The dust is just beginning to settle on what was the largest tech acquisition to date, with the $67bn price tag demoted from lead headline to mere detail in the beginning chapters of Dell Technologies.
Since its inception, much postulating has been made as to how the coming together of Dell and EMC would work, with the logistics of aligning two huge portfolios, brands and customers seemingly presenting an insurmountable task.
However, firmly into its first fiscal year as a merged entity, Dell Technologies impressed with substantial revenue increases in its first quarter results – even more impressive considering the challenging component cost environment and declining PC market. Although the company has had to swing the axe post-acquisition with substantial layoffs, as well as sell some business units to fund the deal, Dell EMC President and Chief Commercial Officer Marius Haas would have us believe that the merger was surprisingly plain sailing:
“The only surprise we had was that there weren’t any big surprises,” Mr Haas told CBR.
“In a merger this size something will always need to be tweaked…there was account movements amongst our account reps, there was the remapping and tiering of our customer base, there was then the systems and tools required to support the new alignment of our team members, consolidation of one portfolio and the other portfolio… You can’t predict everything.”
The result of the many tweaks and “fine-tuning of the engine”, as the CCO put it, was the world’s largest privately-controlled tech company. Enterprise unit Dell EMC has been very vocal in positioning the customer as the focal point for its business, perhaps to offset the perception that the bigger a corporation gets, the more faceless and anonymous the thousands of customers become.
The coming together of Dell and EMC obviously posed some questions – how to align and combine customer base without spooking those that drive your revenues? For Mr Haas, integration planning focused on reducing account and relationship ‘churn’, while also ensuring continuity and consistency for the biggest accounts. Joining Mr Haas in speaking to CBR was Dell EMC UK boss Claire Vyvyan, who also reiterated the importance of maintaining relationships during and following the merger.
“We try to really really protect relationships because ultimately the ability to help somebody with their technology needs, with their digital needs, means that you have got to understand their business. So we tried really hard as we laid out the new UK&I world to make sure we protected relationships,” Mrs Vyvyan told CBR.
“I think we did that pretty well, not universally, but pretty well. Which meant that whether your seller came from Dell, came from EMC, came from other parts of the Dell Technologies family, we kept that understanding of the customers’ business and the relationship with the senior execs within that business. That’s allowed us to take this hugely rich portfolio of offerings and match it up to the customers’ needs.”
The alignment of customers, brands and portfolios also signals a departure from the federation approach of many businesses, although Pivotal, RSA, SecureWorks, Virtustream and VMware have retained independent identities. This means customers can take what they want or need, or get the full end-to-end offering from Dell Technologies.
“The customers were not huge fans of the federation approach. They don’t want to be the integrator of the technology, they want to seamlessly adopt the technology and then be able to layer on the things that create the value for their particular business,” Mr Haas told CBR.
“You have a phenomenal story around the enablement of the software-defined data centre suite, for example with VMware as a core anchor tenant, but then you can go deep in any sub-component of infrastructure that sits below it, or you can go up the stack ,if you will, in offering a full-cloud native application development platform with Pivotal. Then you can go one way in providing cloud solutions that are mission-critical private clouds with Virtustream or you can go all the way to the other side that is enabling the hybrid cloud, public cloud integration with the portfolio. Then you are surrounded with one of the broadest set of security portfolio, everything from Airwatch and remote device management to managing your network with Secureworks.”
This strategy is, of course, a huge departure from one of Dell’s main rivals – HPE. As Dell continues to scale, Hewlett-Packard split its business and continues to sell-off business units. The rhetoric surrounding the two rivals has been focused on their vastly different approaches to the market – one’s going big, the other is going smaller. However, for Mr Haas, there is only one winner in the market.
“Let the results do the talking. I don’t think anyone at HP would be very pleased with the results that they’re showing.
“The notion of getting smaller, more nimble and being able to go faster is not working. There is a big question mark over what’s the strategy. Our strategy is pretty clear and with the portfolio we have we are best positioned to succeed in this market, which I think will continue to look for players that can provide a broad set of capabilities and build relationships with customers.
“We think that we have, clearly have, a much stronger and broader portfolio; we clearly have a much stronger and broader sales coverage. So as long as we stay focused around our execution and embracing our customers, we’re going to win. Which we already are.”
Mrs Vyvyan, giving a subtle nod to the fact that HPE is separating and selling businesses, raised an interesting point which followed on from Mr Haas’ comments:
“You can’t separate the end point, whether the end point is classic devices or IoT, from the data centre. The reality is that those two things are just different ends of a customer journey. I think it is really critical that our teams that work with customers understand that end-to-end piece.”
The early chapters of Dell Technologies are drawing to an end, with the company having now firmly laid its foundations after a period of flux. Although tweaks are certain to continue, the task at hand is now to deliver on the promise of becoming that solid technology partner. In the coming months the company is set to continue to scale aggressively, with Dell EMC chasing the technology, people and processes in order to deliver to that much repeated go-to word for the CCO – the customer.
“We are looking to grow aggressively in all segments of the market, in all routes to market,. The beauty of being a privately held company is that we can look to the future as to how we create more value for customers, how we create more value for us. Hence you take longer-term strategic thought pattern towards your investment profile,” Mr Haas told CBR.
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“So we are in the mode of hiring more people, in the mode of servicing our customers better and in the mode of driving greater R&D investments. We are 2x IBM, 2x HPE when it comes to investment on innovation and we think that will translate to value for customers for sure.”
The CCO told CBR that Dell Technologies spends almost $5 billion on R&D every year, but while IBM has Watson and HPE has The Machine, Dell Technologies has been a little thin on the ground when it comes to ‘wow’ technologies.
Dell Technologies certainly broke the mould with its huge acquisition price tag, but it remains to be seen if the new company can break the mould when it comes to delivering innovations outside servers and PCs. The company, as Mr Haas told CBR, is positioning itself as the technology partner for any business, of any size , that is digitally transforming. But digital transformation now extends past basic hardware and software upgrades, with customers wanting everything from cognitive systems to IoT in order to better serve customers. Part of Dell Technologies aggressive strategy looks to address this innovation shortfall, with Mrs Vyvyan admitting that Dell and others in the market are only “just scratching the surface of what’s the art of the possible at this point in time.”
Mr Haas was bold in his belief that Dell Technologies is number one in the market, with one of the broadest portfolios which can cater to any business’ need. However, the repeated mantra that the customer is key may come under threat if the huge investment into R&D proves fruitless. Similarly, the aggressive strategy to further scale and perhaps get even bigger with acquisitions in both people and firms, could again put carefully cultivated customer relationships in jeopardy – it could also give those rivals betting on the small and nimble approach an unexpected opportunity in the future.
