Dell evolutionDell strategy past to present

Daniel Spanier, Alexandra Bielková

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About the Presenters

AlexandraBielková

Education:Masters in Maths & Mgmt, Comenius

University, 2002PhD in Mathematics, Comenius

University

Work experience Dell:Services FP&A managerWestern EMEA FP&AEMEA RUM Forecast CoordinatorOPEX controlling & consolidationEMEA Fin Systems Training Coordinator

DanielSpanier

Education:Bachelors of Economics and

International Management6 Sigma Green Belt Certified

Work experience Dell:Finance Director – EMEA FP&AController– EMEA Services Call CentersServices Globalization and Liberty LeadAmericas Support Services Team LeadWorldwide Operations - Manufacturing

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Agenda Dell strategy past to present• Strategy

• Dell direct model

• Dell.com

• Dell embracing the channel

• Strategy shift

• IT trends

• The new Dell business model

• Going private – change in strategy?1) http://techaisle.com/blog/2012/04/dell-confirms-its-position-as-an-end-to-end-solutions-company/ 2) http://www.forbes.com/sites/connieguglielmo/2013/10/30/you-wont-have-michael-dell-to-kick-around-anymore/

2)

1)

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What is Strategy?

“The determination of the basic long-term goals and the

objectives of an enterprise, and the adoption of courses of

action and the allocation of resources necessary for carrying out

these goals." Chandler, 1962, Strategy and Structures: Chapters in the History of the

Industrial Enterprise, MIT Press, Cambridge, Mass) 1)

However,

“You learn the most when you make mistakes. There is no such

thing as a perfect plan. Talk about what is not working and

move quickly to fix it as soon as you find it,”Michael Dell 2)

1) http://www.ifm.eng.cam.ac.uk/csp/summaries/ms.html2) http://en.community.dell.com/dell-blogs/direct2dell/b/direct2dell/archive/2011/11/10/michael-dell-opens-e-amp-y-strategic-growth-forum-2011-a-conversation-with-charlie-rose.aspx

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Strategy to execution

Information & Communication Flow

Vision Mission Values

Sales

FinanceMarketing &

Product Development

CustomerSupport

Fron

t O

ffice Back O

fficeIT

ELTStrategy ObjectiveChange Initiatives

Planning

HR

Manufacturing

DemandSupply

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Dell Direct

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PC’s in the Mid 1990’s…

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Dell direct model

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Build to order cost benefits

ConsistentSupply

Globally

Immediate Response to

Customer Needs

LowestCost Consistently

Customer Benefits

Time

Cost

Today

Customer Places Order

Dell Procures Components,

Assembles and Ships

Dell CostChannel

Inventory

3 Weeks

Ago

4 Weeks Ago

6 Weeks Ago

ComponentsPurchase

8 Weeks Ago

Cost to Competitors

Manufacturer's Inventory

ProductAssembly

Shipment to Distributor

Shipment to Reseller

Cost

advanta

ge

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Dell.com

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• 2001: Online technical staff moved into IT

• 2002-3: New content publishing system• 2003: Code re-written to .Net,

consolidation onto global code base• 2005: Widespread AJAX

implementation• 2009: Completed widespread

globalization• 2010+: Radically improve Customer

Experience

• 1994: Launched as internal tech support site

• 1996: Became commercial site with limited product set

• 1997: Reached $1M/day in revenue• 1999: 1st Content Publishing capability• 1999: Accounted for 50% of Dell

Revenue• 2000: Re-platform to VB and J++

Dell.com - a brief history

199619992001200320062007200820112012

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Dell online todayOnline:

Dell.com + Premier Pages + Global Portal + B2B

An online orderis placed

every4 seconds

34 supported languages

1.8M B2B transper year

124K Premier and Global Portal pages

25M visits on PP and GP pages per year

1B visits per year to

Dell.com

7.3 M online transper year, e-pen = 42.2%

11B online revenueper year

2B online marginper year

86% of trans are Client and SnP products

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Dell embracing the channel

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Group exercise & discussion:

Why did Dell enter the indirect business model?

• Direct contact with customers• Ability to provide customized

products (build-to-order)• No need to share margin

• High costs of demand generation (marketing, sales force, after sale support etc.)

• Higher transportation costs• Supply chain management and

cost• Customer has to wait for

product• Too complex for non expert

customers• No ability to see or touch

product if selling via net or phone

Direct model

• External sales force, marketing• Easier coverage of new / minor

markets (sales force, customer preferences, market restrictions etc.)

• No need to have too diverse product portfolio

• Ability to provide a solution or consultancy

• Customer can see or touch product

• Lack of contact with end user• Supply chain management• Risk that reseller will not know

the product portfolio well• Risk that reseller will prefer to

sell competitor’s products (on shelf placement etc.

