Trends 2018 Predictions Technology Part 2

RFG Perspective: Mobility and the digital economy proved to be an overarching theme in 2017
and will prove somehow to be even more ingrained in the all facets of enterprise business in
2018. While desktops are still the on-site work engine, they are no longer the user device of
preference for business or personal use.

Trends 2018 Predictions Technology Part 2

Trends – 2018 Predictions – Technology – Part 1

RFG Perspective: Unlike the past few years, there will be global economic and geopolitical
tailwinds in 2018, which will enable more businesses to increase their IT budgets. Additionally, the
disintermediation impacts of the digital economy will disrupt more businesses – and whole
industries – which must be addressed by corporate executives before their firms' revenues are
usurped by new or transformed competitors.

Trends - 2018 Predictions - Technology - Part 1

Trends – 2018 Predictions – Procurement

RFG Perspective: Unlike the past few years, there will be global economic and geopolitical
tailwinds in 2018, which will enable more businesses to increase their IT budgets. The passage of
the 2018 Tax Cut and Jobs Act of 2017 will boost corporate spending, especially for capital
expenditures.

Trends - 2018 Predictions - Procurement

Trends – 2018 Predictions – People & Process

RFG Perspective: Unlike the previous few years, there will be global economic and geopolitical tailwinds in 2018, which will enable more businesses to increase their IT budgets. Additionally, the disintermediation impacts of the digital economy are disrupting businesses – and whole industries – that must be addressed by corporate executives before their firms' revenues are usurped by new or transformed competitors. More business executives recognize the need for cloud computing and collaboration and strategic planning with IT executives.
http://www.rfgonline.com/wp-content/uploads/2018/06/Trends-2018-Predictions-People-Process.pdf

Predictions: Technology Trends 2016 — part 1

Trends - 2016 Predictions - Technology - part 1

Wither Dell?

Lead Analyst: Cal Braunstein

CEO Michael Dell is coordinating a buyout of Dell Inc. for $24.4 billion in the hopes that the company can more effectively go through its transformation if it does not have to deal with reporting results quarterly to fickle investors. Michael Dell's MSD Capital (his investment firm), has teamed with Silver Lake Partners to take the company private. Microsoft Corp. will be assisting in the buyout in the form of a $2 billion loan. If the buyout is successful – which it should be at some price – what does it portend for IT executives and commercial accounts?

To understand where Dell needs to go, one needs to first see where it is. Dell started as a low-cost PC company in the consumer market. It gradually switched to a bifurcated model – PC for consumers and PC and servers for the commercial space, primarily the public, small and medium business (SMB), and large enterprise markets. Over the past six years the company acquired 22 companies – 10 in 2012 alone – and expanded into other hardware components, software and services, including cloud services. But the company has lost its momentum. It lost PC market share and sales in 2012 faster than most of its competitors, which is disastrous for a company that derives more than half of its revenues from end-user computing solutions.

Smartphones and tablets have curtailed the growth of the traditional PC market and Dell's commercial business has not made up for the loss in end-user revenues. In fact, in both businesses Dell is considered a low-cost commodity hardware provider and not a market or thought leader. The company has not fully integrated all of its acquisitions and is struggling to reach its strategic goal of becoming a one-stop shop. The buyout gives the company time to re-think and execute a long-term strategy, reorganize and change its culture. As CEO Meg Whitman at Hewlett-Packard Co. (HP) can attest, a turnaround is a multi-year effort and doing so in public when quarterly results can be volatile is not fun. Thus, the desire by Michael Dell to go private.

While there are a number of challenges that Dell must address, there are two that will make or break the success of the new corporate strategy. The vendor must either exit the end-user computing market or once again become a market leader. It is lacking products in the key current and future end-user markets and it cannot regain its position with just PC solutions to hawk. Secondly, Dell has not been able to transition from a culture of transaction selling to one of relationship sales. If the vendor is to become one of the top one-stop providers in the commercial space, it will have to invest in customer relationship management. This is a massive cultural change that goes to the core of the company. HP has struggled with the clash of this cultural divide since it acquired Compaq in 2002. IBM Corp. took more than 10 years to change its culture. The underlying question will be whether or not CEO Dell, by trade a transactional salesman, can lead the culture shift to succeed with its new corporate vision.

In addition to the above challenges, there are a number of other key issues to be resolved. IT executive relationships with Dell depend on how these shake out.

Assets.  Dell will need to decide which assets it has today are worth keeping and which are to be shed. In strong customer relationship management organizations, people are a primary asset. Will Dell address this? Additionally, once it has its strategic vision in place, what additional acquisitions are needed to complete the puzzle? Will the new Dell have the funds to acquire the companies it needs or will the buyout end up choking the firm's ability to compete effectively? Dell recently moved into the equipment leasing space. Will it have the wherewithal to remain?

Business Model. What will Dell's new business model be? It will have to compete with HP, IBM and Oracle Corp. – all of whom are innovators, bring more than commodity products and services to the table, and want to own the complete business relationship with their customers. Each has a different business model. Where will the new Dell position itself?

Business Partners and Channels. Dell will have to re-evaluate how it works with business partners and uses various sales and distribution channels. Dell does have a cloud presence but can it leverage it the way Apple Inc. or Google Inc. do? Can it be a full service provider and still utilize business partners and channels effectively? Without strong business partners and channels Dell will not be able to compete effectively.

