Like the pendulum that gathers momentum from forces inside and out its centre, Dell’s go-to-market strategy has swung between direct and indirect in a maverick response to industry norms over the company’s 29 year history. Wrestling initially to wrest channel coverage for its PC products, Dell embarked soon after founding in 1984 on a direct sales approach, based on a build-to-order model that was revolutionary for its time, and which helped the company quickly establish a leading position in the market. With the introduction of additional, enterprise product lines requiring implementation and maintenance support, Dell’s turned again to the channel to address this need: by the mid 2000s the company had begun to articulate formalized, branded channel programs.
To future proof against the continued erosion of PC sales that has fallen from hardware commoditization and tablet competition, Dell has engaged over the past decade in significant acquisition activity to reposition as a provider of end-to-end enterprise solutions. Many of these acquisitions have been in the software arena, providing the basis for establishment of the company’s first software division last year, which its new chief, John Swainson, explained is dedicated to the development of infrastructure solution sets — as opposed to applications — that reach from the data centre core to the endpoint device. At the same time, though, cloud delivery of software has created its own revolution, and as SaaS has expanded its market presence, it has called into question the role and utility of the channel partner. Will Dell’s new software business rely on SaaS delivery, and will this signal a return to the direct approach? The answer is no — and yes. Software distribution will take on many forms to address the complex needs of the enterprise, and Dell’s foray into complex solution sales.
According to Joanne Moretti, VP marketing, Dell Software, the software team has decided to develop four routes to market. On the front line is Dell’s own sales force, which Moretti described as highly trained specialists "who know their product inside out, understand customer pain points, and can go toe to toe with the competition" in areas such as performance management, access management/security, next gen firewalls or desktop management. This group’s mandate is to grow market share. At a next level are software account managers who work with software sales specialists as well as legacy Dell account executives to help them navigate the software portfolio. These managers within software also work to support traditional Dell partners, a third market channel that the software group has chosen to actively engage with. These relationships are incremental to the software distribution partners that Dell connected with through acquisition of companies such as SonicWall and Quest — a fourth route to market.
For Dell software, each of these channels play an integral part in market strategy; however, the traditional Dell partner community represents a readymade avenue to upsell software products. As Moretti explained, "There is a whole new arm of partners [in the Partner Direct program] that we see huge opportunity with — that can give us that strategic lift. Currently, the software group is working to create awareness with this group, to recruit them to integrate software into hardware or solution sales. "We are trying to teach these traditional Dell partners," she explained, "Here’s how you can create more products and services, offer more value to your customers, increase your own margins and grow your business." Over the past three months, the software group has taken this message to partners in 26 cities across U.S. and "they love it," Moretti added, as it empowers the partner to transition from "order taker" to "problem solver." A Canadian road tour is planned for September.
All resources that Dell software has at hand to help the direct sales force "deepen the conversation with the client" will also be made available to the partner, Moretti claimed: "As we as a software organization and all of Dell are coming together to build out our solution areas, what we are going to focus on as a company, our messages and our enablement, we are transferring that right over to the partner." Taking this a step further, Moretti pointed to partner opportunity presented by Dell’s May acquisition of Enstratius, a multi-cloud management solution provider that can support Dell partners that are looking to develop multi-cloud management and brokerage services in order to gain entre to the emerging cloud marketplace.
Software partner enablement "is a big investment for Dell," involving a lot of training, roadshows, awareness building by a dedicated team, "and we’re pushing hard on it," Moretti noted. It also involves migration of systems and staff, creation of new processes and the integration of different cultures from acquired companies (some channel friendly and some not) — "growing pains" that Moretti believes are short term.
So far, Dell is working on SaaS enablement of its partners. Products such as Boomi, Dell’s cloud integration tool, "is a SaaS play" that Moretti believes partners are interested in largely for the services that they can build around it: "they may resell it, or be the prime for us, but really their interest is all in the services and the consulting work that goes around it." In her view, a SaaS offering is really little different from other products — "it’s still a pass through and the only difference is that we’re hosting it in our data centres."
If opportunity for the partner lies in building out services capability, this could serve as another area of potential channel conflict as Dell has also made considerable investment in this area. The company now employs several thousands of services professionals who work in just under a dozen different services areas, and boasts extensive customization capabilities. According to Moretti, however, this flexibility extends to relationships with partners, and Dell is prepared to act as "arms dealer" rather than competitor, providing the tools and expertise that would allow partners to white label Dell solutions - allowing Dell to scale along the way.
Recognizing the value of the channel player to solution sales, and the potential to leverage existing Dell channel resources, the software group has stated a clear commitment to developing the traditional partner community’s ability to sell software. It has also committed to nurturing channels brought into Dell through various software acquisitions. What of SaaS in this channel friendly approach? Interestingly, cloud-based software delivery is not viewed by Moretti as a threat to the channel, but rather as a new opportunity for partners with the vision to capitalize on Dell products/services — including those that are SaaS delivered. Dell’s flexible approach is well suited to a market landscape that is still in a state of flux, and is likely to solidify as opportunities begin to crystallize — based, it appears, on partner response to this outreach. Is this harkening back to early Dell days, or recognition that sophisticated, enterprise sales require complex, and comprehensive distribution?