Dell Partners: A Private Dell Rocks, But Don't Get Too Cocky

Michael Dell had a little extra swagger for his Dell World keynote at the Austin, Texas Conversion Center Wednesday.

After a year of living under a go-private microscope, Dell now brags his business is growing fast and his channel business is growing even faster.

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

[Related: Michael Dell Calls HP Split 'Chaos']

After taking jabs at the "turmoil" rivals such as Hewlett-Packard and IBM are going through, Dell proceeded to roll out a parade of datacenter products. They ranged from a new PowerEdge FX2 server architecture and big data analytics services in partnership with Microsoft, to an all-flash storage array that delivers enterprise-class performance at SMB prices.

"At Dell we are obsessed with finding a better way. We are driving radical simplification and innovation from the PC, to the datacenter, to the cloud," Dell told attendees. "And we see a clear path in an order of magnitude at lower cost and we can do it at scale."

Dell said 40 percent of the company's global commercial sales goes through the channel, a statistic that received thunderous applause from attendees. Many of those in the crowd said Dell was not only justified in his $24.9 billion fight to take the company private, but that tighter channel alignment has also helped it grow.

"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 for Pomeroy, a Dell partner based in Herbon, 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 between their increased revenue and increased engagement with the channel. Dell, they said, still has plenty to iron out when it comes to working with the channel, but the company has made earnest progress in turning channel account managers (CAMs) into sales partners, increasing pipeline growth within existing accounts and winning green-field business.

"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.

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. They said Dell's open approach to the datacenter where Dell 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.

NEXT: Dell Partners Outline Biggest Channel Pain Point

"Dell isn't trying to lock you into 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 is disaggregated. There is less concern on the partner and customer side about vendor lock-in and more emphasis on how Dell can solve problems."

That de-coupling of networking hardware and software increases customer choice in networking software and increases the potential for hardware and software innovation, said Tom Kean, vice president of sales at Shelton, Conn.-based Dell partner Flagship Networks,

"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 said the speed of making decisions has been liberating. What used to take months or even several quarterly board meetings can now happen in 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," Jafarian said.

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

Dell channel executives acknowledged 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. 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 said it's well aware of the pitfalls of growing too fast. The company said it's not actively trying to grow its partner base and instead wants to see its existing partners grow more profitable.

"Our channel partners are growing faster than Dell and three to four times faster than the IT industry as a whole," said Cheryl Cook, vice president of global channel alliances at Dell. "We are very happy with that momentum."

How much more can the channel grow? On Tuesday when Dell made it official it moved the needle on channel revenue from 33 percent of global revenue to 40 percent, Michael Dell tweeted partners could be 50 percent of 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."

PUBLISHED NOV. 5, 2014