Why Dell Has a Subtle, Secret Strategic Advantage

At this week's Dell Annual Analyst Conference, the company has been bringing up customer after customer to praise Dell products, services and sales approach. But the one thing nearly all customers are saying is that Dell's advantage, at least the one that interests them, is none of the above. It's that Dell leads with the question-"What problem do you want to solve?"-as opposed to hardware or software product or packaged service.

When most vendors enter an engagement, their goal is to sell a product, and their response to a customer request for help is to position that product as the solution. Few, if any, actually seem to care what the core problem is, let alone craft a custom solution to address it.

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This is Dell's subtle, secret strategic advantage-the company is more focused on fixing your problem than selling you a product. The reason for this focus? Applied analytics.

The A-ha Moment: 'Take on Me,' Dell Tells Customers

The light went on in my head when I heard this story. Apparently a customer in an emerging market had about 600 hardened laptops that needed to be replaced. Most companies would bid the closest thing they had to what the customer apparently wanted.

Dell didn't. It first analyzed the core problem the customer was trying to solve, then bid a software solution instead so employees could use any number of personal electronic devices to better get the job done.

The result: Massive savings, since the customer didn't make any unnecessary hardware purchases, and a user base far more content to carry lighter, more portable products and not the expensive, heavy products it apparently didn't want in the first place.

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By focusing on the actual core problem, and not just its products, Dell came up with a far cheaper way to address the problem. And end users, far from feeling cheated, liked the results better. It's a win for the IT department, a win for the often-forgotten user and a clear win for Dell.

Any Way Customers Want It? That's Not the Way They Need It

Dell is one of two technology companies aggressively using analytics to measure employees, customers and partners. (The other is EMC, a former close partner of Dell.)

These analytics showcase the need to understand and focus on the core problems. Doing so results in happier, more loyal customers and partners-and, as it turns out, the resulting engagements result in happier, more loyal employees as well.

Analytics helped Dell see that the traditional "lead with a product" approach was counter-strategic to building and retaining customers over time. If Dell instead leads with understanding the problem and then crafts an ideal solution from its analyses, then everyone's happier-and, importantly, customers more likely to stay with Dell are also more likely to sing Dell's praises to other customers. Turning customers into advocates is one of the most powerful ways to cut the costs of both customer replacement and acquisition.

Asking customers "What's the problem?" is actually hard. Companies often release RFPs that simply focus on the hardware, software and services the company itself has determined it needs. Such an approach makes it incredibly difficult and unnatural for a vendor to ask that critical question and instead focuses the proposal on the specific products let out to bid.

IT may deal with a problem once, but a vendor with Dell's size and scope may deal with this same problem with other clients several times a year. That means it has more expertise in which solutions actually work, and/or whether a customer needs to approach a problem from scratch, since the tools available now are often vastly different than the set of tools the IT department believes will be the case.

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Figuring this out puts Dell in a unique and powerful position, but the question is one you should want every vendor to ask. Frankly, your own people should analyze the problem before letting the RFP go and bringing in vendors to see how well they can solve the problem.

Focusing on Tools? You Still Haven't Found What You're Looking For

If you focus on the tools, the old saying applies: "To a firm that builds screwdrivers, every problem is a screw." That's the problem when starting with the tool, not starting the problem to be solved. You can't get to an ideal, lowest-cost outcome by starting with the tool. You can only get there if you first analyze the problem and then craft a solution that's best matched to that problem.

When you do this, what you end up with is vastly different, but also better and cheaper over the long run. This is because the solution is matched to the problem. This just isn't possible if you pick the tool before you analyze the problem.

This is Dell's subtle, secret advantage. It asks the question before pitching the solution. That's a huge difference.

Rob Enderle is president and principal analyst of the Enderle Group. Previously, he was the Senior Research Fellow for Forrester Research and the Giga Information Group. Prior to that he worked for IBM and held positions in Internal Audit, Competitive Analysis, Marketing, Finance and Security. Currently, Enderle writes on emerging technology, security and Linux for a variety of publications and appears on national news TV shows that include CNBC, FOX, Bloomberg and NPR.

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This story, "Why Dell Has a Subtle, Secret Strategic Advantage" was originally published by CIO.

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