Dell's Manifest Destiny

Kevin Rollins has a vision. "We're very encouraged about the potential for Dell to grow into a broadly based and broadly acknowledged IT company," Rollins says about the computer vendor he now helms, having taken over as CEO from legendary founder Michael Dell less than a year ago. "We think of it like our manifest destiny."

Dell has been knocking on the doors of corporate America for a long time, winning converts to its low-cost, high-quality business model, first at the grassroots PC level, then in servers, more recently with storage and networking products. And while Dell's corporate ambitions are well known, and its strategy to win mindshare and market share are basically unchanged, its current game plan, which includes a growing emphasis on technology services as well as a strong push into imaging and printing products, will let it reach further into the corporate environment. That, and overall business forces gathering steam for the past several years, such as cost cutting, standardization, and optimization, are positioning Dell as a central force in business technology.

One way Dell is nurturing its corporate expertise is by looking inside. "We tend to look more like our customer than any of the other technology providers," CIO Randy Mott says.

Dell's 3,700-member IT department operates with a budget of 1.4% of total revenue. Dell's standard software stack includes Oracle, SQL Server, Linux, and Windows, with the choice boiling down to the best product for a particular problem, Mott says. A recently deployed order-management system in Europe runs Oracle and Red Hat Linux on six four-CPU Dell servers.

Dell's low-cost model might seem like the last thing that would lead to business innovation, yet that's what Rollins and Mott argue is a big part of the company's value proposition. The thinking goes like this: Money that isn't spent on IT infrastructure can be directed to other priorities that differentiate a business from its competitors. And money that's spent on IT infrastructure goes into systems that require less maintenance, freeing up IT staff to develop new software capabilities instead. "You have an opportunity to reduce costs and increase innovation," Mott says. "They're linked."And Dell may be its own best example of how that works in practice. Over the past five years, the company has gradually decreased the number of IT staffers who maintain and support its computer systems and shifted those people to software-development projects. The result: Approximately two-thirds of Dell's IT personnel now work on development, compared with one-third five years ago. Over that same period, the number of business-technology projects under way at Dell has quadrupled, from 200 to 800. "When we add a new capability, we build that capability on new technology," Mott says. "There's an efficiency to that."

Not only is there an opportunity for Dell's customers to mimic that strategy, but they're at a disadvantage if they don't, says Mott, who was CIO of Wal-Mart Stores Inc. before joining Dell in 1996. "If IT is not delivering at a pace that's meeting the needs of the business, it's stifling the needs of the business," he says.

Tribune's Dejanovic buys into the Dell philosophy that cost savings and efficiencies squeezed from IT infrastructure can be shifted to other priorities. "I was skeptical at the beginning, but I would say that's happening over the last couple of years," Dejanovic says. "I would like over time for my IT staff to focus more on providing business solutions than maintenance."

If Dell can convince more companies that its low-cost, high-quality, efficiencies-of-scale model can be an agent for business innovation, it may well win the hearts and minds of business-technology managers everywhere.

--with John Foley0