John Byrne and Ng Tian Beng share their experiences on developing one of the largest and far-reaching IT channel programs.
Singapore Business Review recently caught up with Dell EMC's John Byrne, president of global channels and Ng Tian Beng, senior vice president and general manager of channels, Asia Pacific Japan. Read on and find out what is the latest with the company and in their journeys with Dell EMC.
Tell us about a little bit of your background, a little bit of info on the merger and what’s happening lately.
John Byrne: I moved to England from Scotland where I set up my own channel business at the age of 24. My business represented ATI, a graphics cards company, that eventually bought my company. ATI in turn got acquired by AMD and I ran the ATI sales department. At that time, I told Caroline, my wife, that there’s this company who wants to buy ours and they want us to move to America. She asked, where in California are we moving to, and when I told her it was in Austin, she told me to enjoy the flight! Anyway, I went to AMD and I loved the assignment. I ran through several sales roles from channel sales to global accounts, before becoming the Chief Sales Officer.
Long story short, when my wife and I had twin girls two-and-a-half years ago, I resigned. The opportunity to join Dell came when I was speaking to several Dell executives that I know and they presented the offer to join Dell. I didn’t want to be traveling at that time, so my role was to build the plans for the business units and the sales team. Michael then acquired EMC and he asked me to come and lead the channel. The company came together September 7th 2016 and it’s been an amazing place to be. I’m loving every single part of it. I tell as many people it’s not often you get to work for a legend, an industry icon. People were right about Jobs and Gates, and they were right about Michael.
He was coming up with business models and strategies when he was nine years old, isn’t it?
John Byrne: Yeah, he had his first company when he was about nine, then obviously he set up Dell in his dorm room in ’83. He lived the dream. An entrepreneur at heart, he had his own company, took it public, became Fortune 500, Fortune 100, and ultimately, he didn’t like how the company was being run as a publicly-listed company. He bought his company back, put $24 billion, and then had the vision and the foresight, where the transformation is happening, be it workforce, digital, IT or security. He realized he wanted to have IP, he wanted to have assets, acquires EMC, and now be the largest privately owned IT company in the world. It’s amazing and I can’t emphasize enough the private element. Because it allows you to think long term -that ninety-day short clock sometimes doesn’t result in the right actions for the business. Now we’re thinking ultimate long-term. I would say the way the integration was run by Rory Read and Howard Elias has been spectacular to bring together 145,000 people and a US$74 billion company. We did a culture test on both Dell and EMC and would you believe the top five traits of culture were exactly the same on both companies.
Well, that’s the perfect business to go in and acquire, isn’t it?
John Byrne: Absolutely. Customers are feeling the excitement and we feel the excitement too. We can see the size of the opportunity. We’re spending $4.5 billion on R&D .. When you look at our IP, we have a laundry list of it now. We dominate 15 of Gartner Magic Quadrants from a product portfolio. Michael wants us number one of everything all in one place. The procurement scale that we have is exciting. You’ve already seen, we’ve announced some results last week. We’ve already paid $7 billion of the debt back since we came together. In terms of the channel, our channel is $35 billion. Again, that’s bigger than Starbucks, bigger than McDonald’s, bigger than Time Warner, bigger than Nike. our channel is growing three to four times faster than the market, and Tian Beng and team have done a phenomenal job in this region. However, my share of wallet in the channel is only at low double-digits.
So, when I look at the people, portfolio and momentum we have, and when all this green field opportunity, the partners can feel it, we can feel it; it’s an extraordinary opportunity that I think is going to be realized. So, the channel team has done a phenomenal job since we came together on September 7th with big changes in the channel; we centralized the organization from the sales team, marketing, programs, operations to the strategy. Why? Because we’ve got to move fast. There’s a channel that has a different heartbeat, a different pulse, and when you bring in these companies together you’ve got to move super fast.
I like your idea of businesses that actually move aggressively and move quickly when times are down, and that’s when you strike, isn’t it?
John Byrne: Yes, with markets that are flat to declining, you got to physically take from somebody else. I think the program the team has built is pretty spectacular, to be honest, based on three things—being very simple, very predictable and very profitable. But saying to the partners that we built this program for them to go and take more share, and with this program we will be paying more money to them. Partners have the opportunity to sell more lines of business. I spoke about dominating these Gartner Magic Quadrants, our partners are saying they are only selling on average 1.5-5 lines of business and that is not enough for the modern data centers.
