Dell Partners: Some Say They're Feeling The Love, Others Say They're Feeling Left Out

Now that Dell is coming up on its one-year anniversary as a private company, the $24.9 billion question is: How is Dell doing with its Texas-size promises to partners to move nearly 200,000 direct accounts to the channel and transform itself from a box-pusher into a nimble and innovative enterprise company?

Answering that question is tough, especially now that Dell is a private company and no longer beholden to quarterly check-ins with Wall Street. But that was the point. Chairman and CEO Michael Dell maintained that as a private company Dell would be free to do what it needed to do to grow outside the harsh spotlight of anxious investors.

Michael Dell officially took his company private last October. Leading up to what was the largest leveraged buyout of a public company to go private, CEO Dell promised he would put an end to the business-as-usual Dell -- especially when it came to its relationship with partners.

[Related: Dell Revamps Cloud Strategy, Again]

In a bold move, at its Dell World partners' conference in December just months after going private, Dell made good on a promise to shake things up. With a new spirit that partners say was palpable at the Austin Convention Center, Bill Rodrigues, president of Dell North America, outlined his plan to merge the direct and indirect sales armies under one roof and trumpeted the move of more than 200,000 Dell direct accounts to channel partners.

At the time, partners were giddy with excitement at the prospect of a fire hose of new Dell business headed their way. Dell partners told CRN then that they were already beefing up employee head counts in anticipation of an onslaught of new Dell business.

Meanwhile, Michael Dell took to the main stage at Dell World and, with a new swagger, touted a "new Dell" as the "world's biggest startup." He revealed new investments in R&D and data center products such as Fluid Cache for SAN, a solution for supercharging datacenter application performance. Partners were optimistic.

BUT THERE'S 'MORE WORK TO BE DONE'

Fast forward to June and the Dell User Forum in Hollywood, Fla., and the message from Dell's executive team and partners was noticeably more subdued.

"Clearly, there is work to be done on accelerating the whole training, enablement, territory mapping and account mapping," said Marius Haas, Dell's chief commercial officer and president of enterprise solutions. "Things are starting to move into high gear. The changes we have made internally are now enabling the regional sales directors to have much more collaborative conversations with the partners without having to defend a sales territory."

Dell partners, when asked about the "new Dell" in June, expressed divergent opinions ranging from frustrated to overjoyed.

Jarrett Pavao, president of iPower Technologies, a $3 million-a-year Dell Premier partner based in Boca Raton, Fla., said while Dell's heart is on the right place it's struggling to deliver on its promise to break down its once-notorious direct culture.

"For almost a year we have been meeting with Dell channel reps and getting really pumped up about aligning ourselves with Dell to grow our business," Pavao said. "We were ramping up, but when it came to Dell actually bringing us into accounts, it's been crickets. When we asked what happened to all those big promises, our channel rep had that deer-in-the-headlights look," Pavao said.

New Dell business never materialized, Pavao said. "It's not for lack of trying. Our [Dell] channel rep couldn't have been more helpful," he said. Pavao was told it was Dell's direct sales team that was dragging its feet and reluctant to cooperate with channel partners. In the end, Pavao said, Dell has offered the names of 30 companies that he described as "essentially cold-call leads."

"The names didn't include phone numbers or contacts," Pavao said. "I could have pulled these company names out of a phonebook and gotten more information about who they are."

iPower Technologies' story isn't unique. Other Dell mid- to large-size partners say they also have received big promises of account sharing and lucrative new business from channel reps. Like iPower Technologies, those partners have sat in the meetings with their Dell reps and talked about alignment and territory mapping, but ultimately were given cold-call leads.

NEXT: 'It's All Surfacing -- The Good And Bad'

Dell's Haas said he understands partners' frustration and urged them not to lose faith. "The nice part of what's happening is it's all surfacing -- the good and bad -- and that allows us to have the opportunity to get our arms around what are the inhibitors. In the past when you had the two separate [channel and direct] organizations, that conversation wasn't happening in a fruitful way."

Cheryl Cook, vice president of global channel alliances at Dell, said it's not about Dell overpromising -- it's about marrying the right partners with the right direct accounts.

"Our channel account managers are absolutely teaming with our direct sales teams and putting coverage strategies together," Cook said. "Right now we are identifying and trying to understand who the best poised and positioned partners are to help us grow. Partners that have the expertise Dell needs to leverage are the most interesting to Dell."

Other Dell partners say they are frustrated because it appears Dell is giving preferential treatment to its larger partners and giving them its most lucrative accounts. That's a notion Haas doesn't exactly deny.

"What we see is Dell's LARs and fastest-growing partners being the ones that have been the most aggressive about engaging with us," Haas said. "They are the most tenacious about finding opportunities and coming to us and asking to do the territory and account mapping. Those are the partners with the machinery in place to do that. So, yes, they are getting a bigger share of the incremental growth."

Cook and Haas both say partners have been focusing too much on the 200,000-account number. "I think it's less about the number of accounts. It's about promoting a cultural transformation around working with the channel to ensure that Dell products and solutions are best represented to the customer community," Haas said.

Some partners say Dell can't have it both ways. Dell can't woo them in December with big promises of 200,000 accounts to the channel and then in June backpedal and say there's been too much emphasis on account numbers, they say.

Nevertheless, Cook is satisfied with the gains Dell has made within the channel since Dell World. "I'm sure there is room for improvement and we will work tirelessly in trying to provide clarity and better teaming. But I'm really delighted in what progress we have made in a short amount of time," she said.

