Context:
At InsightaaS, we write extensively about “collaboration” — and like many professionals with an IT bent, we often interpret the term itself as referring to a set of technologies first, considering interaction as a supported function.
There are some parallels when we consider collaboration as a business activity rather than viewing it as an application type. In both contexts, collaboration requires integration across multiple different endpoints: devices in technology systems, companies and people in the business world. And the key to success in both cases is integration: effective business collaboration is achieved when multiple parties contribute specific capabilities to addressing a problem, developing a market-ready solution, or bringing substance to a vision of the future.
In an IT industry context, the primary example of business collaboration is the connection of product and services providers in partner ecosystems. The IT industry loves to talk about ‘solutions’ that address business problems, but real business solutions are almost never comprised of a single IT product that improves a business process without any consulting, integration or technical support. To be successful in helping customers to achieve business objectives, product vendors need to work collaboratively with firms that are skilled in understanding discrete customer requirements and aligning multiple products with unique customer needs; and to build a value proposition for customers, these services firms in turn need to develop expertise in the products that they deploy within their customers’ businesses.
The Dell Canada Partner Summit, held from September 30-October 2, 2014 in Toronto, provided an opportunity to evaluate the importance of IT supply chain collaboration, and of the actions that vendors take to enable this collaboration. The event illustrated how and why vendors and channel partners interact, and what the effect of this interaction is on customer IT options and success.
Three KeYs:
Our Vitamin Y pieces are typically structured around three “keYs” — three essential takeaways from an event, an interview, an announcement or an industry development. Given this post’s focus on the collaborative nature of business solutions, it seems appropriate to focus these keys on the three parties — business customers, the channel, and Dell — lined in defining, delivering and obtaining value from these solutions.
The customer perspective: There is a belief that as technology becomes more ubiquitous, as it becomes less expensive (at least, in most cases, and on a unit basis; aggregate spend by businesses on IT continues to increase each year), and as the industry continues to develop standards, that technology should become simpler to deploy. This is not the case. At the conference, John Swainson, president of Dell’s software group, said “The world is actually getting more complex, not less complex. It would be nice if everything was going to be really simple and homogeneous, but — it ain’t. There’s no evidence that it’s ever going to do that — in fact, it’s moving in entirely the other direction.” IT-based business solutions are not comprised strictly of discrete components; they rely on complementary skills connected via a collaborative approach. IT/business solutions require fast, reliable platform technologies. They require applications that address business issues: opportunities to reduce cost, to increase market reach, to improve productivity. And to deliver cost, revenue and/or productivity benefits, they require effective alignment with alignment with the business — its processes, its workers and its management objectives. In this solution ecosystem, there is a role to be played by suppliers of both core products and of implementation and consulting services. Events like the Dell Canada Partner Summit help to assemble, align and motivate the supply ecosystems that solution buyers depend on.
The channel perspective: The channel understands the impact of collaboration in meeting buyer needs, but channel members do not attend partner summits to discuss this kind of end objective. Instead, partners are looking to understand the working conditions involved in their partnership with a vendor: what is the depth of the vendor’s commitment to the channel? What are the opportunities for mutual business growth? What is the product roadmap? And what is the vendor doing at a programmatic level to reduce friction in the supply chain?
The Dell event offered some insight into what the channel is listening for in vendor communications. Here are four examples of what was said, and what it means to the channel and its customers:
- What was said: At the outset of the event, Dell Canada president Kevin Peesker and channel chief Tara Fine emphasized the Canadian firm’s commitment to working collaboratively with partners. Peesker noted that all direct sales representatives receive full credit when a channel member concludes a sale within the rep’s territory. What it means: Full credit for channel sales means that the channel won’t find that the direct sales representatives are working against them in a customer account — which means in turn that customers won’t be confronted with conflicting messages from different teams representing Dell products.
- What was said: Dell’s US-based management team, including global channel and alliance vice president Cheryl Cook and North American channel sales VP Jim Defoe, outlined the overall magnitude and growth of its partner business benefits: more than 30% of Dell revenues are currently driven through the channel, and channel growth is more than double the growth of the overall company. What it means: Partners translate statistics like these into an understanding that Dell offers a large and growing opportunity for their businesses, offering them an incentive to invest in product training and expertise.
