The rise of Dell in the Indian commercial market is nothing short of extraordinary because the company was not visible sometime back but today it is everywhere. It has challenged the existing leaders in the PC & Server categories and mobilized a good number of channel partners to align with them, big time! Over and above this, with the acquisition of EMC, Dell stands as the undisputed leader in close to 21 Gartner Magic Quadrants in the datacenter business.
From being a publicly listed company to going private, from being direct in their engagement with the customer to being indirect in their engagement, from a PC vendor to a complete ICT player, Dell has come a long way. Even Michael Dell, the founder of the company, would never have envisaged this meandering journey. However, this is the way that companies grow but challenges start when maintaining the status quo. And Dell is cognizant of living up to the expectation of customers and partners in the long run and is stitching all the right beads to suit the customers’ taste.
“We are doing what is right for the company, customers and partners in the market.”
President & Managing Director
In the late ‘90’s when most of its competitors were struggling due to a market slow down, Dell had massive growth – particularly in the PC segment. Dell also replaced HP as the leader and challenged other players in the server space. Now, since market dynamics have changed and hardware businesses have become less profitable, technologies like cloud computing, security, storage, Internet of Things, BI & Analytics, etc. have become prominent. And Dell’s growth strategy around acquisitions is not a bad move at all. Over the years, Dell has acquired dozens of companies and among them acquisitions like Wyse, KACE and EMC are very, very important. Particularly, the EMC acquisition would be the largest in the history of Technology acquisitions with a value of $67 billion. It would easily be a game-changer for Dell and at the same time for the entire industry.
The acquisitions and going private has allowed Dell to maneuver its strategy to enforce leadership in the market. The first big change it has done is that it has adopted a new GTM i.e. partner-led strategy, which complements its direct Dell-led strategy, It has addressed the entire spectrum of the commercial market. The new GTM which Dell was never going into for years because of its philosophy around ‘direct to customers’ can allow the vendor to pass margins to the customers and turn the company profitable’ – have given way to a thought process of offering flexibility to the organization in terms of acquiring technologies in a new solutions-centric era though different ways and means.
This was bound to happen as the relevance of vanilla PC became marginalized and the company’s profit started shrinking and disruptive technologies challenged the company’s growth momentum. In this case, Dell had no option but to adapt to a new style of business. The new technologies, coupled with the emerging requirement of the customers around keeping their company profitable and healthy, had compelled the PC leader to adopt this strategy in order to be relevant to the customers.
The change has not only helped the company to gain market share in the US and Europe but also in emerging markets such as APAC and MEA. When it comes to India, Dell’s indirect strategy has brought in great dividends as the new style perfectly suits the region as it is one of the biggest indirect markets in the world. The company has not only adopted the new GTM in India but customized it in favor of the partners.
Alok Ohrie, President & Managing Director at Dell India, said, “We are doing that what is right for the company, customers, and partners in the market. We carry a very strong conviction that going forward, it will help us becoming a much stronger organization and our relevance to the market will continue to grow. We are excited about it and believe that we will get right level of acceptance in the market given the fact that we are investing a lot in building those solutions, products, technologies and services that the customers are looking for especially in a rapidly changing environment that they operate in.”
There is an amazing amount of complication that is staring at CIOs when it comes to transforming their organizations and their IT departments and the services they offer to their end users. In the process, they are looking for partners who can come in and help them realize their dreams and pro-vide them with guiding template that would be easier for them to implement. So, it is an interesting time for the Industry, and also for Dell.
Alok added, “Today Dell is extremely well positioned in the market from a future perspective. And the vision of the organization really captures what we intend to do going forward. It is about the company being an IT powerhouse that will provide cutting edge products and solutions to customers across all segments in realizing their vision of digital transformation with a lot of future ready infrastructure elements in the solutions. Having said that, it is not only the India only statement, it cuts across all of Dell operations globally and India is clearly aligned to its global vision.”
As a business, while Dell is doing exceedingly well in the market, it is also important that the organization continues to challenge itself in coming up with innovative technologies and disruptive deployments that would help customers to extract the full potential of their own businesses while they go on the journey of deploying these technologies and products.
It is true that market is changing very rapidly and there is no organization that can claim to have stitched together all the solutions and hence the ecosystem becomes an extremely critical part of the engagement. This is where it is going to be an increasingly important play for the channel partners including the SIs, SPs, cloud service providers, hosting providers, ISVs, and consultants who influence decisions of customers.
Alok added, “In the channel space, we have gained good momentum and it seems our value proposition is resonating extremely well. We see an acceptance and adoption of our solutions in a very large scale which is translating into overall business growth in India. To give you some numbers, we see 37 % year on year growth in our channel business. What it has done is that it has brought in a whole lot of incremental revenue that we probably did not have in the past. It has also brought in a whole lot of new customers that we probably were not able to reach in the past. So it has been a very satisfying engagement. We continue to see more and more products adopted by customers who are served through partners.”
Anil Sethi, Director & General Manager – Channels, Dell India, said, “We started this new GTM two years back. The major change in the existing model was adding the channel. We were deficit on trust two years back and partners were not clear about our strategy. They were thinking whether Dell is serious about it or not. But we have achieved something, which a normal company would have done it in five years’ time. Today we transact with 12, 000 partners across 243 locations. Two years ago we were nowhere. We lend around US$100 million in the market, which no one does. We have one of the best financing solutions for partners. More importantly, we are the only company in the industry which only bills to tier-2 partners directly and take exposure on them.”
