Dell leverages model as an APEX service to drive growth
Technology purchases and customer expectations have changed with the advent of cloud computing infrastructure and software services. The as-a-service model enables scalable, pay-per-use services that are continually upgraded with minimal customer effort. However, organizations have struggled to adopt a public cloud computing model for all of their workloads. In addition, the companies have also refused to put all their eggs in one basket for fear of blocking suppliers. Because of these two trends, most companies are developing a hybrid and multicloud strategy. While the public cloud is well understood and continues to evolve, the hybrid and private cloud landscape is rapidly changing.
Last week at Dell Technologies World (DTW), the company reported on its progress in delivering APEX, a suite of private, hybrid and as-a-service cloud solutions from Dell. The announcements were well covered by the media, and you can read more about the APEX portfolio here.
In a nutshell, the offers include:
- APEX Data Storage Services Deliver storage when and where organizations need it with a service-as-a-service performance with transparent pricing and no overage charges.
- APEX cloud services offers hybrid cloud deployments and is up to 86% faster than do-it-yourself hybrid cloud. With APEX Hybrid Cloud and APEX Private Cloud, Dell Technologies offers integrated compute, storage, networking and virtualization resources for traditional and cloud native applications.
- APEX Custom Solutions offers flexible consumption options. APEX Flex on demand enables organizations to apply a payment-as-your-use experience, measured in different ways, across infrastructure. APEX Data Center Utility adds an extra level of flexibility with custom counters and managed services applied throughout their data center.
- the APEX Console is a web portal where customers have full access to Dell Technologies’ catalog of offerings and can configure, subscribe, manage and adjust their Dell Technologies APEX services. It offers easy-to-understand billing that shows the amount of IT used each month.
- A partnership with Equinix extend the reach of APEX to colocation sites
What does APEX mean for Dell Technologies and the industry?
Dell’s announcements are part of a wave of solutions as a service offered by hardware manufacturers. For example, Cisco announced Network as a Service offerings to Cisco Live in April. HPE has also embarked on a more than two-year journey to deliver a broad game as a service with HPE GreenLake.
But turning an on-site hardware sales business into a business as a service doesn’t happen overnight. Just ask companies like Oracle that have moved to cloud services or Hitachi that offers trains as a service. The journey requires the creation of new software, sales compensation and technical management models. In some cases, this also requires upgrading the hardware with sensors or new processors.
Dell’s move to APEX has been underway for a long time. Last October, the discussion focused on Dell being late to the cloud party, but being late has its perks. Dell can avoid the mistakes of others and focus on creating its unique differentiation. This year at DTW, questions from industry analysts have focused on clarifying the offering and how the company plans to compete.
One of the outstanding issues was how Dell would implement its offerings and compete with hyperscalers. To answer this question, the company put forward a partnership with Equinix. Although the offering is being introduced in stages, Dell’s APEX strategy delivers strong performance. Although it is a highly competitive market, Dell has a few advantages such as:
- Supply chain prowess. Dell says it can install its services in 14 days. While it might seem like a long time compared to a public cloud service, it takes miles ahead of the months for an organization to set up on-premises servers, storage, and compute. Part of Dell’s ability to quickly deliver and configure products on-site relies on controlling its supply chain.
- Market position and size of the offer. In addition to its robust supply chain, the company also offers one of the most extensive technology portfolios in the industry, making it easy to deliver a more comprehensive offering. In discussions with the industry analyst community, Dell highlighted that its leadership position in the storage and HMI market provides an opportunity to more effectively convert customers to an offering as a service.
- Flexibility from hardware to “as a service” models. While large public cloud companies have spent most of the decade trying to attract IT buyers to public cloud services, many IT managers still want to keep some of their services on-premises. This has created the rise of hybrid cloud services such as AWS’s Outpost, Microsoft’s Azure stack, and Google’s Anthos. Obviously, there is a demand for cloud-like services on a business premises. With its new offerings, Dell can either sell hardware or offer the benefits of an on-premises cloud offering. For example, RelateCare selected Dell Technologies’ APEX Flex on Demand service to support data regulatory compliance using an on-premises IT infrastructure with an OPEX model. The company said it allowed it to get more done in less time and without having to pay for five years of server equipment at once.
- Ease of management. In October, the company announced that it would move all of its products to a consumption-based model and launch a cloud console to control all of its on-premises, multi-cloud, and edge deployments. Sure, cloud computing hyperscalers offer this today, but Dell Technologies’ more traditional hardware-centric competitors are struggling to deliver a unified console.
This is the software
Quality hardware is essential, but the battle for customers is increasingly fought at the software level. When asked analyst Jeff Clarke, chief operating officer and vice president of Dell, about the company’s transition to software, he replied that Dell has more than 20,000 engineers and that 80% focused on writing software. The vast majority of Dell’s $ 14 billion spent on research and development is focused on creating software, whether it’s to maximize PC battery life or improve data center management. Clarke sees the company entering a third wave of growth that focuses on “the marriage of hardware and software”.
A TechCrunch article by Nils Mattison put it best. “While you can sell hardware at a margin and generate significant income at the start, this is not a sustainable business model for a business that requires both software and hardware. You cannot cover an indefinite liability. with a limited amount of money. ”
Are we there already?
The subscription model is a logical choice for a company of Dell’s size and scale. Of course, that doesn’t mean Dell’s strategy is without challenges. The cloud offerings of hyperscalers are evolving at a rapid pace. If companies like Amazon’s AWS and Microsoft’s Azure see a significant need to change the current on-premises parts of their cloud offerings to compete with Dell, they will.
Next, Dell must run on the excitement of its partner channel to sell as a service. He has largely supported this by offering a solid commission rate on APEX. Additionally, Dell cannot underestimate how difficult it is for partners to create unique value-added services in addition to Dell’s offerings as the company offers more functionality as a service. Defining value for partners is easier said than done.
In addition, the choice is often confusing. The flexibility of Dell’s offering, while powerful, can make it difficult for a customer to choose the right solution. Finally, the company must navigate the value of desperation with investors as it replaces big up-front purchases with annual subscription revenue. None of these challenges are insurmountable, but these issues must be resolved. Overall, the DTW event showed how Dell is executing the plans announced last fall and how there is a big opportunity ahead.
For years, the cloud computing industry has focused on creating feature parity with on-premise services. What’s exciting about this space today is that hyperscalers and hardware manufacturers are creating a new set of services focused on creating the next wave of infrastructure. In 2022, we could finally start to move beyond what was to what might be in the cloud computing market.