Company Transformation Lessons Learned From One Who Has Seen This Movie!
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Dell needs to transform from a hardware provider to an end-to-end solutions provider by developing its own integrated software stack, like IBM did. The software should provide systems management, applications, security, and business intelligence on a common architecture following the principles of ease of installation, ease of use, and ease of maintenance. By focusing on enabling end-to-end business processes through an optimal combination of people, process, and technology, Dell can emerge as the market leader.
Company Transformation Lessons Learned From One Who Has Seen This Movie!
- 1. What exactly is How to build a solutions an ‘end to end solutions framework provider’? It’s not about the sale…That may be heresy to some but learning how to become a true end to end solutions provider requires a From a technology history lesson and help from those who have been there…. perspective, Dell is getting much closer. ‘Dell is transforming’ ‘That’s the mantra now and the transformation is What’s missing is how continuing with asset acquisition and the reconstitution of their Services unit. you are helping your These are all good moves and critical to Dell’s evolution from a hardware customers transform IT provider, but they are not enough. Having been down this road before with from a cost center to a IBM, the parallels to the challenge Dell faces with the obstacles IBM had to valued enabler of the overcome to be where they are today are striking. business. That’s the number one challenge Let’s start with ‘Dell is a hardware company”. IBM was primarily a mainframe CIO’s face and although and server company, with some modest success with client hardware. Dell has it’s receiving a lot of Dell Services, built from the acquisition of Perot and integrated with legacy Dell focus lately….that’s Services that positions them for the mid- market with aspirations for being a been true for many player in the global enterprise space. IBM has IBM Global Services, formulated years. by consolidating the various internal IT organizations throughout the company, into one governance model and augmenting with the acquisition of PWC. That How do you do that? acquisition provided the consulting arm and requisite business model change With a combination of that was the key to turning around that perception of being a ‘mainframe hardware, software and company, trying to be credible in ‘Client Server Computing’. Now it’s ‘Cloud services that together, Computing but the premise is the same. provide a solution mapped to a customer The Sales model at Dell is largely the same that served them well to build Dell business problem. You into a very successful hardware company. IBM’s Sales people were once the back them with envy of the industry but when was the last time you heard that? That’s by successful case studies, design, caused by a shift from “selling technology” to an ‘end to end customer segmented by industry engagement process’ that takes a consultative approach to establish a trusted with a maniacal focus business advisor relationship, as opposed to ‘that’s my sales guy’. on Analyst Relations
- 2. How to build a solutions framework The establishment of IBM Global Services and the subsequent shift toward a services focus, ultimately helped keep IBM from near implosion that many industry observers have forgotten due to recent successes. Dell is on a similar path to transform their business but one factor that was overlooked in IBM’s turnaround until the last several years, was the decision to focus upon software as the cornerstone of IBM’s business. That decision was based upon the fact that although the accolades rolled in for the Services business, it became readily apparent that the model put in place, was highly labor intensive and would soon impact the ability to bid competitively and meet desired margins. Short term focus upon Global Resourcing, employee reclassification and layoffs were not enough and ultimately the economy of scale that IBM needed to remain competitive, came from integration made possible by their software organization. Although some question exactly how much integration there really is, their marketing efforts are masterful at conveying this to their customers and it’s apparently working. How we build a solution framework
- 3. How to build a solutions framework The solution that will work for Dell is to develop software that provides an integrated IT infrastructure (Systems Management) that produces, manages and links together an Application Portfolio that is secure which provides timely and accurate business data. That’s a common sense description of what is referred to as Service Oriented Architecture or any other number of industry buzzwords. Some call it Middleware, understanding that Software is the key element. It’s not enough to merely acquire software assets. Claiming to be ‘Open, Capable and Affordable’ are good marketing angles, but at the end of the day, you need to own your own software stack to be deemed a viable vendor. The objective should be a comprehensive strategy to integrate these assets to provide BUSINESS solutions to CUSTOMER needs. That sounds simple as a premise, how do you design and develop software that meets current needs and positions you for future requirements? After all, you don’t want to be obsolete with the first release! Let’s take a look at what makes up the foundation of successful software. How we build a solution framework
