Dell Targets HP, EMC in Race to Win Storage Market

By Alison Diana  |  Print this article Print

The acquisitions of EqualLogic and Compellent were just the beginning. Now Dell is looking to take those technologies to the next level through strong channel relationships as it seeks to beat rivals HP and EMC to dominate the storage market.

Building on the momentum it gathered following its acquisition of EqualLogic and Compellent, Dell is squarely setting its sights on becoming the top-selling storage vendor through the channel, executives told attendees at this week’s Storage Forum 2011 in Orlando. Dell unveiled a formal indirect program in late 2007, when company founder and CEO Michael Dell announced the business would no longer abide solely to the direct model that had led to its early success.

Today, Dell’s overall channel business represents a growing segment within the $61.5-billion corporation, said Bob Skelley, global director, enterprise architecture channel. Today, 29 percent of the company’s commercial revenue comes from the channel, he said. In February 2010, Dell’s indirect commercial revenue contributed 26 percent of the most recent quarter’s revenue, Greg Davis, general manager of Dell Americas Channel Group, told Channel Insider at the time.

"If you took our channel business and separated it out as a standalone business, it would be number 350 on the Fortune 500 list," said Skelley, this week. "And so it’s really been a great journey over the past four years. It really is, I think, the most exciting place to be in Dell right now."

Although some, perhaps many, EqualLogic and Compellent VARs were worried about their organizations’ future and skeptical about Dell’s commitment to the channel when the much larger vendor acquired the storage-specialized developers, numerous attendees voiced satisfaction with Dell’s handling, to date. Dell purchased EqualLogic about four years ago, and many solution providers are satisfied with Dell’s integration of the smaller vendor’s channel-program elements, often reassuring Compellent partners about the benefits of working with Dell, according to partners Channel Insider spoke with at the event as well as shows-of-hands during formal sessions.

"I used to compete against Dell pretty regularly," said Frank Politano, Florida territory manager at Syscom Technologies, a 21-year-old Jacksonville-based Compellent and EqualLogic solution provider. "My biggest fear was that Dell was going to commoditize. But they left the technology alone, and actually flushed cash into R&D."

As a standalone business, Compellent—which sold exclusively through the channel—had 454 partners and Dell had more than 2,200. Today, Dell has more than 2,500 partners selling the Compellent family of storage solutions, the company said.

Earning the Channel’s Trust

Both Dell and its partners recognize each party must earn the other’s trust, said executives.

Dell hopes to do so by stating—and adhering to—a simple, constant message throughout the company and its PartnerDirect program, said Dell’s Davis.

"There are some very basic principles we, as a team, said we were going to do," he said. "We had a whiteboard of ideas and we could only do three out of 40, but we did the three. We try real hard not to commit to things we can’t deliver. The second one was we never sat down and envisioned we’re going to wake up on Monday morning and 20,000 sales people are going to their heads around."

To encourage its traditionally direct salesforce to partner with the channel, Dell’s changed its compensation model, Michael Dell told Storage Forum attendees during a live presentation.

"We said to all our salesforce, 'You will be compensated the same whether you work with a partner or not,’" he said, noting that the most productive sales professionals are those who team-up with solution providers.  "We’re really pleased with the progress."

Finally, Dell wanted to promote a culture of listening to—and acting upon—partner feedback, Davis said. When Dell acquired both EqualLogic and Compellent, it kept the best of both vendors’ channel programs intact, and actually expanded elements beyond those product lines, Skelley said. Compellent’s extended deal program is now available for EqualLogic, for example, he said.

The vendor has a guidelines book and ombudsman to address deal registration issues, said Skelley. Today, 70 percent of deal registrations are approved the first time they are submitted, he said. With certified partners, there is an 84 percent first-time approval rating, said Skelley. Most times, Dell rejects deals because another partner already registered them; they are not within the revenue threshold; there partner does not provide enough information, or they are Dell Direct accounts, he said.

"Do we have issues? Yes. I think if you ask any company, there are issues. When we first started our program, there were weekly meetings about deal-registration violations," said Skelley.

The meetings paid off, solution provider executives said.

"[Dell’s] made tremendous progress since we became partners in 2009. Kudos because you’ve listened to that feedback and implemented it," said Sonia St. Charles, CEO of the Davenport Group, a St. Paul, Minn.-based VAR that specializes in data center solutions. "We’re going to the direct teams. We’re showing them our [client] portfolios. Nobody wants to introduce a customer to somebody they don’t trust. It goes both ways. The trust is building both ways."

By developing relationships with Dell’s direct salesforce and its local field agents, storage VARs can extend the reach of their own sales organizations, said Theresa Williams, president of Data Media Solutions, an Omaha-based solution provider, which used to sell Dell products before the vendor had an indirect program.

"You feel now that you have this collaboration and partnership. I feel a lot of it has been driven from the EqualLogic and Compellent worlds, where everything was 100-percent channel driven. Your responsibility as a business partner is to engage more Dell direct representatives," she said. "They’ve never been conditioned to sell through the channel. You try to look at it from their perspective."

In order to recommend partners and bring VARs into prospective clients, solution providers must invest in educating Dell sales representatives about their services, offerings, and capabilities, said Mike Egmont,  partner in Flagship Networks, a  network integrator in Stamford, Conn., and a member of Dell’s advisory panel.

"They need to know who you are and what you bring to the table. It’s like any business relationship: It’s about building value," he said. "The reps that get it know we’re an extension of their force."

What’s Next for Dell’s Storage Channel

Although much has been accomplished, Dell recognizes much work remains to be done, executives stressed during the user and channel conference, which was held in Orlando this week.  

"We built a plan this year and we’re all signed up and committed to more than two-time the industry growth rate in the U.S.," said Dell’s Davis. "We need partners engaged in that. With that, it should help us grow and gain marketshare. I don’t think we necessarily need more partners. We do need more trained partners. And we need deeper training. A part of that is on our partners, and a part of that is on us to make it easy."

Last year, Dell offered 76,000 courses worldwide, Skelley said. Solution providers took hundreds of classes on the company’s storage solutions and technologies, he said.

Whether they choose to partner with Dell or not, there is little doubt the once direct-only vendor will continue to impact solution providers, said Storage Forum attendees.

"You can get on the bus or you can watch it go by," said Kristy Wilke, sales associate at Data Media Solutions. "It might be a bumpy ride, but you don’t want to miss it."