Partners Get Front-Row Seat As Dell Flips The Script On Channel Commitment

It was a $100,000 deal and things were about to go south.

After months of chasing down quotes from Dell reps, configuring PowerEdge servers with EqualLogic storage for the customer, and drafting the final contract, LAN Infotech was thinking "done deal."

"We nailed it"" recalled Michael Goldstein, president and CEO of LAN Infotech, a Fort Lauderdale, Fla.-based Dell partner. "Our ducks were lined up and we were just waiting for the official purchase order."

Then came the phone call, said Goldstein, and his heart skipped a beat.

[Related: Michael Dell On How (And Why) His Company Is Named Dell]

At the eleventh hour -- and behind LAN Infotech's back – Goldstein learned his customer had contacted Dell Direct sales. All bets were off on the $100,000 deal. Goldstein said his potential customer went shopping to Dell Direct for better pricing and a second opinion on the technical specs of his bid.

Would LAN Infotech lose another deal to a cutthroat Dell Direct sales rep? Would months of prep work be for naught?

But the fateful phone call Goldstein received wasn't from his customer telling him the deal was off. Instead, it was a Dell Direct rep calling to tell Goldstein they'd been contacted by his customer.

"The Dell rep said he wanted to work with LAN Infotech and land the deal together," Goldstein said. In a matter of days, Dell Direct reps, Goldstein and the customer were putting the finishing touches on the deal. "Our original quote was right on the money and Dell worked with my client to assure them of that. In the end, Dell Direct will have helped us close this deal faster and with more customer confidence than if we went it alone," Goldstein said.

Rewind even two years ago and stories of Dell Direct reps rolling up their sleeves with Dell channel partners were few and far between. But it's a new dawn at Dell these days.

Dell partners are now the front line of Dell's growth, said Cheryl Cook, vice president of global channel alliances at Dell. The channel now represents 40 percent of Dell's overall global revenue -- up from the 33 percent it cited this summer, she said.

Dell's commitment to the channel is rock-solid, Cook said. "One of our areas of focus has been -- and will continue to be -- our greenfield account program," she said. That program "is how we align the Dell and partner energies and drive new customer acquisitions and business," Cook said.

"Dell is absolutely more strategic with me over the past year, helping us drive our Dell business nearly double digits," said Robert Brindell, managing director of Dell partner Kraft Kennedy, New York. Dell, he said, is now more engaged, showing its channel commitment with faster access to sales and engineer reps.

THE EMERGENCE OF A 'NEW DELL'

A year after winning its $24.9 billion hard-fought battle to go private, Dell now sees its PartnerDirect channel community as instrumental to its success. In fact, Dell reported its channel business is growing faster than the direct side of the house. That's a trend partners said has directly benefited them.

"Over the last year we have seen a new Dell emerge. One that didn't exist seven years ago or even one year ago," said Tyler Jafarian, business development manager at Pomeroy, a Dell partner based in Hebron, Ky. "Over the year our relationship has gone from transactional, supportive, to a true partnership."

Jafarian and other partners said they can draw a straight line from their increased Dell revenue to the company's increased engagement with the channel. Dell, they said, still has plenty to iron out when it comes to working with the channel, but it has made substantial progress.

"Our Dell business has grown 35 percent over the last year compared to my HP and Cisco business that is growing at around 5 percent," Jafarian said.

At Dell World in Austin, Texas, in November, it became evident that Dell has flipped the script from struggling just a few years ago to excelling today.

When Dell founder and CEO Michael Dell delivered his keynote at Dell World, he had a little extra swagger.

"We couldn't be more pleased," Michael Dell said. Over the past year, Dell has become the "the fastest-growing large integrated IT company in the world."

Bolstered by its partners and unshackled from the scrutiny of Wall Street naysayers, the company is now on the attack, said Michael Dell, and it is set to take on an IT industry in upheaval, delivering "reliable and predictable" end-to-end IT solutions in contrast to uncertainty at rivals including Hewlett-Packard and IBM.

"One of the beauties of going private is we can focus 100 percent on customers and partners and their success," Michael Dell said in a question-and-answer session with the press after his keynote. "You are seeing these moves [HP and Symantec both revealing splits of their companies and IBM divesting its x86 business to Lenovo] that are driven by shareholder interest, particularly short-term shareholder interest. We have a long-term focus. We know we succeed when our customers and partners succeed. We are no longer subject to this short-term turmoil."

Next: The Benefits Of Being A Private Company

THE BENEFITS OF BEING A PRIVATE COMPANY

Partners said that with privatization has come a steady, more focused approach to dealing not only with the channel, but also with Dell's growth as a company. Dell's open approach to the data center where it has partnered with a variety of vendors including Microsoft, VMware, Nutanix and Nexenta is a refreshing departure from what they are seeing from other vendors, they said.

"Dell isn't trying to lock you in to a proprietary solution. It doesn't have a legacy mainframe business to protect," said Michael Tanenhaus, principal at Mavenspire, an Annapolis, Md.-based solution provider and Dell partner. "Dell's hyper-converged strategy in a software-defined world is an ingenious way to sell more hardware and solutions. The software and hardware [are] disaggregated. There is less concern on the partner and customer side about vendor lock-in and more emphasis on how Dell can solve problems," Tanenhaus said.

That decoupling of networking hardware and software, said Tom Kean, vice president of sales at Flagship Networks, a Dell partner located in Shelton, Conn., increases customer choice in networking software and boosts the potential for hardware and software innovation.

"Could Dell have gone in this direction as a public company? I think so. Could it have moved this fast? I don't think so," Kean said.

Dell executives have said the speed of making decisions has been liberating -- what used to take months or even several quarterly board meetings can now happen in just days.

That said, some partners are still grousing over long turnaround times for quotes and on configure-to-order purchases -- something that originally defined Dell. "Quotes can sometimes take four to five hours and require a mountain of paperwork -- an eternity in the IT world," Pomeroy's Jafarian said.

He said he suspects that Dell is still dealing with balancing partner growth with legacy direct ways of doing business that valued one-to-one relationships over one-to-many. Dell, according to partners, is getting better by more heavily leveraging distribution partners. But, they noted, distribution doesn't have access to a growing number of Dell enterprise hardware products.

Dell channel executives acknowledged that this is a pain point and said they are working to iron it out.

"I'm not sure any one account manager knows how to navigate the growing universe of Dell solutions," said one former Dell employee who now works for a Dell partner. "The faster Dell grows, the more it is going to feel the weight of its different business units," he said. "Dell is a $60 billion company now. HP is almost twice as big as Dell. What's Dell going to look like as a $110 billion dollar company? Maybe it will want to split into two?"

Dell executives said they're well aware of the pitfalls of growing too fast. Dell is not actively trying to grow its partner base; rather, it wants to see its existing partners grow more profitable, they said. "Our channel partners are growing faster than Dell and three to four times faster than the IT industry as a whole," said Cook. "We are very happy with that momentum."

How much more can the channel grow? At Dell World, Michael Dell said partners could be 50 percent of the company's revenue sooner rather than later.

"I think Michael has an extra spring in his step these days," said Marius Haas, Dell's chief commercial officer and president of enterprise solutions. "He is excited about the overall trajectory of the business and the overall receptiveness he's had from the customer and partner community and enhancing our ability to deliver greater value to them."

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