Our partners are selling much more lines of business than they are for Dell EMC. So, we want them to sell more lines of business, we want them to acquire new customers, new lines of business, and attached products and services. If they light that up, they would make 1.5 times to 8 times what they were making before. The team has really done a nice job in getting a lot of consistency around the world. That’s what I’ve seen so far. The channel’s only going to go one way, let’s look at the products—we’re number one, we’re the fastest-growing PC company in the planet, taking share 16 quarters in a row, we’re number one in revenue, number one in profit, and continually taking a lot of unit share. It’s going to be 17, 18, 19, 20, you name it. The PC market is consolidating and it’s going to be between the big three. It will be about who can take the most share fastest in the PC space. When you look at server market, in Q4 2016 we were number one in the world, according to IDC.
EMC made a big difference to that?
John Byrne: If you look at Dell, we’ve done phenomenally well selling one-socket, two-socket racks and tower on servers. When you look at the EMC partners that they bring, and they’re ability to sell true enterprise, really selling the value, and I don’t mean value as low-cost but value of an enterprise motion. They know how to sell four-sockets, they know how to sell blades, they know how to drive a data center, that’s what I’m excited about the partners we’re bringing in from the EMC side. I don’t see anything stopping us on servers.
On storage, we spent $67 billion to ultimately get the number one enterprise player in the planet, and number one enterprise sales team. We want to be leading in converged and in hyperconverged, and the great news is that we already are. We’re number one in both spaces and will continue to grow. We’re doing great on backup, DPS has been phenomenal. We want to be attacking that mid-range storage market and continue to lead with All Flash. EMC had Unity and Dell had Compellent and we’re now offering both, and then we have Extreme IO. That’s it. We don’t overthink it and build on that. And if you want go to a virtualized world, who’s the number one software virtualization company? VMWare. The way the Michael has built out that tracking stock on VMWare is spectacular.
We got a lot of hard work ahead of us - you don’t bring in a 145,000 people and $74 billion in revenue together and not experience some hiccups. But, we’re not hiding. We’re on the front foot and when mistakes happen, partners and customers know where we are. That’s why we’re traveling the globe constantly saying, here’s my business card, here’s my email, here’s my phone, and we are going after it.
Tian Beng: I think channels in this region is really important. If you look at our overall business of Dell and EMC combined, the business that transacts through the channels is 70% of our overall business. 30% goes direct, and that means not through any channel partner. So, a big majority of our business goes through the channel, and that’s why channel is so critical to the success here.
What’s the reaction from the channel partner ecosystem in India to the acquisition?
Tian Beng: It’s been fantastic. I spent a week in India meeting up with many of the channel partners and there’s been a fantastic response. The reaction is similar in many other countries where a lot of the partners are very positive because we have made changes to increase the profitability of our program and really simplified it. The core tenets of our program are: simple, predictable, and profitable, which has resonated really well with the channel partners around the world. In India last week, a lot of them really liked that, simple, predictable, and profitable.
John Byrne: It’s not often that you can bring two great companies together and get a chance to pick the best of the best. So, we spoke about our extensive travels, partner advisory boards, Canalys, you name it, and we asked our partners what did they love about both, what did they not like and what is best in class on the planet? The great news is that the feedback has been consistent around the globe, so when you pull all this together, it made it pretty easy. Some of the things they loved about the EMC program, in terms of simplicity, is the annual program. They love the training, the portfolio, and certification that they offered.
Very predictable, EMC had a hard deck, Dell didn’t, however, it made no difference, because it’s so dominated by channel anyway. On the other hand, they loved Dell’s profitability and they didn’t like the profitability of the EMC program. So, then we pulled this together - we’re going to have an annual program, i.e. you’ll know what your tier is, we’ll tell you how much money you’re going to make, the stackable rebates of these behaviors we spoke about and we’re going to use EMC’s training program because it’s the best in the planet.
Predictability of engagement, i.e., when a partner has a deal registration or opportunity, it’s theirs. The way I look at it is that we have 30,000 Dell EMC employees trained and certified to sell their portfolio and 129,000 who are partners, and that’s 159,000 people trained to sell our portfolio. We want partners to know that we are protecting their business. If we are investing in partners, that dollar’s particularly important and are we cherishing it? Are we going to treat partners the way we treat our own employee? We’re saying, yes. We also have a zero tolerance for deal registration violation and what this means is that if somebody does something bad on that registration, I’m going to assume on the first time that the salesperson made a mistake. If you do it a second time, I wish you well somewhere else. that’s the commitment we made to the partners.
With profitability, if you learn all these motions, attack the market, more lines of business, attach services and go after new customers, this thing lights up and you’re going to make an unbelievable amount of money. With the partners in India, the predictability engagement has there for a long time, so that really wasn’t overly relevant to them. The profitability aspect is huge for the partners in India.
