I’m doing a series of win/loss reports and one of the interesting trends is Dell EMC storage is replacing HPE storage pretty aggressively. I think this is showcasing the use of what is termed a “Halo” product in the consumer market to open the account up and showcase the better service experience EMC is providing. At the heart of this experience advantage is a number of things—a more stable and mature workforce, a realization that people are cogs but have intrinsic value as employees, and a customer loyalty measurement process and executive metric that currently leads the industry.
Let me walk you through the case.
Asian Financial Company
I’d love to share the name of the firm but this is an HPE account and they are worried about backlash from HP. But this is a leading finance cloud service provider in APJ (Asia Pacific Japan region) that is building a one-stop financial services platform to provide users with comprehensive, one-stop financial planning services, and financial information services. They were almost entirely HP with some Dell servers, apparently, not any more. (More on the Dell part later). I should point out that they gave a lot of credit to their local sales team which was instrumental in helping them achieve their goals.
What got Dell EMC into the account was XtremIO, currently the top performing flash based storage product in the market. Financial institutions are all about speed, as any slight slowdown in transaction speed can cost them millions and potentially cost them customers. The customer looked at the HP 7450 and found it wasn’t competitive to HP’s offering and moved to install Dell EMC instead. XtremIO is now fully deployed, met expectations (it went through a massive testing process before being deployed using a meticulous proof of concept) and they feel the solution not only meets their needs today but will help fuel the massive growth they expect for their business. This is a young but very successful financial institution.
But then something really interesting happened, they saw how much better Dell EMC was in support and it actually seemed to make them angry with the comparatively poor support they were getting from HP. Like a lot of firms, they aren’t a mixed shop they don’t know that vendors staff, train, and support their customers very differently. Until Dell EMC came in, while HPE was giving them pain, I expect they just thought that was the way American vendors treated their customers suggesting HPE isn’t just damaging their own brand but likely damaging every US vendor’s brand in some accounts.
You see when the firm spoke about the difference between HPE and Dell EMC they talked about how Dell EMC took responsibility for problems while HPE put the problem back on them, they talked about how Dell EMC provided a total solution while HPE just provided the part, they talked about how EMC was more professional and better trained, while the HPE crew was young and inexperienced (professional competency was vastly better with Dell EMC), that Dell EMC gave them better choices than HPE, and that EMC had a far stronger ecosystem to surround the product.
I think this is the fallout largely from a shift in US industry that Dell EMC had been resisting and prompted their sale to Dell. You see US firms have gone from being owned by individual investors to being owned by hedge funds and the result is they are now managed very tactically with a hard focus on profits. At HPE this has led to massive layoffs and a hiring practice that favors kids out of college who are cheap over experienced employees who have greater intrinsic value. The end result is a highly siloed company that can’t think strategically, with employees who lack experience resulting in what sounds like a horrid customer experience. This starts at the top and—given we live in an age where communication is far more common between companies—there is no doubt that soon most of HPE’s accounts will know that their pain isn’t unique and that other vendors, particularly those that have gone private, can and will provide a better experience.
This starts by having an advanced product that leads the market because to convince an account that you have a competitive support advantage you first have to get in it. I’ve seen EMC use both XtremIO and VCE successfully to enter an account. With VCE, which is basically an entire IT shop as an appliance the result is even more dramatic.
Joe Tucci, EMC’s now retired CEO, heroically resisted pressure from the investment community to do the things HPE has been driven to do and he helped drive in a process of executive review which focused on quality. The end result was a firm that was very different even before HPE went through its various organizational and leadership changes. But now that HPE has, the result is almost night and day different.
I should point out that Dell EMC currently leads the market in instrumenting customers so they know better not only where the pain points are, but its executives are motivated to prioritize fixing them over the more normal monetary metrics driving firms like HPE. This kind of advantage is both strategic and sustainable because, to counter it, a competing firm must first get rid of the financial influence and–given most CEOs are themselves heavily measured on the same financial metrics that the hedge funds like—not only is the process very hard, it isn’t popular with most of them.
I do think HPE’s strategy is a going out of business one but I also expect Meg Whitman will be long gone and far richer by the time that happens.
Wrapping Up: Dell
I think this case showcases that while products like XtremIO are worth looking at because of their extreme performance advantage the more sustaining differentiator is how your vendor deals with problems and resolves them. Years ago, I did a competitive comparison between Dell PCs and Sony PCs finding that in almost every case the Sony PCs were higher quality and better looking, but because Sony service was horrid and Dell led the industry in this regard, Dell was far more successful and its customers far more loyal. Dell has massively improved their design and quality while largely keeping their service experience intact.
But EMC exceeded Dell significantly in the enterprise and it is EMC’s process that will apply to both company’s post-merger, suggesting that even though this account indicated they wouldn’t be changing out HP servers for Dell’s at the moment, their position may change once they see a similar difference between HPE and Dell servers from the new merged Dell EMC.
The two lessons here are that products are important to opening an account but it is the long-term customer experience that is important in keeping it. In this new connected world, having the best process to measure customer loyalty and motivate employees should give the new merged Dell EMC a massive competitive advantage. We’ll see.