Dell Goes Indirect
All eyes are on Round Rock as the computer seller changes direction and makes a visibly stronger channel play.
- By Scott Bekker
- January 01, 2008
The Dell mystique drew its power from Dell's direct sales model: inexorable, recession-proof growth, ruthless supply-chain efficiency and outstanding product support.
Those batteries all flamed out or lost capacity over the last few years, and Chairman/CEO Michael Dell has been working to recharge his company. One way he's doing that is changing some of the basics. For the IT channel, the most important change is Dell's decision to acknowledge its hidden channel and try to leverage the indirect model for more sales.
In recent months, Dell acknowledged that this hidden channel includes 30,000 resellers (15,000 in the United States) and accounts for $9 billion in annual sales. On Dec. 5, company officials publicly unveiled details of their first official, standardized and global channel program.
Called Dell PartnerDirect, the program will consist of Registered Partner and Certified Partner tiers. Benefits include a portal at dell.com/partner, a 360-person channel sales team, partner-oriented post-sales support, financing and a special warranty self-service system for partners.
The program offers an encouraging series of firsts for the channel: general manager titles in three world regions; a global, consistent process for becoming a Dell partner; and straightforward deal registration.
The most encouraging aspect of PartnerDirect is that Dell put its sales teams' money where the company's mouth is. Dell salespeople will now make the same commissions whether a deal is done directly or through the channel.
This being Dell, there are numerous reasons for partners to remain cautious. Dell has an on-again, off-again history with less public channel initiatives. Neutral compensation may not prove enough to overcome Dell's direct-sales culture. Also, the three channel GMs each report to different regional vice presidents rather than to one channel czar.
PartnerDirect will be true to its name. Dell will use its build-to-order and custom-installation capabilities to ship solutions providers' orders direct to customers, cutting distributors out of the model. Dell positions this plan as a plus for solutions providers' margins. But for a company trying to establish itself as an indirect player, Dell is foregoing a lot of channel expertise by leaving out distributors.
Ultimately, success will come down to priorities. Dell Americas Channel Group GM Greg Davis says the company expects its channel business to grow faster than the rest of the company. While Michael Dell is driving Dell's channel effort, he also limited expectations at a Gartner symposium in October. He admitted that his services push will cause channel conflict and noted that even $9 billion in channel revenues is only one piece of a $60-billion business.
During a town-hall meeting of channel partners on the day of the PartnerDirect announcement, Davis acknowledged: "We realize that a partner program and a partner relationship is not built in a week or a month, but it's built over several years based on what we do."
I couldn't have summed it up better myself.
About the Author
Scott Bekker is editor in chief of Redmond Channel Partner magazine.