Dell’s Joyce Mullen On Dell-VMware Strategy, Cloud Incentives And ‘Fabulous’ Channel Growth

‘We will make sure there’s great partner value in the Dell Technologies Cloud platforms and we will drive new incentives accordingly,’ says Dell’s channel chief Joyce Mullen in an interview with CRN.


Mullen’s Channel, Cloud, VMware and Server Strategy

Dell Technologies channel sales are soaring as the $91 billion infrastructure giant continues its dominance in storage, server and hyper-convergence with plans to inject new partner incentives around the Dell Technologies Cloud and improve synergies with VMware.

“We will make sure there’s great partner value in the Dell Technologies Cloud platforms and we will drive new incentives accordingly,” said Dell’s channel chief Joyce Mullen in an interview with CRN. “We’ll put together a combination of front-end and back-end incentives because that’s what works.”

Mullen is excited about Round Rock, Texas-based Dell’s channel growth as partner sales spike 16 percent year over year in its first fiscal quarter with channel sales accounting for more than 50 percent of the company’s total revenue. “We saw just a fabulous quarter in the channel,” said Mullen, president of Global Channel, OEM and IoT Solutions.

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In an interview with CRN, Mullen talks about upcoming cloud incentives, Dell’s synergy strategy with VMware, server market competition with Hewlett Packard Enterprise and channel changes ahead to help partners.

Talk about Dell’s integration roadmap with VMware and how partners should take advantage of the tight partnership?

We’re seeing tremendous growth in VMware. In the channel, we’re obviously working on the same imperatives where we are trying to make sure that it’s easier to do more business with us and VMware. So the Dell Technologies [Partner] Program and the work that we’re doing has been dramatically simplified for partners to sell VMware. It’s pretty simple what partners what, they want to make sure it’s easy to register deals across Dell and VMware. Our operations teams are working on that right now. It’s still a manual process but we’re going to continue to drive for more automation there which means they don’t have to register a deal with VMware, they can register with one of the other [Dell Technologies brands] so they don’t have to register twice. We’re working on the enhanced credentials and certification process, so we can automatically grant certifications and compliance with our tier requirements, for example, no matter if the training was taken in VMware or in Dell or vice versa.

Why should VMware and Dell partners be excited about integration innovation in the future?

We’ve already made it possible for our partners to use MDF [marketing development funds] across activities and events that drive VMware and Dell together. We’re going to continue to enhance those processes. We’re adding more capability to that ability in the second half of the year. We started with VMware transactions focused on ELAs, we’re adding more capability to allow for smaller partners to participate with smaller transactions. Then of course the engineering, which is really behind all of this, continues it’s fast pace. There’s some really exciting work that we’re doing together with VMware from a technical point of view.

You recently extended your partnership with Cisco around converged-infrastructure, specifically VxBlock. Talk about your partnership with Cisco?

Our converged solutions are terrific. VxBlock solutions are an important part of our portfolio. Our Cisco relationship is an important part of that portfolio and critical to make VxBlock happen. We have tons of joint training and efforts to make sure Cisco partners understand the Dell proposition. We’re happy to continue to sell as much as that as customers want to buy. It’s great that we renewed that partnership with Cisco.

Will there be any new incentives or rebates for partners to sell the new Dell Technologies Cloud offers?

We have more work to do to figure out how to make sure that we’re incorporating the right partner content into how we create value for customers with those offers. We’re in the middle of doing that now. Right now, with us and VMware, there’s definitely certifications and credentials they can learn around our various technologies associated with cloud. As these offers get more hardened, then we will be offering more specific trainings and certs around those. We have VxRail right now and we can put VMware in all different flavors on top of VxRail. That’s an area of focus for us because that’s a solution that we have all kinds of training and rebate incentives around. We will make sure there’s great partner value in the Dell Technologies Cloud platforms and we will drive new incentives accordingly. We haven’t announced specific incentives outside of what we already provide to VxRail.

What type of incentives can partners expect and when will they become available to the channel?

