Dell Financial Services Quietly Empowers Partners
Yes, Dell remains focused on channel partners amid the company’s pending $67 billion buyout of EMC. The latest evidence: Take a look at Dell Financial Services, which is quietly working with partners on leasing and financing deals that speed customer wins worldwide. Listen closely, and you’ll hear about some big milestones.
In recent weeks, ChannelE2E has spoken with:
- Dell Channel Chief Cheryl Cook;
- Darren Fedorowicz, executive director, Dell Financial Services; and
- David Rodriguez, executive director, Global Channel Strategy & Transformation.
Those conversations were sparked by an earlier chat with Frank Vitagliano, VP of North American Channels at Dell. During each conversation, Dell’s channel and financing leaders described a range of recent milestones for Dell Financial Services (DFS) — and the implications for channel partners. More often than not, the conversations involved real dollars and cents, rather than lofty generic claims.
Dell Financial Services Momentum
Some key examples: DFS now has more than $5 billion in assets under management. Over the past five years, Dell’s U.S. business generated $1 billion in assets under management for the channel. And DFS did $800 million in end-user financing via the channel last year with over 1,800 end users.
“Don’t confuse or efforts with traditional leasing,” says Cook. “We certainly have leasing. But our financial efforts have really focused on the health of the small business. When you grow really fast it can put a financial strain on a business. So we took a step back and really studied some financial approaches that would help to keep those businesses healthy — as long as they were within the right risk profile.”
Indeed, Dell financial leaders from across the company started speaking more frequently in a more formalized over the past year or two. The discussions included Dell’s CFO and Treasurer, the leaders of Dell Financial Services as well as the CFOs of Dell’s various business units. “We all realized the industry — and our partners — were going through a major market transformation,” says Rodriguez.
Of course, he’s referring to the shift from CapEx to OpEx technology consumption, and scale-on-demand computing. In response, Dell’s financial team needed to prime the pumps — globally — to help partners and customers accelerate their journeys toward hybrid and complete cloud computing, digital transformations, converged data centers and more.
So far, that pump priming seems to be working. Consider these milestones:
- DFS’s Working Capital Solutions (formerly known as Global Financial Services) is used by more than 900 partners who transacted $5.4 billion of annual revenue through it. The solutions improve working capital metrics allowing for incremental growth possibility. In 2015 the program increased 111% over the previous year.
- In EMEA (Europe, Middle East and Africa), DFS’s Working Capital Solutions activity grew from $200 million the previous year to $1.5 billion in 2015.
- In APJ, DFS’s Working Capital Solutions launched across in 10 countries, with over 100 partners and achieved revenue of over $500M from zero in 2015.
Financing the Future-Ready Data Center
Dell laid the groundwork for more financing deals in mid-2015, when the company launched Scale Ready Payment Solutions. The effort includes:
- Pay As You Grow, which enables customers to deploy all future equipment today with payments that increase as their business grows. Customers can accelerate project completion by receiving the equipment up front. They will also benefit from making the lowest payments in year one, the company asserts.
- Provision and Pay, which enables customers to grow their technology solutions over time with a cyclical plan, deploy, pay process. Payments are deferred until after their equipment is deployed, Dell says.
- Scale On Demand allows customers to pay for cloud solutions as they use them with payments based on actual usage, Dell adds.
Those programs are “all about the shift from CapEx to OpEx and the shift to more services,” says Fedorowicz. “It’s not just standard leasing. We’ve got that covered. What we’re really talking about is moving toward a future-ready data center — hybrid or cloud. We’re delivering flexibility and risk sharing. And we’re enabling it not just for large customers. We’re enabling it down in the middle market.”
Service Provider and Multi-Vendor Financing
End-customers aren’t the only audiences consuming Dell’s growing financial programs. Service providers can consume any of the programs — Pay As You Grow, Provision and Pay, Scale on Demand, etc. And there are extended terms programs for service providers to cover their longer-term needs, Dell officials say.
Dell can also speed up payments to partners. And the deals can include third-party hardware and software. “We’ve turned around a deal from invoice to wire [payment] within 48 hours,” says Fedorowicz. On about 95 percent of leasing deals, DFS currently pays the partner within 15 days; and DFS is striving to accelerate partner payment to eight days.
Here’s the other perk: Dell provides margin incentives to partners that drive transactions or deals via Dell Financial Services. With DFS, partners can earn up to 2 percent of the total amount financing, so a $100,000 engagement delivers a $2,000 perk to the partner. In that scenario, Dell paid more than $3 million in partner fees in 2015.
Of course, numerous IT vendors and distributors offer financing programs to their channel partners. But Dell Financial Services seems to be opening its arms extra wide, especially as the company prepares to finalize the EMC buyout.