Dell is deadly serious about the channel

Michael Dell has become a very vocal channel champion in recent years. You might hear people might talk about a Damascene conversion but it’s not often that you have a very public example of it, as the IT industry does with Dell.

For many years, he was the channel’s harshest critic, frequently castigating it as an inefficient and expensive route to market and questioning its value to vendors and customers alike. Those well honed anti-channel credentials stood him and his company in good stead for many years while he portrayed Dell as an energetic young upstart taking on staid, slow moving rivals with a vested interest in maintaining an inefficient and expensive way of doing business.

It worked because, to a certain extent, Dell was right, not necessarily about the sales channel but about the way it was being used. There was also the fact that, for some customers, having an engagement directly with the maker of IT products gave them a sense of importance and reassurance.

Over time, however, it became clear that there were limitations to the direct approach that made it almost impossible to usurp the indirect sales model. After all, what Dell was trying to achieve in IT did not just represent an ambitious campaign to overturn the established sales model of the technology market, it also went against the orthodoxy of most other markets as well.

The fact is that people had become accustomed to buying goods and services from third parties who were not the manufacturers of those goods, whether it be cars, electric goods, household items, leisure and sports equipment or food. There was no compelling reason why IT should be any different, especially after it became more distributed as mid range computers and PCs made computing power available to more and more potential customers. True, Dell rode that PC wave to success but it was clear, over time, that the direct sales route could only grow so much.

To his credit, Dell realised this and has now become an enthusiastic advocate and supporter of the channel. In a recent partner update, he said Dell EMC was “fully committed to winning and growing and becoming number one in the channel”.

In the same update, Dell EMC said it had generated $43bn of revenue through the channel globally in its third quarter and was aiming to breach the $50bn barrier. President global channels, OEM and IoT solutions at Dell EMC, Joyce Mullen said: “We want to continue this phenomenal momentum we have seen in this past year and we know exactly what it takes to get to $50bn.”

It was also encouraging to hear Dell EMC report it had taken further steps to prevent clashes with its direct salesforce by updating its rules of engagement. “We are taking infringement super seriously and in Q4 rules of engagement infraction escalations were down by over 80% quarter on quarter,” Mullen claimed.

What was intriguing was that Dell EMC expects to reduce its global distributor numbers by nearly 60%. Jim DeFoe, the vendor’s senior vice president, global distribution, revealed it would finish the year with 150 distributors, compared to 350 last year. The company was “really focusing on distributors that are committed to Dell, understand our complete portfolio and know how to train and educate partners. You will see us reward those that are committed to us”.

Set against a push to recruit more resellers in 2018, it makes sense to have a disciplined distribution tier with the skills and focus to go out and acquire new partners. It might be surprising Dell EMC appears to believe 200 of its distributors weren’t committed, didn’t understand its complete portfolio or know how to train and educate partners. But if the cull results in a leaner, more focused distribution tier, it means Dell EMC is not just a grudging convert to the indirect sales model out of necessity, it’s also deadly serious about doing whatever it has to do to make the model work even better.