Partners: Dell's Transformation As Private Company Is Impressive, But Channel Wrinkles Persist

Twelve months ago, if you'd asked any Dell partner about the future of the $60 billion IT giant, they probably would have had to think a while before responding.

That’s understandable, given that this time last year Dell was snarled in a high-stakes, $25 billion scuffle with shareholders -- and most notably, with activist investor Carl Icahn -- to go private.

Today, when partners talk about Dell’s future, the doubt is gone. In fact, some Dell partners such as the Davenport Group, a St. Paul, Minn.-based solution provider and Dell partner, have a code word for its Dell business.

"We call it 'Operation Gold Rush'," Sonia St. Charles, CEO and co-founder of the Davenport Group, told CRN in a recent interview.

St. Charles said that Dell, after being born again as a private company, has a new fighting spirit backed up with the right product mix, vision for future growth, and more importantly, a commitment to work with its channel partners.

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"Dell’s transformation has been remarkable. The sense of change and momentum is palpable," said St. Charles. She says her Dell business has doubled, and the only thing holding back her company’s success with Dell is her ability to hire talented new staff.

Dell still has plenty of bumps to smooth out, according to some partners. But on the whole, they say Dell is poised to be the IT comeback kid.

On Tuesday, Dell hosts its Dell Users Forum in Miami, Florida where it’s expected to announce a host of new enterprise initiatives, which judging from the conference’s agenda, include competing more aggressively in the converged IT marketplace and stepping up its storage game with all-flash product lines.

Dell executives say next week’s conference will be a coming out party of sorts for Dell, which will deliver its vision for what Chairman and CEO Michael Dell describes as a more "agile" business approach -- one that will allow the company to move at the speed of a nimble startup.

"I think, all-and-all, Dell pulled off something phenomenal," said Laurie McCabe, cofounder and partner in research firm SMB Group. "It has gone through a lot of uncertainty and remains intact and has proved it can be an innovative solution provider and a good business partner."

Dell's transformation includes not only going private, but also a pledge to move some 200,000 direct Dell accounts into co-management with channel partners. That’s a move that has earned Dell a lot of goodwill in its base of around 165,000 channel partners.

However, some partners say Dell hasn’t yet followed through on its pledge.

Dave Hiechel, president and CEO of Eagle Software, a Salina, Kan.-based solution provider that does about 50 percent of its business with Dell’s storage and server hardware, said Dell has been inconsistent.

"Their heart is in the right place. We have discussed joint account mapping and collaborating on accounts, but I don’t think Dell has been able to execute on that promise it made with the channel. Not yet at least."

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Based on interviews with several large Dell VARs, Dell has either broken promises or been unable to deliver "big" accounts to partners as part of Dell’s joint account management strategy announced last year at DellWorld.

Some Dell partners are frustrated because believe the vendor has doled out the most lucrative accounts to partners that are exclusive to Dell.

’I have a lot of respect for Dell, but if I want to grow my business, I can’t be 100 percent Dell right now,’ said one partner who asked not to be identified.

Well-known West Coast solution provider En Pointe Technologies, on the other hand, said it is extremely pleased with its Dell partnership. The company says it is both a Dell and Hewlett-Packard partner.

"Our territory engagement with Dell is in the best shape we’ve ever seen it. We have had more access to Dell direct sellers for joint account mapping and management than we have seen before," said Bob Bogle, senior VP of sales at En Pointe. "Dell has a lot of bad channel history to make up for and from what I can see they are doing it."

Hiechel said "it’s a little too early to tell" if Dell’s channel vision will start paying dividends for his company anytime soon. What has paid dividends, he said, is Dell’s long-range commitment to building products for the future.

"As a private company, Dell has shown it's willing to make the right investments as a company," Hiechel said. "They are no longer reacting to the market. Their focus on Compellent and how it integrates with the larger Dell ecosystem, and their commitment to becoming a leading switch company, is starting to come together."

’Since going private, Dell has been investing strategically to acquire the IP and expertise it needs to package software and services in a more digestible way,’ McCabe said.

St. Charles agrees, and said Dell is taking the time to piece together years of business and IP acquisitions and creating cohesive business solutions that tie client, server, storage and datacenter together.

Dante Orsini, vice president of business development at iLand, a Houston-based cloud computing firm that is both a Dell partner and customer, said Dell has won a "massive vote of confidence" from the channel.

"They have a vision for the long game and have communicated that they are not holding back and will be driving their platform forward,’ Orsini said. "As a private company, they seem to listen more to partners like us – and not Wall Street investors. Dell is taking our suggestions to heart and engineer the types of solutions that are going to help us grow."

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Partners tell CRN they have been winning with Dell at the expense of IBM and Hewlett-Packard.

"There was a lot of uncertainty around Dell, but now customers are seeing that Dell weathered the storm, they are committed to the channel and fired-up for growth," said one partner that not to be identified for fear of hurting its vendor relations.

However, some hiccups persist. Hiechel said he has seen delays in quotes and special configurations. "It’s a two-fold problem. They need to simultaneously encourage the channel to come back to Dell and deliver on the vision it laid out as a private company."

The new Dell, according to VARs interviewed by CRN, seems to be more beneficial to its larger partners. But smaller Dell partners tell CRN they aren’t seeing the same type of account mapping or partnering their larger counterparts are enjoying.

John Pucillo-Dunphy, owner of Miracle Networking Solutions, a Middleboro, Mass.-based Dell premier partner that generates less than $1 million in revenue annually, said his Dell relationship has deteriorated since the vendor went private.

"I’m sure I don’t do enough Dell business to matter to them," Pucillo-Dunphy said.

Pucillo-Dunphy said Dell has raised shipping costs, reduced its options for PCs, and hiked software prices on packages such as Adobe Standard. He said his calls to Gold Account Dell reps are now going to Dell’s Global Account team, which he characterized as less personalized and dedicated to his needs.

"My Dell business is up 10 percent," Pucillo-Dunphy said. "Not because Dell has been more strategic with me, but because of Windows XP migrations and a better economy that have loosened the purse strings of the companies I do business with."

"Dell’s message is right on the money," Pucillo-Dunphy said. "But the execution isn’t there."