Dell's deals focus on simplicity

Dell Inc. is following a familiar pattern with its merger and acquisition strategy -- buy and integrate technologies that can make life easier for IT managers.


If you want to predict where Dell Inc.’s next acquisition is going to come from, you can gain a little insight from two of its more recent deals.

On Friday, Dell announced the acquisition of Gale Technologies for an undisclosed amount. The company brings automation software.

In September Dell paid $2.4 billion for Quest Software, which makes tools for systems management, security, and managing application.

I was getting briefed about what the Quest deals means in the public sector when the Dell executives mentioned Gale deal – which I hadn’t heard about -- after I asked about future acquisition plans.

Jere Carroll, general manager of Dell Federal, connected the dots for me. “If you look in the rear view mirror, you see a trend,” he said.

IT managers across any enterprise – government or private sector – are faced with ever increasing complexity in their IT infrastructure, so Dell wants to bring tools that simplify the management of IT infrastructure, Carroll said.

Where Dell is focusing is data center management and managing end-user devices. And of course, helping customers do more with less.

The briefing I had was focused on Quest and how it is being brought into the public sector, but the theme of simplicity held throughout.

According to Paul Christman, who comes over from Quest and is now vice president of public sector for Dell Software, Dell now has a broader solution to offer customers. Instead of having multiple vendors to manage, the customer has a single, unified solution.

Whether it is virtualization or cloud computing or modernizing applications, “what we are really trying to address is the cost of computing and you do that by reducing complexity,” he said.

So that’s why Dell bought Quest, Carroll said.

From the Quest perspective, being acquired by Dell is an “accelerant and a catalyst,” particularly in the federal market, Christman said.

As an independent company, it didn’t have the infrastructure and resources to make a push into critical federal market sectors such as intelligence, he said.

“We knew we were under penetrated but we didn’t have the scale and scoop,” Christman said.

Now just six weeks as part of Dell they are bidding on opportunities they couldn’t before and Dell is seeing the same thing, according to Carroll.

“With Quest in the portfolio we can address a bigger piece of the customer’s problem,” he said.

A second part of the Dell acquisition strategy that I found interesting is Dell doesn’t usually go out shopping for an acquisition.

In the case of Quest, the two companies were long-term partners.

“We are always looking for good technology partners and we partner with as many as possible and sometimes like Quest they become part of Dell,” Carroll said.

It is hard for me to keep count by the Gale acquisition is probably the seventh or eighth transaction that Dell has made in 2012 alone. Many of the deals are on the smaller side, particular when compared to Dell overall bulk, but the company has been steady in acquiring companies with complementary technologies and offerings.

As others have reported, the margins and growth in the traditional hardware market have slowed considerably and to remain relevant and vibrant, Dell needs to continue to add offerings that go beyond servers and PCs.

I’m waiting for when the company makes another big services play like the acquisition of Perot in 2009. But if the turnover at the helm of the public sector portion of Dell Services is any indication, the company is still struggling with how to integrate services into the Dell family. The current leader, George Newstrom, is the fourth person to lead public sector services business since the acquisition.

So for now my prediction is Dell will stick with software acquisitions and continue to build out IT management solutions.