Techaisle Blog

As uncertainty swirls around both the IT infrastructure needs of the SMB market and the channel that supplies these solutions, Dell’s channel team, led by Greg Davis and Bob Skelley, could not be more upbeat. And as Techaisle research shows, channel members of Dell’s PartnerDirect program continue to power on.

In a recent Techaisle study of channel partners selling Cloud, Mobility, Managed Services, Virtualization and Datacenter solutions to SMBs, 58 percent said that Dell is a trusted brand with 48 percent mentioning that Dell is a reputable brand. With today’s announcement on software competencies, Dell is looking to build on that presence with an expanded portfolio addressing essential (and high-growth) infrastructure software products.

Partner Voice

It is clear that Dell considers sales enablement and execution to be the keys to its channel success. The company exhibits very tight focus on issues like deal registrations and training. In qualitative interviews, Dell’s partners say that Dell is easy to work with. They report that Dell’s partner program is straightforward, with a low threshold to enter, reasonable certifications’ requirements and all training materials available online. Dell partner executive Marcus Lindqvist, Country Manager for Sweden’s Dustin AB highlighted the benefit of this approach when he shared with us his reasons for being upbeat on Dell: “deal registration, robust process that protects the partner investment in our engagement with Dell on a deal by deal basis. We register the deal at an early stage in the sales process, most deal registrations are approved, and from that point we are in the lead without any future discussions about other partners or Dell direct sales undercutting our work. Deal registration is done online with quick turnaround times.”

Echoing the sentiments, Daniel Serpico, President of FusionStorm, [partner of Dell] noted, “[there is] very real clarity around deal registration and partnering; there is significant value creation around integration and configuration and Dell has infused software and tools to win with Dell.”

Software Competencies

It was only a matter of time before Dell extended the PartnerDirect program beyond its roots, from enabling and incentivizing hardware sales to rolling out software competencies. Over the past year, with numerous acquisitions and the hiring of John Swainson to helm Dell’s software operation, Dell has launched an aggressive strategy to build scalable enterprise software offerings into its solution portfolio, with emphasis in the areas of datacenter and cloud management, information management, mobile workforce management, and security and data protection.

On September 3, Dell announced four new PartnerDirect software competencies, including:

• Security: Includes identity and access management, as well as network, endpoint and email security


• Systems Management: Includes client management, performance monitoring, Windows Server management, virtualization and cloud


• Data Protection: Includes enterprise backup/recovery, virtual protection, application protection and disaster recovery]


• Information Management: Includes database management, business intelligence/analytics,  applications and data integration, and big data analytics

Dell partners now have the flexibility to decide between reselling hardware only, software only (via resale or a referral fee program) or both hardware and software. As per Techaisle’s Marketview, worldwide SMB (1-999 employees) spend in 2016 for the above four competences will be US$11.1 billion. Combine it with traditional datacenter solutions that includes servers, storage, networking the market spend jumps to over US$40 billion by 2016. This is a huge opportunity indeed for Dell and its channel partners.

Best-of-breed Solutions

The latest Techaisle channel partner study found that 54 percent of channel partners prefer to offer best-of-breed solutions to their SMB customers, with 28 percent preferring single vendor solutions. The key to successfully addressing both preferences is to combine best of breed offerings under a single brand, allowing partners to also take advantage of integration and volume benefits. HP and IBM have been active in staking out this territory; with the September 3 announcement, Dell has signaled its intention to compete aggressively for leadership within the small and mid-market business market segment.



In the cloud infrastructure area, Dell’s partner program rests on three pillars - Cloud Builder, Cloud Provider and Cloud Enabler. For all three pillars, best-of-breed solutions take on an entirely different meaning as shown in another study recently conducted by Techaisle. The study was done to understand the Winning Strategies of Successful and Profitable SMB Channel partners selling cloud.

The study revealed that channel partners that are comfortable and profitable with cloud solutions combine best-of-breed solutions and wrap them tightly under their own offerings & services. These channels have also begun to utilize reference architectures from their vendor partners.

