Unlocking the GenAI Competitive Advantage with Services – Six Five On the Road at Dell Technologies World

By Patrick Moorhead - May 21, 2024

On this episode of the Six Five On the Road, hosts Daniel Newman and Patrick Moorhead are joined by Dell TechnologiesDoug Schmitt, President, Dell Technologies Services, Dell Technologies for a conversation on leveraging General AI (GenAI) for competitive advantage through services.

Their discussion covers:

  • Exploring the omnipresent GenAI and Dell Technologies Services’ response to it
  • The reasons Dell stands out as the go-to provider for Gen AI and other emerging technological needs
  • How GenAI is reshaping the business landscape towards an outcome-based, services-led strategy and Dell’s role in this evolution
  • Identifying customer needs beyond GenAI and how Dell is addressing them
  • Insights into the future of Services and what to expect moving forward

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Transcript:

Patrick Moorhead: The Six Five is on the road at Dell Technologies World 2024, the show so far has been rocking and rolling. It’s about, surprise, AI, AI in infrastructure, and very importantly, AI in software. It is Dell Technologies’ 40th anniversary. And Dan, 10 years ago, you and I were on stage at Dell World in Austin as hosts.

Daniel Newman: We were, it’s been a great decade of getting to know you and building out the Six Five, but a great partnership with Dell Technologies here. And it’s good to be back in Las Vegas. It’s going to be a great three days here, and I’m very excited to have The Six Five covering so much ground, Pat. I mean, you kind of mentioned it, we’ve got infrastructure, we’ve got software, we’ve got services, we’ve got a new device platform that’s being launched that Dell was really excited about, Pat. And we have just seen so much energy moving in the direction of Dell, and it’s just a great time for the company, for AI, for enterprises that are looking to be more efficient, more productive, Pat. And of course, services is a big topic as well.

Patrick Moorhead: It is. And I can’t imagine a better person to talk about AI services than Doug Schmitt. Doug, welcome back to The Six Five.

Doug Schmitt: Well, thank you for having me.

Patrick Moorhead: Absolutely. And it just warmed my heart when I see services front and center, because I have been beating this drum for years that we are moving into this services led economy one way or another. And AI is just this huge opportunity to not only help customers on the front end, but all along the way, deployment, service, support, just the whole nine yards.

Doug Schmitt: Well, you couldn’t be more right on that, we’re seeing that. I mean, and we’re hearing that a lot from our customers this week, is, “Look, this is a model change.” This isn’t just a project, it’s an extenuation of the digitalization people have been on, but there’s a model change in here for all of us.

Daniel Newman: It’s a bit of a great reset for the entire IT organization within almost every enterprise, rethinking all processes, how you do business. Remember, Doug, we talked about digital transformation? You’ve been on our show several times, we’ve dug into your service and go-to-market model for services. And I would say that generative AI, the elephant in the room right now, is probably making you think about this all over again. So maybe start there, share with us a little bit how Dell Technologies Services is thinking about this gen AI opportunity.

Doug Schmitt: Well, yeah, I think there’s two angles to that. And we’ve talked about this Dan and Pat for a while now. There’s the internal angle of what we can do to improve our operations to deliver service to our customers, and then there’s the angle of helping our customers along their journey as well. And so when you look at the first angle of that, what are we doing internally to improve? We’ve been on this journey for six, seven years. In terms of getting the structured data, the proactive and predictive services, you’ve been very big on that as well, in talking to us and how we help our customers through that.

And then when you dig below that, then the second angle of that is then, how are we helping our customers on their journey? And look, they’re in various stages of their transformation. They’ve been working on digitalization, so to speak on that. And inside of there, what we’re helping them with really is three areas. I would say the strategy, number one is strategy and use cases. Number two is all of the infrastructure needs, the modeling, and how to get the data cleaned up. We could spend a whole episode just on that. And then the third one is staffing, expertise. So between those three angles of helping our customers as well, so lots to do.

