Dell announced the biggest technology merger in history last week with EMC, and at Dell World he was clearly excited about the results. I expect he was especially excited because he stole this deal from Meg Whitman and HP. I know both Dell and EMC reasonably well and there are some little talked about parts of both companies that, when combined together, could be massively powerful.
Let’s talk about that this week.
The Secret Jewels of Dell
This starts with Dell’s acquisition process which currently leads the technology industry. One of the things I don’t get is why every company doesn’t do this how Dell does it, given Dell’s acquisitions go up in value after it buys them while virtually everyone else loses their shirt. This is because Dell does an acquisition like you’d do a good marriage—pooling of things that make sense while leaving each individual alone to showcase their unique strengths. Everyone else does this like Dr. Frankenstein did with his monster—a surgical process that leaves the newly combined company as a mashup of the parts of the merged firm. Instead of 1+1=2 it is more like 1+1=1.2 and—like the monster—not particularly attractive.
Dell’s focus is on entrepreneurs, particularly women. Dell figured out that if you help companies that are starting out they’ll stick with you until the end. It is the only company that aggressively helps small companies—particularly those run by women—get started. It leads the UN Council on Entrepreneurs so it’s a worldwide effort. This bootstrapping of young firms assures it will always have young companies coming up to replace those that eventually fail (more than half of the Fortune 200 that we had in 2000 are now gone).
Strategic use of their CMO. Karen Quintos is not only Dell’s CMO, she is a showcase for the use of Dell technology. Over the last decade CMOs have become the most aggressive users of technology tools from analytics to social media because they are needed to help promote and sell products and to better engage with customers en masse, all of which are part of the marketing job. Dell stands alone in using its CMO as a strategic part of its product development and sales process.
Custom business. This unit inside Dell is one of the least known and historically one of the most successful. They build equipment that goes in third party hardware like medical machines—making that equipment both less expensive and more reliable because the specialized machine maker doesn’t want to learn or service PCs. Dell handless all of that for them and their customers, giving these firms who would typically incur massive costs to build in this technology themselves massive cost reductions and providing their customers far better services than they otherwise might get.
EMC starts with the most creative organizational structure in the market. VMware is a public company where it owns a controlling interest, RSA is a wholly-owned subsidiary, Pivotal is a joint venture with GE, and VCE was (though it isn’t any longer) a joint venture with Cisco, VMware, and Intel. This allows each of the units to both be strong parts of EMC’s federation of companies, and act independently so they can do business with EMC’s competitors as well. It broadens the total available market, allows it to better-retain high profile executives, assures tighter focus, and allows EMC to spread its acquisition dollars much farther.
EMC has the strongest quality and customer satisfaction program of any firm. It actually has patents on its process, which remains the most robust in the business. Tied to executive compensation, it can partition customers based on loyalty—placing resources to assure the most loyal customers—and use the resulting information to decide on future investments focusing on what will have the most impact on customer loyalty and satisfaction. For instance, EMC often realizes it will get a higher return by putting resources on a customer-facing process than on creating a new product or feature. It also allows EMC to showcase a powerful use of its big data analytics solution. When customers find out about this they often demand that EMC build them a similar solution.
IT in a Box. This is EMC’s unique VCE unit which basically puts an entire large company IT solution in a package. EMC has incredible time to value and can often go from successful bid to production in under a month. The customers of this unit are nearly religiously loyal to it and it has grown to billions of dollars with one of the highest growth rates in the industry.
Analyst Relations at EMC is arguably the best in the segment. It is well staffed, focused, and has an execution history that has decades of knowledge and best practices. Known for assuring there are special analyst tracks at EMC’s events and for their strategic use of analyst resources they stand as a testament that Analyst Relations funding provides strong dividends for the firm and its image.
Assuming that these key skills in both companies can be preserved and migrate from one firm to the other—and they should, given Dell’s market leading acquisition and merger process—the end result should not only be a company that leads in over 20 Gartner magic quadrants but one that can out-execute every other firm in acquisitions, creative company structures, customer satisfaction, strategic use of their CMO, custom and semi-custom hardware, IT in a box, creating new customers from entrepreneurs, and excellent analyst relations.
Combined these two firms may be nearly unstoppable.