Dell EMC and the ‘magic’ 47%

(Image: Dell EMC)



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12 May 2017 | 0

Billy MacInnesAt first glance, $35 billion seems like a lot of money. In truth, there’s no getting away from the fact that it is a lot of money. And it’s all money going through the channel. That’s according to a report in Channeleconomics Europe in which Dell’s CEO Michael Dell stated at the 2017 Dell EMC Global Partner Summit: “Today, roughly $35 billion of our roughly $75 billion in revenues is done through partners.”

But it’s still only 47% of Dell EMC’s total revenue. On a positive note, that means there is definite scope for the channel to take more of the overall revenue share. Assuming Dell EMC wants them to. With Dell “growing both direct and indirect”, the question is whether the indirect side will grow faster than the direct business.

On one level, it might not matter that much. If Dell’s indirect sales enjoy “double digit growth” as predicted by chief commercial officer Marius Haas, no one is likely to be complaining about the overall revenue figure. They’re going to be too busy counting their money.

Which leads to an interesting question in terms of channel strategies: is it better to be partners with a vendor that gives you 47% of a big pie or one that gives you 100% of a smaller one? A channel-only strategy has a number of benefits, biggest of which is the removal of any potential conflict with the vendor’s internal sales operation. But there’s also something to be said for joining forces with a vendor where there may be potential to shift direct business to indirect partners over time.

Today’s 47% channel business could be 55% tomorrow and 65% the year after. The big proviso is that the vendor needs to be open to increasing its channel presence and boosting sales through partners. And while the channel can provide incremental business for vendors, it can also be used to fulfil and service existing business more effectively. A number of vendors are attracted by the prospect of migrating business to partners to free them up to pursue other avenues or concentrate on more strategic product areas.

Philosophically, things are a bit tougher at Dell EMC because both businesses had a very strong focus on direct sales for many years. In many respects, they are still in the early stages of their channel sales development. That said, to have reached 47% already could be seen as quite an achievement.

And judging by separate comments made by Dell EMC global channels president John Byrne at the same event, partners have reason to be optimistic that their share will go higher. “Make no mistake, we have ambitions to be number one,” he said. “We want to be the best and the biggest channel player in our industry.”

Best and biggest. What more could you want?

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