AUSTIN, Texas -- At Day 2 of Dell World 2013, being held at the Austin Convention Center here, the company is definitely strutting its private-company status. With shareholders off of the company's back, Michael Dell in his keynote address fondly referred to the company as the world's largest startup with the financial strength, capital structure and scale to disrupt the status quo. The question for the company's channel partners, however, is, Can Dell transform itself from an inconsistent and unpredictable vendor partner to a trusted one?
The company is banking on it.
In fact, early on Day 1 of Dell World 2013, the company announced a slew of new partner initiatives that in a nutshell promised more alignment between the company's direct and indirect sales forces, including combining the sales organizations, and the promise of a 20% "compensation accelerator" to incent Dell's direct sales force to buddy up with partners; expanded profit and coverage opportunities; identifying named accounts to be channel-led; and a plan to grow channel business above industry-average rates. These changes are slated to take effect in North America on Feb. 1.
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In a breakout session titled "Partnering with Dell Sales to increase your business," Frank Vitagliano, Dell's vice president for North America channel sales, moderated a panel discussion with Dell's top sales leaders in North America on how the company's direct and indirect sales groups jointly go to market and how the company needs to fine-tune a collaborative go-to-market process.
All of the Dell sales executives agreed that the Dell channel is not only relevant to the company's current business but is an absolute necessity going forward. The sales executives representing Dell's commercial, public, federal, healthcare, midsize and large account sectors reiterated the company's top-down commitment to the channel and homed in on the opportunity in their space.
Troy West, vice president and general manager of Dell Federal, talked about the company's long-standing relationship with the federal government -- a $2.2 billion annual business with about 55% of that business, or $1.2 billion, representing the federal channel business. August Calhoun, vice president and general manager of Healthcare and Life Sciences at Dell, talked about the company's $3 billion business, 50% of which is services-based, and was clear that Dell's direct group needs its partners, noting that about one-quarter of that business goes through partners and represents a huge opportunity.
John Mullen, vice president and general manager for Dell's industrial business, which includes 2,700 of the company's largest customers, pointed to an opportunity for partners to work with about 800 of those customers, and Mark Horan, vice president and general manager for the preferred accounts division (PAD) at Dell, talked about PAD being a $40 billion addressable market. This market consists of a number of teams: public midmarket or preferred public -- for example, school districts, K-12, higher education and local government; preferred commercial accounts, or companies with about 10,000 employees and $10 million of buying power; an acquisition team for both public and commercial; and an emerging business relationship team, which is commercial, for 100-employee accounts.
"I like to say that I was channel before channel was cool at Dell because I knew that I couldn't get the reach without channel partners to help me get to where I needed to be," said Horan, adding that he also needs the technical expertise of the channel. "I'd like to double the amount of business that I do in my channel space over the next year," he said.
Partner feedback from the audience was positive, in so far as they like what they heard from Dell about it becoming channel-friendly but partners are cautious. "Partners talk about conflict with sales reps. This can be a positive change to reduce that," said Tawna Corley, director of business development at Candoris Technologies, a three-year Dell partner based in Annville, Pa.
Regarding the 20% compensation accelerator that Dell will offer sales reps who work with partners, Corley noted that it's more advantageous for Dell sales reps to see the channel as partners rather than as competitors. "If they see an increase in their paychecks, I think they'll do it," she said.
Mitch Breneman, vice president for large institutional sales at MCPc Inc., a 40-year-old technology products and solutions company in Cleveland, Ohio, didn't know about Dell's channel news announcement until he heard about it yesterday but sees it as part of the growing importance of the channel to Dell. Breneman, who joined MCPc five months ago, worked at Dell for 13 years and was a sales director for Dell's public business.
He's bullish on the company's channel shift. "Dell really needs its partners, especially if you look at how fast they want to grow. They need additional salespeople, and that growth won't be organic," he said.
Tiffani Bova, vice president and distinguished analyst at Gartner, sales strategies and channel innovation, said that aligning direct and indirect resources in a more formal way is a solid step toward meeting new market demands in a cost-effective manner.
"Execution in the field will need to be closely monitored to ensure that intentions of the changes are realized in the eyes of the customer," she said.
Dell's Vitagliano said that the company, with the help of its partners, put together a study to solicit feedback from partners about their experience, including interaction with Dell sales teams. The first study launched in September and was completed in November. "We'll use it as a baseline to help us put processes in place for our sales teams and continue to survey the channel," he said.
Communicating the advantages of getting on board with Dell will be one of the company's biggest challenges as it brings its new channel message to partners. "We want our partners to view Dell as a consistent and predictable vendor partner," Vitagliano said.