Challenges Facing the CIO
As a classic, loyal Dell customer, Sreeja Kapoor is now conflicted between her company’s relationship with Dell and its need for large complex server solutions. Satisfied with the existing Dell support relationship for PCs, entry-level servers, and networking equipment, Kapoor is apprehensive about Dell’s ability to provide the level of extensive, high touch support for the larger server products. Critical to her decision to purchase mid-range and high servers and support services from Dell is the reliability of the products and on-site support. Kapoor’s primary concern is Dell’s focus on low inventory and lean production may prevent it from offering the same level of service as its competitors - IBM, HP, Compaq, and Sun. Contrary to Dell’s core cost leadership strategy and “box-pusher” beliefs, mid-range and high-end servers require proprietary technology. As a result, Kapoor is not convinced that Dell’s existing structure can be relied upon to provide the support services (typically 24 x 7 x 365, four hour response times) for servers that characteristically host mission critical applications.
Challenges Facing Dell
From the case, we know that as the leading supplier of PCs, as measured by domestic and international PC shipments in the 2nd quarter of 2001, Dell recently entered the competitive mid-range and high-end server market. Dell’s products and streamlined manufacturing processes have received numerous awards and enamored the business press and academics alike. Through a business model that focuses on direct PC sales, low-cost production, and superior customer service, they imitate rather than innovate and outsource functions that do not directly relate to producing or selling PCs and entry-level servers. However, Dell has differentiated itself from its competition by customizing PCs for its customers and, unlike leading mid-range and high-end server manufacturers such as SUN, HP, IBM, and Compaq, does not have extensive experience providing the requisite high-end server services sought by their customers. Dell’s latest challenge is to develop and deploy competitive, complex server solutions while maintaining its vision of the customer experience.
Sreeja Kapoor must choose from 3 alternative solutions: 1) procure both the products and support services from Dell; 2) purchase servers from Dell and third-party support services; and 3) turn to another manufacturer for both products and services. Each solution has both benefits and concerns, as described in the sections that follow.
Dell’s Current Product/Service Offerings
Kapoor’s company is representative of Dell’s market segment '' a business client whose needs and expectations are answered by award-winning products and services. As it does with many of its customers, Dell provides Kapoor’s company a high degree of interaction and customization by means of a dedicated account team consisting of sales, customer service, and technical personnel that offer personalized solutions. Much of this interaction occurs through Dell’s innovative use of information technology.
For instance, Kapoor received support through Dell’s Premier Page website allowing her to control configurations through a dispersed company. This ensured no remote location could order product or software that could pose a threat to the company’s IT network. Additionally, this Premier Website allowed Dell to gain insight into its customer base.
In order to keep service costs low, Dell incorporates diagnostic software into the PCs it delivers. In addition to giving the peace of mind that comes with servicing issues on-line, Dell saves money by not having to send technicians on-site for service calls. Empowered, centrally located call center employees with access to a knowledge base are a much cheaper alternative. In addition, Dell collects this service information into its production processes to avoid future technical...