Dell EMC's John Byrne: I can guarantee there will be more M&A between legacy Dell and EMC partners
Dell EMC's global channel chief predicts that more partners - including those in the UK - will link arms in order to secure high-level status in combined partner programme
Dell EMC's global channel chief says he expects to see more unions between legacy Dell and EMC partners as they get up to speed on the combined portfolio in the second half of 2017.
As Dell EMC announced in December of last year, partners entering the new Dell EMC programme - which was launched in February - will be brought across based on their existing tier with either firm. Partners now have until the end of 2017 to work towards new revenue and training thresholds in the new programme in order to maintain - or improve - their standing with Dell EMC.
Talking to CRN sister publication Channelnomics Europe, Dell EMC global channel chief John Byrne said the vendor is eager to instigate M&A activity among its channel partners during the year-long window as a way for partners to expand their lines of business with the firm.
"[What] we are trying to do by giving them a year to get to these thresholds is to spike some M&A activity among the partner ecosystem. We have seen some of that only two weeks ago in the Netherlands, you are seeing some in North America and there are some discussions happening here in the UK. I can guarantee you are going to see more coming.
"Partners realise that some of them are very good at selling Dell products, others at [selling] EMC products, some are good at services; professional as well as managed and implementation. They want them to come together because they realise that to reach the threshold they want next year they have got to do something pretty special."
Learning from mistakes
Reflecting on the mammoth task of integrating Dell and EMC's partner communities leading up to the partner programme's launch in February, Byrne admitted that fitting the two channel businesses together took seven weeks longer than expected.
"We made a couple of mistakes when we brought the companies together… There was a significant mismatch in the customer and partner accounts. That delayed us in terms of us wanting a single portal, single deal registration and something that is fully automated. That delayed us by about seven weeks.
"What happened is, EMC looked at their customer, no matter where they were in the world, as one customer. So as an example, Insight in the UK would be the same customer ID as Insight in North America and Insight in Singapore. Whereas Dell has Insight UK as a different ID to Insight North America. So when we put the two companies together, there was just a mapping issue."
Yet despite the setback Byrne claims that Dell EMC's unified programme has got everything right, and partners are winning new business as a result.
The firm added an incumbency scheme for both its infrastructure solutions group (ISG) and client solutions group (CSG) as well as an exclusivity programme which gives partners a 1.25 revenue multiplier for selling exclusively with Dell EMC.
"Everyone now realises the importance of the channel for Dell EMC. We are a $74bn organisation with 145,000 people and our channel now is globally $35bn."
"If partners light this whole thing up, they are making between 1.5 to eight times what they made the year before."
He added: "We want them to bring net new business. That is why the programme pays an unbelievable amount of money for net new business. That could mean bringing a brand new logo to the company, a company we have never dealt with before, or a new line of business. We have had thousands of new customers brought in through channel partners just in Q1. Thousands have been brought in already but we want more."
Byrne said that Dell EMC has cut more than 100 distributors from its global line up, adding that he intends to continue slimming down the firm's distribution fleet.
In October last year, Byrne told partners at Dell EMC's first-ever partner summit in Austin that the firm was over distributed. EMEA channel boss Michael Collins later told us in December that Dell EMC had asked its distributors to submit a request for proposal as part of the review process.
Byrne confirmed that the firm has now cut 105 distributors globally, bringing Dell EMC's distribution count from 375 in October 2016 to a present day 270.
The channel chief said that he intends to reduce its distribution ranks even further and claimed that cuts were "ongoing" but could not put a number on how many more will be removed.
According to Sarah Shields, general manager of UK channels at Dell EMC, the UK has seen very few distribution cuts, and is likely to remain largely unaffected by the firm's distribution review.
"Just to be clear, in the UK we are pretty clean. Especially when you look at Exertis and Hammer, two become one, then you have Azlan, Tech Data and Avnet, so three become one, so we are in a pretty good position right now," she said.
"It has become far easier for partners to navigate our portfolio which is vast. It has been perfect timing."
Dell EMC intends to maintain a mix of regional value-added distributors as well as maintain relationships with the three global names: Ingram, Tech Data and Arrow. Collins had previously explained that the firm intends to adopt a "two-plus-one" model, where each country will be catered for by two global players plus a regional one.
Byrne said that he intends to keep the same combination on a global basis.
"There will be some regional specialisation, some countries there will be two-to-one, some will be three-to-one and some will be three-to-two. But nonetheless we are looking at significant distribution rationalisation, and we want the distributors with the capability. If you're not a specialist, we want you to be selling more of our portfolio and we want to be taking share from HP, Lenovo and Cisco.
Byrne echoed Collins' sentiments in claiming that the mega-merger between distribution titans Avnet and Tech Data has helped Dell EMC with its distribution review. Byrne claims that since Dell's marriage to EMC, the "big three" distributors have been "all in" with the united company.
"When we came together, for EMC, way over 60 per cent of their distribution business was done with the big four, and now the big three, so Arrow, Ingram and Tech Data. If you look at VMware, which is also part of Dell Technologies, they are also heavily weighted towards the big three. At Dell we weren't, the big three were less of our business," he said.
"Those big disties didn't really look at us as an enterprise play and I think now there is no confusion; we are absolutely an enterprise play, truly end to end. We are definitely going big with the big three, however we are also looking for regional specialists."
He added: "Those big three are all in with us. If you speak to them independently, our channel has been growing double digit, our distribution business has been going double digit since we became a private organisation. We have the widest portfolio on the planet, our channel is growing fast and our share is of wallet with partners is only in the low teens. None of their other existing vendors are throwing those points on the board."