We’re going to get started with more than a handful of customers that we’re going to pilot in the second half of the year for Dell Technologies Cloud. We are working with the team right now to make sure some of that activity happens with partners as well. That’s the focus for us. That’s going to help us. We’ll use it as a pipe cleaner of sorts to make sure we understand what works for the partner and what doesn’t. What makes it easier for the partner? What gets in their way? The incentives, we haven’t designed them yet because we have to understand what the offer looks like. Once we have that, then we’ll figure out the incentives. Generally, we’ll put together a combination of front-end and back-end incentives because that’s what works.

How can partners sell Dell Technologies Cloud in terms of licensing or contract lengths?

We haven’t figured out the partner point of view yet on this. We’re doing that right now. In these deployments we are looking at, ‘What is available to the partner? How can they participate? What type of consulting can they offer? What type of deployment capabilities would they offer? What would the support model look like?’ All of that stuff we’re working on. So more to come on that later this year.

How much did channel sales grow in your recent first quarter 2019?

We saw just a fabulous quarter in the channel. Overall channel revenue was up 16 percent for the first quarter [year over year] – that’s off of a pretty awesome year last year where we grew 17 percent. Distribution was up 10 percent. Client revenue was up 9 percent. Server revenue was up 18 percent in the channel. My personal favorite, storage, grew 26 percent year over year. That is fantastic to see. We’re really gratified to our partners to leading with Dell Technologies because they’re doing that a lot. We acquired 15,000 new customers in Q1. Our deal registrations were 135,000 or so. What’s also really good is we’re seeing a nice improvement in focus on credentials. We use that as a proxy for how invested our partners are and how much they want to understand the technology and how valuable they think the technology is. In Q1, we saw an 80 percent increase in credentials year over year. We saw a 42 percent increase in the number of partners participating in those.

Where else is Dell’s channel growth coming from?

We’re continuing to see the trend in partners who sell more lines of business generate better revenue versus partners who sell only one or two lines of business. Those numbers are a little bit better than last year. Revenues increased in Q1 by 5.6X versus 4.8X [year-over-year] for partners who sell three-plus lines of business compared to partners selling two lines of business. Then partner revenue increased to 10.7X in Q1, up from 8.3X [year over year] in terms of partners who sell three-plus lines of business versus partners who sell only one line of business. It makes sense. It’s nice to see that we are seeing partners figuring out how to knit together the capabilities of the portfolio and when they do, they see really nice results.

Dell Financial Services (DFS) is also growing -- 11 percent [year-over year]. We’re providing financing for about 2,000 partners globally. Those partners grow twice as fast with Dell versus those who don’t participate with DFS. All-in-all, fantastic quarter for channel partners.

Sixteen-percent channel growth in Q1 is huge, especially when total Dell Technologies revenue grew 3 percent in Q1. How come partner sales are so high?

Here’s my read on this. Although it’s not as quite as robust macro-economy as it was last year, we feel very clear that our customers are saying, ‘Hey I want to get smart. I have to figure out how to transform my business. I have to invest in this stuff, because if I don’t, somebody else is going to in my industry.’ We’ve been talking about this at Global Partner Summit for a while, but it’s a great time to be in the channel because the complexity associated with multi-clouds and different types of technologies like artificial intelligence and IoT – these things are complicated. We hear from customers and partners that this is not a question about ‘Should I invest in technology?’ It’s about ‘How should I do it? And I need someone to help me who either has a high level of customer intimacy or knows my business really well and I trust them.’ They need more help especially in these complex data center solutions that we’re seeing amazing growth around. The technology is getting more complicated. Where there’s complexity, there’s huge opportunity for our channel partners to help simplify and drive customers to the right solutions.

What does Dell have to improve on to make business better for your channel partners?

