The “largest startup in the world” is accelerating the transformation it embarked on over five years ago. As Michael Dell noted in his keynote at the third annual Dell World conference yesterday, free from the constraints of shareholder scrutiny, the now private Dell will be able to focus on long term investments to develop technology solutions that can better address current and future IT challenges. Dell will make “bold moves,” he proclaimed, and like any entrepreneurial startup, emphasize and foster innovation as a key to growth.
But how far has Dell come and where exactly is it going? The company’s stated goal is to continue its quest to reposition as an end-to-end provider by helping customers deploy IT that can “transform, communicate, inform and protect” – an approach that entails a market shift from a product to a services/solution orientation. As the CEO explained, “Dell Services is now a $9 billion dollar business; over half of Dell employees now work in services and solutions and that proportion is growing.” Asked if one of the company’s “bold moves” might be divesture of the PC side of the business, he noted that in terms of Dell manufacturing, “IT has had a huge impact on productivity, and fewer people are required to produce the same goods.” But while Dell and other company execs clearly restated the company’s ongoing commitment to its core PC/tablet business – two out of three customer relationships begin with the PC, he noted – the buzz at the event clearly centred on enterprise solutions, and on devices as a sub segment of that.
As a showcase for technology innovation, Dell World 2013 did not disappoint. To support the next generation data centre, the company announced several new or enhanced products in storage, networking and infrastructure management. On the storage front, Dell introduced new EqualLogic storage arrays (six models of the PS6210 series, including all-flash, hybrid and all-HDD options) that it claims deliver up to three times the performance and four times the memory of earlier generations as well as “flash at the price of disk”. Supported by new policy-based access controls in its storage management software (Dell EqualLogic Array Software 7.0), enhanced SAN monitoring, reporting and analysis capabilities (Dell EqualLogic SAN Headquarters 3.0), enhanced support (Dell SupportAssist) and Fluid File System (FluidFS) v3 for EqualLogic FS7610/7600, file system software that reduces storage capacity needs by up to 48 percent through deduplicating and compression of redundant data, Dell’s new storage capabilities are designed for the high performance needs of virtualized environments. Described by Michael Dell as a “game changing, complete enterprise acceleration solution,” Dell’s new Fluid Cache for SAN combines tiering with the integration of networking and servers to bring storage closer to the servers. The result is dramatically increased processing speeds: in an event demo, Forrest Norrod, Dell VP and general manager for server platforms, produced IOP speeds of 5 million per second and a drop in response time for transaction processing from a second to 6 milliseconds per, historic raw performance benchmarks that Dell cited as example of how the company is “disrupting the data centre.”
Networking innovation on display at the event included a new series of wireless access points (Dell Networking W-Series) with data rates up to 1.3 Gbps and centralized configuration, data encryption, policy enforcement and network services; a new series of 1GbE and 10GbE switches (Dell Networking N-Series) featuring an enterprise class operating system, open standard protocols and an interface to Cisco protocols to improve interoperability; modular, fully-redundant 1/10/40 GbE switches (Dell Networking C-Series) with scalable user density and performance on-demand. According to Dell, new campus networking solutions are designed for rapid deployment and scale, offer single pane visibility into the network environment, secure devices and information at the network edge and can reduce capital expenses by more than 50 percent – capabilities that are needed now more than ever to address pressures now placed on networks by increased use of rich media, mobility, BYOD and cloud services.
To improve infrastructure management, Dell also introduced enhancements to its server management technology (iDRAC with Lifecycle Controller) that provide greater automation of server deployment and configuration. Dell’s goal was simplification of systems management operations – for environments ranging from one server to thousands – and the result is a reduction of more than 90 percent in the time required for administrators to move from setup to production. And to further streamline administrative processes, Dell also announced new systems management capabilities in its OpenManage platform that include intelligent auto-configuration of infrastructure-aware servers for the delivery of improved workload and application performance. Other software news includes a rewrite and impending SaaS delivery of FogLight, Dell’s application monitoring technology acquired with Quest, new versions of NetVault backup and AppAssure aimed at rounding Dell’s protection portfolio, and a new Enterprise Mobility Management Solution based on KACE and Wyse technology designed to address BYOD.
But change at Dell over the past year has had to do with more than technology marvels. One category of announcements at Dell World demonstrate a quickening of the company’s interest in building and filling niche gaps in its solution portfolio. The establishment of two new programs that reinforce Dell’s commitment to innovation are: a $300 million Strategic Innovation Venture Fund to support early-to-growth stage companies working in emerging technology areas, and a new Dell Research program to fund organic, long term research that in areas that are disruptive. While these programs will help Dell ‘build it or buy it’, another series of announcements highlighted the company’s aim to deliver customer requirements today through strategic partnerships with organizations that have current expertise and market momentum. New relationships forged via the Dell Cloud Partner Program with Google to offer Dell customers the Google Cloud Platform, with DropBox to offer a version of DropBox for business collaboration with integrated Dell security, with Microsoft to deliver Azure combined with Dell consulting and Cloud Manager (formerly Enstratius) and with CenturyLink to offer IaaS and PaaS through the company’s network of Savvis cloud data centres are designed for quick construction of full capabilities. And for customers focused on private cloud deployments, Dell also announced a joint engineering relationship for solutions built on Dell infrastructure with the Red Hat Enterprise Linux OpenStack Platform, and marketed through Dell Cloud Services.
