Dell on a mission to evolve from pure-play PC maker to global services giant
Its $3.9bn acquisition of Perot Systems puts Dell on a different journey from when it started 26 years ago
IT’S almost a year and a half since Limerick was struck with the harsh news that computer-manufacturing giant Dell was pulling out of the city, with the loss of 1,900 jobs, and transferring manufacturing to Poland.
Since that time, Dell has ceased manufacturing in Europe altogether, having sold its manufacturing operations to Foxconn, the $78bn-a-year manufacturer for the global ICT industry, which makes everything from smartphones and iPods to Xbox 360 consoles and the Nintendo Wii.
While this may be small comfort to the 1,900 ex-Dell workers – 300 of whom have so far received FÁS training under the European Global Adjustment Fund – it’s important to remember that Dell is still a prominent employer in Ireland, with close to 2,000 workers engaged in leading-edge server, logistics and business processes.
With this in mind, it’s worth looking at where Dell is heading now that it is no longer pre-occupied with PC production. Green shoots are already showing. In March, it emerged that Dell has commenced recruiting again in Ireland, taking on 100 people for its plants in Cherrywood, Dublin and Limerick.
For much of the company’s lifecycle it had been a pure-play maker and seller of PCs. In the late Nineties, the focus switched to also assembling and selling servers and storage devices to higher-end activities, with Dell lately unveiling its own smartphone technology to take on the iPhone.
Over the past several years the firm has focused on becoming a services provider not only to SMEs but also to larger corporate and government customers as well.
Dell’s acquisition of Perot Systems for $3.9bn in 2009 is the clearest signal of all that the Texas-headquartered tech giant is focused on becoming a major outsourcing and managed-services provider, competing with HP, IBM and big-five consultancy firms such as Accenture.
At the time of the acquisition of Perot Systems, Dell founder and CEO Michael Dell said: “We consider Perot Systems to be a premium asset with great people who enhance our opportunities for immediate and long-term growth.”
Dell country manager Dermot O’Connell and Liam O’Reilly, who heads up the former Perot division in Ireland, which will now be known as Dell Services, say they are optimistic about the potential to win business and create jobs.
O’Connell points to how many of the 2,000-strong workforce remaining in Ireland carry out complex global roles: high-end jobs for high-end workers.
These include controlling functions across Europe, the Middle East and Africa, as well as analytics and purchasing, wireless R&D and managing relationships with the biggest sales account Dell has in the world. The Enterprise Expert Centre in Cherrywood has experts for all of Dell’s customers in Europe.
“Traditionally, firms would spend 95pc of their total IT budget keeping things going, with little left over for innovation,” says O’Connell, describing the new Dell Services mission.
“Our value proposition is helping firms get that down to 50/50 and allow them to drive new products and services out to the market.”
At the time of the acquisition by Dell, Perot Systems employed 150 people in Ireland and 23,000 globally.
Says O’Reilly: “For the past six months we have been focused on integrating into the wider Dell family. If you take healthcare or banking, for example, we would have the knowledge and expertise to provide a more holistic solution and if you integrate that in with Dell’s expertise around hardware, you have a broader spectrum of service offerings across all industries.”
O’Reilly says the new Dell Services division will have expertise in the areas of business transformation, application services, business-process outsourcing, infrastructure and managed services.
Prior to being acquired by Dell, Perot Systems acquired John Collins’ Origina Solutions, bringing end-to-end systems integration and business-transformation skills into the fold.
O’Connell says Dell Services will work across a number of sectors, including government, financial services, telecoms and healthcare, marrying consulting and applications capability with hardware services.
“This is about moving beyond the CIO level where we were all the time selling PCs with no services, to now being able to do significant data-centre business and mission-critical projects for companies.”
The transformation of Dell from low-cost PC assembly to high-end business services can be construed as a fitting metaphor for the journey Ireland as a nation is now on. It can no longer return to the days of low-cost manufacturing but must progress to higher-end activities to stay in the game.
O’Connell believes the Government’s €150m Smart Schools=Smart Economy, although late, is no less welcome, but warns this should simply be the opening phase of important changes that must sweep our education system.
He is aware that nations across the world are preparing national digital strategies to drive their economies to succeed in the decades ahead.
“I think that not having a digital plan is an issue. We’ve made a great start on education in the last couple of months. I’m seeing a huge realisation from the perspective of teachers and parents that we can use technology in education to drive that part forward.”
One of the realities of the reset world is that foreign direct investment alone is not going to drive this country’s future, with O’Connell arguing for more cohesive and comprehensive support for start-ups and SMEs.
“We all understand the banks have their challenges; lending to SMEs and start-ups is probably seen as a high-end risk. So what do we do? Perhaps we should look at a public-private partnership where some public money and some private money is put in and the spoils are shared,” he says.
The role of multinationals in supporting the local economy – aside from the money that is spent in the local economy by the companies and their employees – could extend to working with smaller local companies, he suggests.
Another key facet is building a more practical ecosystem to translate college research into creating businesses and enabling existing business.
“The colleges are the most important places to start because they have a lot of the infrastructure in place to enable new entrepreneurs or up-and-coming entrepreneurs to do something, to get a project or an idea into fruition.
“I think we have the people and the programmes, and we go as far as getting the research up and running. It is probably at the last piece of that – commercialisation – we don’t quite manage to get the return.
“The trick for us is to build a much better ecosystem in Ireland for those people to move forward and bring those ideas to fruition,” O’Connell points out.
© Silicon Republic Ltd 2010
All content copyright 2010, Silicon Republic Ltd — all rights reserved