Tian Beng: I think it’s a pretty simple message. Number one: the program is really effective. Number two: if you look at the IT industry now and the competitors that we have, Dell EMC is the company with the broadest portfolio of solutions. It’s an end-to-end portfolio, from products like the laptops, desktops all the way to the data center solutions. No other company has such a broad portfolio. Partners really like the effective program, and the broad portfolio. Naturally, a lot of partners are gravitating towards us now just for these two reasons.
How has the merged entity been structured from a leadership perspective, and what’s the role channels will play in supporting the merged entity?
John Byrne: If you look at Michael’s leadership, you have the Client Solutions business unit, which is run by Jeff Clarke. Jeff Clarke’s a thirty-year veteran, historically from Dell, he’s also the Vice Chairman of the company. We have what is called the ISG, the Infrastructure Solutions Group, which is run by David Goulden, previously the CEO of EMC. You then have Howard Elias who runs Dell EMC Services. He’s also our CIO. Howard came from EMC, he was also part of the HP, Compaq merger many, many years ago. Marius Haas, runs the Commercial sales engine. Bill Scannell, runs the Enterprise sales team. Then you have the other corporate functions. The BUs own the P&L. Then within the motion, the channel cuts across Dell EMC. I report directly to Marius Haas but I also sit on Bill Scannell’s staff. Within APJ, the President of Enterprise reporting to Bill Scannell, David Webster. Then for Commercial the gentleman who runs APJ for Commercial reporting to Marius Haas is Amit Midha. I’m a peer of both Amit and David. I run the global channel organization, and Amit owns a number of these channels, and David includes this as well.
What are the challenges being faced from a channel perspective, with the integration of the partners and distributors, and also any internal challenges? How do you overcome them?
John Byrne: Business starts with people, products and profits will follow. So, it was extremely important that everyone felt treated the right way. If you ever meet Michael Dell, he is not only the world’s best entrepreneur, he is all about people. He is high on ethics, high on culture. Thus, when we were bringing the teams together we made sure that the selection process was conducted in a fair and transparent manner.
When you look at the partners and you look at the partner ecosystem, Dell had been on a “come many” partner strategy, while EMC was much more refined and probably a little more developed in their channel strategy. They were very selective on which partners they wanted. If you look at the top tier of the EMC program, to get into that top tier you had to be doing around $100 million dollars. In comparison, to get into the top tier of the Dell program, you had to be doing $7 million PCs or $5 million of servers, storage or networking. When you look at the difference in both of these partner communities, we had to create a program that will be beneficial to all partners.
The new Dell EMC Partner Program has Gold, Platinum and Titanium tiers, as well as an exclusive, Titanium Black tier for the highest performing partners. Tier levels align with key business models of partners, enabling flexibility where needed to meet customer needs. Benefits include generous rebates for channel partners who drive new business, attach services, sell the full portfolio and offer the portfolio exclusively. We communicated to our partner communities’ different ways to get into the top tier program and gave them a 12-month timeline to hit the criteria for tiering. It was well thought process and our partners’ benefit was our number one priority. So far, our partners feel we’ve done a good job at listening to the channel and taking their feedback into account. And what we’re also seeing is that this will drive a lot of M&A activity because a lot of EMC partners don’t have the capability on the compute side, and vice versa. So, over the next coming months we’re going to see a lot of M&A activity among partners. We’ve already witnessed few cases in North America. This is almost like matchmaking. It was a challenge for us in terms the predictability of engagement. Those were the key challenges and I think we’ve overcome them. Other challenges we’ve faced included bringing two different operating systems and data together.
One thing we wanted to do was to take cost inflection out of the selling motion for the partners. We wanted to automate all of our rebate process. Once partners receive their targets, they will be able to track online what they’ve sold and how much money they’ve already made, so they can keep investing in the future... We have never done that before and we’ve only completed the automation recently. We’ve announced new partner program back in February so obviously, we’ve met few challenges along the way. But one thing our team did a really good job was to overcommunicate and update partners regularly on the progress we were making. If you want people to see the journey you’re on you need to explain the challenges and how you’re overcoming them.
The key is definitely communication, for something as grand, as complex as this.
John Byrne: Yes definitely, one key thing was getting everyone settled in their jobs, and now that has been done. The other thing was to educate the EMC partner community on Dell’s offerings, and vice versa. It was crucial to make this matchmaking process successful. The other thing we’re doing is we’re consolidating distribution. We have approximately 300 distributors around the world and that’s quite a high number. As our distribution business is growing fast, reaching double digits every quarter for the past three years. We want our distributors to be selling more lines of business so we’ll be looking at consolidating our distribution business.
Any internal challenges you have faced? Such as merging the cultures?
Tian Beng: At the company level, there’s a lot of work that we’ve done since the announcement was made some time ago. In fact, dedicated teams were formed up to help with the merger of these two companies.
