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Dell evolution
Dell strategy past to present Daniel Spanier, Alexandra Bielková
About the Presenters
Daniel Spanier Alexandra Bielková Education: Bachelors of Economics and International Management 6 Sigma Green Belt Certified Work experience Dell: Finance Director – EMEA FP&A Controller– EMEA Services Call Centers Services Globalization and Liberty Lead Americas Support Services Team Lead Worldwide Operations - Manufacturing 2 Education
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Masters in Maths & Mgmt, Comenius University, 2002 PhD in Mathematics, Comenius University Work experience Dell: Services FP&A manager Western EMEA FP&A EMEA RUM Forecast Coordinator OPEX controlling & consolidation EMEA Fin Systems Training Coordinator
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?
3 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)
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) 4 1) 2) http://www.ifm.eng.cam.ac.uk/csp/summaries/ms.html
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
Vision Mission Values ELT Strategy Objective Change Initiatives Planning Customer Support Sales Manufacturing IT Demand Supply Marketing & Product Development Finance HR Information & Communication Flow
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Dell Direct
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PC’s in the Mid 1990’s…
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Dell direct model
Build to order cost benefits
Components Purchase Cost to Competitors Dell Cost Product Assembly Manufacturer's Inventory Shipment to Distributor Shipment to Reseller Customer Places Order Dell Procures Components, Assembles and Ships Channel Inventory
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Customer Benefits 8 Weeks Ago 6 Weeks Ago Consistent Supply Globally 4 Weeks Ago 3 Weeks Ago Today Immediate Response to Customer Needs Time Lowest Cost Consistently
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Dell.com
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Dell.com - a brief history
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++ • • • • • • 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 1996 11
Dell online today
Online: Dell.com + Premier Pages + Global Portal + B2B 1.8M B2B trans per year 7.3 M online trans per year, e-pen = 42.2% 34 supported languages 25M visits on PP and GP pages per year 124K Premier and Global Portal pages 1B visits per year to Dell.com
86% of trans are Client and SnP products 11B online revenue per year 2B online margin per year An online order is placed every 4 seconds 12
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Dell embracing the channel
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Group exercise & discussion: Why did Dell enter the indirect business model?
Direct 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
Indirect 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
Dell approach – Global commercial channel
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 Level of cooperation 17
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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 • “Direct model has been a revolution but it is not a religion” Michael Dell June 2007 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
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
businesses
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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
• 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.
20 http://www.dell.com/learn/ie/en/iecorp1/secure/2011-0715-annualmtg-release
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Dell’s leadership in the virtual era
Create End-user computing Manage Services, Security, Cloud Next generation computing solutions and intelligent data management Deliver Key design tenets Open Capable Affordable
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Dell customer perception evolving…
OK PCs Old Technology Data center Thought leader Enterprise Efficient
Reliable
Mobility
Computers
Followers Trustworthy Tablets
Cloud
IT leader Reliable Desktops Virtualization
Outcomes
Smartphones
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Dell reflecting current IT trends
Major IT trends
Consumer • Ubiquitous computing • Always On connectivity • Anywhere Anytime mobility Enterprise • Mobility • Increasing IT Complexity • Cloud Computing • Large Data Analytics Rise of Smartphones, Tablets, Ultra-books and Cloud Services • • Rapidly increasing storage requirements, services instead of in-house solutions Global industry trends BRIC country IT market growth Consumerization of IT – change of traditional work/life patterns 24
New Dell Business Model
25 Confidential
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 26 Confidential
Dell –the largest start-up
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Discussion: Does Dell need to change its strategy after going private?
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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