Dell Software Emerging from the Wings
Dell’s John Swainson briefed analysts this morning on the software strategy that he has been crafting since joining the metamorphic vendor in February as president of Dell's Software Group. Swainson knows software. Though more recently at Silver Lake Partners, the prominent private investment firm, Swaison’s pedigree includes 26 years at IBM, rising to vice president of worldwide sales for IBM's Software Group, and 6 years as CEO of Computer Associates where he navigated very rough waters following the top-of-the-house accounting-fraud blowup.
What is Swainson’s strategy? Essentially at this point Swainson is anchoring two of his target areas with a core offering around which other capabilities will be arrayed. In security it will be Sonicwall and in systems management it will be Quest, both recent acquisitions.
In two other target areas, Swainson was much less specific -- business intelligence, and applications – except to say he has a key resource in Cloud integration leader, Boomi, acquired eighteen months ago, and a partnership withsalesforce.com.
In addition, the Software Group at Dell will enable, where possible, differentiation in its other category offerings, hardware and services, with software it develops to increase margins and retain customers.
Thus, Swainson will focus on these four key areas for market offerings: security, systems management, business intelligence, and applications. He predicted revenues in these areas, and possibly others not yet identified, would grow significantly over the next five years:
"We have every expectation that this is going to be a billion dollar business for us in the next few years."
The mid-size market design point provides Dell with a perfect target to reach its goal. First, the midmarket is underserved; second, it easily can be a one-stop shopping play, if Dell should successfully expand its offering in BI and apps; and third, internationally, this is the sweet spot for growth over the next five to ten years.
Fueling this growth Swainson identified four disruptive trends in the software market -- security, connected devices, data, and the Cloud – but had nothing much to say about social networking, media or collaboration. Saugatuck believes that the Boundary-free Enterprise in its many manifestations will require all of these with a heavy dose of integration to make their synergy powerful.
Swainson is a polished performer and a very experienced business executive. Nevertheless, he faces quite a challenge at Dell where he must now compete – as Dell is now a full-line provider of hardware software and services -- against partners (Microsoft), former partners (Cisco) and niche players (a cast of thousands) for a share of the lucrative software and Cloud solutions market.