“I think, as we move forward, we will see this continue to grow in the high double digits. The reason is that our product portfolio is very comprehensive and broad based with the integration of EMC. We will live up to the promise to customers following the closure of the transaction, which will be done formally sometime between August and October of this year. At the same time, a lot of work is happening in parallel ensuring that we will provide a seamless experience to the customers and partners in engaging and having a discussion around products from both companies,” explained Alok.
Dell, in its own right, has a large category of products that are doing exceedingly well and gaining market share. But the combined entity of Dell and EMC would have 21 products in Gartner’s Magic Quadrant which is far ahead of the next best in the industry. So the position of the new entity is very strong in the market place. It will give the company access into the datacenter space and will place Dell in a customer’s consideration set in finding solutions from end-point to datacenter, consultancy, and services.
Alok maintained, “We are really getting to the level where we will have leadership in most of our products that we carry. For example, Q1 2016’s IDC report clearly puts us in the No.1 position when it comes to clients including workstation, PCs and Notebooks in commercial places; with 26.3%. In the server business, our growth on YoY basis is 5.3%, which is a substantial market share gain we are experiencing in Q1 of this calendar year. In storage space, our ranking has improved by three ranks. We continue to experience a strong growth in networking as well. Even in the software business, our growth has been very satisfying – particularly in the space of information management, data protection and security; the growth rate we are experiencing is around 40%.”
On the other hand, EMC has a leadership position in the storage space and they have significant presence in the hybrid cloud. Other products that they carry out of their acquisitions including RSA Security, Virtustream, Pivotal, etc. all are doing very well.
In fact, Dell conducted a survey with customers and partners across the globe and the observation was that partners are seeing this transaction really helping them in the long run on IT infrastructure deployment. So the acquisition clearly puts Dell in a very advantageous position while addressing the enterprise market.
Although Dell covers all the verticals but from a priority stand-point, the focus lies in BFSI, government, PSUs (across central and state), defense, Webtech and startups.
Specifically, in the government space, Alok says, “We will continue to grow in high double digits, although we do not break it out in terms of segments. We are excited about what the government is talking about. I believe the investments going into various digital projects will continue to rise.”
To address government projects, Dell has invested heavily in setting up an organization that would go about engaging various state governments. Alok says, “To give you an idea, I have doubled my team and resource pool within for government and PSU BU. We have brought in some people who are subject experts at a very senior roles including a leader for mega-projects and Smart Cities. We have brought in Ravinder Singh, who is visible in the market now. He and his team have a charter to build our business in mission critical projects, mega-projects, and Smart Cities.”
“We are actively pursuing opportunities and are well positioned in many of projects and we are early in other projects. For example, the GSTN project, which is worth Rs.1380 crores and awarded to Infosys is based on the Dell stack. A similar mega-project won by L&T is based on Dell stack, too,” he added.
From a technology stand point, among others, IoT is emerging as a big ticket play for Dell and its partners. Per Alok, Dell has a very good product-line addressing this technology space. Starting from the edge products, getting into the data center, managing the data, and driving insights to create analytics and storing and maintaining the data record is where Dell’s strength lies. And Dell plays on partners’ strengths in the entire IoT play. Alok expects a consortium of channel players comprising traditional and non-traditional ones to address this market as both would bring distinctive capabilities.
So as Dell is becoming a leader across categories, it is also their responsibility to help its partner ecosystem upgrade skills and capabilities and be future ready. Alok says, “While we do everything, we also understand that we need to be investing in our partners to make them identify opportunities and continue to develop as an organization. Our programs are very rich across various categories of products. And we do handsomely reward our partners for bringing in new businesses. In addition, Dell has an arrangement of finance for partners to grow big.”
Anil added, “Gaining market share is super important, gaining mind share is very, very important but on top of it what matters most to us is how we develop these organizations to the next level – from small to mid-size and from mid-size to large organizations. Today we offer different extended finance terms to partners depending upon their credibility. We bear all the financing costs up till 90 days but on a case-to-case basis we look at other options also. We have the best of the industry programs in ‘Dell Storm’. And we are continually improving it. Apart from this, we are working around creating investor ready partner organizations.”
This entire approach has helped Dell to gain 37% growth in its channel business now. This indicates what kind of well thought out approach it has while addressing the market, which in many ways are differentiated from the ones in the competition. Of course, the competition might be running similar kinds of programs but there would not be much of a change over the years. But in the case of Dell, one will surely find it is very refreshing and rewarding, which obviously qualifies to catch the attention of the partner community.
Does this channel growth hamper the mix between Dell-led RTM vs partner-led or distributor-led RTM? Alok answers: “It is changing though but not reducing. Today, it is 42 vs 58 between channel vs direct and it will remain like this in coming times as the overall business for Dell is growing. However, I would be happy to see the mix becoming 45 vs 55, but we as a company are not seeing it as a mix issue. Rather, we are seeing it as how many more customers can we add? How many more markets can we reach out to? And how do we create those solutions that the customers have not accessed till now? Our approach is we will give choice to the customers.