‘Distribution Is Biggest Change In Dell’s Commercial Business’
Excerpts from the interview
CT: Please tell us about new distribution announcements that Dell has started?
Ravi: After years of having done this successfully, in terms of getting distribution to be a main part of our business, For the last 6 years we have got to a point where we have been able to improvise and embrace distribution. For the first time we are bringing distribution to the commercial side of the business which consists of the small businesses, the medium business, large enterprise and public.
This is the first time the distribution is going to be for the complete end-to-end range of our products desktop range of products- notebook range of products, servers and a few storage products. But this is the biggest change that is happening in Dell. Earlier we had Global Commercial Channel, GCC, which was a separate entity. But going forward all sales is being aligned under one roof globally and in India – so all sales which is distribution led and partner led will roll up to Alok Ohrie, who is the president and managing director for Dell India.
So this clearly something that is new in Dell and our objective is to grow and grow faster and at the same time improve channel profitability and get to a level where sooner or later we become the market leaders. So that is our endeavor and we are betting very big on distribution.
CT: What is the difference distribution going to be from a commercial business point of view?
Ravi: So we had a direct team which would sell directly to our customers and a back-to-back which would consist of our channel partners who would have customers and would take orders for the products and solutions and then deliver it to customers. The difference that the distribution is going to bring is from a customer point of view where we will be able to fulfil all their requirements.
For example in the distribution phase if a customer wants ready delivery of a laptop, desktop, server etc. that will be readily available with the channel partner in that particular region to be installed immediately. That is the biggest difference. Earlier it was, you place an order for a product or service and we ship at back to you. With the distribution, it is readily available in all the key metros.
CT: So how many distributors do you have to drive the commercial business and who are these?
Swarnendu: Currently, we have announced partnership with Ingram and we are in talk with a couple more. What we have effectively done is taking care of end customer requirements and working with partners wherever the customer is ready to wait for our products. This new announcement allows us to improve the reach of our products and make them available for our channel partners easily.
So Ingram will be national distributors and we will continue to build on the relationship that we announced. We are now looking at exploring if there are going to be any other distributors that are interested in partnering with us in a similar manner and if they match with our requirements.
CT: Why have you brought distribution to the commercial side of business?
Swarnendu: Let me explain to you the way we are structured at the moment. Previously, we did deal with channel partners successfully and carried out our transactions with them. But as Ravi mentioned earlier our complete sales will now come under one single organisation.
Earlier in the erstwhile phase, they were running as parallel organisations. We were working with channel partners effectively and this was bringing us profitability. But we never had the stock and sell portion in play. We realised that there is a huge potential that we are not addressing. While we were going through our restructuring we brought this up as a major piece. Infact we are moving a large part of our workforce to be dedicated to channel partners.
If you look at the current marketplace, we (Dell) are one of the few OEMs that give the complete end-to-end stack of solutions – from laptops, desktops to storage, servers, we are doing everything. So it makes more about how were going to cover this market, not only going to tier 1 but to tier 2 and tier 3 markets. And we are major making huge investments in resources to ensure that partner enablement happens at a profitable course. It is the right path for us to go ahead and make that change.
The uniqueness that Dell is bringing with this distribution is that for the first time Dell or any other organisation of such a scale is actually giving its channel partners a list of its already existing customers. What we are trying to do is to get to a level where customers who were buying through Dell all these years, based on their convenience and accessibility, we will transfer all these accounts to the key partners. That is something that has never happened in the industry before.
The second point is that we will have a dedicated sales force who will support only distribution sales, Dell employees will ensure that sales happens through distribution. Distribution will be a key driving factor of the commercial business and that is what we are driving. Swarnendru’s sole responsibility is to drive the distribution business.
CT: So how many such customers will the channel partners have access to?
Swarnendu: At this point what we can share is that these numbers are in thousands. These are worked out in various phases. The customer feedback based on the availability of the products and faster turnaround time. And secondly also based on the coverage model that we are working on.
CT: What is the existing channel partner base that you have in the commercial segment?
Swarnendu: We have done business on a couple of thousands channel partners in the last 2-3 years. And most of these channel partners have been pretty involved with us through the journey as we built the business. In this market there are about 15- 20,000 channel partners in the commercial segment and they are all invited.
We want to enable all our channel partners to join in the sales of our products and solutions. We are going to have several enablement programs – training programs, roadshows, invest in getting them units and this is going to be open to all 15- 20,000 of the existing commercial channel partners. We do not want to restrict it to a few thousands. It will be open for everyone. It will be a journey and it will take us sometime. But this will be our ultimate goal.
CT: What about marketing? How dedicated will it be for your distribution business?
Ravi: From a sales perspective, 50 percent of our team will be focussed on our indirect business. From a marketing perspective we have dedicated team primarily focussed on distribution consisting of resources, funding, training sessions etc.
CT: What role will GCC play in this scenario?
Ravi: Well there are basically three routes to these markets – Direct – Sell directly to customers, Channel partner – For more specialised sales to customers and Distribution led – also led by channel partners. The last two will play a major difference in the growth of Dell. We have been successful in our direct and channel business and we are confident about our success in the distribution business.
CT: What about the integration of channel partners from acquisition companies?
Swarnendu: Integration is an ongoing process for us. For eg. With Dell SonicWall which was completely channel partner led, we have continued the same structure and this has not changed at all post the acquisition. Our end objective is to increase the reach of our products. We will continue to encourage channel partners who are specialised in selling a certain kind of products and this does not change as a result of the acquisitions.
CT: Can we now say that Dell commercial business is completely going indirect?
Ravi: No. It will be a blend of both direct and indirect. It depends on the customer preference and how he/she wants to be serviced – direct, channel or through distribution. That is of prime importance to us.