Dell’s Marketing Strategy

dells marketing dodge In the realm of endeavor IT, dingle is often encountered as having a singular schema-build and sell products cheaper and to a greater extent efficiently than competitors, and thereby grow twain market share and revenue. While that misleadingly simple plan lies at the heart of dingles approach for customers, its everywhereall try strategy, like its presence in the try market, it maturing, growing stronger and turn more complex with each passing year.Dell has crystallized its long-run strategy for business customers in a vision it calls the climbable green light, which has many similarities with the propulsive cypher strategies of its competitorsIBM (On Demand), Hewlett-Packard (Adaptive Enterprise), and so forth. climbable Enterprise is centered on Dell products, run and alliancesall of which are rooted in industry standards and cloaked in the far-famed Dell direct model. The company has been promoting and marketing this vision for only a few y ears, but it has quickly become a focal point for how Dell rationalizes its product and serve roadmaps.And it intersects with Dells overall view that the industry will continue to leverage clusters of high-performance, industry-standard servers and operating environments, and move away from larger-scale, proprietary systems. more than important, the Scalable Enterprise vision also gives Dell a method for speaking with customers about its overall value proposition, and how it can help customers migrate to the long-term dynamic computer science vision.Dells Services employees, in particular professional operate, play a critical role in evangelizing the value of the Scalable Enterprise and in engaging customers in discussions as to how to make the vision real in their IT environments. Dell has never aspired to grow its professional operate business to extend to those of IBM Global Services (IGS) or the global systems integrators (GSIs). However, the company does recognize that o perate are a linchpin for helping customers use Dell products to address some(prenominal) their IT and their business challenges, and convincing them that Dells products and solutions are truly endeavour-class.To that end, Dell has refocused its professional services portfolio (and its entire services roster), placing overall customer satisfaction, lifecycle services and the Scalable Enterprise at the core. In this report, I am examining how Dell is trying to leverage professional services to drive its Scalable Enterprise vision. We begin with an overview of how customers view Dells Scalable Enterprise vision, based on data from a recently completed Summit Strategies position.We then briefly review the tenets of the Scalable Enterprise strategy and drill down into Dells services portfolio, with a particular focus on professional services and some of Dells newer offerings. We conclude with suggestions about steps Dell can takein particular with enterprise services partnersto furth er enhance its professional services strategy and spread its Scalable Enterprise vision throughout the market. We first explored Dells services strategy twain years ago (see our January 2003 report, discharge Dell Find Success in Enterprise Services? ).Then, Dell was still refining its services strategyparticularly, how it would move before in enterprise services. At that time, many of Dells executives were concerned that customers did not view the company as a strategic enterprise seller, or thought that Dell lacked enterprise-level expertise for designing and deploying IT environments. What a difference two years can make. We recently asked IT buyersenterprise and SMBto identify their most strategic IT vendors, both for overall IT strategy and in a variety of different IT areas, including infrastructure software and implementation and support.As shown in Figure 1, when we asked all respondents how important various vendors would be to their organizations overall IT strategy dur ing the next three years, Dell ranked fourth (19%) among those vendors identified as most strategicbehind Microsoft (36%), IBM (21%) and Cisco (21%). Dell ranked ahead of Hewlett-Packard (HP), Oracle, sunshine Microsystems, SAP, and some global integrators and outsourcers. Another 28% named Dell as one of their top two or three most strategic vendors.In another survey data point, among large enterprise customers (with 1,000 or more employees), Dell ranked as the fifth most strategic vendor (20%), with Oracle moving ahead of Dell. The news was even expose for Dell when respondents were asked about strategic vendors for their server and storage strategies during the next three years. Dell came out on top among enterprise customersahead of HP, IBM, EMC and Sun (see Figure 2). Dell also outpaced IBM among small and medium businesses (SMBs), a market that both companies view as a strategic priority.While these two data points do not directly relate to the robustness of Dells services ca pabilities, they do demonstrate that Dells profile as a provider of enterprise-caliber solutions has gone up considerably in the past few years. In addition, when we asked our survey audience to select their most strategic vendor for IT support and implementation services in the next three years, Dell placed fourth among total respondentsagain behind Microsoft, Cisco and IBMand fifth among enterprise respondents.Its also clear that Dells contention that lower-cost, standards based systems can handle IT functions previously reserved for higher-end, proprietary systems is resonating with customers. Also, Dell may benefit from its high-profile consumer business, with familiarity in consumer markets breeding a similar familiarity at the corporate customer levelalthough there is no conclusive evidence about a linkage. The momentum is helping propel Dell and its Scalable Enterprise strategy into a leadership position in enterprise IT environments (see Figure 3).Based on an besotted beli ef that IT customers want simplicity, optimization and better management, Dells Scalable Enterprise vision encompasses Dells mission to standardize core elements of IT datacenters to experience these capabilities. It emphasized de facto standard products, open standards specifications, customer choice, lifecycle services and the advantages of Dells direct model. The Scalable Enterprise encompasses some, but not all, of the characteristics of Summit Strategies dynamic compute framework.This framework tightly aligns IT and business goals through the use of new infrastructure components and virtualization capabilities, automate and policy-based service management capabilities, and optimized business processes. Dell is positioning itself to focus on many of the infrastructure hardware elements of dynamic computingand is bringing in partners to solve the major infrastructure software, management and business process challenges of the dynamic computing equation (although some Dell-deve loped management capabilities are becoming increasingly strategic for the vendor).IBM and, to a lesser degree HP, talk to customers about their ability to deliver dynamic computing solutions from either the bottom-up (aiming to make the IT infrastructure more flexible and adaptable) or the top-down (analyzing business processes and then changing the underlying infrastructure to better support them). Dell, however, approaches customers with a more narrowly-focused value proposition that stresses a phased approach to drive standards and scalability within an enterprise datacenterwhich will lead to better IT support and adaptability for usiness processes over time. In fact Dell believes that its Scalable Enterprise vision will not come to full fruition until 2008, when the company plans to deliver more automated policy-based capabilities, self-monitoring tools and dynamic resource allocation for heterogeneous systems. Of course IBM, HP and others would say they can provide a greater ar ray of dynamic computing solutions now, and that customers remove no need to wait several years to take advantage of them.However Dell believes customers will be more comfortable with their longer-term, phased-in approach that emphasizes standardsand that by leverage its direct model customers will see Dells approach as more affordable as well. When we profi led Dells services business two years ago questions lingered over whether Dell could sustain its services business and how strategic services would play into the companys futurity (Scalable Enterprise had not yet been introduced).Today, with services as one of the three main pillars for the Scalable Enterprise strategy, there is little doubt about services overall importance to Dell. Services currently generate about $4 billion in annual revenue and it is one of the fastest growing part of the companys business. In fact professional services revenue has doubled over a two-year period, with significant growth in both the U. S. and overseas markets.As referenced previously, Dells services reflect the companys overall philosophy that customers want more standard, less custom and more lifecycle IT solutions. Dells approach has been to slowly expand beyond traditional support services (which still generate the majority of Dells services revenue) with more repeatable, higher value-add professional and managed services, both directly and through partners. To address this Dell is attempting to highlight its business-centric expertise in existing and new professional services offerings.