Dell killing partners ... with kindness

To the surprise of many, Dell is emerging as a channel-friendlier vendor, thanks in no small part to its acquisitions of EqualLogic and Compellent.

Once feared for its direct-sales mojo, Dell seems to have picked up some good channel habits from its acquisitions of VAR favorites EqualLogic and Compellent Technologies.

Dell Inc.'s traditional approach made the company a nemesis of PC VARs, who complained that Dell inside sales staff poached their deals. But since early last year, when chairman and founder Michael Dell issued channel friendly marching orders, Dell has done much, much better, VARs said. The company has made requested changes to its PartnerDirect program, and VARs expect more such changes later this month.

“Dell was always difficult for channel partners because of its direct sales, and there are still pockets of resistance. But I really think overall Dell has done a terrific job recently with partners,” said Paul Clifford, CEO of the Davenport Group.

This St. Paul, Minn., VAR was an early Dell partner but also sold a lot of storage from Compellent and KACE systems management. By virtue of Dell buying Compellent and KACE, Davenport is pretty much a Dell shop now, Clifford said.

Fixing the love/hate relationship

In the past, a common complaint among Dell partners was that the company would come in at the last minute -- after a VAR and customer had already negotiated a hardware-software solution sale -- and offer the software free to seal the deal.

Not surprisingly, many VARs preferred dealing with Hewlett-Packard or other more channel-centric hardware vendors. But, today, Dell partners said there is much less channel conflict.

“Dell has become very good with conflict resolution, specifically the direct versus channel issue,” said Bob Guilbert, managing director at Eze Castle Integration Inc., a Dell VAR based in Boston. “They’ve made a significant effort to line up their direct sales reps with the channel to ensure there are no problems, and they’ll deal with an issue quickly if one comes up.”

Eze Castle has had a few dustups with Dell direct sales reps in the past few years, but Dell management swooped in quickly and took care of things before they became problems, Guilbert said.

Sid Herron, sales director with Moose Logic, a Bothell, Wash., VAR, agreed that Dell has been a surprisingly good channel partner of late.

“It was a love/hate relationship 10 years ago,” Herron said. “[Dell’s] stuff was good, but there wasn’t really much opportunity for us to make money. [Dell] thought, ‘Why include these guys if we can do everything direct?’”

But Herron said he’s seen Dell change its stripes first hand, treating partners as valuable assets.

Sun sets, a new dawn for Dell

Dell may also be benefiting from channel changes by other vendors. Since Oracle Corp. acquired Sun Microsystems and disenfranchised its hardware resellers, many VARs have sought server alternatives.

One large Sun hardware VAR in the Midwest picked up Dell early last year when it became apparent that Oracle was taking Sun server hardware sales direct, along with support and maintenance contracts. This reseller already sold EqualLogic storage but now actively sells Dell servers as well.

This VAR also sells HP servers because many customers are hardware agnostic, said an executive with the company. “They’ll buy Dell or HP, whichever is cheaper that week,” he said. “Thus far, Dell has treated us great. We’ve been pleasantly surprised.”

Dell stresses channel communication

The message from Dell execs, including Michael Dell, has been clear and consistent, and the channel program has rolled out in a very deliberate and organized way, said analyst Tiffani Bova, vice president of sales and channel strategies for Gartner Research.

“Since Dell made the decision to develop a comprehensive and global channel strategy, they have remained consistent in their investments and delivery,” Bova said via email. “Furthermore, with any acquisition which significantly relied on the indirect channel (EqualLogic and Compellent), Dell worked very hard not disrupt the go-to-market activities.”

For example, in the early days of PartnerDirect, Dell listened to partners and quickly dropped the minimum deal-registration size from $50,000 to $15,000 for small and medium-sized business accounts in October 2009. Dell subsequently brought EqualLogic storage, KACE systems management software and managed services deals into the deal registration process with no minimum deal size.

Guilbert and others said the PartnerDirect portal is easy to use and that communication with Dell account managers is straightforward. 

“Deal registration has become simple and fast,” he said. “We’re always notified within 24 hours whether a registration has been accepted, which is important to us so we know either way. Dell definitely values highly vertical partners, so we’ve received good attention from them.”

Many Dell watchers agreed that the additions of Compellent and EqualLogic and their highly respected  partner programs positively influenced Dell’s channel strategy.

“Dell has gained insight from these companies with solid partner programs,” Guilbert said. “They have applied best-in-class approaches to their own program.”

Once Moose Logic received its server and EqualLogic certifications, Dell was really good about deal registration and special pricing when it was required, Herron said.

“They’ve become much more channel friendly over the last five years or so, perhaps because they’ve grown big enough that they’re realizing that it just isn’t practical for them to staff up enough to handle everything directly,” he said.

The Compellent wrinkle

Even with Dell’s friendlier channel approach, Compellent storage sales may become a bone of contention. With the independent Compellent, 100% of all sales went through the channel, and clearly that is no longer the case, with Dell bidding for deals as well.

One Compellent VAR said he is upbeat on new ownership, although he gets much more deal-registration pushback from Dell.

“Dell says that 75% to 85% of deal registrations go through, but I’m seeing more like a 50% success rate,” this VAR said. “It seems that the knee-jerk reaction is not to approve, so we have to fight through a lot of that.”

Generally, however, he said the quality of the Dell technical support and sales people is impressive.

Dell in sheep’s clothing?

Other VARs have not seen change for the better at Dell at all. One New England VAR that sells both EqualLogic storage and Dell servers said he encountered two cases of channel conflict in just the last few weeks. In one server deal, he said his company had the deal registered when Dell tried to take it direct. And, he said that in another case, after closing an EqualLogic storage sale, a Dell direct rep called the customer and tried to take that deal as well.

“I’d much rather sell EMC storage than EqualLogic now,” this VAR said. “EMC can be a challenge, but once a deal is registered, I’ve never seen EMC try to come in and take it. I’ve always been distrustful of Dell, and that is not changing now.”

 

For an update on Dell's channel program, seeDell Premier partners could earn more margin. 

Let us know what you think about the story; email Barbara Darrow, Senior News Director, or Pat Ouellette, Associate Editor, or follow us on Twitter.

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