- 4. How to build a solutions framework Security Applicaitons Software Business Intelligence Systems Mangement Software is the bits and bytes that interact on hardware, providing logic calculations that form the basis for output processing commonly referred to as applications. Those applications formulate the rationale for business measurement, reporting, analysis and collaboration which require various levels of security to protect against unauthorized access. Over time, the sheer volume of data provided by the software applications themselves must be analyzed for relevance and competitive advantage. Dell’s Software Division is aligned by Systems Management, Applications, Security and Business Intelligence. That’s not an accident and not once did you hear the term ‘Cloud’ or Big Data’! Yet the very foundation behind those marketing concepts is what I just described. Successful software must be architected to meet customer challenges with the design principles I call the 3 E’s. They are: 1. Ease of Installation 2. Ease of Use 3. Ease of Maintenance How we build a solution framework
- 5. How to build a solutions framework Easy to Easy to Install Use Easy to Maintain Successful Software Those design principles will ensure that you develop software solutions that avoid the complexity that plagues many companies while accommodating a mobile and consumer driven client base. These principles and the related IP will bring substance to discussions about ‘Cloud’ or ‘The Consumerization of IT’. While very creative marketing phrases and concepts, their value is only derived from the combination of efficient, cost effective hardware and software that has a linear mapping to a business problem(s). Previously we referred to this concept as a Service Oriented Architecture or SOA or Middleware as noted earlier in this article. The premise is still the same. Integration or interconnectedness of application data is the glue that holds together business processes and enables that transformation from thought or objective to reality. This requires an enterprise architecture that takes a business strategy and maps an end to end process that brings together an entities strategy, cost, and performance and growth elements. That is accomplished by interconnecting diverse hardware and software platforms through a common application management architecture, that allows for interoperability and can avoid obsolescence when technology changes. It is much easier to start with an architecture with the 3 E’s and scale up than it is to build a complex architecture and try to scale it down for mid- market and small medium business market segments. How we build a solution framework
- 6. How to build a solutions framework It may appear to be a tall order, many have tried and continue to try but the technology vendor who can get past the preoccupation with technology for technology sake, focusing upon enabling end to end business processes with a Hardware, combination of PEOPLE, PROCESS and TECHNOLOGY will emerge as the Software and market leader. Services= People, Process and Technology… To further illustrate, have you ever sold ‘A Cloud’ to anyone? Of course not! How would you do that? You wouldn’t just show up at your customer meeting or call without a process or an organizational support model in place to deliver a solution to a customer business problem. What you provide is a combination of your organizations people, process and technology, to address and solve a We’ve talked about the importance of people, process and technology and the customer pain point. importance of providing an end to end solution to customer business problems, None of those elements with a combination of hardware, software and services. Easy to say, much can solve the problem harder to deliver and often the very organizational model we’ve constructed, independently. precludes our ability to do so. Sticking with our PEOPLE, PROCESS and TECHNOLOGY foundations, let’s discuss how changing those dynamics enables a successful transformation. How we build a solution framework
- 7. How to build a solutions framework As with any large organization, despite best efforts a silo approach will inevitably take hold irrespective of pledges by management and establishment of what seem to be ‘best practices’. Having been a part of that management and at least 15 product launches over the years involving multiple divisions and organization, I can tell you first hand it will happen! There are several ways to minimize this and induce even the largest and disparate of organizations to work together. STEP 1: INCENT BUT DON’T PREVENT! The largest obstacle I have seen to building a true solutions framework is individualized or segmented compensation plans that induce your key contributors to focus upon the short term or ‘bread on the table’, as opposed to the long term success and overall best interest of the product, service or company goal. You may not like that…but it’s true! If I’m being held to a quota of selling blades or they put more How we build a solution framework