- What was said: In roundtables, partners drilled down into the programs that are essential to the business logic connecting Dell and its partners: Cook, DeFoe and sales operations vice president Bobbi Dangerfield handled questions on issues like deal registration and escalation procedures, noting historically high levels of registrations and registration approvals, and emphasizing their commitment to clarity, consistency and predictability. What it means: Partners rely on deal registration; it allows them to invest in working with a customer to define the best solution by protecting them against having a competitor swoop in with a low-cost, eleventh-hour bid. Without deal registration, a channel member would need to charge customers up front for consulting services, which would impede the spread of high-value complex IT solutions, especially within the SMB market. Most vendors offer some form of deal registration; what differentiates the programs is ease of use, consistency of application, and the willingness of the supplier to ‘go to bat’ for channel members in the event of conflict. The channel interprets increasing deal registration volumes and high approval rates as an indication of progress in a key channel business process, and the “clarity, consistency and predictability” of the process itself is also of pivotal importance to the channel.
- What was said: In presentations, attendees listened particularly for product highlights. While a Dell presentation to a buy-side audience might stress the business benefit of a new product, channel members are more interested in the technology itself — what does it do? How much does it cost? How easy is it to deploy? How reliable is it? — since they will be looking to deploy new products within their customers’ existing environments. A presentation like the one that Mike McGuire, Dell’s vice president responsible for North American channel sales, delivered on the use of different types of storage (spinning disks, hybrid disk/flash arrays, all-flash arrays) in different workload environments might have been overkill for a business audience, but this is exactly the kind of information that partners require, to ensure that they are recommending appropriate technologies to their customers.
The Dell perspective: Later in McGuire’s presentation, he talked about a database appliance that accelerates performance by 40%, and reduces cost by 90%. This kind of purpose-build product addresses a critical channel success criterion: products designed for a direct sales force emphasize elegance, or the ability to address many different needs in different ways, while products designed for a channel sales approach stress relevance, or the ability to meet a single objective in a predictable and compelling manner. The channel adds value primarily by addressing a buyer’s requirements by configuring the best products into a solution that is easy to deploy, easy to integrate and maintain, and which offers a compelling price/value proposition — and not by attempting to use custom development to create systems that are extremely complex in their design, and very costly to operate over time.
This type of task-appropriate design is deep within Dell’s DNA. As Swainson said, Dell’s products are engineered “to deliver value quickly, they’re easy to set up and install. The customer gets value right away…We’ve walked away from situations where people want things that are infinitely customizable….we’re trying to do something for the market that works fast for the vast majority of customers,” and added later that Dell’s channel expands its market reach. These points aren’t disconnected. Dell needs the channel to expand the application of its hardware and software technologies within high-value business solutions. Channel partners need relevant products, so that they can focus on business value-add. And customers need solutions that are cost-effective to deploy and manage, and which can be used to support new workloads as they are added to business environments.
The bottom line:
There is a great deal of talk about consolidation in the IT industry — and to be fair, there is a substantial amount of consolidation occurring, and there are some valid reasons for aggregating diverse capabilities under a single brand. However, there are also sound arguments for specialization in addressing different aspects of an organization’s IT/business infrastructure needs. There is an old saying that “markets behave in logical ways, and therefore, channels exist for logical reasons”; firms that focus in a particular area are valuable to buyers that require their products/services, and the synergy between firms that address different areas of a complex solution is valuable for customers of all sizes, and particularly for SMBs, who tend to lack the internal skills to ‘fill in the gaps’ between products and business needs.
Dell has not always had an easy relationship with the channel; those with long memories recall a time when Dell and the partner community were in direct conflict. However, the channel and Dell have both evolved since that time. Both have moved from a focus on commodity hardware to business models centred on the provision of complex solutions, expanding in complementary ways even as other firms — notably, IBM — are evolving away from core platforms towards value-added solutions. Dell, as a provider of both platform technology and foundational capabilities like security, plays an important role in the Canadian solution ecosystem. The Canadian channel, too, plays an important role in bringing IT/business infrastructure (IT workloads connected with real-world business processes) to Canadian organizations, especially SMBs. These IT/business infrastructure solutions are — and are increasingly — important to market reach, productivity, cost control…the core of business competitiveness. The process of collaboration that enables delivery of these solutions may have been the focus on the Dell Canada Partner Summit, but the integration resulting from that collaboration is the key to evaluating its impact in the market as a whole.
