Analysts: Dell's Multiple Channel Program Approach Too Complex

By Jessica Davis  |  Posted 2007-11-17 Email Print this article Print
 
 
 
 
 
 
 

Analysts say Dell's multiprogram channel will be difficult for partners to navigate.

Dell's aggressive moves in recent months to acquire technology companies to fill its own functional holes have created a tangled mess for the company's fledgling channel hopes.

Through its acquisitions, and pending acquisitions of Silverback, EqualLogic, ASAP Software and now Everdream, Dell has also acquired a handful of separate channel partner and MSP (managed services provider) programs. In addition, the company has plans to announce by the end of the year details of its own partner program that it has been developing behind closed doors for the last nine months.

Dell has promised to keep the individual channel programs of the acquired companies intact, a cautious strategy designed to win the trust of the channel partners in those programs. However, some analysts and channel consultants say that approach is a big mistake.

"I've been concerned about how Dell will integrate these companies into their culture. Dell is acting on the assumption that they have a handle on this and that it's not that difficult," said Anne Zink, chief strategy officer for AZtech Strategies, a go-to-market channel consulting group. "They will end up spending way more money than they need to and being far less efficient than they could be."

The approach also risks making Dell much less attractive to the most sought-after, highest-revenue-generating VARs.

"VARs will have to be members of multiple programs, with five different people calling on that VAR," Zink said. That will add complexity to a channel program at a time when Dell is promoting a "Simplify IT" message and will likely freeze the company out of partnerships with the highest-earning VARs, she said.

PointerRead more here about Dell's acquisition of Everdream.

And a $3 million partner in one program may only bring in $500 in another program. Dell won't have the visibility into who its best partners are until it creates a unified program and risks treating some high-earning partners as "unwashed brethren" if they happen to be low-earners in another of its many channel programs.

Zink said she believes Dell should have made cultural changes internally to make the company more channel-friendly before embarking on its current acquisition spree. IBM and Cisco made the same mistakes 10 to 15 years ago when they went on acquisition sprees and left existing channel programs intact, she pointed out. Eventually they saw the wisdom of combining all the programs into one.

"There is inherent conflict in companies that are direct dealing with companies that are channel-centric under the best of circumstances," said Zink. But in the power-play-laden environment that inevitably comes with acquisitions, "it's going to be even worse."

Other observers say Dell's acquisitions show it is serious about the channel, but major challenges loom.

"[Dell's acquisitions] confirm and validate their interest in working with solution providers," said Diane Krakora, president and CEO of Amazon Consulting. "The challenge will be to segment their customer audiences and align the channels to the opportunities and needs while addressing potential conflict.

"Dell will have to create and communicate a solid economic business proposition for the partners of the acquiring companies, to basically recruit and engage them all over again," she added. "You don't acquire a channel when you acquire a company."

The approach of leaving the acquired companies' channel programs intact does offer some short-term benefits, however, according to Tiffani Bova, an analyst at Gartner.

"It is unrealistic to assume that Dell will be able to combine three different channel programs from their recent acquisitions into their soon-to-be-launched program right out of the gate, so running parallel programs in the short term would be the best course of action," she said. "Although in the short term it may increase complexity, it will be the least disruptive to the existing business."

 
 
 
 
Jessica Davis covers the channel for eWeek and Channel Insider. Her technology journalism career began well before anyone heard of the World Wide Web and has included stints at Infoworld, Electronic News/EDN, and the Philadelphia Business Journal. Her work has also appeared on CNN and Forbes.com. She has covered hardware, software and networking, as well as the business side of technology. She has won several journalism awards, including a national ASBPE award for best staff-written column, and was named Marketing Computers hardest working tech journalist on their inaugural list of top tech journalists. Jessica can be reached at jessica.davis@ziffdavisenterprise.com
 
 
 
 
 
 

Submit a Comment

Loading Comments...
























 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Thanks for your registration, follow us on our social networks to keep up-to-date