- 8. How to build a solutions framework money in my pocket than selling an integration solution or ‘services’, most sales people will do just that. Similarly, if I’m a Services Executive, a long term outsourcing deal will mean more to me than a VDI deal for a 1000 employee company. And let’s not forget about the Software Executive who has incentives to ship a product that may not be ready to go from a feature or quality standpoint, but gets paid based upon ship date. Clearly not all Sales, Services or Software people fall into these categories. However, if your compensation plan is not developed with the end in mind, or was designed for individual product sale while your strategy is to provide end to end solutions, a re-assessment is necessary. STEP 2 THE LONGER THE CYCLE, THE GREATER THE REWARD End to End Solutions despite the design principles we outlined previously, will by definition require more complex go to market and customer engagement ecosystems. From the go to market perspective, the shift will be from ‘sales plays’ and marketing generating leads to a ‘market management’ approach. Market research, business consulting and demonstrating that you can help a CIO move their organization from a cost center to a profit center for their company, will be your barometer for success. How you bring your solutions to market will determine your success in transforming to a solutions company. It will no longer be acceptable for Product Groups, Services, Marketing, and the Software division to be able to launch products or solutions independently, which has been a past practice. You must establish an end to end go to market process that links hardware, software and services organizations with a market management function driving the front end. This must be supported by a rigorous program management discipline to manage the development and sign off cycle, followed by a consistent customer engagement process that provides a credible customer focal point, backed by a deal closing process that is agile and responsive. STEPS 3 DO WHAT YOU SAID YOU WOULD DO The ability to execute is the key to establishing and sustaining an end to end solutions provider. As we’ve outlined, the software division will be the critical element in ensuring true integrated technology that maps to a customer pain point, as opposed to ‘integration by power point’ which many companies practice. Your hardware must differentiate in terms of cost, efficiency and features while services must be lean, agile and able to scale up or down depending upon market segment. Right now, many companies have a growing portfolio of assets that map to technology segments like applications, storage, security etc. The integration to compliment and supplement each other will ultimately prove how successful they become. While the focus will be upon automation and enabling efficiencies through technology, the human capital investment in terms of consulting, architecture, How we build a solution framework
- 9. How to build a solutions framework project management and service delivery management skills will determine your position in the market. If done right, it’s a very high margin business. If done wrong, it’s a very labor intensive business which ultimately is not sustainable. STEP 4 CASE STUDIES…CASE STUDIES…CASE STUDIES.. One of the biggest lessons I learned at IBM was the art of obtaining case studies or customer reference accounts as they are sometimes called. Put simply, if the customer is happy with the partnership they have with you, more often than not they will agree to be an advocate. There are many ways of securing this commitment which are outside the scope of this paper but focusing upon key business impacts that you have made, generally are better received than a request for endorsement of a particular product or service. Given that’s exactly what most company transformations are all about, that should be the key incentive. I can’t stress the importance of this enough. Prospective customers as well as existing customers want to know who in their industry has done business with you and what the results were. No credible discussion whether in the Executive Briefing Center, an industry event or presenting an RFP can be held without quantifiable customer case studies to back your assertions. Simply talking tech won’t get the job done anymore. STEP 5 TALK THAT TALK IF WE CAN WALK THAT WALK Perhaps the most crucial element in a company transformation is the industry credibility and endorsement from the analyst community. Many organizations think they have made great strides in obtaining that credence but their overall market share and perception from existing and most importantly prospective customers, is not where we need to be. Achieving leadership status in several Gartner quadrants is something to be proud of and provides a solid foundation to build upon. Right now, the perception is that Dell has a sound strategy but the question is still unanswered as to whether they will be able to deliver. They can point to many positive reviews in what I call second tier industry analysts groups and some endorsements from Tier 1 groups like Gartner, Forrester etc. Social media is both a plus and a minus, Dell does a very good job managing the noise level and promoting the cause through that medium. Dell has analyst events, Dell World and participates in most of the significant industry showcases but the net effect is not what it needs to be. There is still a large hill to climb. How we build a solution framework
