By Charles King, Pund-IT, Inc. February 15, 2016
The Original Equipment Manufacturing (OEM) model is common across the globe in industries and businesses of every sort, but it is particularly important to Information Technology (IT) vendors. In essence, while vendors develop and design products they rely on partners, including Original Design Manufacturers (ODMs, that make products according to customers’ specifications) to provide complex, often highly specialized components.
This benefits everyone from the vendors and partners to the channel and their end customers. How so? Because it helps make computing products from smart phones to PCs to enterprise servers orders of magnitude easier to develop, faster to build and take to market, simpler to refresh and lower in cost than they would be if individual vendors had to design and manufacture individual components themselves.
But there is also a secondary market in which Tier-1 IT vendors provide their commercial offerings and technologies to OEM customers who use those solutions as elements in their own branded products. These include everything from computerized arcade games to medical imaging devices, like MRI and CT scanners to manufacturing and other heavy industrial equipment.
Dell is one of the most prominent Tier-1 vendors in this space, having launched its OEM Solutions business in 1999. At this point, the company’s OEM Solutions organization serves more than 5,000 businesses worldwide and provides solutions for over 40 vertical industries. Dell’s growing OEM efforts in the Asia/Pacific/Japan (APJ) region are particularly notable, as its partners and customers have benefitted from Dell’s investments in this growing region.
This report will consider Dell’s OEM Solutions organization and business, with a special emphasis on the company’s APJ efforts, strategy and customers.
Dell OEM Solutions – Simple beginnings, continuing success
Originally launched in 1999, Dell’s OEM Solutions group aimed to expand new business opportunities by developing alliances leveraging Dell’s engineering, design and support capabilities, and its renowned global supply chain. Since then, the group has steadily increased sales and deliverables in global markets and verticals. Dell OEM now works with partners in 180+ countries and 40+ industries, and has become a multi-billion-dollar Dell division.
Dell’s OEM Solutions leverage numerous company products, including its PCs, laptops, tablets and workstations, data center offerings like its tower, rack and blade servers, and storage and networking solutions, as well as its software and peripherals. These offerings can also incorporate Dell’s ruggedized technologies, ProSupport services, IT lifecycle management processes, product customization services and Windows Embedded software. In other words, the group’s goal is to help the company’s OEM partners take full advantage of Dell’s deep experience and innovation power.
Since 2012, the OEM Solutions group has been led by Dell VP/GM Joyce Mullen, who joined the company in 1999, bringing with her years of expertise in service, support and operations management. Since then, Mullen has focused on developing Dell OEM’s global partner program, honing its focus on communications verticals and expanding geographic coverage. According to Mullen, “We are a dedicated organization that helps global customers accelerate their time-to-profit by providing them with Tier-1 customizable solutions.” The team also offers services as an additional value for customers.
She believes that the group’s continuing success is a result of its essential value proposition: “The message for our customers is clear – If you have a solution that requires some sort of technology, why not leverage our global supply chain and purchasing power? Why not take advantage of our 620+ global parts depots so you don’t have to stock parts yourselves? Why not engage dedicated teams of Dell engineers who customize products so that you don’t have to invest in engineers to do that same thing?”
Dell OEM in APJ – “Transnational” evolution
Another key to Dell’s OEM success relates to how its technology portfolio can be applied across a broad range of business solutions. The company’s work in the APJ region offers some particularly interesting insights in this regard.
Dell launched its OEM efforts in APJ in 2009 with an eye to expanding into Asian markets via existing global customers. Since 2010, the APJ OEM Solutions business has been led by Glen Burrows, APJ Area Vice President. That year a new strategy was launched, focused on “East for East” solution development. The genesis of that strategy came about as a result of the company’s nearly two decades of work in the region. What Dell has learned is that U.S. vendors historically have developed products at home and then shipped these offerings to the rest of the world. However, U.S.-market solutions and imperatives don’t always best meet the needs of other regions, in particular in emerging markets.
For example, business customers in the U.S. have long embraced customized Industry Standard servers as dedicated datacenter Information Management appliances. But in Japan, with limited land and higher energy costs, power efficiency and data center floor space costs are paramount concerns. It’s no surprise that Japanese firms often prefer highly virtualized, consolidated hardware platforms that can support software-based appliance functions, instead of single-purpose hardware appliances.
In order to maximize the OEM Group’s efforts in APJ, Burrows and team have set to work on a number of concrete steps. First, the company moved Asia-market product integration efforts into the region’s manufacturing sources so that Dell and its OEM customers can better adapt to local market requirements. Dell has also invested in its Asia-based operations to ensure that it can replicate the capabilities of its U.S. facilities. The company has also hired in-region engineering and design teams, and local staff who fundamentally understand and are keyed into local technology trends and developments.
Finally, Dell is helping its manufacturing partners improve the quality and consistency of their operations, which benefits both their own and Dell’s solutions. As a result of this strategy, the company has continued to gain substantial benefits from lower wage and product costs in APJ. But Dell is also regarded as a local partner within Asia, a partner that is helping to grow local businesses and drive job growth.
This approach has translated into tangible business success. Dell OEM APJ works with 9 OEM channel partners and has presence in 18 Asian countries where it has seen exponential growth in its client base to over 1,000 customers. The company has enjoyed six consecutive years of double digit percentage sales growth, and its work in APJ accounts for over 25% of Dell’s global OEM revenues. These achievements suggest that Dell is well positioned to pursue emerging APJ market opportunities, including developing new healthcare solutions for the region’s billions of citizens.
