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Dell's Acquisitions Part of Larger Enterprise Play

By David Needle (Send Email)
Posted Mar 7, 2011


PALO ALTO, Calif. -- There are some things you can't do over again. Michael Dell started PCs Limited (the company later renamed Dell) out of his college dorm room in 1984. Dell (NASDAQ: DELL) went on to become one of the fastest-growing companies in history and last year was ranked 38th on Fortune Magazine's list of the largest companies in the U.S. with more than $52 billion in revenue. Dell embraces a startup mentality to reshape its image from being just a direct seller of hardware to a more comprehensive provider of all kinds of IT services.

Now Dell's founder and CEO wants to instill some of that same startup entrepreneurial spirit at the computer giant, without sending anyone back to a dorm or cramped apartment.

In the past few years Dell has made a string of acquisitions aimed at expanding the company's reach and help fight the kind of stagnation and bureaucratic roadblocks that can stifle innovation at big firms. Rather than 'Dellicize' these acquisitions by merging them with existing departments and divisions, Dell is letting them stay largely independent, while free to leverage Dell's considerable resources as part of a broader push to reach more enterprise customers.

"Dell has a great hardware legacy, but now we make sales even if there are no servers involved. That happens every day because we support HP, IBM and other suppliers," said Ben Linder, founder and CEO of Scalent, acquired by Dell last July. "We're not just a hardware vendor; we're here to help you run your data center better."

Dell renamed Boomi and KACE after they bought them. They now go by Dell Boomi and Dell Kace. Scalent is still Scalent.

Linder joined two other founders of startups Dell's purchased to talk about how these companies fit with a broader enterprise and cloud strategy at a media event here last week. The other two were Bob Moul, founder of Boomi, a SaaS integration software vendor Dell acquired last November; the other was Rob Meinhardt, founder of systems management supplier KACE, acquired last February.

Boomi's Moul said hooking up with Dell has made a huge difference to his business because, among other reasons, "we're no longer having to spend time fund raising or answering questions about our viability." Moul said Boomi is on track to double in size this year and is expanding both in its home base in Philadelphia and offices in Silicon Valley.

Moul said a recent leadership meeting of between 700 to 800 Dell executives was an eye-opener. "I was like a kid in a candy store because there were so many opportunities to interact with people there" and leverage those resources, he said.

Boomi is set to be a key part of Dell's portfolio of integration services. Moul said Boomi solves the number one or two barrier to adopting new SaaS or cloud-based services, which is integration with legacy, on-premises systems.

"We make them all work together seamlessly together from a Web browser," he said. "We solved a fundamental integration problem that would otherwise cost tens of thousands of dollars. With Boomi you can buy apps by the drink and eliminate the integration issues as a hurdle."

Meinhardt of KACE said a recent amusing Tweet by a customer captured his company's value proposition.

"It said: 'Drink beer while 8,000 teacher's workstations are provisioned with Internet Explorer'," said Meinhardt, noting the KACE appliance provides a simple way to deploy a new software image from a central location.

"We've made tremendous strides in the SMB and midsize enterprise market with Dell's reach," said Meinhardt. "NASA is a good example of a customer we probably would never have served without Dell behind us; that's 90,000 endpoints."

Bob O'Donnell, vice president at research firm IDC, said he likes Dell's strategy, but notes the company faces a considerable challenge facing the likes of HP and IBM who are more established enterprise solutions providers.

"Dell's legacy is hardware, it's not known for innovation and software," said O'Donnell.

But Karen Quintos, Dell's chief marketing officer, said Dell is more than up to the challenge.

"You don't change people's perceptions overnight; we realize this is our part of marketing journey," said Quintos, adding that Dell is in the midst of spending a $100 million dollars retraining its sales force on Dell's expanded solutions portfolio.

David Needle is the West Coast bureau chief at InternetNews.com, the news service of Internet.com, the network for technology professionals.

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