Dell VP: We're Accelerating Channel Investments, Acquisitions As Private Company

Dell has freed up capital and is accelerating its investments in the channel and on technology acquisitions as a private company, said Dell Vice President Bryan Jones in a keynote address Sunday afternoon before several hundred solution providers at the 2015 XChange Solution Provider Conference.

"The private Dell gives us the ability to accelerate the channel investment," said Jones, a 19-year Dell veteran who oversees North America commercial marketing, in a ballroom address at the Gaylord Texan Resort in Dallas, Texas."I can spend more and put more emphasis and effort into the channel on a regular basis than I potentially could as a publicly traded company with a 91-day reporting cycle back to Wall Street."

[Related: Dell's Enterprise Boss: Channel Is The 'Shining Star' ]

Dell, which celebrated its one-year anniversary of going private in October in what was one of the largest leveraged buyouts in history, also has more cash to focus on making critical acquisitions in growth markets like security as it builds out a comprehensive solutions portfolio from client systems to the data center, said Jones.

Those that think the $25 billion buyout has put a debt burden on Dell that could stifle channel investment and future acquisitions are flat-out wrong, said Jones.

In fact, Jones said the amount of money Dell spent in the three years preceding the leveraged buyout on "share buybacks and dividends and all the costs associated with those activities" is far greater than the debt service level that Dell now has as a private company.

"We have actually freed up capital to focus more on this acquisition space, and you are going to see us aggressively continue that march," said Jones.

Dell has spent some $20 billion over the last decade on acquisitions, building out its portfolio by purchasing companies like security managed services provider SecureWorks, security software maker SonicWall, systems management software maker Quest Software and Networking equipment maker Force10.

Among the areas Dell is likely to look at making additional "strategic" acquisitions are security, networking and software, said Jones. "In the software market, you will continue to see us aggressively look at acquisitions in all the different markets that we participate in," he said. "The software piece is obviously that critical component to tie all these things together into end-to-end solutions."

As for the potential for increased security acquisitions, Jones pointed to Dell CEO Michael Dell's sharp focus on the security market. The SecureWorks advanced malware and protection managed services business reports directly to Dell.
Michael Dell is "personally involved in the security strategy and what we are doing there," said Jones. "You are going to continue to see us invest there."

The aim of the acquisition offensive is to provide the end-to-end solutions from the client to the data center, all wrapped with next-generation services which solution providers are a "critical component of," said Jones.

NEXT: A Barrage Of Dell Channel Investments

As for using cash to drive channel sales growth, Jones put forth a barrage of channel investments Dell is making under a $125 million program including up to a four percent backend rebate on new account sales; a new account sales rep spiff of $250 per new customer acquisition; new AdvantEdge incentives including $1,000 on security sales; $400 on storage sales; $200 on server sales and $20 on PC sales.

Dell's Premier Earning Market Development Fund (MDF) incentives, meanwhile, now total up to $40,000 per quarter based on volume client and enterprise sales with a 100 percent reinvestment in demand generation, said Jones. Finally, Dell has a client demo program that provides up to six systems per year at 50 percent off the suggested price.

It's that kind of investment that led to 35 percent growth in partner rewards paid in fiscal 2015 and 50 percent growth in distribution sales, said Jones. Dell now derives 40 percent of its revenue through the channel, said Jones.

Dell can simply not achieve its growth targets without driving significant channel sales growth, said Jones. Speaking of the channel support from both himself and Dell North America President Bill Rodrigues, Jones said: "Neither one of us can get to any of our goals without substantial growth in the channel," he said.

That top executive support, including from Michael Dell, has sparked a "partner revolution" inside Dell that is putting "more money" in partners' pockets, "making you more successful and competitive," said Jones.

Al Freeman, a managing partner for Bayou City Solutions LLC, a Bronx, N.Y., Dell partner, said he couldn't be happier with the aggressive investments Dell is making in partners and the Dell product portfolio. "The Dell channel program has gotten better and better every year," he said.

Adam Swafford, vice president of operations for Computer Solutions Inc., a Waxahachie, Texas solution provider, said he sees Dell making progress with its channel offensive. "It's a big change," he said. "I am glad to see it. I think they are going to get more partners with the model they have now."

PUBLISHED MARCH 1, 2015