Dell OEM APJ’s Embedded Solutions – How can we help?
How does Dell approach APJ market opportunities? Consider the embedded systems space where custom-built solutions were once the norm in most industries. Burrows notes that “At some point, customers realize that commercial off the shelf (COTS) solutions offer a much better way to address complex embedded IT use cases.”
Burrows’ group works with OEM customers across Asia whose embedded solutions fall into three general categories:
- Inbound – from Dell customers outside the region that wish to expand their markets for global-standard offerings
- Outbound – from Dell’s indigenous APJ customers of every size that are seeking to develop new markets for locally-developed offerings
- “East for East” solutions developed in Asia to meet local market requirements on behalf of Inbound-to-APJ global customers
Dell OEM APJ’s embedded solution areas include industrial automation, manufacturing, automated control systems and equipment monitoring. Burrows noted that the company is helping many APJ industrial customers transition from traditional manufacturing processes leveraging high numbers of low wage workers to computer-controlled systems that help enhance quality and improve yields.
“Basically,” he stated, “Dell provides the ‘digital brains’ for OEM clients’ manufacturing, automation and monitoring equipment. For example, unlike U.S. manufacturers, Chinese companies won’t pay millions of dollars for specialized industrial control systems. But solutions built on ruggedized, industrial-grade Dell OptiPlex systems can add computing power at the edge, on the factory floor and at a price point appropriate to local market conditions.”
Burrows said that Dell’s practice of investing locally in APJ and other regions, including resources and local human capital on the ground has resulted in the company evolving into a ”transnational” organization with flexible business practices adaptable to local requirements and markets.
The company’s longstanding practice of investing in local infrastructure, jobs and businesses also means that Dell is not at any disadvantage when competing with indigenous companies, something many U.S. vendors struggle with in the region. According to Burrows, “Success begins with having the humility to say, ‘We’re not here to tell you what to do,’ and instead asking, ‘How can we help?’”
Dell OEM Solutions in APJ – Customer success stories
Dell’s OEM Solutions group has many successes to share, but here are two notable customer engagements from the APJ region:
- Siemens China – During a customer engagement, Siemens China discovered that its client was struggling with software/hardware incompatibilities, and that software engineers were losing time by having to work on debugging issues. Siemens decided to correct this issue by developing a configuration design environment for its Totally Integrated Automation (TIA) Portal software. The goal of the project was to help customers avoid the expenses of hardware procurement, software installation and compatibility testing, allowing engineers to focus on core tasks. The company chose Dell OEM Solutions and began working on what became the TIA Portal integrated platform that leverages Dell’s Latitude notebooks and offers options, including Intel Core i7 and i5 processors. Dell’s Configuration Services customized the notebooks with Siemens branding and software, added a one-key recovery function and accelerated the notebooks’ SSD drives to Siemens’ requirements. The new solution has delivered notable improvements in task efficiency and user satisfaction, and are also easier for customers to manage and maintain.
- NxtGen – Based in India, NxtGen is an emerging cloud and data center service provider that wanted to drive business growth in Southeast Asia and the Middle East while also increasing customer value. But the company lacked local offices in some countries which cost as much as $500,000 to establish and staff, a significant burden for a still-growing business. NxtGen also faced severe challenges in assembling new servers from bulk components, resulting in time-consuming, costly delays. In order to focus more attention on sales generation and reduce hardware infrastructure expenses, NxtGen partnered with Dell OEM Solutions. The company was especially impressed by Dell’s willingness to “start small and grow big” according to the customer’s requirements. NxtGen chose Dell’s OEM-ready PowerEdge R730xd servers, which deliver 40% better workload support, and uses Dell’s Remote Access Controller (iDRAC) for systems management, resulting in almost 100% uptime. Along with capturing significant operational improvements, NxtGen has enjoyed an 853% increase in revenues during the past 12 months without needing local offices in new markets.
Though the OEM business model is well-established in IT, the practice in which Tier-1 IT vendors customize their technologies for industrial OEM customers is less common. Dell is one of the most prominent vendors in this space, and has been particularly successful in helping customers leverage its solutions, technology and services portfolios, and global supply chain capabilities.
Since its launch in 1999, Dell’s OEM Solutions group has grown to serve more than 5,000 businesses in 180+ countries and 40 vertical industries. The organization has enjoyed double digit sales growth for the past six years and has become a multi-billion-dollar business.
Dell’s OEM efforts in APJ since 2009 have been especially notable, resulting in exponential growth in its customer base to over 1,000 industrial clients in 18 countries. Dell has succeeded in helping both “inbound” western companies hoping to do business in China and other APJ countries and “outbound” indigenous APJ businesses seeking global opportunities. Today, the OEM Solutions Group in APJ now accounts for over 25% of Dell’s global OEM revenues.
But the company has also focused its energies and investments in better understanding regional values and business needs. This has resulted in Dell-powered “East for East” solutions attuned to the requirements of indigenous APJ organizations. Additionally, Dell’s placement of customers’ needs first and its willingness to actively invest in local infrastructure, jobs and businesses have led to the company succeeding in areas where many competitors have found continuing difficulties and failure.
This strategy, along with the continuing efforts of its APJ OEM Solutions organization has resulted in Dell being well positioned to keep growing its business and to pursue emerging opportunities, such as developing new healthcare solutions for the region’s billions of citizens. Businesses investigating or considering technology OEM partnerships and solutions would be wise to consider Dell’s OEM Solutions group.
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