Business Management

Dell's software president on learning from his IBM past

When he came to Dell in 2012, John Swainson had a simple sounding brief; transform the company from a pure hardware company to one with expertise in hardware and software. Under the former IBM exec/CA CEO’s Stewardship, Dell has acquired Quest, SonicWall, StatSoft and more, spending somewhere around $3 billion in the process.  Of his three years, Swainson – officially the President of Software - sums his time up as: “So far, so good. It’s been an interesting journey.”

As well as transforming a company that’s been all about hardware since it was founded in 1984, Swainson has had to contend with founder and CEO Michael Dell taking the company private 18 months ago. “I think that was the right decision, given the volatile nature of the marketplace,” he says. “There were a lot of transformational things that we had to do inside the business that would be easier to do as a private company than as a public company. Having run public companies, I know how hard that is to do.”

A $5 billion journey

When Swainson took the reins, he said he wanted to make the software unit a $5 billion business. Although he admits that they’re not quite there yet, he says they’re “on the journey” to getting there. “We're certainly growing the business, we want it to be a bigger part of Dell's overall business and it will be a bigger part of Dell's overall business in the next few years.”

Swainson explains that going private had knock-on implications to the rate and pace of growth. He says there was the assumption that Dell was going to continue to do more multi-hundred million dollar acquisitions in the vein of Quest or SonicWall, which has obviously not happened – Dell has bought just one company [StatSoft] since going private.

When you compare Dell’s sparse list of acquisitions for the last few years – none in 2015, one each in 2013 and 2014 – to companies who are buying five, ten or even more in a year, some might worry that Dell is staying still, but Swainson has no such concerns. “The types of acquisitions we would make vary from the types they [our competitors] would make, at least in the software side.”

“I don't know if it's a tech bubble, but valuations right now are pretty high so it's difficult to acquire technologies in those kinds of environments. Within the spaces that we care about; systems management, security, information management, we feel pretty good about our basic technology portfolio and we're investing heavily.”

So what’s the focus to get to that magic $5 billion figure? “The areas you see us in now are the ones we're likely to stay in: systems management, security, information management - the sum of those is a $100 billion market opportunity.”

“Right now the focus is on integrating the technologies that we bought and investing to build those technologies out, and at some point you'll see us look for opportunities to go into adjacencies or buy technology that's very complimentary.”


When asked if he thinks Dell will ever become a software and/or services company first, Swaison quickly dismisses the idea. “That was never the idea,” he says. “We have a $55 billion hardware business, the idea was to be a solutions company where we had significant software and services capabilities.”

Learning transformation from experience

Two other companies going through major change right now but taking are very different approach are HP and Symantec. Both companies are splitting across various product lines into two different entities, but is this the right way to go? “Regardless of how you break the companies up, I think there's significant dis-synergies in doing either one, more so in the case of HP than in the case of Symantec,” says Swainson.

“I think that the reason we've elected to keep our business integrated is that we see a way to offer a broader solution to customers as opposed to having separate channels and separate salesforces, which is what they're inevitably going to have. We don't think that is what customers want. We think they want a more integrated solution, not a less integrated one.”

So will they come to regret the splits? “I'm sure they gave it enormous thought before they did it, but even if they do regret it there's nothing they'll be able to do about it. These are irrevocable decisions, you can't put Humpty Dumpty back together again.”

Swainson clearly isn’t afraid of giving his opinion. Last year he labelled the Apple-IBM alliance little more than “a good press release,” a view he still has today. “It was good PR at the time for both companies, particularly IBM,” he says.  “I think what I said was that IBM were going to do those things anyway, most of the apps they're talking about doing were really providing mobile UI for their existing environments. I continue to not think that there's a huge amount of strategic synergy between those companies.”

“Because IBM don't have their own device capabilities, they have to have device partners. They're going to partner with Apple, they're going to partner with us, they're going to partner with Lenovo, and they’re going to partner with other people on a tactical basis.”

On the subject of IBM, how does Dell’s transformation compare to your experience with Big Blue? “It's clearly a different time, starting from a different place, but it's as every bit as important and interesting a change,” he says. “And frankly it's why I came here in the first place; there was an opportunity to inject a much stronger software element into what had historically been a hardware company and help it make that transformation.”

Swainson explains that his idea of making software a part of the fabric of Dell’s business was based on his experience at IBM. “It's not a stand-alone thing, we haven't tried to design a standalone software business with no connections to the rest of Dell other than a brand.”

“At IBM, it took a long time but ultimately they did realise that it was the integrated value proposition made the most sense, not hardware or software or services. And so from the very beginning, I have thought; that's the path we have to go down.”

While you’d think that such a large change might be difficult or face resistance, it’s not the case. “I think there was a recognition that it was time to do it, that it was important to do it. There hasn't been any culture clash,” he concludes “there's obviously been a learning curve associated with it, but that’s more at the educational level.”


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Dan Swinhoe

Dan is a journalist at CSO Online. Previously he was Senior Staff Writer at IDG Connect.

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