We are 100 percent focused on making sure our partners are satisfied with the solutions we bring. We just got our partner satisfaction surveys back and our numbers keep getting better, so that’s great. We still have a long way to go before we are the best in the eyes of our partners everywhere. We have more operational work to do and we’re making investments in self-service tools and automation. We’re very focused on that. There’s more that we can do about facilitating the ability to transact and engage across Dell Technologies. There’s a huge, untapped opportunity there and working hard on that. Now, as these technologies become more prevalent and customers are looking advise around them, we have some more work to do around enabling partners to figure out how to embrace, get really smart in these technologies and help them monetize them. Honestly, I spend a lot more time listening to our partners than I do to our competitors. We like what we’re seeing in the results. We’re going to keep on listening so we don’t become complacent -- that’s a big focus for us. We have to stay moving nimble, we have to stay innovative and we have to make sure we’re listening.

Speaking of cross selling Dell Technologies, how is momentum going for the new Dell Technologies Partner Program?

The Dell Technologies Partner Program is crystalizing. We’re making some good progress in making it easier for our partners to buy across the portfolio. We added some SKUs for SecureWorks at the beginning of the year. In North America now, partners can buy, not exactly 100 percent of everything offered by our family of strategically aligned businesses, but a lot of it. That’s good. We need to make that true everywhere. We need to figure out how to bundle some of those things together like we are doing with VxRail and PSK, for example, or our Workspace One unified communications solution. All of that is evidence that we’re putting these things together and making it easier for partners to buy them.

HPE is cutting server prices in North America. Any concerns in terms of competitiveness?

Of course we watch the market and what our competitors do with pricing. It’s no secret that commodity costs are coming down. So we have made a significant list price moves over the past couple of months in servers and we’re going to continue to make sure that we’re priced competitively and deliver the best value to customers. HPE launched some promo-type pricing with partners. So of course we look at that. We put that into our assessments of how we price competitively, and we’ll continue to monitor that and make sure that where are in a position where we’re creating enough value for partners and for customers. We watch that stuff all the time and we talk, of course, to our partners about, ‘How are we doing? Are you making money with us? Where should we be focused and how should we improve?’ That guidance helps us a lot.

Can you provide any details about those server “price moves” Dell has done over the past few months?

The commodity costs cut across the entire server portfolio. We know what we’ve moved in list prices. It was a fairly comprehensive move. Costs are coming down. One of the benefits of Dell Technologies is we don’t have tons and tons of inventory in the distribution channel. So we can move faster and that helps us a lot when commodity costs are coming down because in a position that we’re not trying to protect any inventory that we sold in at a higher price. Our goal is to pass that on to customers as fast as possible. That helps us grow.

Dell increased worldwide server market share in the first quarter, but also reported a 9% drop in server sales during your quarterly earnings. What’s your take on the server market right now?

You have to look at it in two places. One is in China, it’s a very different deal. There’s some very different macro-economic forces at work in China. Think about that as separate because that really is the bulk in the decline that we saw. When you look at the rest of the world, it’s preforming pretty well. IDC last year said the server market grew about 28 percent, now IDC’s calling for basically flat server sales this year. Obviously, that’s a different dynamic. What is going on there? We think people got very excited about making sure they were prepared about digital transformation. They made a bunch of investments. We think there’s a digestion period of those investments. That’s why the market is flat. We’re continuing to take share. Why is that? Our customers are voting with their wallets and saying, ‘Ok I like the portfolio. I like the fact that I can consolidate purchases with one supplier.’ Partners are doing the same. We have an incredibly stronger server lineup, we took the No.1 position in EMEA. We’ve been after that for a long time. We’re going to continue to make sure our partners have the appropriate training and motivation to position and lead with Dell Technologies servers. By the way, 5G is still a huge opportunity. We’re just at the beginning of that. We’re expecting to see that improve.

What’s your message to channel partners in the second half of calendar year 2019?

We have to stay focused on the things we can control around how satisfied our partners are, how good of a job we’re doing in supporting them and how are we making sure we’re considering their feedback as we design next year’s program. I’m really excited about getting the Dell Technologies Cloud work underway, so that next year we’re in a position to really make sure that we can sell that effectively and our partners are in great position to add value to that and create an even better offer. We can’t get too wrapped around the things that we can’t control. There’s more chatter and noise from a macro-economic point of view than there was at this time last year. I feel pretty good that we have the right focus.