• Need to share margin

Indirect model

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Dell approach – Global commercial channel

Level of cooperation

Registered Partners

• Entry program for most partners

• Grants access to Dell’s partner portal and customer support

• Access to trainings and certifications

Preferred Partners

• Assigned account manager

• Better return and payment conditions

• Requires Dell certifications and minimal revenue threshold

Premier Partners

• Highest level of support from Dell

• Requires two or more Dell certifications and higher revenue threshold than Preferred

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Dell approach

1984-2006

• Pioneered direct model• Extreme growth, 2003 No.1 in PC market• Indirect business not addressed specifically• Changes on IT market in 2005/6

June 2007

• “Direct model has been a revolution but it is not a religion” Michael Dell

2008 - 2013

• Expansion into Indirect (Channel) business• Global Commercial Channel• Consumer Retail• New Dell : E-Dell, BVS, Client Reinvention• BRIC countries

2013 - Now

• New Dell Business model• BYOD• Going private

Dell Strategy shift

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Dell strategy shift in 2011

• Dell’s strategy to develop its capability as an efficient technology solutions provider, grow faster than the industry in strategic areas and shift the company’s mix to higher-value products and solutions was outlined here today at the company’s annual stockholders meeting.

• During the meeting, Michael Dell, chairman and CEO, and Brian Gladden, chief financial officer, reviewed the company’s business progress and its competitively differentiated strategy to deliver solutions that are highly capable, affordable and flexible to meet the needs of large enterprises, public institutions, small and mid-size businesses.

• Mr. Dell described the company’s focus on next-generation computing solutions and intelligent data management; services, security and cloud; and end-user computing, which are critical to driving industry leadership and growing operating income and cash flow over time.

http://www.dell.com/learn/ie/en/iecorp1/secure/2011-0715-annualmtg-release

Next generation

computing solutions and

intelligent data

management

Services,

Security,

Cloud

End-user

computing

Create

Open

Capable

Affordable

Key designtenets

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Manage

Deliver

Dell’s leadership in the virtual era

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High qualitySolutions

Customers

Cloud

Reliable

TabletsTrustworthy

Efficient

Thought leader

Virtualization

Technology

Best customer service

Services Infrastructure

Data center Enterprise

Innovative

Outcomes

Mobility

SmartphonesPCs

Meets my needs

IT leader

Future

Dell customer perception evolving…

ComputersPC providerLaptops

Desktops

customization

Cheap

Quality

Bad service

Followers GreatAffordable

Dude

Poor quality

Home

Old Good

InnovationGood

Inexpensive

ServiceServices

Crap

Reliable

OK

Value

Followers Low quality

Manufacturer

Services

Present

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Dell reflecting current IT trends

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Major IT trends

Global industry trends• BRIC country IT market growth• Consumerization of IT – change of traditional work/life

patterns

Rise of Smartphones, Tablets, Ultra-books and Cloud

Services

Rapidly increasing storage requirements, services

instead of in-house solutions

Consumer

•Ubiquitous computing•Always On connectivity•Anywhere Anytime mobility

Enterprise

•Mobility•Increasing IT Complexity•Cloud Computing•Large Data Analytics

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New Dell Business Model

Confidential26

New Dell Business Model

What:• Introduced in 2013• Pre-set desktops / laptops for consumer, small businesses• Limited configurations for larger customer• Unique configurations available for very large deals

Why:• Lower cost• Quicker delivery• Usually customer doesn’t need that many options

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Dell –the largest start-up

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Discussion:Does Dell need to change its strategy after going private?

Dell – the largest start-up

• http://www.dell.com/learn/us/en/19/videos~en/documents~from-year-one.aspx

• This transaction positions Dell to enter an exciting new chapter, continuing the execution of its long-term strategy and focusing on delivering best-in-class solutions to customers as a private enterprise. Under a new private ownership structure, Dell will be even more flexible and entrepreneurial, allowing it to do what it does best — to serve our customers with a single-minded purpose and drive the innovations that will help them achieve their goals.

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Key takeaways

• Dell has adapted its strategy to better serve customers several times throughout its history

• Examples presented in this session include:– the Direct Model on which the company was founded

– Leadership and pioneering in E-Commerce (Dell.com)

– Embracing the channel – revisiting the direct model

– Strategic shift of Dell transformation into an end-to-end solutions provider

– Dell New Business model

• Dell being private – strategy change needed?

Thank You

Backup

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How does Michael Dell describe the Dell evolution?• http://www.youtube.com/watch?v=N3VOR31Hrn4

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Dell’s commitment to customers

• http://www.youtube.com/watch?v=-5-3t4RAaio