Techaisle Blog

Dell was always been relevant for small business and education markets but is now in an exalted position to stake its claim within the enterprise segment and the new battleground – the midmarket firms. In this Techaisle Take analysis I cover Dell Technologies’ On Demand offering, Progress Made Real initiative, expanded PCaaS for SMBs, focus on customer advocacy, continued SMB investment, new converged infrastructure PowerOne, Unified workspace solution and channel partner strategy.

Dell Technologies Summit in Austin was a showcase of bold announcements and understated commitments to corporate social good and customer advocacy. Dell has certainly transformed in the last five years. It has moved along a path from a PC company to end-to-end solutions provider to a digital transformation partner to a place where it is driving its own transformation through the power of analytics with a goal of delivering customer success. Dell has catapulted itself into relevancy for the next decade.

In 1984, when Michael Dell founded his namesake company in his college dorm, I was a freshly minted engineering college graduate working through my first job at a tractor manufacturing plant in India. My first interaction with Dell was in early nineties when an India-based firm was awarded a contract manufacturing deal. I was then running the secretariat of a computer manufacturer’s association in India. Since then not only technology has progressed but both the consumers and commercial buyers have evolved. Dell has not only moved with the times but sometimes has been ahead of the curve. One such “ahead of the curve” initiative is “Progress Made Real for 2030” announced at the summit.

Progress Made Real for 2030 stands on four pillars:

1. Advancing sustainability: for example, one-for-one recycling, that is, every product that Dell sells it will recycle an equivalent product
2. Cultivating inclusion: committing to 50 percent of Dell workforce to comprise of women by 2030, 40 percent of managers of people will be women, 25 percent of US workforce will be Hispanic or African American
3. Transforming lives: for example, Dell’s work with Tata Trusts, with a goal to reach 40m under-privileged people from the current 11m
4. Upholding ethics and privacy

Enabled by a combination of pervasive use of technology and vastly-expanded solution options, the technology user and buyer community has become more diverse in both composition and focus. Business decision makers (BDMs) are not content to await IT’s blessing to pursue technology options that align with business needs: an increasingly tech-savvy business user/management community plays an ever-expanding role in assessing technology options, and even in specifying solutions and managing their rollout. At the same time, the solution options themselves have expanded to become more accessible to non-IT staff. Some technologies, such as analytics and IoT, directly address business management questions. Others, notably cloud, provide support and delivery options that give business units the option of avoiding IT oversight. Even core IT functions, such as storage management (especially with respect to Big Data) and security (particularly with regard to cloud and mobility) are reshaped by system requirements imposed by BDM needs. It is not out of place, as an analyst, to say that Dell has been a little late in recognizing and pursuing the shifting patterns. Regardless, Dell has been a believer of technology democratization and has begun a concerted effort to manage technology chaos with a differentiated customer strategy and drive the ability to scale human capacity. These are very lofty and moonshot initiatives. But then Dell is a founder-led company whose founder is skilled at assembling the proverbial ship piece-by-piece and navigating it through uncharted and occasionally choppy waters.

Dell Technologies differentiated customer strategy is built on four key points:

1. Driving social impact with purpose-driven relationships
2. Creating customer advocates for life by honoring customer loyalty and delivering success
3. Making it easy to do business with Dell by executing on basics
4. Unlocking customer value by leading with insights

Dell’s customer advocacy team is constantly analyzing 9.5K social conversations per day, looks at 33K customer verbatims in addition to its 16K sales team members sharing feedback. Dell’s plan to delivering a seamless and simplified customer experience is not very different from recently announced customer lifecycle experience, aka race track, by Cisco. End goals are the same, approaches are slightly different. But the fact that all suppliers are landing at the same end-state is significant on how the technology industry has evolved.

Perhaps the most important announcement at Dell Tech Summit was its On Demand offering. Dell went to great lengths to explain its genesis and development but it is clear that it a direct response to the growing popularity of HPE GreenLake. Regardless of HPE commanding the media-waves Dell has jumped headlong into the as-a-service, post-transactional market with Dell Technologies On Demand Autonomous Infrastructure available via DT Cloud. Dell is prepared to deliver solutions today and at scale. And it is also within reach of midmarket businesses. Key takeaways of Dell’s On Demand solutions are:

