New designs, new procurement strategies, new sales and marketing channels, new partners and a renewed emphasis on services – Dell Inc. unveiled all these and several new products to boot to herald the advent of what it dubs Dell 2.0.
The emphasis on novelty notwithstanding, company execs are quick to point out that Dell 2.0 does not constitute a full-scale reinvention but rather a revitalization.
“It’s all about evolving; it’s not about revolution,” said founder and chairman of the board, Michael Dell at Dell Technology Day held in New York City on Tuesday.
To him and other company top guns that’s not just semantics.
They took pains to clarify that Dell, which sells more systems globally than any other computer company, is by no means abandoning ‘Dell Direct’ – its direct sales model to which it owes its historical success.
“But we are carefully re-examining what we do, focusing on every aspect of our business,” Michael Dell said.
This scrutiny has triggered some pretty dramatic shifts in the way company is doing business, a few of which were announced at yesterday’s event.
It appears many of these changes have to do with offsetting some inherent shortcomings of the Dell Direct model, though that’s not the official company line.
Analysts have pointed out that while this model has several advantages on the production side – such as cutting out the middleman, avoiding excess inventory, and operating an extraordinarily lean production system – it leads to quite a few challenges on the support side. These include: the difficulty in effectively fielding information requests before the sale, handling service requests, and responding to problems after the sale. (The responsibility and costs of these cannot be offloaded to distributors or reseller partners as there aren’t any such partners).
At least two of Dell’s programs – showcased on Tuesday – directly address these service/support challenges.
One is Dell Connect, a program that enables Dell support technicians in support centres across the world to access customer PCs (with the customer’s permission) and then directly troubleshoot and resolve problems. “The wonderful thing about this is that the technician sees exactly what the customer sees, can go in and solve the problem,” said Lawrence Pentland, vice-president and general manager of Dell Americas International (that includes Canada).
Kim Vogelman, a project manager for Dell Connect says the technology enhances everyone’s comfort level. “Our technicians and customers love it. A customer can observe or participate as the technician troubleshoots and resolves the issue. It’s also a more efficient and fun process.” See Vogelman’s Dell Connect demo video.
According to Pentland, 95 per cent of Dell’s customers have expressed satisfaction with Dell Connect, while 85 per cent said their issue had been resolved through the program.
At least one Canadian analyst believes Dell Connect will give Dell a leg up over competitors that do not have a similar program.
“Expect to see similar [support] programs from other key PC vendors as well,” said Michelle Warren, an IT analyst with Evans Research Corp. in Toronto. She said the benefits of the program are likely to spread by word of mouth. “There’s a certain ‘wow’ factor about a technician remotely getting into your PC, troubleshooting and resolving a problem. That will help create the buzz.”
While Dell’s messaging focuses on the benefits of this program to the customer, Warren believes it could also potentially save Dell a load of money by ensuring speedy problem resolution, and in many cases, doing away with the need to dispatch a technician on site. “It also builds customer confidence in Dell, and its support and issue-resolution competency.”
Quicker resolution is in fact the stated aim of many of Dell’s new customer satisfaction programs. Dell even has a name for this objective: Resolve in One. “It expresses our determination that every customer’s issue be resolved the first time,” said Dell president and CEO Kevin Rollins. “To that end we are moving towards multifunction call centres. The idea is to resolve customer calls as they come in, with no transfers.”
Rollins said the same philosophy is exemplified, at the enterprise level, by programs such as Platinum Plus Enterprise Support.
Platinum Plus customers, he said, can access a Web-based tool that brings the enterprise command centre to customers, allowing them to track the real-time position and status of every open incident they experience around the world, without picking up the phone. Likewise, he said, an operations performance benchmarking tool offers these customers the ability to compare critical IT performance metrics to historical results, internal and external peers.
Apart from all the benefits to customers, Warren sees this as another revenue stream for Dell. “Today vendors make money by improving and widening their “services” portfolio.”
However, to make this money, companies may first have to spend quite a bit of it. According to Rollins, Dell has invested around US$150 million to enhance services.
Warren predicted Dell competitors, such as HP and Lenovo, would soon offer similar programs.
Some value-added services described by Dell executives at the event are enhancements to Dell Direct, the company’s direct sales model.
Dell’s focus on customer-factory integration falls into this category. Pentland cited an example of how such integration can work in pratice. “If the client has a proprietary application they want loaded on their desktops, notebooks, or servers, we can do it in the factory, instead of the customer having to do it after market. It saves the IT department a lot of time and energy.”
Warren believes this “preloading” option will have better reception among smaller and mid-sized businesses, rather than larger enterprises. “It’s another potential revenue stream for Dell.”
In addition to the emphasis on services, Dell execs announced some fairly decisive shifts in procurement management, as part of Dell 2.0. For instance, the company has reduced its approved vendor list for supplied components by more than 50 per cent.
Warren sees this as a radical – but possibly temporary – move by Dell to simplify and streamline its procurement process and operations, and reduce costs. “This is a ‘clean house’ operation. It wouldn’t surprise me if the trend changes in the next few years. As Dell broadens the scope of its operations it will require more supplier partners.”
One of the most decisive – but not unexpected – shifts is Dell’s increasingly cozy relationship with AMD.
This was further witnessed at the Tuesday event, when Dell announced an expanded Dell Dimension lineup allowing customers – for the first time – to opt for AMD Athlon 64×2 processors on select models of the Dimension E520, E521 and C521.
This builds on Dell’s decision, in May, to add AMD’s Opteron chip as an option for high-end, four-socket servers.
Pentland said the decisions were in direct response to customer feedback. “Benchmarks on our four-way and two-way servers revealed AMD was preferred by customers.” On the PC front, he said the option to select either AMD or Intel would be offered on specific models, wh