Client, server and storage - the three lines of business expected to drive partner growth for a simplified Dell Technologies’ channel in Asia Pacific during 2020.
In reducing core product segments from seven to three, as part of widespread channel enhancements, the technology giant has ushered in the next iteration of a partner program designed to be “simple, predictable and profitable”.
To achieve the holy grail of profitability however, foundations have been laid to ensure engagement is simplified across the supply chain, spanning condensed solution sets, streamlined rebates and consistent in-country go-to-market strategies.
“Our key focus in 2020 is to advance our channel program, building on our simple, predictable and profitable approach,” said Tian Beng Ng, senior vice president and general manager of Channels across Asia Pacific and Japan at Dell Technologies. “Since launching the program three years ago, we have kept true to these three key points but we’ve also added more enhancements for partners.”
First rolled out in February 2017 - following a preview to select resellers - the program was built to combine the channel capabilities of Dell and EMC, months after the multibillion-dollar merger was finalised. Fast forward to 2020 and the partnering philosophy remains unchanged, with only the channel framework modified to reflect changing market dynamics.
“The program will always evolve over time and we’re constantly hearing feedback from our partners, taking that feedback and making improvements,” Tian Beng added. “This year in particular, we’ve focused heavily on the simple element of the program.”
In wide-ranging interview with Channel Asia at regional headquarters in Singapore, Tian Beng outlined a strategy built around the deployment of multiple minor improvements, culminating in wholesale changes to how the channel goes to market during the next 12 months.
“Our biggest strength is our portfolio but with such a broad portfolio comes complexity,” he acknowledged. “Our program is focused on making this simpler for the channel and to achieve that, we have changed our rebate structure.
“This was previously based on seven lines of business, which we have consolidated to just three, focusing on client, server and storage. In the past, we sub-divided segments such as storage into a few more lines. But now we have brought everything together and made three lines of business to simplify rebate calculations for partners.”
With new offerings such as Dell Technologies Cloud straddling both server and storage segments, Tian Beng said the vendor has also moved to eliminate the quarterly target process, favouring an automated approach instead.
“We have increased program automation to make it simpler for our partners to estimate how much earnings they are going to receive from our rebate program,” he explained.
Another key change, according to Tian Beng, is centred around rebate multipliers with Dell increasing such an offering to boost product sales through the supply chain.
“For example, if a partner sells a four-socket server which is a high-end server, they will receive a multiplier,” he added. “Partners can earn more through selling our focused products.”
Rounding off the simplification changes, five global zones have also been introduced to collate countries based on the key indicators of market size, population, GDP (gross domestic product) and presence of Dell, among other measurements.
“We realised that a country such as Malaysia, which is small relative to the US, is different in terms of scale,” Tian Beng said. “Therefore we have rolled out different revenue tiers to ensure that if you are a smaller country, you will be measured relative to your country size and not by geography.
“The previous structure was more complicated because each region had individual zones, whether that be Asia, Europe or Latin America. This new approach also makes it easier for partners with a global presence, such as NTT, who can leverage a more consistent level of engagement going forward.”
Revenue from Dell’s global channel business has increased eight per cent year-on-year, with data points running until the vendor’s third quarter, which ended on 1 November 2019. According to Tian Beng, Asia Pacific and Japan - excluding Greater China - grew at twice the global average, with client, server and storage all reporting double digit growth.
“The channel is bringing in lots of new logos to drive acquisition which is why we are talking about new business incentives and competitive swaps, this is bearing fruit for us now,” he observed.
With simplified building blocks now in place, Tian Beng acknowledged that success for partners in the region during 2020 will be dependent on profitability, outstripping all other considerations for a channel pursuing aggressive growth ambitions.
“Profitability is the area that partners care the most about,” he accepted. “Our Partner Preferred program targets the acquisition of new customers, with incentives built around this. For those selling to the Partner Preferred list of accounts, they will receive more aggressive discounts.
“For example, partners will receive lower pricing from Dell and more aggressive discounts which allows them to earn more in terms of upfront margins. This is something partners want, they want to earn more upfront from a margin perspective because for most partners, the sales reps are paid on gross profit.”
Therefore, through the Partner Preferred initiative, Tian Beng - recently inducted into the Channel Asia Hall of Fame - said technology providers can chase new customer logos safe in the knowledge that behind the scenes, Dell is working in tandem to secure the sale.
“We have also neutralised sales compensation for our sales reps on these accounts,” he outlined. “Sometimes, the sales rep will say, ‘great that you’ve lowered the price but this impacts my commission’. We actually neutralise the price so our own team are not adversely affected and instead, are more than happy to work with partners on securing these accounts.”
The definition of customer acquisition, as explained by Tian Beng, includes new lines of business, bringing existing users into play for partners seeking to expand offerings within an organisation.
“If the partner already works with a customer on the client side, winning business through server or storage will be recognised,” he qualified. “Even though they are technically a customer, partners will be rewarded for introducing a new line of business.”
Also in place are business incentives around winning deals with customers who have not purchased from Dell during the past 36 months, in a competitive swap type of scenario, added Tian Beng.
“There will always be a set of partners that we are trying to recruit, but the number is low,” he said. “We have strong presence and coverage in the countries that we operate in so we are focusing on doing more with our base.
“We’re seeing huge interest for many of our partners with respect to as-a-service. Of course, the maturity is different with Australia and New Zealand the most advanced compared to other countries in the region.”
Following the recent launch Dell Technologies on Demand in November - a service containing multiple consumption-based and as-a-service hardware and software offerings - Tian Beng said plans are in place to drive adoption through the supply chain.
“We’re definitely pushing the transition element with partners,” he added. “We’re making good progress. We see a lot of partners that have been purely reselling but are now moving towards having some type of consumption model to create two routes to market.
“We’re helping partners take that first step, especially in regions such as ASEAN where adoption isn’t as advanced. A lot of partners are making the move and we have specific initiatives in place to help them along the way, in terms of enablement and the models they need to run to move into the service provider business.
“A lot of vendors are focusing on the larger partners but not so much on the smaller partners that want to take that first step, which is a priority for us.”
Specific to VMware - which recently unveiled its largest channel overhaul in 21 years through the launch of Partner Connect - Tian Beng said close synergies remain from an ecosystem perspective, evident through increased joint engineering efforts.
“VMware operate as a separate legal entity and make decisions independently, but we do a lot of core engineering together,” he said. “A lot of our solutions are engineered with VMware such as VxRail, with hyper-converged infrastructure running on Dell storage and server and VMware software. A lot of our customers and partners are seeing that these type of solutions are resonating well in the market.”
The revamped partner strategy is widely expected to be shared in more detail during Dell Technologies World 2020 in Las Vegas during early May, despite increasing coronavirus concerns turning the annual conference virtual. Also on the agenda will be the sale of RSA, spun-off in a US$2 billion deal with Symphony Technology Group and a consortium of buyers, which is expected to close within “six to nine months”.