Training as the Lead-in

Channel partners prefer to partner with IT vendors that have quality products and innovative technology solutions that solve SMB pain points. This presents a complex challenge to vendors like Dell: partners need suppliers to both address customer requirements (with innovative, reasonably-priced and easily-deployed technology that addresses SMB pain points) and partner business requirements, such as training, pre-and-post sales support, and lead generation. As the results of Techaisle’s research demonstrate, product training is particularly important in this context. Dell is clearly cognizant of this demand: Marvin Blough, executive director of Worldwide Channels and Alliances for Dell Software is on record as observing that “Trained partners sell four times more than their untrained counterparts,” and Dell is said to be on plan to deliver over 250,000 training sessions this year.

Techaisle has observed, however, that most vendor training focuses on product attributes, and does not address development of the skills (building and advising on infrastructure strategy and workload roadmaps, establishing effective sales tactics and compensation models, developing the services competencies needed by customers) required for VARs to migrate successfully to advising on and deploying hybrid infrastructure. These advanced management-level training offerings will be essential for vendor differentiation, especially for the complex hardware/software solutions that are at the core of Dell’s evolving strategy.

Concluding Remarks

Clearly, building leadership in the SMB infrastructure market is an ongoing challenge: requirements continue to evolve, entrenched vendors have strengths and relationships that have developed over many years, and Techaisle’s research has found that trusted brand figures for Dell are lower than for some of its competitors. Its brand equity score (BES) among channel partners is also lower than its competitors. It seems clear, though, that Dell is aware of market requirements and willing to invest in its SMB market and channel success, rolling out training modules, integrating partners acquired through acquisitions and combining both hardware and software for end-to-end solution delivery.

Michael O’Neil, Consulting Analyst with Techaisle, notes that “Infrastructure delivery has become a very challenging issue for business partners. Hardware-only sellers are at a significant disadvantage in a market where buyers are looking for hybrid solutions involving both on-premise and cloud-based platforms that combine server, storage and networking hardware with system management and security software to build solutions that will seamlessly support application delivery, data protection and backup, and many other key operational objectives. By offering a wide range of product types, and focusing on making the selling motion as clean as possible, Dell is enabling partners to focus on customer requirements rather than product silos.”

Looking at Dell’s approach from a partner’s perspective, Daniel Serpico provided an apt summary: “Dell sales teams cover all markets, which allows us as a partner to be able to have discussions with the Dell account manager on a specific account or deal, giving us a counterpart that understand the end-customers actual requirements and needs. Both teams have a laser sharp focus on the customer and to jointly win the deal [supported by] shorter turnaround and quick responses from Dell.”

 

SMBs are being deluged with IT solutions that aim to address their pain points of reducing costs, improving sales and marketing, penetrating new markets, improving employee and group productivity as well as managing more IT with less. The channel comprising of SIs, VARs, SPs, MSPs and IT Consultants form the essential cogs of an IT vendor’s eco-system that puts products and solutions in the hands of the SMBs.

Today’s SMB channel has numerous vendors to partner with to build and grow its business especially if they are targeting the SMB segment. Each channel partner has usually has multiple vendor partnerships. It is therefore essential to have a positive mindshare of the channel which would potentially translate to wallet share.

Techaisle’s SMB Channel BES-360 provides an actionable path for IT vendors to manage their channels. Techaisle’s BES-360 Model looks at the equity of the brand on six overall independent dimensions:

1. Emotional,

 

1. Likeability,

 

1. Rational,

 

1. Dispositional,

 

1. Visibility, and

 

1. Human Connect

The data is collected by conducting a primary research and thereafter using ANN (Artificial Neural Networks) we model the responses on several variables with action variable using a non-linear model. Action variables are crucial to measuring brand equity, since having a brand equity which does not lead to action is useless. Techaisle’s BES 360 uses ANN for computing the dimensional weights as opposed to assigning arbitrary weights or no weights at all.

Cisco’s Brand Equity Score with SMB Channel Partners = 41

The model reveals that the BES of Cisco is 41 on a scale of 1-100. The question is, is this good or bad? Since the highest BES is 56, 41/56 is “Good”. Two other IT vendors including IBM have a higher BES than Cisco.



 

 

 

 

 

 

 

Breaking down the data for Cisco we find that almost 25 percent of Cisco’s channel partners have a BES of 80+. They form Cisco’s core partners. The customized report can delve deeper into the typical profile of these SMB channel partners of Cisco. The data also shows that almost 35 percent of Cisco’s SMB channel partners have equity of less than 40. These are the partners that Cisco needs to work with to try and raise the brand equity. Further research could also be conducted to check and see what these partners contribute to Cisco’s business and their relative importance.

