Starting next week, Dell Technologies will internally announce its new and updated 'Go-to-Market' (GTM) strategy. This initiative is expected to receive some external Analyst Relations (AR) and Public Relations (PR) coverage, either as a standalone announcement or as part of the quarterly results update.
The core change in the GTM strategy emphasizes a 'channel-first' approach, shifting significantly from direct to indirect sales. This strategy, piloted with Storage over the past few quarters, is now being expanded to other lines of business. Consequently, distributors and resellers will be asked to invest in and assume core sales responsibilities, receiving new (end-user) business opportunities in return. This transition will substantially reduce Dell’s Cost of Goods Sold (COGS) and enhance profitability.
Senior Directors and above have signed Non-Disclosure Agreements (NDAs) regarding this plan. However, it is important to note that only a select few have received comprehensive details of the global plan, while most managers have been given insights relevant only to their areas of responsibility.
Managers have been tasked with submitting plans to prepare for this GTM change, often involving organizational alignment and headcount reduction. Various metrics, including cost, percentage reduction, skills, and future potential, have been applied to determine these reductions. All plans have now been submitted and reviewed, with those impacted by Workforce Reduction (WFR) identified and approved by senior management. The timing of these notifications is the final step.
It is anticipated that the Sales department will be most affected when the announcement is made, with initial reductions projected in the range of 15-30%. As Dell is a sales-centric organization, reductions in sales roles will necessitate corresponding cuts in supporting staff.
AI will be cited as a justification for staff reductions, although the prevailing belief is that this is more of a strategic positioning rather than a reflection of AI's current capabilities. While AI is not yet capable of replacing roles on a large scale, leveraging the AI industry hype serves as effective corporate PR, shifting focus from financial challenges to AI potential. This narrative is expected to be well-received by shareholders and analysts.
This is a phased plan, rolling out from next week through Q4. Employees on the WFR list will be notified of their job status over the coming weeks and months. This approach ensures compliance with various laws and regulations that prohibit overnight WFR notifications in certain countries. Where applicable, work councils have already approved the new GTM strategy, paving the way for execution.
High-level changes have already been communicated in some countries, as evidenced by employees accepting Voluntary Separation Packages (VSP) last week.