Dell's 'Transformation': Customers Speak

Dec 17, 2012 (04:12 AM EST)

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Having completed its transformation from a hardware-focused maker of PCs and servers to an all-encompassing IT service provider, the new Dell has finally arrived -- or so Michael Dell and the rest of the Dell leadership team asserted during the company's Dell World conference, which concluded Thursday in Austin, Texas. But do its customers agree?

InformationWeek spoke to several Dell World attendees to gauge reactions about the tech giant's evolution and future.

Nate Byrnes is VP of technical operations at Collective[i], an analytics-as-a-service start-up based in Manhattan with about 25 employees. He said his company isn't yet a Dell customer but "we're looking to establish a pretty good partnership with them and things are definitely proceeding along those lines." He was interested in the PowerEdge C8000 servers because they'd "double my capacity and cut my footprint in half."

[ How is Dell broadening its product offerings? Read Dell Boosts Storage Portfolio With New Hardware, Software. ]

Byrnes seemed mostly impressed with Dell's growth. "I get the sense that Dell is finally a junior IBM," he said, elaborating that IBM has a "much richer" knowledge and pedigree but that "Dell is moving in that direction." In Dell's favor, he said, it's less expensive and that "for a lot of scale-out shops, those extra bells and whistles are irrelevant."

He also said Dell's standards-based offerings are attractive because they allow customers to avoid proprietary lock in, and that Collective[i] also has considered products from companies such as Cisco, which he said "fits 80-90% of use cases, but we're one of those fringe ones."

Benito Salinas, a systems engineer with South Texas College, was enthusiastic about his institution's relationship with Dell, which he said includes using its storage and server products. He praised the scalability of Dell's offerings, remarking, "To meet our budget, I can start slow and then grow it up to where we need to be."

On the topic of Dell's transformation, he said the company has "really done a great job" diversifying its services, and that, thanks to sales teams effectively communicating the expanded capabilities, most of Michael Dell's statements from the conference "were not news to me."

Salinas said he appreciates Dell's customer service in particular. "Our relationship is a very important part, and 'relationship' is really the key word," he said.

Brian Anderson was at the conference with Turner Construction, one of the largest construction contractors in the United States. He said his company uses Dell for "pretty much everything -- desktops, laptops, all the way to everything in the data center," although Turner also employs storage products from EMC and networking equipment from Cisco.

Anderson said that little from the Dell World sessions was new but that "it's nice to see it all in one place." When asked, however, if the company has successfully transformed itself, he paused for several seconds before remarking, "I suppose. It's hard to tell if they're there yet. It's a work in progress."

Jorge Dominguez, a network administrator with Odebrecht, a Brazil-based organization that works in engineering, construction and chemicals, said that he "never imagined" Dell would become so large but that the new software and services offerings seem "very good." Odebrecht currently uses a "wide range" of Dell hardware, and has experienced "excellent" customer service, said Dominguez. He wasn't certain what additional steps Dell should take but offered, "I'm sure that in the future we're going to see more of Dell -- more service, more innovation."

Eddie Baker, director of customer service for IT for University of Kentucky Healthcare, wished that Dell would embrace a more active role in medical fields. He said his institution's biggest Dell investments include "roughly 15,000 end user devices and some server infrastructure." When asked if the company had completed its transformation, he said, "Yes, I think that's what they're pushing. I'm not sure I'm completely sold that they're there yet. For us, Dell is still more a supplier than a partner, unfortunately."

He noted that the university "appreciates" its relationship with Dell but said, "I think they're a little bit nervous about getting into the healthcare space … They seem too risk–adverse to get too deep." Baker said his criticism isn't "isolated to Dell by any stretch of the imagination." He said that few tech companies -- he singled out Microsoft -- are willing to deal directly with HIPPA regulations.

Dell and other service providers "can provide solutions as long as the liability is on the agency they're providing to," he said, "but it'll be different when they're providing a service. It's the difference between, 'Do I give you all the equipment and the data stays with you, or do I accept some of the data and some of the liability?'" Because of this provider hesitancy, Baker said that cloud technology is "not really a reality at this point for health care."

Baker also said that the University of Kentucky has embraced BYOD and uses tablets "quite a bit." Dell now has offerings from its Wyse and KACE divisions for managing mobile devices but Baker said the university currently relies on Citrix Receiver for data management. "So far, it's worked out really well for us," he said. He also approved of Citrix's recent acquisition of Zenprise, saying, "We haven't fully deployed all of the Zen products yet but [the purchase] opened up a nice range of products."

IDC analyst Matt Eastwood also was at Dell World. In a phone interview, he said the company has "made a lot of progress" and that "the product side is in good shape" but that there are question marks regarding how it will market its new capabilities.

Eastwood praised Dell for listening to customers and for being "very disciplined" in its acquisitions, which he characterized as "ingredients based" and forward looking, "aimed at 12, 24 or 36 months out." Still, he wondered how "a salesperson used to selling boxes" is going to transition to "selling solutions." The company needs to develop the proper training and hire the right people, he said, noting that "IBM is the master" in this regard, and that other large companies, such as Cisco, have established good models as well.

Even so, Eastwood said "Dell deserves credit for a consistent strategy" and for focusing on the mid-market. The mid-market, he said, represents the largest number of potential customers, and Dell's modular product approach allows these customers to not only start with Dell products but also to stick with them as they grow and scale out their operations. Eastwood predicted Dell would "lose" if it tried to go exclusively after the biggest accounts. "They're not IBM, and they're not Cisco," he said, noting that HP has struggled in part because it has stretched itself too thin.

Eastwood also sees unknowns in Dell's PC business, noting that this uncertainty pervades the entire industry. For PC sales to pick up, "Microsoft needs to win consumers" with Windows 8, he said. Michael Dell optimistically broached this point during his opening keynote but Eastwood said the consumer space is "not a market [Dell] wants to own." Dell isn't trying to compete with Asus or Lenovo, he said; it's trying to compete with IBM and Cisco, companies that "aren't gonna feel that drag" from lagging PC sales. This combination of factors, he said, raises questions about how Dell will position itself as a competitor in multiple arenas.

Nonetheless, Eastwood noted, Dell's transformation has made it "less reliant on its PC business." Although Wall Street has little faith in Dell's laptops, tablets and desktops, "I don't think they're truly valuing Dell's enterprise assets," he said.

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