Quotes from conference call between Dell’s Steve Schuckenbrock and Sanford Bernstein

Select Quotes from Steve Schuckenbrock, President of Dell Services (April 5, 2011):

“You know the demand for IT and the torque frankly in the system for CIOs, when you balance the huge demand for efficiency with really sort of unprecedented levels of efficiency being driven through cloud like execution, and whether that’s a public cloud, private cloud, whatever the case might be, the reality is, is there’s a significant amount of standardization that’s occurring in the world. And that standardization brings all sorts of value from an efficiency standpoint, and places real pressure on CIOs to make sure they embrace those opportunities as quickly as possible.

And at the same time, there’s increased demand based on sort of any information available anytime, anywhere to basically any device for flexibility and for speed, and the ability to respond to this enormous sort of expectation. You know I guess probably best summarized by us as consumers, and our need for instantaneous gratification of any information available anytime.

And it’s this torque between these two things that I think creates a tremendous opportunity and a bit of an inflection point. Dell, I believe, is positioned exceptionally well to respond on both of those two fronts. We have terrific leadership in the standardization of technology. We are in fact very focused on standing up highly virtualized, highly efficient, you might even call it optimized data center infrastructures for our customers, and we are doing the same with our own data centers from a services standpoint.

And that certainly gives the counter balance that says, from a flexibility standpoint, you get greater speed, when there’s standardization, you can respond faster, you can innovate faster. And you get a repeatable quality and cost proposition as a result.

Cloud services is certainly something that brings new levels of efficiency as well as flexibility. When you look from a cloud services standpoint, it’s the ability to frankly deliver an infrastructure all the way through a set of applications in a manner that takes advantage of all the efficiencies of the cloud, whether that be a private cloud or a public cloud, but at the same time, responding to this need for speed. The fact that people want just in time kind of capacity, they want the ability to provision services themselves, and to be able to turn them on and turn them off at their whim, as opposed to these sort of monolithic, contractual structures that have been a part of the services industry for so long.

And from a talent factory standpoint, there is a huge need for access to the right skill sets in the right place at the right time, and sometimes those skill sets are local and consultative in nature, and other times those skill sets might be leveraged in a cost optimized location someplace around the world. But these talent factories are vital in terms of being able to help customers move their applications to the standardized or optimized infrastructure footprint that I described above. And I think all three of these capabilities are absolutely crucial to embrace what’s happening in the services space today.”

Source: See “2011-04-05-Services-Transcript.pdf”

DELL Inc.
Services Conference Call with Steve Schuckenbrock
Hosted by Sanford Bernstein
April 5, 2011

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The Case for Cloud Computing in Large Scale Enterprises

With IT budgets increasingly stretched thin, CIOs in large scale enterprises are considering cloud computing because it offers an alternative to data centers containing expensive servers that need to be constantly maintained by expensive technicians and periodically replaced. Alongside IT hardware, electricity constitutes the other notable expense associated with data centers and represents a commodity that, like capital investments in equipment, stands to be decreased as a result of a transition to a cloud computing model of software delivery and development. In a cloud computing environment, subscribers pay only for usage of instances of a server and hence avoid both the capital investment in servers and the constant drain of power and ventilation required to maintain data centers.

Large enterprises additionally face the challenge of maintaining chaotic assemblages of hardware that have been acquired over generations and vary considerably depending on the needs of each business unit. Upgrading fleets of servers and machines represents a significant logistical and technical challenge that requires standardizing security applications over a wide range of machines and operating systems. A cloud computing model enables large enterprises to render their security policy uniform and scalable as its hardware needs change over time.

Cloud computing also offers opportunities for collaboration and innovation amongst geographically dispersed business units that confront technological challenges in sharing their work and methodologies. By using a cloud computing model that provides an interface to a set of shared resources, geographically disparate employees have the opportunity to share information and innovate through a common platform with standardized tools. Moreover, a transition to cloud computing frees up IT staff to drive innovation within their business units instead of dedicating resources to maintaining data center resources whose capacity has been increasingly utilized given the proliferation of automated, computationally intensive or web-based technologies. IT executives now have the freedom to collaborate closely with strategic business leadership to determine how best to utilize technology to foster innovation, shorten delivery cycles and decrease costs.

Factors that large enterprises need to consider when transitioning to cloud computing include the following:

• Cost savings (a demonstrated return on investment due to decreased costs for investment in hardware, space, ventilation and electricity)
• Visibility to the performance and processes of Virtual Machines (VM) enabled by technology known as virtualization that hosts more than one image or instance of a machine on a single physical machine
• Control over deployment of the cloud and the ability to edit settings, provision or cancel machines at will and deploy additional technologies
• Security considerations and the opportunity to standardize security software across a diverse range of machines housed in different business units, enabling a more robust, enterprise wide security policy
• Accounting concerns related to integration of cloud computing costs with the enterprise’s accounting processes

Additionally, the opportunity to foster increased organizational collaboration and innovation represents another factor to consider as large enterprises consider a transition to cloud computing by way of a more easily accessible IT infrastructure for exchanging ideas across different business units and geographically dispersed offices.

Despite the benefits of transitioning to a cloud computing for a large scale enterprise, executing the transition from a data center environment to a cloud based approach requires significant planning and strategic leadership. Security and system uptime remain the two issues most frequently cited by CIOs as deterrents to executing a cloud based IT strategy. For large scale enterprises, security and system uptime concerns can be most effectively managed by a robust governance process that takes responsibility for service level agreements, security, regulatory compliance and ensuring that the enterprise’s IT strategy is synchronized with the company’s larger business strategy. Robust governance processes need to be supplemented by a cloud strategy that spells forth how people, processes and technology will enable the transition to a cloud based model of computing for the organization.