If we look at Cisco’s equity among its own channel partners and non-partners, the difference in equity is substantial. The BES of Cisco among its partners is 55 and among non-partners the BES is 29. A polarised equity pushes a brand in to a niche status, which may not be desirable for all brands Cisco’s BES is the highest among the channel partners of Avaya and even among the channel partners of SAP too the BES is quite high. These could be potential channel partners for Cisco. 

  

 Techaisle’s BES-360: Why is Brand Equity Score Important?

Companies no longer produce products and services but deliver a brand experience through their products and services. It is widely recognized that the status of a brand in the mental space of the customer is best measured through brand equity. If the brand equity is good then a product or service that is similar to another brand with lower brand equity will sell better. Additionally, a brand with a good product or service but lower brand equity has a lower customer satisfaction compared to a brand with a higher brand equity that offers the same, if not an inferior, product or service. Hence measuring and tracking brand equity score is of critical importance to brand management.

What is the key information that I will get from Techaisle’s BES-360 to manage my brand?

Our customized report answers following nine relevant questions:

1. What is my BES and my competition in the industry?

 

1. What is my BES among my channel partners? Understanding overall equity is fine but this equity should also be good among its own channel partners and the difference between the equity among a vendor’s own channel partners and the non-partners should be significant. Otherwise it indicates a non-exploitation of the market completely.

 

1. What is my Brand Equity profile of my channel partners? The data and analysis provides critical information for assessing the potential for expanding the foot print of the brand to the other channel partners. The composition of the BES among the channel partners of a brand indicates the core strength of the brand. A brand needs to know what proportion of their customers are at, say, half the total BES? If a small portion of the channel partners have high brand equity and a large number have low brand equity then the customer base is shaky.

 

1. What is my BES among the partners of other channels?

 

1. What is the composition of my channel partners at various levels of BES? A brand would like to know the business that their partners generate at different levels of brand equity. For example: what is the number of solutions offered by a channel partner whose equity is twice the average brand equity? Such information can be quite useful to build a complete business strategy by better equity management.

 

1. How is the BES affecting my business among my channel partners?

 

1. What do I do to improve my brand equity? We measure brand equity on nine variables. We can dive and pick up the dimensions on which the brand needs to score. In fact we can even suggest using an optimization scheme the best values of the dimensions that the brand should achieve.

 

1. What business improvement do I expect at 5% increase in my brand equity from my channel partners? We can do a detailed analysis of our data to indicate what will be the impact of an increase of 5, 6, 7 or more points on the business, using the survey data.

 

1. Which brands’ partners should I choose to enlarge my foot print?

For SMBs, channel partners are the trusted advisors. Addressing the channel partners directly contributes to raising the brand equity among SMBs (measured separately by Techaisle). We call it BES-360 because it covers all the dimensions as well as competition.

If more information is needed for developing a comprehensive and successful marketing strategy Techaisle has the capability to provide the necessary information. From the current data itself we can get more information by looking at the scores on each of the nine variables. However, we can also do a dedicated BES 360 Survey for a specific brand and get a comprehensive picture of the brand that can identify and answer strategic questions like “Why my score is low on the VISIBILITY dimension and what should I do about it?”

 

ML110 Proliant from HP is a favorite of VARs/SIs in India to sell to SMBs, especially small businesses. It is “robust, configurable and affordable”. In India where there has been considerable drop in sales of commercial servers within enterprises and government segments, VARs/SIs have turned their attention to the ever-elusive SMB market segment.

VARs/SIs from Delhi to Chennai, Mumbai to Kolkata, Lucknow to Jamshedpur, Pune to Hyderabad – you get the picture – hold the key to opening up demand for first server opportunity within the SMBs. They are doing so by delivering two key messages:

1. Servers help in Business Process Consolidation: With an on-premise server SMBs can install software solutions such as locally available ERP (not SAP), accounting and financial management, CRM and many different vertical applications to improve business processes and thereby grow revenue

 

1. Servers help in Email Consolidation: With an on-premise server SMBs can use email applications that promote scheduling, calendaring and sharing within the same domain name. There are still way too many SMBs in India that have employees using individual emails with no common folders

The messaging seems to be working. Channels are optimistic that the small business server spend in India will reach US$75 million in 2013, a jump of 13 percent from previous year. But they also say that the path to influence small businesses will not be easy.