1. On-demand, consumption-based and as-a-service solutions for on-prem infrastructure / services is customizable, integrated across the full-stack for Dell's end-to-end portfolio from edge to core to cloud
2. Dell widened the product of their Flex On Demand offerings for PowerEdge servers and their new PowerOne autonomous converged infrastructure solution (announced at Dell Technologies Summit). With this announcement, Dell’s consumption-based on-demand solutions now cover PCs, servers, storage, CI/HCI, IoT, datacenters, networking and data protection. Ideally applicable for firms with a minimum $250K 3-year contract-value but end-points including PCaaS is available for SMBs (at lower committed contract values).
3. Dell knows how to create simplicity within complexity. Businesses can customize and select their on-demand path from:
   1. Payment: Pay As You Grow, Flex On Demand, Data Center Utility
   2. Services: ProSupport, ProDeploy, Managed services
   3. Portfolio: Edge, Endpoint, Core, Cloud
4. On Demand offering provides two options for channel partners to participate:
   1. Referral fee – 7%-10% on committed contract value including tier credit program benefit. Dell owns and manages the customer. The partner still plays an active role in managing the customer relationship. The referral fee model positions the partner to address the customer’s solution needs, and enhance their customer relationship without having to take on the usage and credit risk associated with offering a pay for use solution.
   2. Resell – Partner owns and manages the customer. Allows partner to uplift base usage charge and earn program benefits including rebates, marketing development funds, and tier credit

Pay As You Grow is for committed workloads. The metering coverage in Flex On Demand includes processor, memory, and GB consumed. Data Center Utility adds metering based on VM and per port. The solution is still in its early stages and Dell views this as a journey rather than a destination. But the offering, in early stages, is finding acceptance at many of Dell’s customers. Scalar (a CDW company) has been configuring on-demand solutions with unlimited scalability for major Hollywood studios.

Relative to the cost of conventional hardware and software, on-demand cloud solutions are generally more cost effective than equivalent CAPEX-based on-premise alternatives, and its OPEX-based billing model works well for cash-constrained SMBs and midmarket firms. Cloud’s ‘as-a-Service’ delivery model reduces the need for individual SMBs and midmarket firms to attract and retain specialized IT staff; scale up as the organization grows, and cloud provides SMBs and midmarket firms that are often unable to maintain refresh cycles with ‘always-on’ access to current technology.

SMBs are not being left out from Dell’s strategy. In fact, small and midmarket businesses are two of the fastest growing segments for Dell. Its small business advisory has witnessed tremendous success but the team is not resting on its laurels. It aims to add 100 more small business advisors in the next one year. Each advisor goes through 160 hours of in-person classroom training. Dell has built a progressive hierarchical advisory structure, based on “needs complexity” to help SMBs learn, identify, buy and deploy technology. Small businesses with specific and simple requirements can also use Eva – a chatbot – to help guide through product selection and purchase.

Every year or two (or three), a new trend sweeps the IT industry, and breathless coverage asserts that the new phenomenon has arrived fully-shaped to transform technology and/or IT’s role in business strategy. This is, of course, very rarely true. Most trends play out over a long time, and change in technology tends to be incremental rather than revolutionary. For example – it is certainly true that digitalization (and digital transformation) are important issues today, and that they will have a transformative effect on IT and business strategy. But Techaisle research demonstrates, they are a recent highlight in a series of business issues and technology themes that stretch back at least 15 years, from 2003 to 2019.

Key SMB and Midmarket digitalization themes, 2003-2020

As we enter the next decade, it seems that online capabilities and activities are entering a new era. There are still advances to be made in the ‘net’ realm: there is constant pressure to expand the speed of the Internet, enabling it to handle the voracious demands of unstructured content like video, and the rise of IoT and 5G portends a coming tsunami of data from billions of connected devices. However, the key focus of web-based business investment is now less about the ‘net’ and more about the ‘work’: the ways that an increasingly-connected world supports pursuit of previously-unattainable objectives. The most important IT-related development in 2020 will be this focus on connectedness – connected cloud, edge, applications, security, collaboration, workspaces and insights. Internet and the web are the navigation routes that we have been developing since the 1970s; the always-on, everywhere-connected Interwork© platform is the destination that we will be creating in 2020 and for years to come.

This eBook has been written to provide guidance to supply-side management responsible for digitalization strategies that affect sales and marketing of advanced IT solutions to SMBs and midmarket firms. The document is structured into six sections:

1. What’s past is prologue – The Path to Digitalization
2. Closing the gap between business priorities and IT challenges and the rise of digital
3. Business Issues over the years – paving the route to digital transformation
4. The rise of innovation – and digital – as a business focus
5. IT challenges over the years – paving the route to digital transformation
6. What’s future is epilogue: Connected Business

Download the free eBook here

For decades, channel partners have aspired to achieving ‘trusted advisor’ relationships with their customers. The concept is so ingrained that it is nearly impossible to separate the notion of ‘trusted advisor’ from the broader sense of being a partner.

