Dell EMC Channel Chief Byrne: New VMware Enterprise Licensing Engagement Model Puts An End To Channel 'Conflict'

Dell Global Channel Chief John Byrne is pledging to end VMware channel conflict with a new field engagement model that for the first time opens the door for partners to receive full VMware incentives for selling VMware enterprise licensing agreements (ELAs) in tandem with Dell-EMC hardware.

As a result of a new Dell EMC agreement with VMware, Dell EMC Titanium Black and Titanium partners for the first time can procure VMware enterprise licensing agreements (ELAs) in tandem with Dell EMC hardware on Dell-EMC paper, said Byrne in an interview with CRN.

The change directly addresses requests from partners who were anxious to combine VMware enterprise licensing agreements and Dell EMC hardware on a single purchase order, said Byrne.

[Related: VMware Shuffles Channel Execs: Brandon Sweeney Takes Top Channel Post; Ross Brown To Lead Cloud Charge]

"Partners wanted the capability of buying all the Dell Technologies portfolio from a one-stop shop," said Byrne, acknowledging channel conflict as a result of Dell EMC sales reps and VMware partners battling for VMware sales. "This takes away the conflict."

The watershed channel change is aimed at stopping in its tracks channel conflict that has bedeviled longtime VMware partners who have seen an increase in Dell and VMware reps taking deals direct. Dell is one of VMware's top licensing software partners and the company has stepped up its VMware software licensing charge since its blockbuster acquisition of storage market leader EMC and virtualization kingpin VMware last year.

The new model is focused on Titanium and Titanium Black partners for deals involving Enterprise License Agreements. It's being launched today in six countries, the U.S.; the U.K.; Canada; Mexico; Brazil and France. It will be rolled out worldwide during Dell EMC's 2019 fiscal year, which begins in early February 2018.

Dell EMC has plans to introduce the system for non-ELA business once it has built out those capabilities, said Byrne.

Partners can roll VMware into deals being completed on Dell EMC paper simply by selecting Dell EMC from a drop-down menu from distributors.

VMware Channel Chief Brandon Sweeney, who was just appointed to the top VMware channel job, said he was "excited" by the change, which makes it easier for partners to do business with VMware. "That just leads to more top-line growth for all of us," said Sweeney. "We need to continue to have a balanced ecosystem, but we're certainly excited to be able to work with Dell to make the partner experience better."

In the past, solution providers weren't eligible for VMware incentives – and VMware reps didn't get paid – when VMware was pulled into Dell EMC hardware deals. Now partners will bank Dell EMC incentives, as well as VMware incentives, while closing deals on a single purchase order and all the reps will get paid.

"It's the first time that we are going to be able to provide partners the choice that they've been asking for," said a source close to the change. "We're giving the customers what they want: a seamless solution on one PO [purchase order]. Partners get the best of both programs. This is a way to get the best of both worlds. A partner can do the deal with Dell, and still get the VMware benefit stack. Partners would make margin and incentives of [Dell EMC hyper-convergence solutions that include VMware] VxRail, VxRack, and take advantage of the VMware benefit stack. You can offer customers one consolidated solution, one purchase order, but two different incentive stacks."

Dan Serpico, CEO of FusionStorm, a San Francisco-based solution provider that works with Dell EMC and VMware, said the channel conflict for large partners that work combined deals with Dell EMC and VMware boils down to confusion over who gets paid for what.

"The conflict has been, which team do you support in the transaction?" said Serpico. "Do you support the VMware team? The hardware team? That's an obvious conflict that is potentially solved today. There's potential to get the Dell team committed through registration so partners are protected where they wouldn't be otherwise. If you're doing registration through Dell on a VMware solution, then the Dell team can't really go direct anymore. Any of these problems, it's all part and parcel of confusion. Take the confusion out and focus on the solution. This helps clarify some of the noise in the channel and focus on what's right, on what customers need and how do we support it."

A top executive at another large solution provider that works with both Dell EMC and VMware said the new system is a clear sign that VMware is serious about improving and modernizing its channel operation.

"They have really compelling solutions, but the program is less than state-of-the-art and there was real conflict," said the solution provider executive, who did not want to speak on the record. "This is a big step toward solving that. We have had any number of opportunities where we have struggled with whether to do the deal direct with VMware, through disty, or do the deal through the Dell EMC rep to help them retire quota. The problem with the first one is that it doesn't help the Dell EMC rep retire quota. The problem with second one is that we weren't able to pick up [VMware] back-end rebates or goals that were only attributable to us if we did it with VMware."

The clarity comes as VMware takes other steps to level the channel playing field. Last May, the company said it would become "channel neutral" across the board, meaning its sales reps will get the same compensation for working with partners that they get when taking deals direct. In the past, VMware reps made bigger commissions when taking deals direct. The model is intended to encourage VMware reps and partners to work together on opportunities to drive what VMware calls its "transformational technologies," like NSX, VSAN and cloud management software. "We need this, and it's going to be explosive growth in the channel," said one source close to the channel neutrality effort, which goes into effect in early February.

"We're trying to remove friction to scale the business," Sweeney said. "We're responding to customers and to partners saying, 'make it easier to procure VMware through Dell Technologies.' We're trying to make it easier on some of the channel neutrality that we're trying to reinforce across the ecosystem. This is a really good thing for partners, and it's a really good thing for customers. (Dell EMC Channel Chief) John (Byrne) and I are trying to be responsive to partners because there's a ton of upside if we can make it easier to sell together."