Interview: Stephen Murdoch, European head of Dell's large enterprise and public sector business

By Martin Courtney
26 May 2011 View Comments
Dells' Stephen Murdoch

Stephen Murdoch, European vice president of Dell's large enterprise and public sector business, is understandably pleased with the company's better-than-expected financial results, released last week.

Optimism that the worst effects of the downturn are behind the company prompted executives to raise Dell's income outlook for 2011 from 6-12 to 12-18 per cent.

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Net income for the quarter ending 29 April grew 177 per cent to $945m (£580m), though the £209m profit from the same quarter in 2010 had been partially skewed by the £61m, which the company paid in settlement to the US Securities and Exchange Commission (SEC) over claims by the SEC that Dell had misrepresented its accounts between 2003 and 2007, after hiding Intel ‘kickback' payments received in return for Dell using Intel chips exclusively.

Though Dell's worldwide revenue growth for the first quarter of 2011 across the business was actually flat, up one per cent to £9.2bn, Murdoch is happy that global revenue specifically from the enterprise solutions and services division grew five per cent to $2.7bn, with servers and networking leading the way with an 11 per cent increase in sales value.

"It is a mixed bag in Europe as you might expect, but it [success] is down to a number of key elements: there is the solutions and service piece; a continual transfer of core client end-user desktop and notebook PCs; and the delivery of products that have specific end users in mind," he said.

And while revenue from Dell's consumer business (desktops, laptops, netbooks, printers, etc) fell seven per cent to $3bn, the operating profit margin on the business actually improved to 4.5 per cent, due in part to lower component costs, but also to improvements in the company's supply chain management (SCM) efficiency.

"We have a full program of re-engineering for our own supply chain management, including delivering our products by ocean rather than air," said Murdoch.

Murdoch made much of Dell's growing employment base, with the company boosting its staff in Europe by 700 in the quarter, with around 100 of these employed in the UK. But whether those being given jobs will balance the staff laid off in 2009 following disappointing financial results that year is anybody's guess.

UK-specific job losses were never confirmed, but the company had originally aimed to shed 8,800 jobs worldwide in a bid to shave $3-4bn off its operating costs.

"I don't know if the numbers will be the same, but we have a different staff profile than we had then, a concentration of higher salaried and more skilled technical specialists in whom we have invested heavily in education and training," he said.

"We intend to locate those as close to the individual customer as we can, either letting them work from home or in the London, Bracknell, Nottingham or Glasgow offices, and we will see those numbers increase in the second quarter."

Much of those specialists will be employed in datacentre management roles, with Dell looking to make the most out of the current buzz around cloud computing, both public and private, as more corporate customers switch to virtual infrastructure and internal usage models.

The company already provides cloud infrastructure equipment, software and services to European hosting companies, as well as internet giants such as Facebook, and the company agreed to buy data centre storage specialist Compellent Technologies for £590m in cash late last year.

"The way the cloud opportunity is going to evolve is that there will be no one-size-fits-all approach. While mega cloud provision offers incredible efficiencies, we can take the same principles for internal cloud provision to deliver choices and power and workload resource," said Murdoch.

Computing was keen to know how Dell intended to improve its performance in the public sector market, given that sales here were flat year on year, while Dell has been locked out of key UK government buying schemes, such as the Desktop21 initiative, which sees rival HP named as a preferred supplier alongside Atos Origin and Fujitsu.

"There is a challenge from a growth perspective within the public sector, but we are looking to drive the same efficiency agenda as in the corporate sector and keep delivering cost savings for customers so they keep re-investing," he said.

"We are doing a tremendous amount of work focusing on specific solutions such as digital forensics, students and patients, rather than broad-based participation."

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