The 10 Biggest Channel Challenges Facing Dell After Acquiring EMC
Tough Tasks Ahead
The close of Dell's $65 billion acquisition of EMC is a milestone for each company, and for the IT industry as a whole. While Dell Technologies' top brass will undoubtedly spend the day explaining how powerful the combination is, they'll also acknowledge that creating a more than $70 billion, privately held tech industry behemoth comes with challenges.
Many of those challenges have direct implications for the channel, too. The companies' partner bases overlap significantly, but their programs are very different. They'll remain different at least until Feb. 1, when Dell begins its fiscal year, and that doesn't give channel chief John Byrne much time to iron out those differences and formulate a program that plays to each company's strength and wins favor with channel partners.
The company will also have to address things like corporate culture, an intense competitive landscape and questions about how well its sales forces will work together. Here are 10 of Dell Technologies' biggest challenges.
Integrating Corporate Cultures
Depending whom you ask, the corporate cultures at Dell and EMC are either quite similar, or vastly different. At the very least, Dell Technologies will have to reconcile what solution providers call EMC's aggressive "no lose" culture with Dell's leaner, more laid-back vibe.
Solidifying A Unified Channel Program
Dell and EMC's channel programs have some pretty significant differences. Dell channel chief John Byrne (pictured) says they'll run in parallel until Feb. 1, when Dell's fiscal year begins. EMC uses a hard deck, by which all deals below a certain size are automatically handled by channel partners. Dell uses strong back-end rebates and new business incentives to push partners to sell across its portfolio from PCs to data center infrastructure. Byrne will have to make a series of decisions about whether to maintain the EMC hard deck, and the focus of the program's incentive structure. Byrne will also have to make decisions about who will lead different aspects of the company's program. Byrne has hinted that many current Dell and EMC executives will be offered positions in the combined company.
Ensuring Sales Teams Work Together, And With Partners
Bringing together two sets of channel partners and two distinct sales teams isn't going to be easy, and Dell executives know full well that they've got to get everyone on the same page right away. Dell COO and President of Enterprise Operations Marius Haas (pictured) told CRN in June that it'll be of utmost importance for Dell and EMC account executives to work closely with partners in the company's existing install base while the channel team hunts for new business.
Organizing A Stable Of Complementary Yet Competing Hyper-Convergence Solutions
Both Dell and EMC have moved to capitalize on the red-hot market for hyper-converged infrastructure. Dell has a solid OEM agreement with Nutanix, one of the startup darlings of that space, while EMC's VCE unit has found success with its VxRack and VxRail solutions. The marriage of the Dell and EMC hyper-convergence portfolio will undoubtedly put pressure on Cisco, which has a close relationship with EMC, but a fiercely competitive relationship with Dell and a new hyper-convergence solution of its own. Dell has already begun reselling EMC hyper-convergence solutions, and executives say it'll be easy and straightforward to match customers with the appropriate solutions.
Making Its Complicated Relationship With Cisco Work
Relationships are complicated, and Dell's relationship with Cisco is about to get more complicated. EMC has a tight, longstanding relationship with Cisco, and Cisco technology underpins much of EMC's converged infrastructure technology. In June, Haas told CRN that the company would forge a close working relationship with Cisco, saying leveraging that relationship would help Dell beat other competitors, including Hewlett Packard Enterprise and NetApp.
Galvanizing An Innovation Strategy
A market that stresses innovation has forced both Dell and EMC to refocus in recent years. Dell's strength is in its supply chain prowess and in its ability to acquire and market technologies that it can't develop internally. EMC has always been an engineering company, but in recent years it has faced significant challenges as the IT market moves away from hardware in favor of software-defined, hyper-convergence and cloud technologies. The combined Dell Technologies will have to prove that it is able to innovate in a rapidly changing market while also maintaining leadership in its traditional lines of business.
The PC Battle With HP, Lenovo
Dell's historic strength is in PCs, a now-contracting market where the industry's big three vendors do battle for a shrinking piece of pie. Earlier this year, Dell overtook the top spot in North America PC shipments from HP, according to IDC figures, only to cede the title back to HP the following quarter. Lenovo, which dominates the worldwide market, is making inroads in North America, too. Dell has to be careful not to let the merger distract from its efforts to maintain a top position in the PC market, where it continues to consolidate share and push innovation as the market shifts toward tablets, 2-in-1s and other devices.
Doing Battle In The Data Center
Adding EMC's powerful data storage, hyper-convergence and software lineup to Dell's server business is a recipe for data center dominance, but HPE hasn't missed many opportunities to blast Dell for getting bigger when the market is demanding speed, flexibility and nimbleness from IT vendors. Also, Lenovo is keen to gain traction in the data center market and has dropped prices and booste incentives in its quest to push more units to customers.
Minimizing Conflict Between Internal Sales Executives And Channel Partners
Dell Technologies' Haas has said keeping conflict down is one of the company's top priorities as the two tech behemoths come together. "How do we stop our guys from fighting over the same piece of business between direct and channel? We're being very descriptive around -- this is a route to market, this is the customer, this is how they want to buy. There's no need to have conflict," he told CRN in June.
Maintaining VMware's Independence
VMware, which is 80 percent owned by EMC, is perhaps the crown jewel of the acquisition. The virtualization kingpin has interests and relationships in seemingly every corner of the market. This means it does a lot of business with key Dell competitors, a state of affairs Dell will have to be careful to maintain despite competitive pressures. VMware, Haas told CRN, "will have all the incentives to work with all of the other infrastructure providers because we want them to be the de facto, default virtualization layer across all compute, all storage, all networking, and we want them to be a core architecture standard for our software-defined ecosystems. The only way to do that is allow them to work with HPE, allow them to work with other competitors so that they have that integration and collaboration with them as well. We have to let VMware be independent so that they can work with other people."