But if the market is moving from value addition by the channel to value creation for the end-customer, isn’t it essential to move beyond ‘trusted partner’ status to becoming, in a meaningful sense, a partner of the customer, invested in the customer’s business success?

Techaisle’s WW channel partners study of 2445 channel partners and corresponding US channel partners study of 814 partners shows that 61% (66% in the US) are transforming their organizations to focus on delivering business outcomes to their end-customers, up from 42% three years ago. However, the figure is still below customer expectations which stands at 78%. There are several points of disconnect between the customer and the channel. One of the most important disconnects stems from the notion of trusted advisor relationship versus meaningful customer partnership. Only 51% of partners are building meaningful partnerships (55% in the US) and the balance 49% still believe in being trusted advisors. There is nothing wrong with it except that customers, especially SMB and midmarket firms are looking for a “super consultant” – a firm that can offer advice that is more complete than what is being obtained from most partners and which can move beyond strategy to deliver operational support that is tied to business outcomes.

These firms exhibit a clear preference for advisors who can move seamlessly from advice to architecture to procurement to deployment and finally to management. Nearly three quarters of SMB buyers would like their channel partners to be able to provide technology advice that is directly connected to business issues, and nearly two-thirds want a partner who is “invested in customer success.”

The nature of the sales relationship will be a critical determinant of channel success. 52% of channel partners globally and 58% in the US are still running their businesses on sales quota requirements rather than a book of business. When all channel partners call themselves “advisors” there is no differentiation left across partners. Channel partners need to focus on being a meaningful customer partner delivering customer success. And this falls into the realm of being a super consultant.

Recently concluded HPE Discover was different than most other analyst events in more ways than one. First, HPE announced that it has strategically dived into the cloud swim-lane with a confident commitment to offer “everything-as-a-service” by 2022. HPE has plans to offer entire portfolio through a range of subscription, pay-per-use and consumption driven offerings. It is a bold strategy and in direct contrast to its key competitors. Second, the phrase “doubling down” on SMB and midmarket segments was not only mentioned in the HPE Global Partner Summit on the mainstage, but also in the keynote address by Antonio Neri as well as by several senior leaders in their respective breakout sessions thereby targeting SMBs as a priority market segment.

Specifically, “everything as a service” or XaaS is a very astute strategy. As we near the end this decade, it is clear that the IT industry as a whole has been transformed by cloud - by the way it alters IT service delivery options, by the way it impacts the economics & resource requirements associated with that delivery, and by the applications and business opportunities that cloud unlocks for user organizations of all sizes and in all industries. We are increasingly immersed in a post-transactional market, where discrete sales of individual products or integrated systems are replaced by agreements to provide IT capacity and business functionality “as-a-Service.”

No segment of the IT market is immune to this trend. Sales of on-premise hardware and software are declining and will continue to decline; at the same time, leading web service providers, including Microsoft (Azure), Amazon Web Services, Facebook, Google and Alibaba, are building 40 percent – 50 percent of all x86 servers for internal use, and then providing access to these servers on a pay-as-you-go basis, and software developers are creating systems on these platforms to automate sales, marketing, finance, HR and other business functions.

Inexorably, the market is shifting from one defined by discrete purchase-and-deploy deals aligned with refresh cycles to one where businesses take a hybrid approach that blends a limited number of on-premise assets with a growing range of on-demand services. Although hybrid IT is inherently a more flexible and efficient way of providing IT services needed by businesses, it still requires effective planning to address important issues within business operations. There are many different types of hybrid IT solutions, but they all belong to one of three basic types: Solutions that respond to IT department needs, and are adopted by IT professionals; Solutions that address business management needs, where demand is driven by non-IT executives or staff members; Solutions that change both business processes and IT systems, and which require IT/business management collaboration for effective delivery. And these are the hybrid market segments that HPE plans to address.

But Antonio Neri’s ambition is far bolder and greater than simply pivoting to an XaaS business model. His promise is for a zero-friction future in a cloud-less world for all segments of the market. A strong foundation has been laid with HPE GreenLake, an outcome of its acquisition of Cloud Cruiser in 2017. At HPE Discover, HPE extended its GreenLake offerings for the midmarket to enable quick deployments of workloads with right sized and ready to go storage, compute and virtualization. For midmarket firms which do not own and manage their own data centers, HPE has partnered with Equinix and CyrusOne to offer co-location solutions. To help its channel partners that serve the midmarket segment, HPE has developed a new quoting tool that reduces quote time from 18 hours to 15 minutes. In addition, HPE also announced the availability of HPE GreenLake Chatbot - an artificial intelligence driven, automated chatbot that quickly answers partners' HPE GreenLake inquiries.