November 28, 2023
Housed in the Singapore office at Changi Business Park – occupying a boardroom fresh from a recent round of refurbishment – Tian Beng Ng sat down, shuffled his papers and started… “we track a lot of things here”.
Line by line, a clearer picture of Dell Technologies emerged in relation to company revenue, product line growth, market performance and ecosystem engagement.
In a challenging economic environment – and following a record 12 months previously – year-on-year comparisons can be tough with revenue down 13% during the second quarter. But sequential growth of 10% offered a positive indicator of future opportunity.
Notably in the ASEAN markets, Singapore, Malaysia, Indonesia, Philippines, Thailand and Vietnam continue to perform well both individually and collectively, while optimism in India remains high due to buoyant domestic conditions. More broadly speaking across Asia Pacific and Japan (APJ), the numbers mirror global performance.
“We’re benchmarking against ourselves and the market,” explained Tian Beng, speaking as Senior Vice President and General Manager of Channels across APJ at Dell. “We’re optimistic going forward despite such a difficult environment currently. Our sequential growth is starting to improve which is an encouraging sign.”
On the many occasions of interviewing Tian Beng – whether in Sydney, Seoul or Singapore – data has always been a driving force. Just let the numbers speak for themselves… good, bad or ugly.
This occasion was no different, with attention drawn to Dell’s new Partner First Strategy for Storage. Effective early August, more than 99% of Dell customers and potential customers are now considered “partner first for storage”.
“What that essentially means is, we’re going to pay our Dell sellers more if they sell through the channel rather than if they sell direct,” Tian Beng explained.
Within this well publicised announcement is Partner of Record. This protects channel-led accounts and ensures Dell sales reps team up with partners on specific opportunities as per the vendor’s rules of engagement.
“This is not new but we have increased the number of accounts by 4X globally which represents a huge shift in strategy,” Tian Beng said.
“We regularly receive feedback from partners wanting more ways to collaborate with Dell sellers so we relaxed the criteria to achieve this. Partners want more predictability and engagement and this change not only offers protection but helps drive new opportunities forward.”
Unlike stock-standard partner program updates, this new strategy triggered a substantial response from rival vendors in the industry – in turbulent markets, tensions can run high.
Perhaps this is unsurprising given that for many years, Dell has faced criticism from competitors about a perceived lack of ‘channel friendliness’. In that sense, ardent critics would argue an increased focus on channel offers little to shout about.
The response has always been consistent that Dell is built on two core pillars – direct and channel. Based on the data, the vendor’s channel business has grown $21 billion within the space of five years, climbing annually from $38 billion in 2017 to $59 billion in 2022. In parallel, direct sales have unashamedly increased also.
“One of the big and unique advantages of Dell has always been our very strong sales coverage at the end customer,” Tian Beng said. “If you look across the industry, it’s well acknowledged that this is one of the most extensive in the market.
“Think of the benefit of now having that Dell seller knowledge inside those accounts for partners. If you join that with our partner ecosystem capabilities, that represents a very strong combination from a go-to-market standpoint. We see this as a competitive advantage.”
Such market tribalism has been fuelled by traditional B2B media for decades – lazy journalism obsessed with channel vs. direct engagements. This editorial and analyst appetite for sensationalism has trained some vendors to care more about projecting declarations of partner love, rather than actually outlining strategic opportunities for mutual end-user growth.
Cue the press releases… “we’re 100% channel”, “we don’t screw over partners”, “we’ve been channel since day one”.
Never underestimate the value of loyalty and trust when doing business – this is mission-critical and widely acknowledged by vendors – but equally, don’t discount the importance of winning. Partners value vendors that win.
The primary function of any vendor, partner or distributor is to make money. Perhaps that memo got lost in the mail but to clarify, the channel is a for-profit enterprise.
In that context, forward-thinking partners are placing more importance on end-user opportunity than constantly judging levels of channel-centricity. The ecosystem has moved on, aligned with key vendors and has one simple request: let’s collaborate to unlock customer deals.
“One important metric to consider is that historically, Partner of Record accounts have grown at a premium compared to direct accounts,” Tian Beng confirmed.
“We’ve tracked this during the past 4-5 years and those accounts are performing better – activity is increasing, account plans are progressing and pipeline is growing. This alone speaks to the magnitude of this change.”
According to Tian Beng, Dell sellers have “embraced this change” and acknowledge the value offered by partners in relation to deep levels of technical and vertical expertise.
“We’re seeing lots of engagement between partners and sellers already happening,” he added. “This will start with Partner of Record accounts but once partners and sellers build trust and collaboration, we see this moving into net new accounts also.”