Microsoft. Microsoft did not become an owner but a lender to Dell. This will cost the company more than just money. Will it restrict the vendor from providing certain products or solutions?

Processes. Dell needs to revamp its development, operations, and sales processes to be fully integrated and customer relationship based. The customer must come first; not the products or services. This will be a long-term change, which may be agonizing at times.

Technology. Today Dell assembles some products and has the intellectual property (IP) for those products and services that the company acquired. Can it leverage the IP and become recognized as an innovator or will the IP assets wither and the talent depart? Over the past year Dell has been bringing on board the resources to take advantage of the assets. Will the new Dell continue down the same path? If Dell stays in the end-user computing space, will it be able to figure out how to do mobility and social (key components to staying competitive)? If not, will it bite the bullet and exit the business?

The company was at one time the leader in the PC arena. Then it became one of the top players. Now it wants to be a leader in the full-service enterprise space where it is not a top player and is losing momentum.

RFG POV: Dell has a long, tough transformation ahead. By going private it will no longer have to worry about the stock market price but will still have to answer to investors. RFG does not expect the company to pull out of any markets in the near term – although the printing and peripherals business is exposed – but a number of the executives and employees whose visions are out of sync with new direction will depart. In the full-service enterprise space Dell will have to be more than a low-cost provider. It must become a hardware, software, and services innovator, determine its positioning vis-à-vis competitors, make additional acquisitions to fill in the gaps, and spend time and resources building relationships that may not yield near-term revenues. Whether or not the stakeholders will allow the company to spend enough money and time to make the conversion is an open question. The fallback position may be to go back to being a low-cost or custom commodity provider to the commercial market.  Moreover, Dell will have to invest in a new end-user computing model, watch its market share shrivel, or quit the space. One thing is for sure – it cannot be all things to all players and must pick its choices carefully. Dell must articulate its strategy to business partners, customers, and employees over the next three to six months or loyalty may falter. In any event, IT executives should expect Dell to provide support and a smooth transition for businesses that are divested, restructured, or sold. IT executives desirous of using Dell as a strategic provider should continue to work closely with Dell, keep abreast of its strategy and roadmaps and factor the knowledge into the corporate decision-making process. Additionally, IT executives should not be surprised or concerned to find the company fails to make the short-list of candidates. There are plenty of options these days.

CEO Surveys

Lead Analyst: Cal Braunstein

IBM Corp. and PricewaterhouseCoopers, LLC released results from their global CEO surveys. For the first time the IBM study identified technology as the most important external force impacting the business. Both studies recognized the need to employ finer customer segmentation and use IT to change business processes to take advantage of new opportunities.

Focal Points:

• IBM released results of its fifth biennial CEO survey, in which the company interviewed more than 1700 CEOs with more than six years tenure in 64 countries. One of the top findings was that technology is now driving more organizational change than any other force, including the economy. In this regard, outperformers embrace openness, excel in executing tough changes, differentiate themselves through better data access and insights which are put into action, and are more likely to partner for innovation and driving revenues from new sources. The top three sources of sustained economic value come from human capital, customer relationships and products/services innovation. Internal and external collaboration are being used as tools for creating organizational change. The second finding was that CEOs create more economic value by engaging customers as individuals. These companies are investing in getting customers to share their insights into what they value individually, and when and how they want to interact. Then they develop and execute plans to interact using social media as well as traditional face-to-face engagements. Outperformers in this category strongly differentiate themselves through better data access, insight, and translation into actions. While big data is playing a role in this dimensional change, other factors are the old fashioned way of listening and capturing what employees see and hear, and then being where the customer expects the company to be.
• The third major CEO survey finding was that CEOs create more economic value by pursuing more disruptive innovation with partners and collaborating to drive new revenue sources. In some cases they create new industries while in others they merely move into new industries. Two of the keys to more effectively meeting the partnership challenge are making the partnerships personal and breaking the traditional collaboration boundaries. In effect, these companies are themselves becoming disruptors. While CEOs have shifted to address the transformational needs of the organization, CFOs are still concerned with controlling cost and improving efficiency. In a separate IBM retail study, IBM found most customers were willing to share information if they perceived there was a benefit to doing so. The greatest areas of reluctance for data sharing were in the categories of financial and medical data.

• The PwC study of more than 160 CEOs in the U.S. identified customer demand as the primary driver of corporate strategy in 2012. While the executives are slightly less optimistic than last year, 40 percent expect their own companies will grow and approximately the same number expect to complete a cross-border merger or acquisition this year. To deliver on their strategies CEOs are reconfiguring operations in local markets, nurturing talent and addressing potential talent shortages, and encouraging the free flow of ideas and innovations. Two significant findings in the survey were a major jump in the concern about competitive threats (73 percent of the CEOs are worried) and a considerable decline in anxiety about risk exposure (a 20 point drop to 19 percent). PwC notes that with more growth opportunities arising in distant lands business leaders are acknowledging that an overly conservative attitude will put their companies at a competitive disadvantage. Lastly, PwC determined that the top CEO priorities overseas are growing the customer base followed by access to the local talent base. Additionally, the PwC study confirmed one of the IBM findings – most CEOs were planning on entering into new strategic alliances or joint ventures this year.