- 10. How to build a solutions framework To achieve that impact, it will take a combination of resource allocation to analyst relations, adaptation of the principles outlined in this whitepaper and a maniacal focus upon crafting the reputation as a top tier player in the How will solutions business. Right now, Dell is at a cross roads in this journey. Dell know it It’s really pretty simple, when the majority of your customers and prospective customers are aware that you aren’t just a hardware company anymore; you has arrived? know the benchmark has been established to build upon. That is the number one challenge that I see for Dell at present and they need to expand the efforts There are typically 3 from simply reiterating the transformation message to existing customers. questions I opened an Executive Briefing Being able to differentiate and show why Dell deserves a seat at the customer Center session with as I table are intertwined in that you won’t get to the customer table without put myself in the place being able to do one of two things: of the customer. I used 1. Make a financial impact to the customer business to get a smile or a 2. Help them solve a customer issue knowing nod when doing so. Those questions are: 1. “I didn’t know Dell did that?” 2. “Now that I know Dell does that, so what? Why are you different than HP, IBM, or anyone else?” 3. “Why does Dell deserve a seat at my table?” When those questions are not prevalent in the minds of customers or analysts, you are there... It really is that simple! After all, the customer wouldn’t be in business to start with if there weren’t a financial inducement to do so and they can’t do it without customers. We tend to get caught up in the allure of technology, How we build a solution framework
- 11. How to build a solutions framework business jargon and the latest societal trend but keeping those two principles in mind will enable Dell to successfully transform. If you accept that premise and assuming you agree with the prescription outlined in this whitepaper, your reaction may be ‘Well hasn’t Dell been doing these things?’ The short answer is yes but an objective assessment should tell you it hasn’t been good enough. After many years of assessing the success or failure of products, service offerings or organizational transformations, it really comes down to 3 elements: 1. Awareness 2. Function 3. Price While appearing simplistic on the surface, I assure you the success or failure of any product, services or organizational transformation is tied to a failure in one or more of these phases. Awareness is much easier these days with social media and technology, so your customer no longer practices ‘Management by Magazine’. But they can sure use Google or access the latest analyst report! How often do they see Dell on CIO.COM or any of the other high influence mediums? Have you clearly communicated the central tenants of what your product, service or organization transformation means to them and can you map it to their business problem? Assuming you can overcome the awareness barrier; do you provide a Function that is not readily available or differentiates from your competition? Or are you a ‘me too’ vendor? Are you providing a compelling reason to adopt that new product, embrace Dell as a business partner or buy into the transformation story? Can Dell compete on a functional basis with industry peers and market leaders? Building the Software Division will go a long way toward answering that question. Finally, Price which can mean how much your products or services cost as well as the financial effort it would take to switch to Dell and for Dell….to complete its transformation are both central questions that need to be answered. What is the business benefit of going with Dell? If they price products and services at a premium with high margins up front, is there enough ‘functional differentiation to make that strategy successful? Consequently, if priced at a discount and lower margin, will volume and market share validate that tactic? The cost of Dell’s transformation , enduring quarters of ‘missed expectations’ and resisting the urge to manage ‘quarter by quarter’ at the expense of long term strategy will be the ultimate test of Dells commitment to their strategy. How we build a solution framework
- 12. How to build a solutions framework Dell is on an exciting journey and it remains to be seen how it turns out. I truly believe that by following the guidelines outlined in this whitepaper along with the required patience and persistence, not only this customer but many more like him will not be asking ‘Why Dell? He will know because the results of Dells efforts have demonstrated that they have indeed become that valued business partner their existing and prospective customers need. DWG David Gemuenden Senior Manager and Technology Professional [email protected] How we build a solution framework