John Byrne: The moment Michael said “I’m doing this” an experienced integration team was selected led by Howard Elias, currently President for Dell EMC Services and IT from the legacy EMC side, who was a part of HP-Compaq merger and Rory Read, Chief Integration Officer for the Dell and EMC integration, from the legacy Dell side. It wasn’t a part-time role. The team had to manage a lot of work streams, such as go-to-market or IT work streams, to make the whole process smooth and tackle all the challenges swiftly. I think the team has done a phenomenal job.
That’s probably the best way around it, to form a team of people who have experience in similar types of transaction so decisions can be made quickly and people felt comfortable.
John Byrne: Absolutely, for instance we had our FRS, Field Ready Seminar, in Vegas four weeks ago, with more than four thousand sales managers. We were very consistent in terms of our strategy and where we’re headed towards and how we can help our customers. It was also the level of excitement, enthusiasm, passion and consistency that was startling. Michael deserves a lot of credit for it. You have to remember that the combined company – Dell Technologies – is made up of unique family of businesses, including Dell, Dell EMC, VMWare, Pivotal, RSA, SecureWorks, and Virtustream. The partner program we built is for Dell EMC, but when we’re looking at partner selection, or distribution selection, we’re definitely considering the future, which is Dell Technologies enabled. So, if any of other brands were ever to come in and join the program, it won’t be an overhaul of our partner strategy.
Well, you’ve just gotten off a 27-hour flight and you’re still pretty excited about it.
John Byrne: I am! I see it as we should never be arrogant, we should be confident, but the people who can stop us from winning is going to be ourselves. And not our competitors when we’re already 80 plus percent in the channel and been at it for a long time and the market’s flattening out. There is a lot of upside. So, what’s not to like?
How is Dell EMC supporting the channel partner organizations through the market development fund(MDF)? I’d like to know more a bit about that.
John Byrne: One of the big things is that, Jeremy Burton who’s our CMO understood when we said we need somebody in marketing for channel, that understands the channel. So, we brought in a dedicated Channel Marketing Officer. Her name is Cheryl Cook. Cheryl used to run the Dell channel business. Why did we do this? One, she understands the customers and she also understands marketing. What we said is we want our partners to have a consistent MDF i.e., paid in some form of a rebate. So, we have accrued MDF and a proposal-based MDF, unlike our competitors who stop doing accrued and go all proposal. What our partners told us it that they want to know not only what they’re selling but how they can market it. We’ve also simplified our terms and conditions dramatically. Partners don’t want to be arguing on issues like the logo size.
Plus, it’s negative—
John Byrne: Absolutely, so we’ve been very consistent on the rules of engagement. We do want them to market, but there will be accrual. Then we’ll have proposal MDF over and above - if partners want to pursue some big initiatives they can pick specific and dedicated proposal-based MDF. Just as I mentioned the automation of rebates, there’s also the automation of marketing dollars that the partners can see every single week and see how much money they have accrued in their pot. We’ve also created a marketing handbook that provides partners with guidelines on spending their money, and how to undertake initiatives.
Tian Beng: In summary, we’ve made it a lot simpler to use the MDFs and we increased the budget. So not only have we made the program easier to administer, but also made more funds available. We’ve announced that this year, we’re investing a $150 million more in incremental dollars for the partners, for their rebates and their MDF.
So, post-integration, what’s the new channel strategy? Is there a new channel strategy or you’re basically just taking the best of both worlds?
We want to be the number one channel partner on the planet. We continually talk about people and we want to be a talent magnet for great people; acquiring and keeping. We want people who have the character and competence, who have a positive mindset. We have great products and the program, and we want it to be the most enviable and desirable program on the planet, rewarding for the right behaviors. I think if we do that, we’re primed for a lot of success in the future. As we talk about the exponential pace of digital, IT, security and workforce transformation, our partners ask us what role will they play in the next three to five years. A lot of our partners don’t just want to be sell hardware, so we want them to be attaching services. That’s a pot of gold for them and for us. We want them to be driving solutions, rather than products themselves.
We have our Dell EMC World, as well as our Global Partner Summit in Vegas on May 8. We’ll have 3,000 partners there. We’ll show them the progress we’ve made as a collective and walk them through the journey we’re going, and what role they will play. The partners are enjoying it and they can see a real commitment. But I keep saying, we’ve got to execute. That’s the foundation.
Finally, what’s the channel roadmap in 2017? What’s your take-home message?
John Byrne: We have the widest portfolio on the planet, and this isn’t just a tagline. We are number one in all things, all in one place. We’ve made a commitment to partners, we’re putting our money where our mouth is. We’re primed to win. We’re talking about go big win big, I say now, go bigger, win bigger. We’re all in.
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