Cloud shines through acquisition buzz at Dell World 2015

With a quick quip on the expectation that he explain “version 1.0 of the theory of the universe,” Michael Dell intimated at Dell World 2015 that it’s early days in the incorporation of EMC’s federated assets, which includes ownership positions in VMware, RSA Security, Pivotal Software, Virtustream and other joint ventures. That said, he also noted that event attendees would “get a sense for where strategically the company is going and how well positioned the new company will be.” In essence, the new EMC trajectory is the latest tack in a course that Dell has been on for some time now – in fact, with the EMC acquisition, Dell is now positioning the company as “the only provider of end-to-end solutions,” a claim that is no doubt bolstered by the split of HP this year into two corporate entities for the delivery of enterprise solutions and PC/printer products.

Michael Dell, CEO, Dell Inc.
Michael Dell, CEO, Dell Inc.

For the CEO who engineered the largest acquisition in the history of the IT industry, the EMC deal is also vindication of the decision to take the company private: as Dell put it, “Acquisition of EMC: $67 billion. Being your own master: Priceless.” In his view, going private was the right decision for the company and customers, as it has enabled the ongoing buy and build (Dell registered a 20 percent increase in patent filings this year) of the capabilities needed for Dell to position as a full service provider. Speaking to EMC specifically, Michael Dell touted the competitive advantage the deal would bring through its combination of leadership positions in servers, storage, virtualization and PCs – in 22 Gartner Magic Quadrants – and the new reach into high growth areas and enterprise accounts to be won through the merging of future technologies like EMC/VMware advanced software-defined data centre and converged infrastructure solutions with Dell’s broad compute portfolio and strength in SMB markets. “We plan to mirror EMC’s approach of a strategically aligned family of businesses… backed by Dell’s best in class global supply chain to achieve scale – an 80 billion plus revenue business,” he explained.

The Dell/EMC merger is a huge undertaking: with over 110,000 employees and 2014 revenues of $57.2 billion, Dell will take on more than 70,000 employees and $24.4 billion (2014) in revenues with the addition of the EMC federation. So what does Dell strategy for the incorporation of EMC look like? If history has shown that merger success depends on integration at cultural, operational and technology levels, there is wide disparity on the mechanics of this. Asked if Dell will execute in each of these areas, and what will its priority will be, Michael Dell explained: “on a cultural level, we have built synergies with EMC through partnerships for over ten years. Within EMC organizations themselves, there are huge variations in departments, in styles, etc. I don’t believe in homogenization: we should build on the strengths that each group can bring. That said, there are some ethical and cultural values that are fundamental and each entity should share these. On the other two [operational and technical integration], we are absolutely doing that.”

So far, integration is in the planning stages, and will be the preserve of COO Rory Read who is responsible for the merging of operations end to end across the companies; according to CIO Paul Walsh, technical integration will follow creation of the roadmap by Read. This does not mean that the heads of various Dell business units are not engaged in reconnaissance. President of Dell Software John Swainson, for example, is “currently engaged in discussion with his counterpart at EMC to see where the various components are.” According to Swainson, while Dell has been legally obliged to refrain from making comments on EMC activities – such as the company’s acquisition of cloud service provider Virtustream this May – until announcement of the EMC deal two weeks ago, these kinds of activities form part of the parent company’s considerations: “while you can’t begin integration until the moment integration occurs, you can engage in pre-integration planning,” he added.

On this score, Dell’s growing cloud portfolio appears to be the poster child for augmentation through acquisition. As Jeremy Ford, GM and exec director, Dell cloud services explained, Dell’s cloud strategy has developed around three core capabilities. With an extensive server line and cloud management tools, such as the Hybrid Cloud System, Dell has served as a “builder of clouds” providing the building blocks for organizations ranging from the hyperscale to the smaller enterprise, as well as management for private cloud environments with vertical component, i.e. medical and US government clouds. A second area of focus has been organic cloud business development in areas such as virtual desktop, desktop-as-a-service and supporting data centre or appliance infrastructure. Dell’s third strategy has been to act as a broker of cloud services, delivering management of customer relationships on behalf of 19 partners, while providing security and governance around access to 160 data centres to customers via the Cloud Marketplace. As an additional piece, Dell has also delivered systems integration value add through BOOMI AtomSphere, an iPaaS multi-tenant platform that supports cloud-to-cloud, SaaS-to-SaaS, cloud-to-on-premises, on-premises-to-on-premises and B2B integration.

On balance, Dell’s cloud focus appears to have been weighted on the private cloud side, which Michael Dell argued will continue to offer a good source of opportunity for Dell’s core cloud capabilities, and indeed for the converged infrastructure/virtualization leader VMware: “If you look at enterprise workloads, you have about 160 million of these in the world today; and roughly 10-15 million exist in what’s known as the public cloud. The rest of them are on premise or in some kind of privately managed environment, and the vast majority of those are virtualized.” Virtualization and automation, he added, allows the management of IT to be abstracted up to a higher level – at the application, workload, user and security level – allowing Dell to supply equipment to a public cloud platform or to a customer who runs cloud on-premise, “if the software is the same, there may not be that much difference in terms of the benefits of one [deployment mode] vs. another.” This leaves a lot of latitude for continuation of Dell’s existing cloud strategy, bolstered by new EMC storage, VMware software and VCE converged infrastructure capability – and for the non-compete stance that Dell maintains around the delivery of public cloud, evidenced in the spinoff of Virtustream to VMware in acquisition planning. According to Dell president of enterprise solutions Marius Haas, “most cloud providers and web tech providers today are our customers. Our philosophy has been that we would rather enable our customers than compete with our customers.”

At the same time, however, Dell announced a new and significant partnership at Dell World reflecting the company’s recognition that it’s a hybrid world after all – a new hybrid cloud solution, featuring technology jointly developed with Microsoft designed to help customers more quickly onboard to cloud. The Dell Hybrid Cloud System for Microsoft, built around the new Microsoft Cloud Platform System Standard, is an integrated, modular hybrid cloud solution that simplifies and automates deployment and maintenance capabilities for the rapidly growing Microsoft Azure platform and other cloud environments. The new solution promises: on-premises private cloud, with consistent Azure public cloud access in less than three hours, the ability to build and provision workload templates for multiple cloud environments from one management construct (Dell Cloud Manager (DCM), and unified, simplified private/public cloud management and consumption control across Azure Pack and other cloud services. It also features a flexible payment solution – Dell Cloud Flex Pay has been added to its portfolio of Scale Ready Payment Solutions to help customers better understand their hybrid cloud usage before committing to purchase – a financial service aimed at reducing the risks associated with cloud adoption. To further reinforce its support for hybrid cloud – and the Microsoft relationship – Dell also announced its  New Dell Administrator for Office 365, a management console for Office 365, SharePoint and OneDrive that will allow IT administrators to better manage existing collaboration platforms and drive further the ROI of the Microsoft stack.

Sidewinding conversation around the largest acquisition in the history of the tech industry proved a difficult challenge at Dell World; but it was a gauntlet that event organizers took up with considerable gusto through new product and service announcements like this. Stay tuned for more on Dell IoT – the second most significant source of buzz at Dell’s fifth annual user conference.

 

 

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