Dell EMC Enacts “Zero Tolerance” Policy for Channel Conflict

Channel conflict is nothing new for either Dell or its channel partners, but following its merger with EMC, there is now a unique opportunity for the combined Dell EMC entity to address this issue.

To minimize channel conflict, EMC implemented a “hard deck” that reserved access to key accounts for its sales force. It then went a step further by implementing a policy under which a direct sales representative would be automatically terminated after the second time they took a deal direct that had been previously registered by a partner. The first offense would result in a warning and no compensation.

Last week, John Byrne, global channel chief for Dell EMC, initially waffled when asked by attendees at the Dell EMC Global Partner event if the new combined entity would implement the same policy as part of a zero-tolerance commitment he made to the partners. Later, however, Byrne made it clear that the former EMC policy is now the law of the newly combined Dell EMC channel land. While EMC sales representatives are used to that approach, that level of enforcement will be new to salespeople who worked with Dell before the merger. Undoubtedly, there will be some tension as those sales representatives get acclimated after a previous approach to deal registration that amounted to their getting little more than a slap on the wrist for taking a deal direct.

Of course, there’s still some fluidity in the Dell EMC channel. The hard deck EMC had in place is gone. In its place Dell EMC is trying to set up a line-of-business (LOB) incumbency model that recognizes the relationship a partner has developed with a specific customer. If a new partner suddenly emerges working with a customer that has previously been working with another partner, Dell EMC will review the deal to make sure the end customer is aware of the choice it is making between partners. The same review process will be applied to deals that go direct. What Dell EMC is saying is that customer choice will trump all other channel concerns.

While all this represents an improvement for traditional Dell partners, the channel as a whole should also be aware that gamesmanship of the deal registration system itself is also about to come in for a more scrutiny. It’s not unheard of for a partner to register the same deal with two competing vendors. At the last minute, a partner then moves the deal to one vendor versus the other based on whatever suits their needs. The vendor, of course, feels abused because it could have gone after that deal via a partner or direct sales force that is more loyal to them. Channel partners that register deals that they don’t land can expect a lot more scrutiny into what ultimately transpired.

Byrne said there’s a tendency in the channel to make business more complex than it needs to be. Prescriptive approaches to managing the channel don’t work. In fact, most vendors prefer to see some creative tension in the channel. Competition between partners tends to make them more aggressive, especially when there’s a certain amount of tier envy between lower- and higher-level partners that have access to more vendor resources.

By definition, managing a channel is messy. Partners want clear swimming lanes they own. Vendors tend to view the channel in terms of overlapping fields of fire designed to best optimize the capturing of strategic sales goals. Friendly fire casualties are built into the model. The real issue is not so much preventing that friendly fire but rather what the vendor is willing to do to make that partner whole once they fall victim to it.

Mike Vizard has covered IT for more than 25 years, and has edited or contributed to a number of tech publications, including InfoWorld, CRN and eWEEK. He currently blogs daily for IT Business Edge and contributes to CIOinsight, Channel Insider and Baseline.