven by the data that's being generated, and a tremendous amount of it stored in our systems," Dell said. "There's tremendous growth in unstructured data. Isilon is a tremendous platform for unstructured data. We're also doing a ton on the compute platforms because of the use of specialized processing technology. You've got CPUs, GPUs, and we've been investing in a bunch of new companies that have next-generation microprocessor technology to deal with all that data."
Dell Technologies revenue hovers around $75 billion and it has 130,000 employees in 180 countries. The company has strong positions in all the key infrastructure markets, including servers, storage, PCs and hyper-converged infrastructure. When CFO Tom Sweet joined Dell some 20 years ago, the company did about $12 billion in annual revenue and had about 15,000 employees. The channel, and Dell's decision to embrace it, were key ingredients in that growth, Sweet said.
"Over the years, as the company has expanded its capabilities, solutions and offerings to customers, you've seen a realization and maturity around the fact that customers like to buy in different ways," Sweet said. "I've seen Michael mature in that perspective and realize that ultimately this is all about the customer and you have to facilitate their buying dependent upon their preferred method. That's been an evolution as we've evolved and grown and understood more in depth the customer dynamic as our portfolio has expanded."
A Technology Balancing Act
Part of that customer dynamic requires Dell Technologies and its partners to strike a careful balance between "bleeding-edge" technologies and traditional solutions used by most customers today.
WWT's Kavanaugh said he's confident enough in Dell's leadership and commitment to the channel that WWT has invested heavily in its advanced technology center working on next-generation solutions and application development.
"I look at it as a bidirectional collaboration between the two organizations," Kavanaugh said. "We have invested a lot into our advanced technology center, and this ecosystem of labs and individual technology products built into architectures and transformational business solutions. We work very collaboratively with them on mainstream products and architectures, but also leading-edge and bleeding-edge technologies around IoT, application development, AI and big data and a number of things. That's important, and it's also a bit of an art and science in how aggressively you invest in the next generation of leading-edge technology while also making sure you're delivering mainstream capabilities. It's a collaborative relationship we have and we learn from each other."
And as Dell and its portfolio have expanded, so too have the opportunities for partners, especially those that align closely enough with Dell EMC and its channel program to earn the ultra-exclusive Titanium Black designation—which Insight, WWT and FusionStorm all have done.
In the months after Byrne took the wraps off the unified channel program, Insight closed a storage deal that tipped the scales at $133 million for a single order. WWT won a $32 million storage deal, and FusionStorm recently closed an $11 million deal that includes VMAX all-flash storage, Dell EMC XC Nutanix and VxRail hyper-convergence solutions and Dell EMC servers.
FusionStorm is also moving into new territory — PCs — as it heeds Dell's call to sell across the company's entire portfolio, Serpico said.
"We just won a huge opportunity based on desktops and will ultimately lead into data center," Serpico said.
"That's important to us not only because of the scale, but it represents for us our first real foray in a meaningful way into the client business and to adding meaningful value in the client business, and I don't mean selling five laptops to somebody. That's a big opportunity for us because strategically it allows us to get more aligned on that side of the house, which we hadn't put a lot of focus around until now."
To fully understand Michael Dell's evolution from direct sales partisan to channel champion, one must understand his ability to adapt, and his deep understanding of the market, and all of that is predicated on his deep commitment to data. Without data — the right data — the company's ability to execute is dampened and executives tasked with generating that data set themselves up for difficult conversations with the boss.
"If you don't know your business, if you don't know your data, if you don't know what drives the results you're seeing or what you need to do to achieve the objective that you have identified, you're going to have a tough meeting," said Marius Haas, Dell EMC president and chief commercial officer. "Michael is extremely passionate about getting to the answers and then driving hard-core execution. The velocity at which he wants to run is extremely high. There's not a lot of appetite for expanded analytics, or rock-fetching exercises. Know your business, know what you need to do, show me you're executing. If you're missing on any of those three, it's going to be a tough discussion and you know it going in. "What we very often say when our executive leadership team
is around the table with Michael is, ’Data is your friend,'" Haas said. "Michael always starts with, ’What is the opportunity, can we win, what does it take to win, what is our current competitive position and what do we need to do either to change, add investment or add coverage capacity?'"
"Ultimately, Michael is about, ’Do you deliver?'" Sweet said. "Do you deliver the results and do it in an appropriate manner? The history of this company has always been about delivering on your commitments and ensuring you do it in the right way. And while we do that, making sure we're delivering for customers and end users."
Armed with the data he expects from his leadership team, Dell is able to take risks, make big bets and move quickly on major decisions, including taking the company private in a $25 billion buyout in 2013, buying EMC in 2016 in the biggest IT industry acquisition in history, and establishing a unified channel program for the global behemoth.
Pain Points And Opportunities
But Dell's success is far more than a numbers game, and his quest for data goes well beyond taking reports from his executive team. Dell is known for being accessible, for responding to and reaching out to partners and employees to get their take on the business, the market or technology. It's part of Dell's drive to thoroughly understand every aspect of the business.
"He does a lot of skip-level conversations, meaning he will at any point in time pick up the phone and call someone two or three levels below me and ask him or her how it's going," Haas said. "His natural curiosity is to understand the business inside and out. He's got a personal agenda to continue to learn, to continue to transform himself and the only way he can do that is by getting deep into understanding either pain points or opportunities."
Dell's personal style, on full display when he joined WWT's board members for that impromptu meeting last spring, has gone a long way toward endearing him to solution providers, Kavanaugh said.
"That is engaging and endearing to people from a personality perspective," Kavanaugh said. "He has kept grounded, but he is also incredibly passionate and driven to take that organization to a whole other level. A lot of times, people who move into positions of significant wealth and power lose sight, they lose that position of humility and grounded personal perspective, and a lot of times that can come back to really hurt them."
Dell's ability to mix business insight with technology smarts is a powerful combination, said Insight's Lamneck. "He's obviously got incredible business acumen, but he is also incredibly strong on the technology front," Lamneck said. "He's got a great combination, and it's really hard for someone to be at the top of the game in both of those arenas. Putting together EMC and Dell was no small feat. Having the financial savvy, the business sense and having the technology sense for how it all comes together—that combination benefits all of us in the channel."
Michael Dell is just 52 years old. Senior Dell executives and top partners agree that he's just getting started.
"He's never done," Haas said. "I'd be pretty certain that he's got lots of ideas and that he's prioritizing them now. It all starts with how we provide more value to customers. What are the gaps in the portfolio and how do we position ourselves to win?"
"He's pretty firm in his beliefs, and he's not afraid to make some big bets," Sweet said. "They're thoughtful bets. They're done with the appropriate amount of due diligence, the facts as we best understand them. He's decisive, he collaborates to make sure we've got all the data points, but ultimately, he's comfortable to make pretty big decisions."
"He knows how to survive. Let's not underestimate that at all," FusionStorm's Serpico said. "The portfolio is far more extensive than it's ever been. Their go-to-market strategy is far different based on the channel play. The leadership in the business has changed, the structure in the business has changed. This is a guy that has survived a market that is changing faster than anything else. The guy is a survivor. The business has survived and is thriving and that is a compelling story in its own right."