Dell Looks to Capitalize on Storage Industry’s Gaffes in the Channel

20 years ago Michael Dell envisioned a future where businesses no longer just bought servers and storage from resellers but instead bought these products over the Internet. Naysayers scoffed at the idea of Dell ever making inroads into this market. Now that Dell ships 1.5 million servers and generates billions of dollars in revenue quarterly, no one questions that Dell has succeeded.

Fast forward to today. Michael Dell envisions a new type of future as Dell puts in place a channel program with equal ambitions of selling equal amounts of gear through the channel and pulling in billions of dollar from it. The question is, “Did Dell so succeed in going direct that, in the process, it forever alienated the very resellers that it now needs to partner with in order to succeed in the channel?”

We recently conducted a briefing with Sean Phelan, Dell’s Director of Storage Sales and Advanced Solutions Group, to better understand his vision for Dell’s channel in North America. As we met with him, two thoughts struck us. The first is, with this type of leadership, it’s no wonder that Dell is building momentum with the channel. The second is how long it will take for storage vendors to wake up to the new reality of Dell effectively serving the channel.

It seems about time that the channel receives this type of serious attention from a major vendor in storage. With recent commentary on Symantec’s latest gaffe all over the industry press and HP making some unexpected overtures towards expanding its relationship with CDW, it seems that respect for the channel in North America has generally gone from bad to worse. Caught between low margins and lack of attention from the major storage vendors, resellers are getting creative with managed services and riding the virtualization wave but without much in the way of apparent support.

Phelan shared his perception that the channel is wide open in North America, and Dell’s plan is to capitalize on all of the apparent neglect. Phelan and the Dell team are listening to the channel virtually non-stop these days through a variety of online forums as well as in face-to-face meetings. The creative use of Internet forums focused on the channel is cutting-edge and demonstrates Dell’s commitment to putting its best foot forward. Dell has even invented a new role called Channel Community Manager staffed by Amie Paxton. Paxton uses Facebook and Twitter to keep up with her partners, along with a multimedia blog, a monitored wiki (PartnerStorm) and an online partner forum (PartnerDirect).

Yet a web site, a blog and a Channel Community Manager may not not make for a good partner in the eyes of some VARs. That’s where Dell is learning to tap those partners who bought in early to Dell’s Channel program and are helping Dell transform into a partner-friendly company. Steve Brown, one of the original founders and partners at Rev2 Technologies, was an early adopter of the Dell’s Channel partner program and is a good example of how Dell is using its existing partners to transform the channel.

Brown built his relationship with Dell in HP’s back yard (San Jose) and admits that the first couple of years it was not easy going. However in the last couple of years Dell has made huge strides in working out discrepancies between its reseller and direct programs so that they are now working more closely together rather than competing against one another.

How is Dell’s direct sales team reacting to all of this? Phelan reports that the overlap in deals is less than 3%, so conflict is minimal even with an annual run rate (based on Q1) of $12 billion. Phelan admits that there is more work to do, but early adopters in the sales team who “get it” appear to be out-performing their peers by harnessing the power of the channel. If this type of success is profiled – and then emulated by others (which is how it tends to work in sales) – then Dell may have found a way to get their direct sales team motivated to work with the channel.

Phelan envisions more than just stepping into the channel gap. Dell is in a unique position to:

  • Select from among the many storage software technologies that are available
  • Put investment into testing each to meet its rigorous standards
  • Offer them to the VARs as part of custom solution packages along with the expertise and training resources designed to help the VARs make informed recommendations to their customers.

By delivering a solutions architecture along with components that meet Dell’s rigorous testing standards, Phelan envisions delivering a practice platform on which his VARs can build with confidence. This is a better arrangement for the VARs than working directly with the vendors as VARs can rely on Dell to pick a solution that works and then spend their time assisting their customers with better service and results. Phelan cited a recent decision to partner with CommVault to develop joint collateral, training and OEM products that decrease installation time and create a more unified approach to supporting a backup infrastructure with Dell Equallogic, PowerVault or Dell|EMC Clariion.  Dell will continue to look to bring solutions like this to its partners that can create synergies and create value for partners’ end users.

All of this is a tall order for a company that has just started to work with the channel, and is known more for winning on lower prices than for winning on technology. But Dell already seems to grasp the challenges of catering to the channel and is ahead of storage vendors who have tried and failed to serve it. At the very least, Dell’s focus on the channel should help the industry at large get pointed in the right direction in regards to better serving the North America storage channel community going forward.

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