The question is, why have the VARs/SIs taken the lead in creating server demand.

Let us take the example of VARs/SIs in Kolkata. West Bengal is a “dead state”; State government is not spending on IT, Central government is not giving any budgets to the State to spend on IT; therefore VARs/SIs instead of sitting idle are busy pounding the streets of Kolkata, seeking out SMBs and discussing the above two key simple messages which seem to be resonating well. On the other hand, in Delhi NCR region, a hot bed of technology adoption, VARs/SIs are targeting pockets of areas such as Gurgaon and Noida.

Selling to SMBs is a very time consuming and pain-staking process. As one SI put it mildly, “there are no green pastures anywhere; we have to plant the seeds”. These channel partners have to overcome three important barriers to adoption:

1. Lack of awareness of technologies: Too much information and technical jargon is being thrown at the SMBs forcing them to “tune-off” creating lack of awareness. VARs/SIs therefore are engaging SMBs, one at a time, to make them aware what servers can do for their business

 

1. Lack of time: SMBs generally do not have time on their hands to search for a channel partner to help them understand technology. Even if they have the time, business priorities in many cases trumps technology and decisions get pushed to the proverbial eleventh hour

 

1. Affordability: Price is still a major factor for purchase of servers and accompanying solutions.

At the other extremes are cities in southern India (beyond Bengaluru and Chennai) such as Kochi, Madurai, etc. where channels are fighting a different battle, the infamous “power-cuts” for nearly 8-10 hours each day. The SMBs in this region are first focused on their usual business continuity before turning their attention to IT adoption. But the relentless channels are not giving up on their pursuit and messaging.

Server vendors like IBM that do not have affordable server products for the small business segment are paying attention to the messaging from VARs/SIs and have begun working with them selectively to organize road-shows in Tier 2 cities from northern to western India, from Lucknow to Nagpur and Bhopal.

Still there are many SIs across the country in India who are unhappy by the continuous evaporation of margins on hardware. Some even have gone to the extreme and said that “the way some vendors are working on lowering the margins on servers and storage, SIs will be forced to alternate business models in the next few years”.

India is a more complex IT market than we usually imagine. Based on local infrastructure capabilities and capacities, India has three different segments:

1. Totally mature,

 

1. Immature, and

 

1. Not Mature at all

Nevertheless, the SMB server market is still a massive, slow-moving glacier which has not yet reached the precipice of a waterfall. Till that happens, VARs/SIs are creating the demand and trying to grab the opportunity.

Gitika Bajaj

Dusting off my notebooks (the notepad variety) I came upon some carefully documented notes of my conversations with Dell’s Channel team, in particular with Greg Davis, Vice President and General Manager of Global Commercial Channels.  Just reviewing the notes of the previous two years it hit me squarely in my face that Dell’s channels team has been on a restless pursuit of:

• Simplicity,

 

• Training & enablement,

 

• Winning datacenter together with the channel, and

 

• Partner profitability

Fall of 2011

Although Dell’s Partner Direct program was formally launched in 2007 with aggressive channel recruitment and courting happening in 2008, we will pick up on our conversations with Dell’s Greg Davis and Paul Shaffer, Executive Director Global Channel Marketing & Demand Generation from the fall of 2011. Partner enablement, training, certification and integration of acquisitions had percolated to the top of the team's agenda. For an IT company which is notorious in selling direct, drastic measures were needed to become “one” with the channel. Dell delivered 75,000 training modules to its partners, 30 percent of Dell’s commercial business had started to come from channels and 58,000 registration deals were closed. With the acquisition of Force10 Networks Dell announced enhanced network certification programs and 130 premier partners got their certifications. Emphasizing that the training modules were working, Greg Davis had mentioned that top 10 partners who invested most in training had seen 110 percent growth in revenue. Fall 2011 was also the time when partners started seeing the first glimpse of gentle motivations from Dell to push deeper into healthcare segment and drive revenue from datacenter solutions. Inroads were being made into smaller partners for SMBs as much as national and larger partners.

