Dell pins software hopes on the midmarket
Dell described a plan Thursday that pulls together its acquisitions of Quest, Boomi and several other vendors
IDG News Service - Dell has laid out a plan to dramatically grow its software business by targeting mid-sized companies that it says are under-served by rivals such as IBM, Hewlett-Packard and Oracle.
Its plan is to target four key areas: security, systems management, business intelligence and applications, said John Swainson, the former chief executive of CA who was hired by Dell in February to run its newly formed software division.
Dell expects security to be "a billion dollar business" for it in the next couple of years, Swainson told reporters during a round-table in San Francisco on Thursday. Systems management will be a billion dollar business "in the near term."
Today, Dell's entire software business is worth roughly $1.4 billion, Swainson said, implying significant growth in the years ahead.
The strategy will take time to implement, however. A cornerstone is Dell's $2.6 billion acquisition of Quest Software, which sells a variety of system management tools that Dell hopes to leverage across its other products, in areas like storage management and security.
The Quest deal isn't expected to close for a few months, however, and integrating the companies' products will be "a journey that will take 24 to 36 months," Swainson said, although he said there are "immediate gains" as well.
The push into software is part of a wider turnaround effort at Dell, which wants to become less dependent on PCs and a bigger player in software and services, which tend to carry higher profit margins. That too will take time.
"IBM took 20 years to remix a business that was hardware-centered to one that's software- and service-centered," said Swainson, who spent 26 years at IBM before moving to CA. "It won't take us 20 years to do that, but it also won't take a year-and-a-half."
Still, Dell has been making acquisitions at a rapid pace. In security, for instance, it bought SecureWorks and SonicWall, and for systems management it has bought Wyse, AppAssure, Scalent and Kace, as well as Quest.
Its pitch is that mid-sized companies, or those with 200 to 2,500 employees, want similar capabilities to large enterprises in areas like network security and business intelligence, but need products that are easier to deploy and use.
Dell says it will combine hardware and software into preconfigured systems that are easier to install and manage, and support them through its services arm. An example is its Quickstart Data Warehouse Appliance, which combines Dell servers and its Boomi integration software with Microsoft's SQL Server database.
Transitioning itself from a PC vendor to a "solutions" vendor is not an easy task, however. It's having to retrain its 20,000 sales people to sell more complex systems, which Swainson acknowledged is "no mean feat." Eventually it will need to retrain some of its channel partners as well.
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