Analysts: Dell Channel Program a ‘Marathon, Not a Sprint’

Analysts are taking much the same wait-and-see attitude toward Dell’s new channel program as the VARs Dell is trying to attract.

“The measure of Dell’s success in the channel is going to depend on the success of the channel selling Dell’s products,” said Steve Tepedino, co-founder, president and CEO of channel consulting firm Channel Savvy.

In a conference call and virtual Town Hall meeting held Dec. 5, Dell unveiled details of its long-awaited channel program, which will include a two-tiered structure, deal registration, an online partner portal, and access to logos and other marketing collateral.

“Dell has been working quietly in the background for many months on the program, meeting with existing partners and new partners, piloting certain aspects of the program and testing the partner portal,” said Tiffani Bova, research director of IT Channel Programs, Sales and Alliances Worldwide at Gartner.

Click here to get VAR reactions to Dell’s channel program.

Dell said it launched a pilot channel program for 75 VARs on Nov. 19 and began a training course for its direct sales force on Nov. 27 to prepare for the program’s launch. Analysts are skeptical, however, that the sales training may not be as pervasive and comprehensive as it needs to be, especially in a company with such a strong direct-sales DNA.

“One training course may not do the trick,” Bova said, adding that Dell’s deal registration program may not mitigate channel conflict as much as Dell claims. “If the sales team honors deal registration and works with the channel versus [it], Dell will have a much better shot at succeeding. If they don’t, then conflict at the field level will have a devastating effect on results,” she said.

Leadership from the top down is key to the program’s success, analysts say, and Greg Davis, appointed in August as Dell’s North American channel chief, has the unenviable job of implementing the channel strategy across the company. “If this effort is not supported companywide—starting at the top—then chances are slim to none that things will be different,” Bova said.

Tepedino and Eileen Gibson, co-founder and chief marketing officer at Channel Savvy, believe Davis is the right man for the job.

“Who better than a previously successful insider executive?” Tepedino asked. As an insider, Davis, formerly head of Dell Canada, has the influence and the trust of his company and its employees. However, Gibson said, she wouldn’t be surprised if Davis brought in outside help in the form of more channel-savvy executives.

Dell’s launch strategy calls for the U.S. program to go live Dec. 5, with planned launches in the United Kingdom and Australia in early 2008. Tepedino believes Dell’s global strategy shows the company’s commitment to the program but said Dell may struggle with cultural elements in other regions. “Rolling things out to multiple countries means they are serious about making this happen,” Tepedino said. “We’re excited to see they’re committed to launching this, but many vendors’ programs don’t look the same across all these regions.”

The initial U.S. launch and resulting feedback should give Dell some time to make adjustments where needed, especially in its international programs, said Bova. “That should give it some time to learn from the activities in the U.S. and adjust where needed,” Bova said.

Dell’s success or failure, analysts say, will not depend on a matter of will, but on market conditions and successful execution. “As the old saying goes, this is a marathon and not a sprint,” Bova said. She expects it will take Dell two to three years before the channel strategy begins to bear fruit. The channel programs of other large vendors such as Hewlett-Packard, IBM, Oracle and SAP were not home runs from the start, Bova said. “If anyone expects Dell to get it right the first time, then it is best you reset your expectations,” she said.