5 Incentives Driving Partner Profitability: Dell Financial Services VP

Here are five new incentives around Dell Technologies’ as-a-service program that will drive margins and recurring revenue for channel partners.

Dell’s New As-A-Service Incentives

Dell Technologies is doubling down on its as-a-service Flex on Demand program to give channel partners more lucrative incentives than ever before.

“We all can see the momentum in the market around customer desires and trends to consume in flexible consumption models,” said Cheryl Cook, senior vice president of global partner, embedded and edge solutions marketing, in an interview with CRN. “We’ve enhanced the incentives that are all aimed at the promise we made to our partners around simple, predictable and profitable. These are going to increase the profitability around these as-a-service options through Flex on Demand. It’s a step forward in our vision to offer increased flexibility and a simplified user experience around Everything as a Service.”

Dell Technologies Chairman and CEO Michael Dell last month unveiled his plan to eventually offer all of the company’s portfolio in a consumption-based, as-a-service model with Project Apex. This push toward as-a-service is being led by Dell Financial Services’ Flex on Demand program, which has been sold in over 40 countries as Dell’s as-a-service run rate has climbed to $1.3 billion.

Darren Fedorowicz, vice president of Dell Financial Services and global channel sales, breaks down five new incentives and channel strategies that will drive partner profitability, led by a new 20 percent up-front incentive.

Twenty Percent Up-Front Incentive Of Total Contract Value

Through its Flex on Demand program, partners can now receive up to a 20 percent up-front incentive on the total contract value when selling any storage, data protection, networking, converged or hyperconverged infrastructure offering as a service. This also includes new as-a-service offerings like PowerStore. On server as-a-service deals, partners can receive up to a 10 percent incentive on the total contract value.

“They earn the 20 percent of the committed contract value on the front end after a customer enters into a contract and the equipment is delivered,” said Fedorowicz. “Partners needed margin assurance up front.”

Twenty Percent Incentive For Just A Referral

A channel partner can receive a 20 percent up-front incentive of the total contract value for an as-a-service referral. Once the contract is signed and equipment is shipped, the partner can give Dell the referral and will still receive a 20 percent incentive.

Fedorowicz said this option is for solution providers that do not yet have the capacity or capabilities to do monthly billing, collecting and managing.

“Regardless if the partner comes to us and says, ‘I have a registered opportunity, but this is complex because I have to bill, collect, manage, etc. so I’d much prefer to work with Dell and just refer this opportunity and let you manage it with the customer.’ If they simply refer it to us, they’ll still earn that 20 percent of the committed contract value up front,” said Fedorowicz. “We have a number of partners that don’t have the capability to bill and collect over four years; maybe their business model has been set up as a true reseller of selling that value up front. So we still want to partner with them.”

For example, Fedorowicz said, “If a customer is interested in a $1 million storage transaction but said, ‘What I really want to commit to is a baseline capacity of $700,000 over four years, and I want you to bill me on a monthly basis for that $700,000. And whatever I use in my buffer capacity, bill me for that as well.’ Well, the partner would earn 20 percent of the $700,000 committed contract value or $140,000 up front, regardless if they simply referred it to us and we managed it. Or if the partner wanted to participate in the management of billing, collecting, potentially adding more margins or services over time, they’ll still earn that $140,000 up front. … So we continue to be committed to offering flexibility and choice to our partners.”

Tier Credit Included; 20 Percent Incentive For Add-Ons

The 20 percent incentive for as-a-service deals with Flex on Demand is for all partner levels including Gold, Platinum and Titanium. Regardless of whether the partner sells and manages the as-a-service offering or simply refers it to Dell, the solution provider will receive tier credit.

“So even as a referral, we want to make sure we still apply that tier credit to the partner even though they’re simply referring it and they’re not transacting it,” said Fedorowicz. “So they’ll receive that 20 percent up front, they’ll receive the tier credit and they’ll also hold the incumbency, so when that customer comes back to Dell and says, ‘I need to add more storage. I need to add on to another solution.’ The partner who originally brought the customer to us, we’ll go back and engage with them jointly with the customer. For the incremental add-on of storage or other products, they’ll receive additional tier credit and also 20 percent of any additional storage that’s added.”

Two Percent Incentive For Distribution Partners

Dell distribution partners can earn a 2 percent front-end incentive when participating in Flex on Demand, which can still include only a referral.

“So for a registered partner that historically would have purchased through distribution, that distribution partner—even though we’re not reselling any product through distribution through the channel and it’s simply a referral—we still want the distribution partner to participate in that predictable and profitable offer. So distribution earns its own 2 percent [of the deal],” said Fedorowicz.

Fedorowicz said Dell still wants to collaborate and work with distribution partners around its as-a-service go-to-market model and program.

“As we looked at it, we thought we want to align with the Dell go-to-market and we have products and partners that buy through distribution. If we’re not really ‘selling’ a product, we’re giving the right to use to an end user and they’re paying for their actual usage—we’re not really selling to distribution, who can then add on their margin to resell to a partner. We didn’t want them to be excluded,” he said. “Distribution is absolutely part of the program.”

Dell Still Engages With Referral-Only Partners

Dell reassured partners that if they give Dell the referral and collect the 20 percent up-front incentive, the company will still engage and jointly work with them.

“You’re not going to simply pass it off and we take it direct. We’re going to work jointly with the partner, communicating with the customer, making sure we size and manage the opportunity jointly,” said Fedorowicz.

If the customer wants to change from as-a-service to a more traditional technology refresh, such as a lease or some other type of financing, Dell will engage with the referral partner.

“We want to make sure the partner continues to be engaged. But they don’t have to do anything more than keep being engaged, help us manage the process. We will work through the contacting, the final pricing, the billing, the collecting—they really help manage the customer relationship on the front end,” Fedorowicz said.