Q&A: Bill Scannell And EMC Make The Channel Push

Bill Scannell, executive Vice President, Americas and Europe, Middle East and Africa for EMC, spoke with CRN editors about the company’s push to move more services business through enterprise partners and the company’s stepped-up partnering strategy. Below are comments from the Q&A session with the 27-year EMC veteran, who started his career as a sales rep working closely with channel partners. ’The first year I was a rep, I did 100 percent of my business through the channel,’ says Scannell. ’I have been a big fan of the channel since the day I started with the company. The channel has served us well. And we have served the channel well.’

CRN: Talk about how big a game-changer it is to move enterprise services through partners.

Scannell: This is not new to EMC. We did this in the commercial space when we segmented the market from enterprise to commercial. We just said with commercial 100 percent is going to go through the channel. We know what motivates the channel. We want to have the best products, the best portfolio. And when you look at commercial 10 years ago we had great products, but we didn’t own Data Domain at the time. We didn’t own Isilon at the time. We didn’t own VMware at the time. Yet we created a very strong business by working with our channel partners to go after that space. We had low market share at the time. Now we have very large market share in that midmarket space. We are just making the same play with enterprise.

We have got the right portfolio now. We have had partners that were traditionally non-EMC partners coming to us saying, ’We think we are missing the boat. We think we need to do more with you EMC because you are spending more than anyone else in the industry. We love the company and the things that you are buying. We were reselling Isilon before you bought them. We were reselling Data Domain before you bought them. We love VMware. We love your strategy. We’d like to get closer with you. But we understand that you guys are direct in the enterprise.’ That has never been the case. We have been working with partners in the enterprise forever.

We do have a direct sales organization. We do have markets and accounts that we sell directly into, but we also work with partners where it makes sense for us, for the customer and for the partner. Go back 10 years ago, we had 35 percent of our enterprise business going through resellers. So we have had folks we have been working with for the 25 years I have been here. We have partnerships (with channel partners) that date back that far.

NEXT: Moving To A 100 Percent Channel Model

So now this is just formalizing the strategy, saying, ’Look, we can’t get at all the opportunity.’ If you look at EMC today vs. the EMC of 10 years ago, there is so much opportunity with our current portfolio that we don’t have all the reach [that we need to get to all of the potential customers]. So we are looking at our channel partners as an extension [of our direct sales force]. We are looking for channel partners to tell our story to their customers where they already have a relationship and with prospective customers. If they don’t have a relationship and we don’t have a relationship, then we will work together and figure out who does what.

CRN: It sounds like under the new Enterprise Select program you are moving to a 100 percent channel model. What percentage of channel sales was that one year ago?

Scannell: If you look at Enterprise Select, there is tier one, tier two, tier three and tier four. We have said, ’Let’s do this thing over time, measure twice and cut once.’ So we are taking all the tier three and tier four accounts that we had and moving them to the channel. We are not going to reveal the revenue, but it is significant. That is where we are starting off first with those named accounts in the tier three and tier four category and all that business is going to go through partners. But there are many of those accounts who are not EMC accounts today or who are small EMC accounts today and we feel by working closely with the partners that we can significantly expand our market share in that space. Based on how well that goes, then we will go to tier two [accounts].

There will always be some accounts that EMC sells direct. If we are selling direct to an account and we are doing $150 million a year or $200 million a year in that account, we don’t necessarily need a partner. Now if a partner comes and registers an opportunity and they can add value and it makes sense for EMC and the partner and the customer, then common sense says we will work with the partner on that opportunity.

What we are now saying is that there is a whole subset of the enterprise where we are going to go indirect and we are going to let partners do the services because it worked really well in the commercial market. If you look at the high end of the commercial or midmarket vs. the low end of the enterprise market, they are the same size companies. So if it worked well in the commercial high-end market, it is going to work really well in the enterprise low market.

NEXT: The Value Of Enterprise Select

CRN: When did the new enterprise plan go into effect?

Scannell: We have been working on it for 12 months. We announced it internally in April.

CRN: What is the road map for handing over the accounts to channel partners?

Scannell: We are doing this right away. Partners are going to come and say, ’I have got relationships here. I am selling here. We have registered an opportunity. Can we register the account?’

CRN: When will you move the tier two and tier one accounts to the channel?

Scannell: We’ll look at how well we do with tier three and tier four. If we can do it sooner than by the end of the year then we will.

CRN: There are also new rules of engagement. How big a deal is that?

