Michael Dell Makes His Bold Case To Partners: Why Dell?

On The Hot Seat

Michael Dell, who won a hard-fought bid to take his company private, sat down with CRN in a series of one-on-one interviews to talk about what's next for Dell. Since the leveraged buyout closed in October, Dell already has made key internal changes to position the company for growth as a private company. Dell appointed Bill Rodrigues, former vice president and general manager of global business, as president of Dell North America. Cheryl Cook, former vice president of enterprise solutions, was named vice president of global channels and alliances, replacing longtime worldwide channel chief Greg Davis, who started the official Dell channel program nearly seven years ago. The net impact of these recent moves by Dell on partners, Michael Dell told CRN, is a Dell that is "faster, easier, better and bigger."

How does going private help you build a better, faster channel?

We believe we have a great program today and are really pleased with the progress over the last four or five years. I'd like to come back [to CRN parent The Channel Company's Best of Breed conference] in the future and be your best partner. So that is our goal. We haven't set a low goal. I think if you step back and look at the last five years or so, we have taken the channel program at Dell to be about one-third of our commercial business, so order of magnitude we'll call it a little more than $15 billion. So this is very substantial. There aren't that many channel programs that are $15 billion or more. You can probably count them on one hand.

You said the executive changes you've made will lead to 'enormous' new opportunities for partners and Dell. How?

We are going to be working even more closely with our partners to increase our reach and coverage. Our inside teams and our channel teams are going to be working even more closely together. I think it is a fantastic step forward. I am super excited.

Will this supercharge the effort to grow the channel business by an order of magnitude?

The great news is that we have a fantastic set of partners and have enormous opportunities to expand because we are not covering all those accounts. We are going to be working even more closely with our partners to increase reach and coverage. Our inside teams and our channel partners are going to be working even more closely together.

How much more account planning and engagement will we see between partners and the Dell direct team now?

We have made a lot of progress in the last several years, as you are well aware. I think we can make even more now. There was a logical reason to have it be kind of a separate thing when it start with ed. This is a sign of success and maturity in terms of the evolution of our channel program that it is now fully integrated. It is just part of how we do business at Dell.

What is your strategy to grow the channel faster with partners?

We want to build deeper links to the segment sales organizations that we have in the company and continue to build that knowledge of how to leverage each other and expand and grow together. The set of capabilities that we have—in terms of data center offerings, storage, networking, systems management, data protection, identity management, security— are unbelievably broad. Having done 30 or so acquisitions, we'll keep doing acquisitions. And, of course, as a private company we can be more aggressive. We are thinking about the medium term and the long term. We don't have to think in 89-day planning cycles.

Talk a little bit about what you expect of your channel partners.

The first thing I will say is we haven't restricted our program to say, ’Oh, we only want you to go after these customers.' So our largest Dell partners and smallest are encouraged to go after the entire set of opportunities out there. We think those opportunities are significant. The fastest growth in our industry is going to continue to be midsize companies; small to mid is actually the largest part of the industry and it is the fastest-growing part of the industry.

What type of opportunities does the midmarket offer channel partners?

And if you look at the kinds of solutions that Dell has built and acquired — with SonicWall, Wyse and EqualLogic— they fit nicely in that midmarket kind of space, and we see these solutions scaling up to the biggest companies in the world. I think the partners that have really done well with us are the ones that are deeply committed to understanding the Dell portfolio. They are engaged and with lots of training and have an in-depth understanding of what it is Dell does. That understanding is reciprocal about what Dell knows about its partners.

What are a private Dell's biggest challenges?

We are not too worried. We are feeling pretty good. I think one of the biggest challenges for Dell and other companies is asking ourselves, 'What happens to the PC space?' My point of view is the PC is evolving. The obituary of the PC has been written 25 times. The term ’post-PC era' was first coined in 1999 by IBM. At the time, there were about 120 million PCs sold per year. Now there are 450 million PCs sold per year. So the post-PC era has been better for the PC than the pre post-PC era.

But, the PC is a challenge. We are assuming that that business will contract. We have very modest assumptions for that business. Dell will be a consolidator and look to gain share. But, PC is not our primary objective. Our primary [objectives are to] grow enterprise storage solutions, security, software. Those are things are partners are helping us do.

How much quicker can Dell change direction and make decisions as a private company?

Going private isn't like everything happens instantaneously. But, you can absolutely accelerate decision-making and simplify things. For example, we built up a lot of reporting inside the company over time. And, you look at all this reporting and say what are we doing here? Now we can say which of this stuff do we really need and what's important? Growth and cash flow—everything else, forget about it. Being private simplifies everything, streamlines everything, and we can go faster.

How mature is the channel business and when do you think you will cross the 50 percent of total sales channel sales barrier?

I think it will help us go faster.

Talk about Dell World.

Dell World is going to be awesome. We have tremendous engagement [with partners]. We are going to have 5,000-plus customers and partners from around the world. It'll be the biggest Dell World ever.