Michael Dell: Dell Channel Sales Transformation Is Ahead Of Plan

Dell CEO Michael Dell says business for the new private Dell, including channel sales, are running ahead of plan.

"Our business is running well ahead of our plan, and demand I would characterize as strong," said Dell in an interview with CRN Monday. "The enhancements to our channel program have been a big part of that. So I am feeling great. We're off to a great start for the year. It looks from all indications that we are growing much faster than the overall market."

Michael Dell, Dell Chief Commercial Officer and President Marius Haas and Dell Channel Chief Cheryl Cook provided CRN with an update on the company's plan to move 200,000 accounts to channel partners by providing Dell direct sales reps with a 20 percent "compensation accelerator" to generate new enterprise solutions sales with Dell channel partners.

[Related: CRN Exclusive Q&A: Michael Dell Says Sales Are Strong, Ahead Of Private Company Plan ]

Haas, for his part, said both the company's indirect and direct business are growing at an accelerated rate as a result of the Dell decision to place direct and indirect sales under a single sales organization after the company completed its landmark $24.9 billion leveraged buyout last fall.

"What we are seeing is the total business is at an accelerated rate," said Haas. "So we have both the channel business as well as the direct business well ahead of plan both on revenue and margin, and across every segment and across every region. This is testament that we have a program that is comprehensive in nature [that is] being well received by our partners as well as by our customers."

Haas said that the biggest winners in the new accounts strategic joint planning program, which was announced last December at DellWorld, have been solution-provider behemoths, such as PC Connection, Insight and SHI. "We are actively in territory with them mapping out accounts, our teams, their teams," said Haas, noting that there has been a lot of partner activity in North America.

In fact, Haas said, the joint account teaming program has been "very, very well received" in North America.

PC Connection, Insight and SHI did not return calls seeking comment on the Dell program as of press time.

Several top partners, who did not want to be identified, said they have been disappointed in Dell's execution of the strategic account mapping and account planning. "It has been a disaster," said a top executive, who has been unable to get a list of potential new accounts to go after working hand-in-hand with Dell direct reps. "They have not executed. I see it as a bunch of lip service. They are talking out of both sides of their mouth."

The top executive said Dell informed him that the strategic account planning process was a "beauty contest" of sorts as to who can help Dell grab enterprise business in the data center. "They must think Insight, PC Connection and SHI can help them the most there," he said.

NEXT: Some Partners Say They're Still Waiting

Another top exclusive Dell partner, who did not want to be identified, said he was excited by the prospect of the joint account planning, but that it "feels like we are waiting for this program to get off the ground. We had hoped to see lot more Dell business, but it hasn’t materialized yet. Dell’s new channel strategy has brought us a trickle of new business, not the flow we had hoped.’

When asked who makes the final call on which partners get an account, Dell Channel Chief Cheryl Cook said: "We actually work jointly with the local sales leadership and we put teaming arrangements in place with the partners on the relationship and the investment."

Yet another Dell partner, who did not want to be identified, said program specifics are not coming into focus fast enough. ’Of course we want this to rollout as fast as it can. But the key for us is engaging with field reps, getting more clarity on how to identify more accounts, and being crystal clear on the rules of engagement,’ said the Dell-exclusive partner. ’The devil is always in the details.’ He said nagging questions remain such as who leads the new accounts, who owns the jointly managed accounts and what type of accounts is Dell moving to the co-selling model.

Dell channel executives trumpeted the 200,000 accounts initiative as a game changer aimed at doubling Dell channel sales from just 33 percent of global commercial business to as much as 60 percent as it moves to grow its enterprise sales footprint as a private company.

Dell executives were mum on the exact number of accounts that have moved to the channel since the program was announced in December and officially launched February 1. Haas said in India Dell has moved 9,500 accounts from direct to a co-managed managed with channel partners. He said, in North America, the target number of accounts to move to the channel is still 200,000.

Haas said the channel transformation represents a major shift in how Dell goes to market. "A big part of what we did in early December is we moved the channel team into the general sales team," he said. "We did not want to continue to emulate siloed go-to-market motions. We felt it was much better for us to have a holistic view as to how we cover as much of the total addressable market as possible with one team."

NEXT: Dell Sees Reps, Partners Working Closely Together

Michael Dell, for his part, said the channel charge is showing up in sales recognition garnered by Dell direct reps working hand-in-hand with channel partners.

"We just had our annual [sales] recognition event, and the folks that are coming up on stage and getting recognized are the reps that have figured out that you win with the channel," said Dell. "Our message is clear and consistent, and we continue to grow the share of relationship. The reps that are doing the best have figured out that they can leverage themselves tremendously with channel partners. It is as simple as that. We are very happy with the progress, growing nicely, growing faster than the market."

Dell himself pointed to the success the company has had with FusionStorm, No. 56 on the CRN SP500 list with $449 million in annual sales.

Daniel Serpico, president and CEO of FusionStorm, Dell's SMB Partner of the Year for two years in a row, said his alignment with Dell is driving significant new business. Currently, Serpico claims, his company is on track to double its Dell business from $35 million to $70 million in 2014 -- stealing existing sales from Dell competitors. ’Dell continues to drive net new business for me," he said. "We have a lot of tired HP and Oracle business that is primed for Dell solutions. But this is not a simple share shift. This is net new top line business for us, and we couldn’t be happier.’

’In February, Dell put a stake in the ground with this program," Serpico said. " It’s the culmination of what I’ve seen from Dell over the past few years. Dell isn’t just talking about being more partner friendly, it is. The 200,000 accounts is just icing on the cake.’

Michael Dell said the company is ready, able and willing to help partners that have had trouble engaging on the 200,000 joint account opportunity with Dell. "If there are some that need help we are happy to work with them to figure out how we engage," he said. "I would say in aggregate the numbers are absolutely impressive and growing very very nicely."

Marty Wolf, president of Martin Wolf M&A Advisors, Walnut Creek, Calif. one of the top channel deal makers, said it is not surprising that Dell has turned to behemoths like Insight, PC Connection and SHI to drive gains with the new account planning strategy.

"PC Connection, Insight and SHI are better equipped to go into those accounts than Dell itself," said Wolf. "They are lower cost operators and they aggregate customers, they are good at developing customers. The [product] unit itself doesn't matter that much. What matters is the cost that they can provide a solution and make it work. These guys are experts at adding other product procurement to lower margin sales. It's a no brainer."

Wolf said he sees more opportunities for computer makers like Dell to get creative and drive strategic relationships with solution providers in an era of considerable channel consolidation where size and scale are critical. "When you look at the traditional channel, there is lots of room for vendors to shift share by having more creative partnerships," he said. "If Dell decides to get creative, there are all kinds of opportunities for them, as there is for HP."

Dell said he see a bright future ahead for Dell and its channel partners. "It feels awesome," he said. "It feels great. I think that we have been able to tap into some real excitement among partners and customers and the momentum of the business.

STEVEN BURKE contributed to this story.

PUBLISHED APRIL 7, 2014