Cloud Channel

During the same time period while Dell was building out its confidence and trust with the channels, enterprises and SMBs were moving to cloud, thus dis-intermediating the channel. Especially the VAR channels (which typically form the largest percent of channel partners of an IT Vendor) had been finding their traditional business models threatened by products and services that could be sold direct by a vendor over the Internet. To continue to adapt to the changing times and never taking its eye off the channel partners’ livelihood Dell launched cloud channel programs in the spring of 2012:

• Cloud Builder,

 

• Cloud Provider, &

 

• Cloud Service Enabler

A technical services team was also put into place to help partners sell data center solutions namely, server and storage. Dell now had roughly 250 premium partners and had delivered 135,000 training modules in the year.

Work was far from complete. More acquisitions were taking place; these acquisitions had to be integrated and above all emerging market countries had to be targeted. Both Greg Davis and Amit Midha, President, Asia Pacific and Japan, Chairman, Global Emerging Markets underscored the fact that they were working to ensure a consistent channel engagement across every market covering:

• Deal registration

 

• Compensation neutrality

 

• Conflict escalation process, and

 

• Executive priority

Asia/Pacific

The channel commitment work in Asia/Pacific countries in our opinion is far from complete. There are still some major strides to be made, specifically in the Asia/Pacific region. By its own acknowledgement, Asia/Pacific is the fastest growing regions for Dell which requires a constant confidence and trust building process with the channels. In many of Techaisle’s analyst interactions with channel partners in 2012 in Asia/Pacific, it was found that channels had warmed up to Dell but some questioned Dell’s sincerity whenever bigger contracts were involved.

In both summer and fall of 2012 we asked Greg Davis and Amit Midha where they thought they were with consistency and confidence. Not only were they bullish but also recognized that they have some hills to climb. They were also candid that services remain a big component of any channel’s revenue mix and while typical services such as warranty, break-fix, and insurance were straightforward re-sale of Dell Services, partnering in consulting was a bit more challenging.

Summer 2012

By the summer of 2012, efforts were paying off, 62,000 deal registrations per quarter were coming through partners with 72 percent approval rate, 35,000 training modules were being delivered per quarter, the number of premier and preferred partners had jumped to 2500, Asia/Pacific channel programs were being strengthened, SonicWALL was integrated and specific courses were introduced on how to talk to a CIO, value of integrated datacenter. Above all social media training programs were launched for the benefit of the channels.

In late summer, in a conversation with Greg Davis and Bob Skelley, Executive Director, Global Certified Partner Program & Channel, they reiterated their commitment to make Dell “easy to work with” and restated their deep & maniacal focus on training and competencies. This focus resulted in 34 percent of global commercial business funneling through Dell channels, up from 30 percent in the fall of 2011. Number of deal registrations had jumped to 71,000 and an enhanced deal registration tool on mobile platforms was rolled-out. 47,000 training courses had been delivered in the quarter and Dell now had 113,000 channel partners. Initial focus on healthcare segment had resulted in a surge in end-user customers. A 40 percent growth in certifications was also achieved when compared with previous quarter. With the integration of Wyse, a desktop virtualization certification program was introduced. Dell channels had truly arrived and there was never a question of ever turning back.

One year later, Fall 2012

One year later, by fall of 2012, Dell had 130,000 channel partners, 35 percent of commercial business revenue was funneling through channels, 142,000 training courses had been delivered in the year, number of deal registrations had shot up to 65,000 and there were now 3600 preferred and premier channel partners. In the words of Greg Davis, “Dell has the most confident and competent channel partners in the world”. One year later, I saw an urgency to deliver with a profound focus on datacenters, systems management and cloud services. Virtualization was also beginning to take center stage. Kathy Schneider, Executive Director, Global Channel Marketing & Programs, drove home the point that she and her team were focused on driving best practices across four strategic pillars:

1. Easy to do business with One Price and Sales Tools

 

1. Win in the Enterprise using a comprehensive sales tool aptly named as Enterprise Master

 

1. Training & enablement through expansion of training beyond Dell’s standard solutions to include social media

 

1. Partner profitability through a simple, effective and rewarding incentives program

It has been a long way from direct PC selling to indirect solution selling. Real progress has been made. Dell’s channel executives are an end-to-end solutions empowering team for the channels. Not all channels will thrive but those that are equally committed to learn, adapt and practice will certainly succeed.

Anurag Agrawal
With contribution from Gitika Bajaj in Asia/Pacific