After spending several billion dollars on software and services firm Dell is trying to get its staff and partners to push solutions rather than hardware. An executive explains the strategy

Ever since it bought Perot Systems in 2009 for almost US$4 billion, Dell Inc. has been trying to diversify away from hardware sales, like IBM and Hewlett-Packard have done.

Since then it has broadened its reach into software, picking up companies that make application management, infrastructure automation and backup and recovery solutions.

However, a senior company official admits it still has a way to go to convince enterprises and mid-sized organizations to think of it in those terms – and to get its sales staff and system integrators to start offering end-to-end solutions.

“This is a big change for Dell. It’s going to take some time,” Joanne Moretti, Dell’s Canadian-born vice-president of marketing, said in an interview. “This is not for the faint of heart. This is a hard, long piece of work we have to do to transform.”

Moretti, who was hired away from HP a year ago, was in Toronto last week for a family wedding and to talk strategy with Dell Canada president Kevin Peesker – what products sales staff to emphasize, and the kind of support he’ll need to increase software sales.

Next month she’ll be in Australian, Japan and China doing the same thing

Part of her job is merging the marketing divisions of seven recent acquisitions

It’s a little hard to get a handle on Dell’s software business since one of its major divisions, Quest Software (acquired in 2012), reported separately until the first quarter of this year.

But according to the latest figures, Dell software group suffered a US$85 million operating loss in Q1 on revenue of US$295 million. That would work out to about US$1.2 billion a year. By comparison Dell’s total annual revenue is about US$14.1 billion. Services in Q1 pulled in $370 million income on revenue of US$2.1 billion.
RELATED CONTENT

There’s a long list of software companies Dell bought in the last couple of years: Quest, probably the biggest at US$2.4 billion, came with the Foglight application, network and service management applications, the Quest One identity and access management family, a cloud automation platform, a VMware backup solution, Toad database management tools for structured and unstructured data, and Windows migration tools.

The 2010 purchase of Kace Networks brought appliance-based systems management and security software. The same year Dell picked up Boomi, a software-as-a-service data integration provider that can connect data between on premise and cloud applications.

Most recently Dell picked up Enstratius, a small company that makes multi-cloud infrastructure management solutions.

All of this feeds into Dell’s focus on cloud, big data, mobility and security, Moretti said.

She’s trying to get Dell to go beyond pitching hardware to customers and make more considered approaches. For example, at her invitation last week executives of an unnamed Canadian financial services company came to Dell’s Texas headquarters to see what it can offer.

The staff was well-prepared, she said, having studied beforehand the company’s annual report to understand its key goals. After hearing from company officials about its IT strategy and problems, Dell staff outlined their capabilities. By Moretti’s account, the customer was impressed and agreed to work with Dell’s services division on nine projects, including developing an end user strategy. There’s no assurance, but the work may lead to business.

That’s the way Dell has to work in the future, Moretti says: Do a workshop with a customer, draft an assessment, then a business case development and then design a solution.

Getting staff and partners to think this way won’t be easy, she says. But “we think once that Dell sales force of 12,000 turns on and starts making software part of their regular sales promotion and talking to customers …. this is going to be incredible.”
IDC Canada analyst David Senf noted in an email that the Quest acquisition “gave a huge shot in the arm for the management software portfolio Dell was building out organically.” They bought themselves market leadership positions in system management markets, security and database management.
“Quest has a strong presence in Canada showing up in the top three in key management markets,” he wrote. “As Dell pushes deeper into enterprise data centres, management software needs to be front and centre given the cost and admin challenges firms face.”
While Dell has no problem reaching mid-sized companies, larger organizations may not have the name top of mind. The challenge, Moretti acknowledges, is getting the word out.

“We have tons of proof points but we have to do a better job of marketing information and case studies out there.”

As for the ongoing effort to privatize Dell, she said it’s not proving to be a distraction for customers. “I haven’t heard any instance where we lost a big deal because of it, because we’re a big company and we’re going to be here.”

Related Download
Under cloud cover: How leaders are accelerating competitive differentiation Sponsor: IBM Canada Ltd
Under cloud cover: How leaders are accelerating competitive differentiation
To get a global snapshot of how organizations are using cloud computing, the IBM Center for Applied Insights collaborated with Oxford Economics to survey 802 cloud decision makers and users.
Register Now
Share on LinkedIn Share with Google+ Comment on this article
More Articles