According to software president John Swainson, a “steady cadence of innovation continues to give us more credibility as a software provider,” but a key goal for the year old software group has been to “put acquisitions together in a way that make sense to the customer.” Over the past decade, Dell has made substantial investment in the acquisition of companies with IP that could serve as the foundation for capabilities across the range enterprise IT needs. More recently, the company has directed attention to the integration of these capabilities in a coherent way — a critical piece of its go-to-market strategy. In software alone, Dell has taken IP from eight or so acquisitions as well as scattered organic software and built solutions in cloud and data centre management; mobile workforce management and BYOD; Big Data and information management; and risk and compliance, including security and data protection.
In defining these solution areas, Greg Davoll, senior director, solution marketing, Dell Software, explained that the team looked at market segments, and further refined this group of 24 categories by applying a horizontal lens, defined as current IT challenges. While Dell has developed considerable expertise in serving the needs of customers in healthcare/life sciences, education and government, a vertical approach to solutions is more future than current reality for Dell: according to Davoll, “we looked at applying a vertical lens, but at the time we decided we didn’t have enough expertise and enough people to cover verticals adequately as Dell Software…. though that is ultimately where we are going to go.” He explained further that “organizationally, we are in the v. 1 state, but in the v. 2 state, we will begin to take on vertical mass.” An alternative approach was to look at the critical drivers in IT today: Davoll’s team asked, ‘what if we aligned our 300 products in six portfolio companies behind these [key IT drivers], and mapped our capabilities and products to each of these solution areas?’” Not surprisingly, Dell software’s “outside in” solutions orientation (based on customer needs) also maps fairly closely to the solution categories targeted by the company as a whole.
This alignment covers not only products, but also messaging, and how Dell talks to customers about its solution portfolio, though the company — and the software unit in particular — leverages experience with individual customers to build custom solutions where required. In this work, Dell Software engages with the services teams which often have experience in verticals where Dell has particular strength, or a specific form of expertise. The company is reaping the rewards of its increased services focus – year-over- year growth of 65% according to Suresh Vaswani, president of Dell Services – and investing in new areas designed to capture emerging opportunity. A good example is the new group headed up by Kevin Groff, director of emerging technologies in Dell’s infrastructure services business unit (a technical services group in IT outsourcing), established to focus on customer issues and future capabilities that are strategic but will have broad applicability. Groff described three objectives for his small team: “we want to become a trusted advisor through innovation; to continue to do optimization with right shoring, including finding places where we can provide high value/low cost delivery; and to integrate Dell IP” – adding that his group will also incorporate third-party technologies to deliver the best solution to solve a customer problem. In Groff’s view, services represent the true vendor differentiator, and while Dell has a range of capabilities, including business consulting, it will be important for the company to “put more services focus on the front line, as opposed to product focus. Our legacy and heritage around the account executive is very hardware-centric, but if that is all that the customer sees, things have to change.”
Another option to building services capabilities is to partner with organizations that have developed vertical focus and/or application expertise. Dell is testing this approach in a new relationship with Accenture (and Avanade) for joint development and marketing of offerings for cloud, security and application performance which was announced at the event. Another big news item at Dell World was a greatly-expanded commitment to the channel (currently account for about 30 percent of total sales) through enhancements to the PartnerDirect Program, including a new 20 percent incentive for direct sales reps when product is sold through the channel, consolidation of channel and direct sales teams, and a move to partner lead in a number of named accounts. In Davoll’s view, this move will allow Dell to scale, and also serves as a means to greater specialization: “Not every one of these partners will have industry specialization, but we are going to find more in the ecosystem that we can rely on to go to these verticals we are not in.” Part of the initiative includes increase in dedicated resources for demo units, training and certification in the following solution areas: PowerEdge VRTX converged infrastructure, storage, networking, software products, thin clients, workstations, and SecureWorks security services. “We see the channel as a huge resource,” noted Cheryl Cook, VP global channels and alliances for Dell, “and are looking to align Dell’s solutions approach with that of the channel. We expect partners to flourish as they add their own value.” Dell will support this added value by ramping up training and certifications in the competencies noted above.
Commenting on Dell announcement, Marius Haas, chief commercial officer and president of Dell enterprise solutions, claimed that Dell’s product functionality and lower cost of ownership for “solutions-ready infrastructure ” will “disrupt the data centre by offering unprecedented value.” Dell has been long known for its cost competitive product positioning, a stance that is not necessarily consistent with its growing services orientation. Perhaps the best indication of the company’s shift along this path was provided by a customer who offered a frank appraisal of Dell value at the event. Describing the partnership he has forged with a responsive Dell services team, Kevin Dunn, president infrastructure and operations at First Command Commercial Services. “I can beat anybody down on price. That’s not what I’m looking for.” The message from Dunn — and indeed from Dell throughout the conference — was clear: the newly-privatized company will progress not through efficiencies in commodity hardware pricing, but by value as it relates to implementing IT solutions.”