EMC hands enterprise sector over to channel

EMC will restrict its direct sales activities to a hard deck of 150 UK accounts as part of a global move to open up the enterprise market to its channel.

The company has traditionally operated a largely direct sales model in the enterprise space, but is now giving its channel the run of large accounts with an addressable market of between $1m and $3m (£1.9m) per annum.

The storage giant will also issue a new set of rules of engagement for its resellers at the end of this week, and has promised to open up $100m in services opportunities for its partners.

The strategy forms part of the NASDAQ-listed firm's plans to double its turnover to $35bn between 2010 and 2015. Last night the vendor reported 2011 annual sales of $20bn – up 18 per cent on 2010.

The midmarket – which EMC has traditionally served through the channel, alongside the public sector – forms EMC's other big bet for growth. To support this, the vendor will boost its UK sales headcount for the midmarket to 60 this year.

EMC works with about 200 UK resellers including a core of 30-40 top partners, but currently has direct relationships with about 1,000 UK enterprises.

Under the new approach, the company has pared this back to a hard deck of just 150 UK accounts that it will reserve the right to serve directly. About a third of these are the UK HQs of global accounts, with the remainder being very large enterprises which EMC thinks have an addressable market of more than $3m.

Chris Gould, director of channel and midmarket at EMC (pictured below), said: “This opens up $3bn in enterprise opportunities that didn't exist before.”

Shuffling the pack

In 2013, the UK hard deck will be cut again to 100 accounts, and EMC is setting up a quarterly governance board to ensure the strategy remains fair and consistent. A sales compensation plan for EMC's enterprise sales force will also be introduced, to ensure its internal employees work hand in hand with the channel.

Channel sources said they understood this would see EMC's direct sales staff paid more for pushing deals through the channel than for a direct sale.

Together, the changes are designed to bring more predictability and professionalism to the channel, the vendor said.

Worldwide, EMC's hard deck of direct accounts stands at 1,000 firms.

The vendor said it will also work with its partners to help them build a $100m services business.

Historically, EMC has enabled its partners to provide implementation services in a formalised fashion, but has not done the same for customer support and cloud services.

The company launched a service provider programme last year for large partners but will now look to cement ties with local resellers that have an appetite to embrace a cloud services model, as well as professional services.

EMC is already the kingpin of the external storage market, with 27.1 per cent revenue share in Q3 2011 in the UK, according to IDC. At the high end, encompassing systems priced above $250,000, its share was 31.6 per cent, behind only IBM.

Gould denied that EMC's heavyweight status will preclude further growth, claiming its recent acquisition of Isilon will open up new opportunities in the oil & gas and medical industries in particular.

“We are not going for a mass partner recruitment drive,” Gould added.

“We are selectively looking to recruit 10-15 new partners where we have capability or geographic gaps. We do not have an HP, VMware or Cisco partner model, as we want to be important to a relatively small number of partners.”

Reseller revelry

Martin Hellawell, managing director of EMC partner Softcat, welcomed the vendor's shift in strategy.

“I can't see any downside to this,” he said. “If more business is coming into the channel partners, then it's fantastic.”

Brett Edgecombe, director of EMC partner 101 Data Solutions, said: “It looks like EMC is not acquiring new resellers but investing heavily in its existing resellers. Part of the growth opportunity for us is in the enterprise accounts that are being handed down to the channel and aligned with specific resellers.

“We also see a huge opportunity in the SMB space and EMC now has the proposition to address that with VNX and VNXe.”

Edgecombe said he is awaiting details of how the 850 enterprise accounts will be allocated to resellers.

“They are working on that right now and we don't yet know if it will be aligned by skills sets or geography.”

He added: “EMC has made big changes in the last 3-5 years in how it engages with the channel. This seems to be the last evolution in them moving pretty much all of their business into the channel.”

Richard Flanders, product marketing director at MTI – which claims to be EMC's third-largest partner across Europe – also welcomed the changes.

“We are enthusiastic about the reorganisation,” Flanders said. “We see it as a refocusing of EMC's efforts to support partners that are making the effort to expand the market. A lot of our business comes from the top of tier-two – below the main enterprise market – so it makes sense for us that EMC is refocusing its efforts on that area.”

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Of the 850 enterprise accounts going spare, Flanders added: “There are a significant number of accounts in that 850 with which we feel we have a great engagement.”

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