Scannell: The ironic part is we really dusted off rules of engagement I put together over 10 years ago. The thing is: you just have to be consistent and make sure they get enforced. So what we are doing now is republishing them and saying [to our direct sales force], this is how you work with our partners. This is how you work with the channel.’ There are dos and don’ts and you need to be aware of it because if you go outside of the rules of engagement then there is going to be consequences. So it is just re-educating [the direct sales force].

We are really good at working with channel today. This is not the EMC of 15 years ago when we were a hard-charging direct [sales company]. A big chunk of our revenue in enterprise and global goes through resellers today. All of our business in the midmarket or commercial goes through partners today. If you look at the [CRN] ARC [Annual Report Card] survey, we used to be at the bottom of that ranking. Now we are at the top. We are the No. 1 company to do business with. Partners like the margins they are making on EMC. They like the EMC strategy. They like working with EMC.

We are giving partners the services. That is where they make high margins. We are just investing a lot more than any of our competitors as a result of the companies that we have acquired and the technologies that we are rolling out to the market.

This VSPEX is a huge announcement. We are basically taking the role typically the manufacturer had to do and we are saying to channel partners: ’This is what you do best. Why don’t you guys come up with the solutions and help us roll them out.’

NEXT: Enterprise Select And VSPEX

CRN: What was your message to the direct sales force and partners with regard to Enterprise Select and VSPEX?

Scannell: That is if we do these things right then we are going to continue to grow much faster than the market. Our goal is to take more share. Our theme for the [sales] kickoff meeting in 2010 was ’Take Share.’ In 2011 it was ’Take More Share.’ In 2012 it is ’Transform To Take More Share.’ Our focus is taking share. Protect our installed base. Make sure we don’t lose customers. And then go win new customers.

CRN: Talk about the tone of the call with the direct sales force with regard to Enterprise Select.

Scannell: It was positive. If we do this then we are going to grow faster than the market. It is good for you. It is good for the customer. It is good for the partners. People aren’t pushing back. You will always have a couple of people asking questions, ’What does this mean for me?’ People understand that we have thought this out, that we have been successful because of the channel.

Our channel business is growing. When Dell left us, we went to the channel and said, ’There is a huge opportunity or a huge risk for all of us here. If we all focus on making sure that we protect our customers we can take this business that historically went through Dell and we’ll make sure it goes through you.’ And we grew that business significantly at a much faster rate than EMC’s growth.

CRN: One of the big enterprise rules has to do with the direct sales force pulling partners into the accounts. Talk about that.

Scannell: Declare the partner after the first call. Figure out who your partner is and don’t go on calls unless the partner [sales] rep is there. If our sales rep goes on a call, the partner sales rep should be there.

This is how you enable the partner. If they can be self-sufficient and run the campaign then we should let them be self-sufficient and run the campaign. And we should go focus on other accounts. If they need help then we should help them. We are all about developing the partners. It takes a lot for EMC itself to understand the full breadth of our portfolio of products so we’d be naïve to think that the partners are going to completely understand it day one. So we have got to do on-the-job training and work with them.

All the rules of engagement are set up to make sure that we are successful going to market with our partners and that they learn as we learn.

NEXT: Attacking The Competition

CRN: How big a competitive advantage do you think the new rules of engagement will be against the HPs and IBMs of the world?

Scannell: We don’t take any of the competitors lightly. So we are focused on all of them. We have got a special attention on anybody who is growing. Look, IBM’s results came out yesterday, their storage business was down. We have slowed NetApp’s growth down significantly by focusing on them. We’ve got a better product and we have just got to educate our customers on the [EMC] value proposition and when we do that we win a lot more than we lose.

So we’re going to focus on HP. We are going to continue to focus on Hitachi. We think we are well positioned against the [entire] field [of competitors].

CRN: EMC seems to be putting a much bigger investment into the channel. Is there any way to quantify that? How much more are you investing in sales through the channel?

Scannell: It is significant. We said we want our partners to be successful. We want our customers to be delighted with the portfolio of solutions that we have and the way to do that is to invest heavily in products and go to market. Our go to market is both direct and indirect. And we are investing more heavily now in indirect than direct so we can get much better reach into the market.

CRN: How do you feel about your channel opportunity this year?

Scannell: We gave very high growth rates for the global channel organization. And I think we will raise those numbers because the investments are paying off. We are going to continue to invest where it makes sense. And this is an area that makes a lot of sense for us.

CRN: How big a stick is there behind the partner rules of engagement?

Scannell: It is a good-size stick the first time and it is the ultimate stick the second time.