Dell EMC, as a combined company, will execute for longevity in next generation data centers, says Krista Macomber, senior analyst, Data Center TBR.
The Dell EMC World 2016 customer and partner event showcased the benefits of scale and early product integration from the newly combined Dell EMC organization. Customers are turning at a quickening pace to increasingly converged and virtualized IT assets and “as a Service” IT delivery to evolve their underlying infrastructure from a cumbersome cost center to an agile enabler of business productivity and advantage. In this climate of heavy disruption, incumbent vendors must disrupt long-standing business models in kind for future relevancy.
Discussions at Dell EMC World 2016 indicated that the heritage Dell and EMC organizations have completed initial planning and are beginning to collaboratively execute on a portfolio and go-to-market vision that more effectively addresses customers’ quickly evolving workload requirements as a combined company. Today’s rapidly modernizing business environment requires customers to undergo substantial IT and process change.
For its part, the Dell EMC organization will differentiate by providing more comprehensive next-generation infrastructure capabilities as a combined company. It will also mesh the heritage Dell stance as the IT organization for its large concentration of midmarket customers with the heritage EMC cachet in providing reliable innovation for mission-critical large enterprise workloads, to serve as an adviser that maps customers’ evolving workload and application requirements to optimized underlying IT resources.
This strategy will enable Dell EMC to maximize its core strengths, go to market with a clear and sticky value proposition, and hone in on the divergent requirements of the vast customer base, spanning SMBs to large enterprises, that it addresses. To serve as this next-generation IT enabler, Dell EMC has identified three core tenets it will execute on: modernizing the underlying IT architecture, automating service delivery and management, and enabling hybrid cloud-driven operations transformation. While Dell EMC will lead the infrastructure modernization charge, it will heavily tap VMware for automation, and Virtustream as well as other third-party cloud service provider partners such as Amazon Web Services (AWS) and Google to support cloud transformation. With these tenets, Dell EMC is establishing a framework that astutely distills the major pillars of data center modernization initiatives that are inherently plagued with complexity, but is also flexible enough to be adapted to customers’ particular requirements.
It is also maintaining the structure of “strategically aligned businesses” (or “federated companies” in legacy EMC verbiage) that the heritage EMC team incrementally built out over the preceding decade. Dell EMC’s core strategies are sound, and the company benefits from a team of confident, energized and experienced executives prepared to execute on the organization’s vast portfolio and go-to-market resources. The company will remain a data center industry mainstay for the foreseeable future, but TBR notes the company proceeds in a crowded and competitive market that is shifting as rapidly as customers’ foundational IT requirements.
Dell EMC will remain a key target of a wide range of competitors, including multiplatform OEMs such as Hewlett Packard Enterprise and Lenovo, pure play vendors such as Nimble Storage in the all-flash storage space, and original design manufacturers serving the world’s largest cloud data centers.
As a result, the degree to which Dell EMC will maximize its revenue and profit growth will be predicated on its ability to execute on several portfolio and go-to-market elements, including the following:
Retaining focus on executing to address customer requirements, as the legacy Dell and EMC teams navigate not only overlaps but also areas of divergence in historical cultures and strategies, through creating a unified team under Chief Customer Officer Karen Quintos
Constructing a portfolio approach that integrates the heritage EMC team’s focus on remaining ahead of disruptive technology trends, including its willingness to invest early in capabilities such as flash and software-defined storage that are likely to cannibalize core businesses, to ensure future relevancy, with legacy Dell’s mature and proven supply chain and industry-standard server franchise
Consistently executing on pre- and post-sales services from a near-term perspective, but also delivering a more unified approach to supporting the newly combined portfolio from a mid- to long-term perspective
Quickly rationalizing direct and indirect sales initiatives to minimize not only client and partner impact but also internal conflict; this will require engaging in careful ongoing evaluation of market segmentation, simplifying engagements with partners, and carefully cultivating best practices from legacy Dell and EMC approaches.
Further maturing messaging across the strategically aligned businesses — Dell, Dell EMC, Pivotal, SecureWorks and VMware; the legacy EMC team set a strong foundation for the value of its family of companies in markets such as hybrid cloud and analytics, and brings competencies in managing multiple brands for best-of-breed recognition in targeted markets. Meanwhile, the legacy Dell team brings a more open, third-party partner-centric approach that will help to manage coopetition with Cisco, Microsoft, Nutanix, Red Hat and others.
Impact and opportunities
Dell EMC’s go-forward strategy will remain predominantly grounded in infrastructure. Hardware will increasingly serve as an optimized delivery mechanism for high-value, strategic software functionality for Dell EMC. As the market continues to move to internal storage capacity, virtualized functionality and more scalable architectures, Dell EMC is quickly integrating legacy EMC software competencies in areas such as data protection and object storage with legacy Dell PowerEdge servers — as demonstrated at Dell EMC World.
Most notably, PowerEdge will serve as the foundation for future Dell EMC hyperconverged platforms, which TBR research indicates are quickly displacing stand-alone hardware and, to a lesser degree, traditional converged systems deployments by providing a simplified on-ramp to cloud-like agility on premises not only for point workloads but also increasingly for mission-critical workload hosting and general-purpose consolidation. Over the past seven years, the heritage EMC team has built large installed and revenue bases, as well as robust expertise and brand cachet, around converged systems through its VCE organization.
However, the advent of hyperconverged platforms is shifting underlying architecture requirements away from the high-end, more traditional compute and storage technologies around which VCE built its business. For its part, the legacy Dell team brings Dell competencies around modular and scalable standards-based servers and highly efficient, direct-toorder supply chain management and manufacturing capabilities that substantially bolster the VCE team’s ability to deliver its software-defined data center functionality. Integrating with PowerEdge massively expands the configurability of the VxRack and VxRail portfolios, opening the door to downstream expansion and enabling Dell EMC to address a broad spectrum of new use cases.
Additionally, this creates the opportunity for enhanced differentiation and strengthened customer loyalty, as greater scalability is a top additional or enhanced capability required by hyperconverged platforms customers to ensure a future purchase, according to TBR research. As Dell EMC improves the configurability of its hyperconverged platforms business, Dell’s legacy manufacturing prowess is another major benefit in positioning the VCE team to more quickly and cost-effectively deliver more customized hyperconverged appliances, and ensure spare parts availability.
PowerEdge-based hyperconverged platforms will play a critical role for Dell EMC in executing on its hybrid cloud transformation pillar. TBR research indicates that a growing majority of hyperconverged platforms customers are using the architecture to support a private cloud implementation, and we anticipate a large portion of these deployments will become integrated with public cloud assets as the hyperconverged and hybrid cloud markets continue to mature. As a result, we expect the new hyperconverged platforms to become integrated with capabilities such as legacy Dell’s Boomi cloud brokerage and integration platform as a key foundation upon which Dell EMC enables customers to seamlessly migrate assets across on- and off-premises workloads.
