Dell Indirect Revenue Climbs, Certified MSPs Static

By Jessica Davis  |  Print this article Print

A little over two years after technology vendor Dell announced the program details of its PartnerDirect channel partner program, Dell says indirect commercial revenues have increased their share versus direct commercial revenues. It's not a coincidence that Dell dramatically dropped its deal registration dollar threshold in October.

Dell’s PartnerDirect program is just a little over 2 years old, and the company has had its work cut out for it winning the trust of VARs. Previously known as the company that made direct-only sales a religion, Dell’s channel organization has been looking to engage with channel partners. And its efforts may be paying off.

Dell increased its commercial indirect revenues to 26 percent of the total in the most recent quarter, channel chief Greg Davis told Channel Insider, up from 22 percent in the same period a year ago.

Davis and his channel partner program colleagues at Dell provided Channel Insider with an update about the company’s PartnerDirect program soon after Dell released its fourth-quarter earnings last week.

It’s no coincidence that the increase in the percentage of commercial revenues from the channel came after Dell’s move in October to reduce the dollar amount threshold for deal registration. In October, Dell lowered the deal registration threshold to $15,000 from $50,000 for small and midsize businesses of 499 seats or less.

"That increased the opportunities coming in," Paul Shaffer, director of U.S. marketing and operations for Dell’s Global Commercial Channels, told Channel Insider. Dell saw an increase in deal registration of nearly a third—32 percent—sequentially in the fourth quarter versus the third quarter.

In Q4, Dell’s deal registration approval rates were 72 percent, but among certified partners they were 86 percent.

"Our strategy around certification is working," said Davis. "It is the right strategy for Dell. We’ve been consistent with it. Dell understands more about how to engage with partners."

Managed services still remain a stumbling block for Dell as far as the channel is concerned, however, as numbers of Dell-certified MSPs have remained static and subject to high churn rates since Dell introduced the program on the heels of its acquisition of Silverback and Everdream.

Dell currently has 115 certified managed services partners, according to a spokesperson at the company. When Dell acquired Silverback, Silverback had 150 managed services partners

MSPs have told Channel Insider and Dell that they moved from the Dell platform because they preferred to host their managed services themselves. Dell has moved to a hosted-only model. Another issue for partners may be around Dell’s direct-sales model for managed services.

But Dell executives say they are satisfied with the progress of the company’s managed services program.

"We remain very stable in terms of our partner base," said Davis.  

Peter Klanian, the global head of services sales for the channel at Dell, told Channel Insider that the end-of-life for the Silverback appliance is June 2010, and Dell is expecting an improved growth rate in number of partners after that date when the churn will end from those dropping off due to the hosted-only model.

Klanian worked at Silverback and joined Dell through the acquisition. He says that Dell’s services strategy with partners will focus on the following three areas: to support partner sales with their own branded services, to collaborate more closely with partners and to make a portfolio of Dell services available through partners for resale to end customers.

Klanian explained how the deal works: The deal is on the VAR’s paper, and they resell the service after they buy it. The end customer is obligated to work with the Dell Services Team.

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