Dell going private will generate uncertainty for CIOs

Carter Lusher, Chief IT Analyst, Ovum

AUSTRALIA: Dell is on its way to open a new chapter in the IT industry by taking the company private. A move, which according to Carter Lusher, chief IT analyst at Ovum makes strategic sense:

Dell is in the midst of a wrenching transition from a supplier of commodity hardware, mainly traditional PCs, to being a supplier of enterprise-grade IT infrastructure. Dell’s ambition is nothing less than offering the entire IT stack with supporting services. A significant risk likely to face Dell during this transition is that enterprises and public sector organizations cut back on their purchases “until the dust settles.

The implication of going private is that Dell is planning radical changes to its strategy and product roadmap. While the company might come out of this transition stronger with a product lineup that better meets the needs of businesses and public sector organizations, there will be uncertainty as to what products and services stay, get strengthen, or get eliminated.

Ovum sees effective communication to prospects and customers about its strategy and product roadmap as a, if not the, critical success factor to get through the transition. While this might sound simple it is not. Compounding Dell’s challenge is the deep seated brand identity as a “PC company. Yet another communications challenge will be how Dell Services (built on the Perot acquisition) shares its financials for the due diligence phase on large, multi-year IT services deals.

Ovum recommends that CIOs need to asset the risk to their infrastructure and put into place plans should Dell’s radical hardware, software, and services shifts require changes to procurement plans.