Dell delivers on its strategy to become a solution-centric vendor

OVUM VIEW

Summary

At the recent Dell annual analyst conference (DAAC) in Austin, Texas, Dell provided evidence that it is delivering on its stated strategy of moving to become a solution-centric vendor, and is using the software division to generate a platform approach to add value to its hardware business, rather than just a collection of products. Dell did not comment on the current state of Dell becoming a private company, but Ovum believes that it is in the final stages of making the conversion from a public to private company (we expect a shareholder vote in July).

Changing the sales culture was key in the transition to a solutions-centric vendor

Michael Dell in his keynote made reference to the difference in the culture of Dell today from that when he started the company more than 20 years ago. While Dell’s core value has not significantly changed, its approach has seen a big shift away from the hardware sales model to a more solution-centric standards-based approach. Dell has spent time and money carrying out a sales force competency assessment, and reskilling the sales force to focus on a consultative solutions-based sales model. Many other vendors also say they have moved to this solutions-based model, but few of them have invested in the wholesale reskilling of the entire sales force, which for Dell is more than 20,000 employees. The work in progress is the partner sales program that is required to ensure consistent quality of sales.

This last point is important because the other big shift is that Dell is open to supporting the different ways in which customers want to interact with it. It operates three main channels: online, direct, and via partners. Ovum believes that this is very beneficial for customers, but it requires the channel partners to be mature enough to accept customers’ choices and must be aligned with the solutions-based sales model.

John Swainson’s first year has seen some changes and clearly maps out the future for software in Dell

When John Swainson joined Dell as the company’s software chief 12 months ago, everybody knew the challenges he faced. Dell was a hardware vendor with a services division, and had collected a variety of software technology through acquisitions. Swainson’s remit was to coral this technology, remodel it, and apply it to the hardware solutions in a value-added way. His first obvious change was to move away from company names as brands. Everything now sits under the Dell Software division, with the offerings referenced in terms of a descriptive approach, such as Dell’s security solutions. The third layer is where the product names are introduced. Ovum believes that this approach is a sensible way to address the transition from a product-centric collection of software to the more aligned platform and capability approach that Dell is working toward.

Swainson’s second big change was to introduce the concept of an N+2 innovation group, which would look at technology trends and identify where Dell should be investing today to deliver solutions in 12 to 18 months’ time. Key to this group’s success would be to work with Dell’s partners such as Intel and Microsoft and use their research and insight to be ready with solutions for the next technology wave. Swainson also introduced a prototyping team under the CTO function that would prove the concepts and understand the impact on configurations and performance, releasing the product teams to develop the products with confidence that these will operate as designed on Dell’s hardware platforms.

Swainson’s biggest challenge remains work in progress, and relates to the change in how the software integrates and how to deal with the areas of duplication that still exist between the many different acquisitions Dell has made. Ovum believes that the concept of decomposing the products and creating a message bus with pluggable APIs is a sensible approach to turning the products into modules that can be combined in many different ways. The thorny question of how to deal with existing customers of these products that are not Dell hardware customers has yet to be fully addressed, but Swainson did say that at some point support for the product will be reduced as the platform is ramped up.

APPENDIX

Author

Roy Illsley, Principal Analyst, Ovum IT

Roy.illsley@ovum.com

Further reading

Dell’s Software Strategy: Focused Ambitions, IT018-001393 (August 2012)

“Dell Tech Camp provides a clear indication of Dell’s strategy”, IT017-004092 (February 2013)

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