Seeing the light
Dell's channel business recently overtook its direct business in size in EMEA. But the former direct-selling purist still has a way to go to win over partners, finds Doug Woodburn
Five years on from its formal channel entrance, Dell has conceded that its partner strategy still needs some fine-tuning.
The one-time channel foe used its recent European Solutions Conference in Madrid to announce that its channel business has surpassed 50 per cent of its overall sales in EMEA, but admitted its tools and systems need improvement.
The vendor is set to generate $2.5bn (£1.5bn) of business through its PartnerDirect partner programme in western Europe this year, up from $2bn last year.
Add in global systems integrator and OEM sales conducted in the region, as well as partner sales in emerging EMEA markets - where Dell has always operated a channel model - and the total indirect sales tally now makes up half of the region’s total.
Emmanuel Mouquet, vice president of EMEA channel sales, said: “This is an important symbol that says a lot about the transformation we have been through in the past five years.”
PartnerDirect will celebrate its fifth anniversary in EMEA on 1 February 2013. The programme now encompasses 900 certified partners in EMEA, 100 of which sit in the higher-level, Premier tier. In the first half of the year, Dell delivered 20,000 training sessions to individuals at partners in EMEA.
Mouquet was among a small band of European staff charged with concocting an indirect route to market in 2007 when Dell was a sworn enemy of the channel.
“We started in a room like this, with 10 people, a bit more than five years ago after Michael [Dell] told us we would be launching a channel,” Mouquet explained.
“We spent the first six months just meeting partners. [At one event], we were behind a see-through mirror in London and I could see them, but they couldn’t see me - I felt like I was in a spy movie. The topic was what they thought about the fact a new vendor was coming to the channel. The message from partners was unanimous - it’s fantastic, as we need more choice and competition in the channel.
“At the end of the session, they were told the vendor was Dell and you could see their faces going blank. I remember one UK partner at the time saying ‘over my dead body’, and now they are one of our best partners in the UK.”
But while Dell has spent the past five years striving to win the channel’s trust, Mouquet conceded its tools and systems for resellers still lag behind rivals such as HP.
Ahead of the event, the boss of one Dell Premier partner - who wished to remain anonymous - told CRN he had shifted a sizeable chunk of business from Dell to HP over the past year due to frustrations over the amount of time it takes Dell to get back to him with a price.
“They have not developed their systems,” he said. “HP will come back to you within a day or two on complex deals, whereas with Dell it can take ages.”
Mouquet was quick to acknowledge that Dell can be hard to do business with but stressed the vendor is drawing on distribution and launching new tools to speed up engagement.
“We heard that feedback and it is a complex [issue] to fix,” he said. “It is more complex to order Dell systems than systems from any other vendor, because we do not have fixed SKUs and pricing.”
Six months ago, Dell launched a UK pilot with Micro-P, allowing the distributor to build Dell servers for resellers on a next-day-delivery basis, and the initiative was recently extended to include PCs and notebooks. Mouquet said this will probably be rolled out to the continent next year.
The vendor also used the summit to announce a new online tool partners can use for configuring and ordering complex server, networking, storage and service solutions. The Automated Price List tool will be available as a pilot in the UK from January, ahead of its debut in mainland Europe later in the year.
Although Dell is committed to the PC space and is gearing up for a big push around Windows 8, its vision is to “win in the datacentre and become an end-to-end solutions company”, said Mouquet.
In its most recent results, a third of its business - and more than half of its profits - came from datacentre solutions, as opposed to the client technology that launched the brand.
Dell aims to quadruple the business it conducts through PartnerDirect in western Europe to $10bn over the next five to seven years, increasing its share of partner wallets from 10 to 25 per cent in the process. But Mouquet said there is no ultimate objective or limit on the split between its direct and channel business.
“It does not matter to us as at the end of the day; it’s a customer choice,” he said.
“According to IDC or Gartner, 30 per cent of customers prefer to buy direct and 70 per cent want to buy from a partner. So the opportunity for Dell is still in the channel space and this is where we will continue to invest and build our growth.”
Stuart Rae, managing director of Dell Premier partner Nviron, said that - despite its direct-sales heritage - VARs know where they stand with Dell.
“I think Dell has seen the light and the bottom line is the cost of sale by the channel has proven to be lower,” he added. “There are other vendors who fudge it by saying we will only go through the channel but then sell direct and fulfil through the channel, which affects margins. With Dell, it is either a partner or direct engagement and if there is conflict, in most cases they come down on the side of the reseller.
“My only gripe would be their [lack of] a returns policy, although I think the configurator will minimise this [issue].”
Alastair Kitching, chief operating officer of Dell Prem-ier partner Esteem Systems, said Dell’s relative inexperience in the channel has often worked to its advantage.
“Because they do not have the baggage, Dell can take the learning and experience other vendors such as HP have gathered over a long period, which can be refreshing,” he added.
“Dell’s sales force is used to doing direct business so you have to recognise that and prove you can bring something to the party. It is one of the better - if not the best - vendor relationships we have.”