Dell admits limits of direct sales model

MIchael Dell
Dell CEO MIchael Dell



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20 December 2017 | 0

Billy MacInnesIt’s weird how the whole dynamic has shifted from ‘direct good, indirect inefficient’ in the 1990s and 2000s to ‘channel great, direct poor’ in the 2010s. Dell’s high-profile conversion to the joys of indirect selling probably marked a turning point in the whole ‘direct v indirect’ debate. Michael Dell had always been incredibly outspoken about the benefits of direct sales over indirect, branding channel-friendly rivals such as IBM and HP as expensive and inefficient because they added a layer of distributors and resellers between them and their customers.

It helped his argument that, for quite a while, Dell was doing very well portraying itself as the dynamic young upstart insurgent while the likes of IBM and HP were dismissed as the ageing, slow moving forces of the establishment.

Dell’s public endorsement of the channel varied more weight precisely because of the company’s years of virulent opposition to the indirect sales model. Everyone suspected, rightly, that the only reason Dell would go to the trouble of launching a partner programme was because it made sound financial sense to do so. And many people also suspected that if Dell was becoming a supporter of the channel it signified an unspoken admission that the direct model had reached its limits for its strongest advocate.

Against this backdrop, I saw a story in MicroScope last month claiming that companies that wanted to sell direct were being hindered by the inability to hire good sales staff. Apparently, companies trying to build their own sales teams are struggling to find suitable candidates because of a lack of experienced candidates and high salaries.

Research among its customers by partner relationship management specialist Impartner found that 90% of hiring managers were having problems recruiting direct sales staff and half of them said the problem had become worse in the last 18 months.

Dave Taylor, Impartner’s CMO, argued this was great news for resellers. He claimed the “golden age of the channel has arrived” because companies couldn’t afford to “put all their revenue eggs in the direct sales basket”.

Why was this good news for partners? Well, as Taylor put it: ”Why struggle to hire direct sales people in an extremely competitive market that’s stifling your ability to increase revenue, when the indirect sales channel provides an immediate avenue to growth?”

It’s a good question, not necessarily a new question, but a good one nonetheless. It brings us back to the issue of whether a technology company really wants to try and become a sales and fulfilment business as well or whether it makes better sense to leave that to the experts. As I said, that’s not a new question. After all, it’s the question Dell sought to turn on its head by asking customers why they would want to deal with a sales and fulfilment company as well as the IT manufacturer when they could choose an IT manufacturer that could do the other stuff as well.

But that also brings up the question of whether you want to deal with someone who claims to be a Jack of all trades or a couple of companies that claim to masters of their own. For a while there, customers seemed to be swayed by the attractions of Jack (Dell). Not so much now. Today, it’s more a question of blending all those solutions and skills, whether provided by the reseller, distributor, vendor or someone else, but there is an acceptance from vendors (and most customers) that partners are the primary channel to customers. Long may it last.

Not so fast
“We will look back and see things have changed a lot but in a slow way, as they always do.”

When it comes to predictions, that’s the kind of prediction I like. It’s a statement by Michael Conway, director at Renaissance, elsewhere in this magazine. It says pretty much all there is to say about the IT industry. Yes, things change a lot but never quite as fast as the cheerleaders of this wonderful technology or that innovative product would have us believe.

The true pace of change is always a little bit slower than the people pushing it would like and a little bit faster than the people having to make the change are quite comfortable with.

But there is always change.

It’s very hard to stay the same. Even if you want to, when there are lots of people around you who are starting to do something different, you can’t get away with doing nothing. If you opt not to do anything, things can still change for you anyway, quite possibly for the worse, because you get left behind or lose out to a competitor.

So change is inevitable, even if you’re not changing.

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