Dell (NASDAQ: DELL) – once a nasty four letter word in the eyes of the channel – has worked harder than ever over the past year to build relationships in the partner community to change that image. Since launching the Dell Partner Direct program in the U.S. in December 2007 and then in Canada last February, Dell has slowly been earning the trust of the channel. But, Dell still has a way to go. However, with just over 1,000 partners in Canada and 13,000 in North America – just shy of Dell’s target for 2008 by about 2000 – Dell’s Americas channel vice-president Greg Davis says he thinks the company is making great strides with the program.
“The channel is beginning to see that we’re committed to growing our business in the channel,” says Davis. “I don’t know anybody who has grown and built a successful channel relationship in a week or a month or a quarter.”
Rome wasn’t built in a day
James Alexander, vice-president of the London, Ont.-based Info-Tech Research Group, says he thinks the Partner Direct program has gone better than anyone in the industry originally anticipated.
Alexander adds that it’s important for the channel to be able to offer its customers the ability to choose from a wide variety of brands. “There was pent-up demand for a vital option,” he says.
While Dell has made strides to improve on how it goes to market, the reaction in the partner community has been pretty mixed. Stuart R. Crawford, the former vice-president of business development at IT Matters, a solution provider based in Calgary, says the reaction has been better in Canada, where partners like himself have found it a good move to work with Dell.
“Having a partnership with Dell was a very strategic move to ensure that we had a total solution that we felt comfortable with to provide to our client base,” says Crawford. “Now having the ability to go to market together with Dell and having a name that many small businesses respect in the marketplace has added instant credibility.”
Crawford added that Dell Canada is easier to work with than Dell in the U.S. because it is smaller, which allows for direct and indirect parts of the business to work better alongside one another. “In the U.S., partners there haven’t been very receptive,” he says. “They have an 800 pound gorilla to battle with.”
Dell isn’t the only vendor that has a direct sales model that the channel has to battle against. “Everybody’s going to the direct model,” says Crawford, referring to HP. “There are other parties that are creating animosity.”
One partner at a time
In Canada, Alexander says he’s witnessed the partner community’s perception of Dell do a complete about-face. “When I first started talking to partners about Dell there was a lot of hostility because Dell has eaten the channel’s lunch for the last 10 years,” he says. “Now, when I talk to partners, they say they like what they hear from Dell.”
In terms of channel conflict, Alexander says Dell has kept a pretty tight cap on a potentially explosive issue that isn’t uncommon in the partner community between vendors and resellers. One major part of the equation, however, that helped Dell in this matter was its purchase last year of EqualLogic.
The US$1.4 billion acquisition of the SAN vendor took place about a year ago and Dell quickly rolled the EqualLogic partners, which were more than 100 in Canada, into its Partner Direct channel program, while also unveiling a new ¬certification.
“Dell’s purchase of EqualLogic, what they did with it and the reputation (EqualLogic) had within the channel space helped them,” says Alexander. “(Dell) learned some lessons, and it caused partners to take them a little more seriously.”
Davis says the EqualLogic acquisition has played a key role in what Dell has done with its Partner Direct program. He adds that EqualLogic and its channel partners were a perfect fit for Dell’s growing number of solutions around servers, storage and data centres.
“Partners who have migrated from EqualLogic to Dell have seen no change in the program and they’ve had an opportunity to expand their relationship into blades and servers,” says Davis. “We’re lucky that the vast majority of (EqualLogic partners) joined Dell.”
What Dell has gained by inheriting EqualLogic’s channel strategy has helped it deal with potential channel conflicts, added Davis. “It’s opened up the door and it’s allowed our direct teams to feel very comfortable in finding good solution providers that they can partner with.”
One of the ways in which Dell does this is through its online registration tool that allows partners to submit potential business opportunities that they can go to market with Dell on. Davis says Dell has had nearly three-quarters approval rating from the channel and the tool has proven to be very popular to date. When the tool was launched last December, it had four opportunities submitted. In December there were more than 500 opportunities submitted by Dell’s North America partners in one week alone.
Over the course of the year, Davis, who was recently promoted to global channel chief, slowly improved the partner experience with Dell. For example, Dell partners are surveyed on their satisfaction with the program. Dell also encourages partners to highlight areas they focus on to better align with them. Davis wants to continue to build specific partner portal sites for the channel and has launched a customer advisory council that will include partners.
All this has led to Dell earning a $12 billion run rate through the channel, Davis said.
One of the main concerns with channel partners was that Dell would take partner-led business direct. The deal registration portion of Partner Direct was put in place to minimize partner conflict. In 2008, Davis said that he has seen a consistent and steady usage of the deal registration plan and the number of deals have climb on a weekly basis.
“More partners are using the tools and we have been consistently approving 70 per cent of the opportunities since we launched Partner Direct. Partners are bringing new opportunities for Dell and we are approving them in less than 36 hours on average. We are trying to live up to our commitment,” Davis said.
One of the biggest challenges going ahead for Dell’s Partner Direct program is getting partners certified.
Out of the total number of partners in the U.S. and Canada, just over 530 are certified. Certification is one of the areas that Dell is looking to grow the program in 2009. Currently, certification is available in managed services, enterprise products such as EqualLogic storage, and Dell blades and server solutions. In the U.S., partners that work with government clients can also choose to be certified in Dell’s federal practice area. Davis says ¬Canada should see a similar government certification program in Canada in the near future.
New certifications, and an SME focus
“Our intention is to grow our program around the skills and services that our partners provide through a certification program,” says Davis.
Davis adds that another area partners will see Dell expand its certification to is health care. “There are a number of partners that are growing their skills to satisfy health care customers,” he says.
The small and medium business sector is also another potential certification area down the road, Davis added.
This is good news for partners such as IT Matters, which provides computer service and network solutions to the SME market. While the company does not yet have staff certified with Dell’s solutions, it’s an area they’re considering investing in next year, says Crawford.
With the SME market, Crawford says there are plenty of opportunities for a VAR to step into a trusted advisor relationship. As opposed to large companies, small companies don’t have an internal IT team. Aside from support, Crawford says he is finding that customers are increasingly looking for an end-to-end solution, which requires expertise help.
As for trusting Dell, Crawford isn’t worried about its support wavering any time soon. “We’ve been very strategic in developing key relationships with people inside Dell,” he says, adding that he has developed an excellent rapport with his regional Dell representative.
If there is one thing Davis is sticking to it’s not offering rebates in Partner Direct. He said that he is willing to listen to partners on rebates, but that is it for now.
“To be honest, those partners that build a business on rebates do not align with Dell’s startegy. We want to build the business with those that match with the certification program. That’s our focus.”
-With files from Paolo Del Nibletto