Unearthing pockets of opportunity
Reflective of current trading conditions, hesitation among CIOs to invest in new projects and initiatives is pushing a significant portion of IT spending allocated for 2023 into 2024.
The domino effect of such hesitation – widely considered an enterprise issue irrespective of market or sector – is an ecosystem of vendors, distributors and partners now operating in a serious state of limbo as budgets move between quarters at pace.
Despite this wave of “change fatigue” slowing down technology upgrades and deployments, pockets of opportunity still exist across Asia.
For Tian Beng, that can chiefly be translated into artificial intelligence (AI) and multi-cloud, alongside native edge, security and workforce transformation. Notably in the field of AI, the impact on the server market is continuing to heighten.
Dell houses two categories of servers, the mainstream product line and new solutions powering generative AI projects.
Total server revenue – coupled with networking – during the second quarter stood at $4.3 billion, of which approximately 20% was allocated to generative AI sales which equated to $860 million.
“Both categories are growing,” Tian Beng said. “The core server range is growing sequentially quarter-by-quarter but we’re seeing a big boom in generative AI demand across Asia.”
NHN Cloud – a cloud service provider based in South Korea – recently partnered with Dell to provide the infrastructure for a new AI and high performance computing (HPC) facility.
The Gwangju AI data centre is designed to provide the compute needed for NHN Cloud customers running AI and HPC deployments, alongside national AI research and development (R&D) projects.
From a technology standpoint, the facility will use Dell PowerEdge XE9680 servers, each equipped with eight NVIDIA H100 Tensor Core GPUs.
“You can actually see this crazy surge of interest in generative AI but even beyond that, this is translating into projects,” Tian Beng added. “Demand exists at the enterprise level but that’s also trickling down into the mid-market.”
Directing the ecosystem to such an emerging opportunity, Tian Beng noted strong interest from partners seeking to capitalise on first-mover advantage – spanning global, regional and local levels.
“This is a once-in-a-generation opportunity but nonetheless, partners have to figure out a strategy,” he advised. “Whether you’re a global or regional player or a national partner in Malaysia, there’s a role for you to play. But that role will be different depending on your focus.”
At the top end of town, one such example is NCS. The Singtel-owned technology provider recently partnered with Dell to deliver “secure and localised” generative AI solutions to enterprise customers across Australia, Singapore and Southeast Asia.
As part of the agreement, Dell will provide a full-stack technology portfolio developed jointly with Nvidia – under the banner of Project Helix – which allows organisations to deploy AI tools “at scale and securely” through on-premises environments.
“A system integrator such as NCS with lots of technical in-house skills could build their own generative AI stack in theory,” Tian Beng acknowledged. “But working with Dell is a much faster way of getting up to speed and out in market.”
While large-scale players start building specialised AI practices, Tian Beng accepted that scaling up dedicated divisions may not be as feasible for mid-sized and small-sized partners.
To mitigate such challenges, Dell is partnering with independent software vendors (ISV) to bridge the gap between infrastructure and software.
For example, H2O.ai operates as a fully open-source distributed in-memory AI and machine learning (ML) platform, collaborating with the channel to deliver generative AI projects.
“We work with many ISVs in the region such as H2O.ai,” Tian Beng noted. “A mid-sized partner in Indonesia may not be able to build up a team of data scientists so we partner them with our ISVs that house those software capabilities.
“Our aim is to link up our infrastructure partners with specialised ISVs. The ecosystem is important in this space – partners working with partners and not trying to do everything themselves.”
Aside from AI, Tian Beng noted that multi-cloud adoption is also standing firm against considerable market headwinds.
As part of plans to build Tuas Port – the world’s largest fully automated, intelligent and sustainable port – by the 2040s, PSA Singapore (PSA) recently embraced multi-cloud at scale in partnership with Dell.
The project is motivated by a desire to overhaul port operations and create an intelligent logistics ecosystem, increasing the port’s handling capacity to 65 million units in the process. This will almost double the volume of 37 million units handled in 2022.
The backbone of this initiative is Dell VxRail, complemented by Dell Unity XT storage and Dell PowerScale storage systems. Dell is also collaborating with VMware to design a software-defined data centre (SDDC) with multi-cloud capabilities.
“Multi-cloud interest is increasing as businesses maximise both cloud and on-premises environments,” Tian Beng added. “Despite challenging market conditions, we see lots of opportunities for partners to deliver growth in the months ahead.”
Inform your opinion with executive guidance, in-depth analysis and business commentary.