Dell Indirect Revenue Climbs, Certified MSPs Static

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.