The ‘New Dell’ Talks Public Sector Problems And HP’s Fall

On the face of it, the ‘new Dell’ is doing well. Recent results have shown the Texan firm’s added emphasis on software and services is paying off. Indeed, the services division is now Dell’s fastest growing unit.

Yet economic factors and a tough consumer market are making life difficult. Public sector cutbacks have already hit the company’s coffers. Meanwhile, Dell continues to invest in tablets and PCs, even though iPad is dominating the former market, whilst the latter is in decline. It’s a testing time.

We caught up with the vendor’s vice president for infrastructure and cloud, Kevin Jones, and director for UK public sector services, Tim Sheppard, to talk about the ‘new Dell’, its troubles and its rivals.

What is the ‘new Dell’ and how is the shift going?
Kevin Jones: Dell is right in the middle of the transformation and it’s going very well. We’re no longer just a PC company, we’re a services and solutions company. That’s the strategy we’ve had for a several years and we’ve backed that up with tonnes of investment, both in new talent, both in our services organisation and throughout our solutions teams.

Within services the fastest growing part is EMEA. We see lots of opportunity here in this region.

You talk about investing in people – do you expect to boost numbers in this region?
KJ: We are investing in people. Our headcount now globally is over 44,000. We don’t break down further but as our business continues to grow we’re going to add more people in the UK and more people in other regions.

Government IT ‘cartel’

Public sector was one of the weaker parts of your recent results. With slimmer budgets and a purported move to using more SMEs, does Dell foresee that as being a weak area in the coming months?
KJ: I think it is a huge opportunity for us in the services business. A lot of our strategy is around making governments more efficient, particularly in the UK where they have very, very aggressive goals to be more efficient. I think that will actually help us grow, not shrink.

Tim Shepherd: We’ve always seen it as a positive thing. In times of recession, you often see technology companies rise because it is all about driving efficiency. The Government now needs to drive a lot of efficiency, and not just central Government. Local councils, hospitals, universities, they all need to drive efficiencies.

Last year we saw a lot of turning off of taps, which is an easy thing to do for finance directors in the public sector. But from September last year, we’re seeing financial directors, CIOs, CEOs of the public sector have worked out roughly what they’re going to do and we’re seeing a lot of public tenders around, all kinds of activity.

It will be services led, our push in the public sector, because services is the transformative bit that can save them money.

Other major vendors, including HP, have said SMEs won’t be able to deliver the big government contracts. Is that something you agree with?
KJ: I don’t agree. SMEs can provide a lot of value. We have a partner strategy that we’re working and we think the Government is right to want to utilise them more.

A lot of these SMEs have been involved for decades and are actually delivering great content and great programs for citizens. We think that’s really valuable. You add that to the technology and you get a really good combination.

TS: Dell was never really one of the big five organisations delivering to central government. Yes, if you look at some reports of IT spend we’re about number six, but that’s mostly the hardware business. We weren’t delivering into central government. I think we’ll be perceived as a market entrant in government. Essentially government wants to diversify its supply chain and they want to stimulate the SME environment. So in terms of the diversification, it’s a great opportunity for us.

So you were not part of what some had called a “cartel” of vendors supplying into government?
KJ: No, so it’s a good opportunity for us.

But in the US you’re huge in government, right?
KJ: Yeah, we have a massive public sector business in services in the government… But we’re very keen we help the government here [in the UK].

Devolving IT power

How different is this current government compared to the Labour one before it, which was considered fairly profligate?
TS: The great change we’ve seen is the devolution of accountability down to a regional level. What that means for us is procurement has opened up. It has allowed them to increase their supplier base and focus on SMEs. It automatically results in smaller deals because there is no National Programme for IT anymore.

Over the last year, we’ve started to see local bodies coming our to market, CEOs working out what they’re going to do, with lots of tenders. And they’re for everything: little bespoke solutions, the odd IT outsource, as-a-service models, mobility – all the things CIOs should be buying.

Do you see much public interest in cloud yet, what with the launch of the G-Cloud framework recently?
TS: No, this is a slow burner. It will be a trajectory rather than a big change. The commercial sector is embracing it much quicker.

But the CloudStore is big and there are a lot of suppliers. It’s a great step. It’s almost world leading and they should be applauded for that.

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