On this day in 2007...Dell drops direct-only mantra

The vendor famous for its direct sales model embarked on an odyssey to win over partners as it plunged headfirst into the channel

On 5 December 2007, all eyes were on Dell as it set aside its direct-only model and announced its formal entrance into the channel with PartnerDirect.

Built on the basis that direct selling was its "religion", the PC and printer vendor performed a U-turn 12 years ago after deciding that growing indirect routes to market was the only way to continue increasing its customer base.

PartnerDirect initially launched in the US, rolling out to the UK and EMEA in February 2008. Martin Hellawell, Softcat's former CEO and current chairman, recalled having "mixed feelings" about the move.

"We were one of the partners who'd already started working with Dell before PartnerDirect," he explained to CRN.

"Before they started the partner programme, quite a lot of customers wanted to buy Dell products but wanted to buy it through resellers, so we had a working relationship with Dell, but they hadn't fully embraced the full channel at that point.

"When they did go to embrace the channel I probably had mixed feelings on that. We didn't have exclusivity, but I'd say a privileged relationship, and then they opened it up to the whole channel but I think it was a great vote of confidence in the importance of the channel - Dell had been the enemy of the channel for many years."

Launching its partner programme much later than its peers gave Dell an advantage in that it could create the programme from scratch and design it to best appeal to partners, Hellawell (pictured right) added.

"They tried harder because they knew they had to win over the channel, so they were very hungry to get partners on side and listened a lot," he said.

"Michael Dell himself had a huge impact on that. He got very personally involved with the resellers like ourselves and has continued to do so. That leadership from the top of Dell has been a great testament to how much they believe in it."

Cliff Fox, COO at Leeds-based Dell partner Pure Technology Group said that he considered it a "brave" move for the vendor at the time.

"We welcomed [the partner programme] but with a hint of scepticism," he said.

"In hindsight, it was a pretty brave step and quite radical at its time. It certainly paid out in terms of the way they approached it.

"It's logical in terms of the business-to-business IT market, trying to do it all direct yourself you need an amazing amount of overhead so the channel model is quite sensible."

An enterprising journey

The past 12 years have seen the tech titan undergo huge changes, not least ownership, which has seen it change hands from public to private and back to public again last year.

Around the time Dell introduced its partner programme, it made a number of interesting acquisitions in the enterprise storage space. It snapped up SAN vendor EqualLogic for $1.4bn (£1.1bn) in 2007, which was its biggest acquisition at the time. Three years later it splurged $876m on storage vendor Compellent.

The money splashed on the EqualLogic purchase looked like pennies compared with the mammoth $67bn Dell spent on acquiring storage giant EMC in 2015, which it span out to separate company Dell EMC.

Leona Lewis topped the charts with Bleeding Love on this day in 2007

Hellawell reckons it was no coincidence that these early enterprise plays coincided with its channel entrance.

"The technology that we were selling predominantly in the earlier days was very much client computing and server and they moved into software, networking, storage, services - the whole gambit," he said.

"Particularly with the EMC acquisition, they've become much more of an enterprise player, and I think that was really why they needed to channel.

"They knew they were going to become an enterprise player in terms of enterprise technology and they knew to be really successful in that, they needed close relationships with customers.

"It wasn't a transactional sale, it was a consultative one; they knew that's what the channel did, it had both those relationships and the ability to consultatively sell enterprise solutions.

"I think that has matured hugely over the years that we worked together."

More than half of the tech giant's $91bn tech revenue now comes through the channel and Dell EMC's UK channel chief Rob Tomlin told CRN that the company "absolutely depends" on partners to grow its business.

"It's absolutely crucial that our partners, and the ecosystems of the acquisitions that we've made, are supported and maintained as we go along," he stated.

"Our partner community is crucial to us and they are enabling the solutions that we are building to go to market."

12 years a partner

In the dozen years since diving into the channel, Dell has gone from a company that partners viewed with wariness to having the third biggest UK channel footprint of any vendor, according to the 2019 CRN Vendor Report, ranking just behind Microsoft and Cisco.

But the PC and infrastructure vendor received mixed reviews from partners, with some feeling Dell remains a direct sales operation at heart.

However, Fox said he "couldn't sing Dell's praises highly enough" at the moment, acknowledging that it has resolved the major sticking points of the early years of the programme.

"It's got better and better as it has progressed. I remember it well; in the early days of 2008 there was a lot of conflict [with its direct operations]," he explained.

"They tried to deal with that; they dealt with some of it, but not all. But that's almost non-existent now.

"They deal with [any conflict] directly and if there is a direct salesperson attached, the edict is very much to go through the partner and work with the partner, and we see that."

Softcat's Hellawell, who stepped down as chief exec in April 2018, remembers the early days of the partner programme as being "a bit chaotic".

"It hasn't always been easy because they have had a mixed route to market, it's not like they stopped selling directly," he stated.

"There certainly have been times where there have been tensions, where we thought we brought them an account and then they end up selling directly to it.

"And sometimes it hasn't really been clear whether Dell has wanted to enter a market through the channel or enter it directly or just be completely ambivalent about it.

"That's not been easy, but I think they've handled it extremely well and in a mature way, and over the years, I think that has got better and clearer."

Dell's time in the channel so far has had a positive impact on the vendor and its partners, according to Dell EMC's Tomlin. He emphasised that the organisation is firmly invested in the success of its partners.

"We've gone from not being in the channel to having pretty much the largest channel business in the UK and Ireland," he stated.

"Our company is super invested in the channel and it's in our ecosystem everywhere; all of our salespeople sell through the channel and they're getting great results.

"I think we're a major part of the business of all our major channel partners in the UK. Twelve years, start to finish - that's a pretty good result for all parties.

"We can't do any of what we're trying to do without the channel."