Those channel gains include Dell's server business being up 30 percent in North America, strong growth in the number of new customers that channel partners have brought to Dell in the first quarter, and Dell deal registrations seeing an uptick of 22 percent quarter on quarter, Cook said.

Today in North America, 37 percent of Dell's revenue is going through the channel compared with December 2013 when it was 33 percent, according to Haas.

"The indicators don't lie; we are making great progress," Cook said.

In fact, business is good for many Dell channel partners that have successfully hopped on Dell's 200,000-account train.

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. She said Davenport Group's Dell business has doubled, and the only thing holding back her company's success with Dell is her ability to hire talented new staff.

Michael Pearson, president of DSA Technologies, an Elk Grove, Calif.-based solution provider and Dell Premier partner with about $15 million in annual revenue, said DSA Technologies' alignment with Dell since the beginning of 2014 has driven about $4 million additional revenue.

"We were quick to reach out to our Dell account reps and let them know we were ready to do business," Pearson said. "Since January we have been invited to go after a number of existing Dell accounts. They reached out to us in many cases and said, 'We have a big storage opportunity here; we know you're a big infrastructure shop. So let's start talking about selling together into this account.' "

NEXT: The Pieces Are Coming Together

THE PIECES ARE COMING TOGETHER

But for Dell and its new identity as a private company, it's far from just the partner program that defines the "new Dell." Its message to partners at the Dell User Forum in June was Dell isn't just a box-pusher. The company, Haas said, wants to help partners over the long term with new business opportunities that can help them grow new hardware, software and services business up the IT stack deep into the data center.

Its biggest challenge on that front has been taking a deep breath after years of acquisitions totaling $13 billion, gobbling up more than 20 firms. As a private company, Dell executives say it's catching its breath and the pieces are coming together.

Since going private, Dell upped its research and development spending from 1.6 percent of revenue to 2.1 percent, according to the company. Its revenue in 2013 was $56.9 billion before going private. Dell also unveiled a five- to 10-year internal research push centered on a new division that would pursue Dell homegrown innovations. Dell also has said it will invest $300 million in Dell Ventures, which will focus on IT innovations around storage, cloud computing, big data, data center, security and mobility.

Unlike its enterprise OEM peers, Dell's approach to innovation is far more conservative. IBM, for instance, just last week invested $3 billion into computer and chip research to build quantum and cognitive computers that mimic brain functionality. Hewlett-Packard, in June, revealed plans to make a new kind of computer called "The Machine" based on a new computing architecture that uses nonvolatile lightning-fast memory technology that can hold more data, called memristor.

Sam Greenblatt, CTO of the Dell Enterprise Solutions Group, calls IBM and HP's billion-dollar research efforts "science fair projects." Greenblatt said Dell's R&D emphasis is on making better products that can help customers make more money.

Dell's most recent brand of innovation includes a strong partnering ethos. That has included partnering with large independent software vendors such as Oracle, Cloudera, Fusion-io and Nutanix on appliances while also touting an open architecture.

Last month, Dell debuted four workload-specific appliances beginning with the pre-built and pre-integrated Dell acceleration appliance for databases designed to simplify deployment. It also unveiled a partnership with converged infrastructure company Nutanix to deliver an appliance that integrates computing, storage and networking.

"What Dell has brought together are some A-list partners that together make Dell a formidable opponent in the data center," said Michael Goldstein, president and CEO of LAN Infotech, a Dell partner based in Fort Lauderdale, Fla.

The appliance approach, Dell executives say, illustrates its commitment to open standards, giving users choice, and preventing vendor lock-ins. For example, unlike Dell's OEM counterparts, Dell customers have a choice when it comes to network operating systems -- either Force 10 Operating System, Big Switch Networks' Switch Light Operating System, or Linux-based networking software from Cumulus Networks.

Tom Burns, vice president and general manager of Dell Networking, calls this approach a "disaggregated networking model" that provide customers with a choice of third-party operating system, tailoring networks for their specific application needs. "We are trying to re-create with networking what Dell did in servers," Burns said. "Dell changed the game from mainframe to x86 and provided scalability, performance, availability and services at a lower cap-ex and op-ex cost. Whether it's Dell's own IP or Big Switch IP, we are giving channels a chance to diversify."

Evidence of that openness also can be seen with Dell's move last week to create an Internet of Things alliance with Intel and Samsung, called the Open Interconnect Consortium, which creates an open-source standard for machine-to-machine communication.

But at least for now, as much as Dell wants to reinvent itself, it's still primarily a PC company. According to 2013 Securities and Exchange Commission filings, the last year it reported financial figures, Dell still gets more than 60 percent of its revenue from PC sales.

Dell's PC business, Cook said, is strong and acting as a springboard into more lucrative enterprise opportunities. Just this past quarter, she said, Dell has seen 13 percent growth in new line-of-business registration where a partner may be selling just PCs or servers and added more lucrative storage, networking or other lines of business.

How do those numbers look almost a year after going private? Dell's not saying.

Of course, as a private company Dell's financial books are closed to Wall Street investors. But on June 9, Dell reported some financials to bondholders that suggest the company is finding success. Dell reported its bond rating is up, while the cost of insuring its debt against default fell sharply. Dell also said it had had repaid $1 billion of debt in the first quarter of its 2015 financial year.

This article originally appeared as an exclusive on the CRN Tech News App for iOS and Windows 8.