Tuesday, May 24, 2022

Why Dell’s Own IT Group is Customer Zero

Dell Technologies recently held an analyst update on how they are using their own IT service organization to improve their products and services over time, and it is worth sharing as a best practice. 

There is an industry term called “eating your own dog food,” which means the company uses its own products. You’d think this would be a universal rule. But twice I’ve found that large IT companies don’t use their own products, and twice I watched as this practice did significant damage to the companies that did. 

Let’s talk about why this practice at Dell is working, and why it hasn’t been universally successful at other companies:

Forced use

At four companies, I watched as forced policies created huge problems for the companies. 

The first one required all employees to use a poor productivity product that had a drag on the firm. I later learned the product manager had never actually used that product and had no idea how poor it was until one of the firm’s top sales reps got him to log in to try it. 

At the second company, it was the forced use of a computer and companion software. But at that time, their servers were poor with I/O. Since that product put a huge load on I/O, the result was a solution that again created a drag on the company. 

The third company had a productivity product. It wasn’t good. But employees were forced to use it, and it harmed the company competitively. 

At the fourth company, they used workstation technology that was 20 years out of date, and the result was engineer turnover in the U.S. that was an unsustainable 200% per year.

The forced use of company products when those products are uncompetitive can create a death spiral, where problems breed delays which breed more problems, and the company begins to circle the drain.

Non-use

I ran into this at several companies over the years: IT organizations that don’t use the companies’ offerings should be a huge red flag. 

I was once called in to lecture at one of the larger OEMs to provide advice to their IT group. The company was a broad supplier of PCs and servers. The question I had to address was, “Who makes the best servers?” They wanted to know who to buy from. I was stunned, because internal organizations typically get their own products at cost. If their own products weren’t competitive at cost against the competition, they would be less competitive at retail, even when discounted for volume.  

At another company I worked for, I realized their IT group wasn’t using the company’s products. Instead, they used a third-party service, because it was cheaper. Again, if the company’s products weren’t competitive at cost against a third-party offering, I figured we had a serious problem. I was told not to worry about it. But after I left a few years later, the related division was shut down, because revenue had cratered.  

Doing the dog food thing right

Dell is one of the best instrumented companies in its class. A common comment when executives join the company is how amazed they are at the amount of information they have prior to making a decision. As a result, Dell’s decisions appear better founded and seem to have a far higher success rate than their peers.  

Dell’s IT organization is tightly linked to their development efforts as designated customer zero. This works in companies with an enterprise focus. When Steve Jobs managed Apple, he was customer zero, which worked better for Apple, given its end customer focus. Both efforts were successful, because their respective customer zeros had the power to redirect product creation to ensure it met their needs before going out to an external audience. In Apple’s case, the practice better coordinated marketing messages and product creation into offerings that were more effectively marketed and sold. In Dell’s case, it resulted in offerings that were more complete, easier to use, and more focused on the needs of the enterprise than would be the case otherwise.  

It is a powerful process validated by Dell’s continued success.

Does the vendor use their own product?

Technology is a force multiplier, but it is also a dual-edged sword. If the product isn’t competitive, it will have an increasingly adverse impact on the company. And if IT doesn’t use the product, it suggests no one else should either. 

However, if the product is competitive and jointly developed with IT, then it also helps create a success spiral that propels the firm forward into ever greater competitive advantage. 

Dell stands out as a firm that does this particularly well. Therefore, the firm stands out ahead of their peers in terms of performance and showcases both the potential advantage and disadvantage of a tech firm. If they are competitive and use their offerings, it can accelerate their success. But if they aren’t and refuse to use their own products, then it conversely accelerates their failure.  

My advice is that when considering a product from a tech vendor, find out if they use that product. If not, don’t buy it. If they use the product internally but are performing poorly, don’t buy it. But if they use their own products, and they are doing as well as Dell, then buy their product. 

Something to noodle on.  

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