Patrick Moorhead: Yeah. So scale is an absolute known, I mean, you have 60,000 people in your group, and it takes scale to do what you do. Now in this new land of generative AI, why is Dell… Should it be the choice for enterprises out there? What’s the elevator pitch here?

Doug Schmitt: That’s a great question. There’s really two reasons, two main reasons. One is the depth of expertise that we have in the company, I think that’s coming across this week, as you can tell. When I say depth of expertise, that’s in the product group, that’s in our sales group, that’s in our services group, solutioning, all of it. And then the second one is just the portfolio breadth, I think hopefully with the launch of our Factory AI, you’re seeing just the breadth of the portfolio. And when I bring up portfolio, as you guys well know because you have talked a lot about this as well, I’m talking the ecosystem, including all of our partners. So those would be the two reasons.

And on the first reason with the depth of the expertise, as you both well know, we’ve been on this journey for six, seven years digitizing 5,000 service processes to date. And what we’re doing with that is really on the structured data side, shrinking the standard deviation, improving the customer experience for our customers, and at the same time learning from those models and moving the mean, so to speak. So we find new ways of doing it. And gen AI with the unstructured data now coming inside of there is just giving us a whole new opportunity for model change. And look, what this is really about, I thought it came across very well today when Michael talked about, “We’re moving from just the service to the experience.” And these capabilities are really going to bring that out for our customers with that expertise.

And then look, the second one is really all about what I talked about, helping our customer through their journey. And that starts obviously with the strategy. These use cases, getting the use cases correct is very important. Then we go through all of the infrastructure needs they may have. The data, cleaning that up, making sure that they have access to it. All the way through the modeling, and then helping them with the staffing needs that they have. So between the portfolio and the expertise, we’re able to help our customers.

Patrick Moorhead: That’s great.

Daniel Newman: So you teased this out a little bit about the sort of changing business model, Doug, and I couldn’t agree with you more. I mean, companies are going to have to completely rethink about their entire… First of all, the companies you serve, the thousands and thousands of clients of Dell have to rethink how they’re bringing their products and services to market. You have to rethink with generative AI how you’re going to rebuild your product services. Say for instance, moving to outcome-based, right?

Doug Schmitt: Yes.

Daniel Newman: Just one opportunity that you have is to say, “Hey, everything’s very measurable now, we can do everything very digital, we can see the savings we’re generating you, we can see the enhanced productivity.” ROI might be the word you would use. I mean, how do you see these sort of models changing? Talk a little bit more about the business operating models that you see for services going forward.

Doug Schmitt: Well, yeah, that’s just it, we’re helping our customers. But at the same time, look, we’re going through our transformation and learning this. And I think being able to give those examples, those real-life examples to our customers, show that we’re along the journey with them on what we’re doing around AI. Look, these business models, when you look at it, I kind of break it down when the team and I talk about services and what AI can do. It’s really about removing the steps that don’t matter to the customers. And you could talk to any organization, there are steps in there that we do that don’t matter to the customer at the end of the day. How do you remove those? AI gives us the visibility to that. But then what we’re seeing is, is we’re able to move our team members, which they love to do, they want to be in front of the customer.

So we’re making them more efficient, more effective to be in front of the customer, delivering those outcomes and those experiences that they’re looking for. That adds just a tremendous amount of value and stickiness for us as Dell helping our customers, but gives them a better outcome. So we’re going to see those model changes I think drastically expand with gen AI, because you’re now bringing in all the unstructured data. Especially when you start bringing in all the language and you start bringing in the customer satisfaction scores, you’re able to know and customize the experience. It’s just going to be tremendous I think, what we’re able to help our customers with. So definitely living it both internally, and then what we’re delivering to our customers, we’re able to show them proof points internally as well as help them along their journey.

Patrick Moorhead: I’ll admit, I really like the way you framed giving your folks more time in front of the customers where they should be. There’s just so much power in that, and this whole gen AI process has forced everybody to re-look at the processes, look at the true value add, like you said you did, and you’re pulling stuff and you’re moving stuff around. And Dan, I think you called it the grand reset in here as well. That’s super exciting. So while I know all we want to do is talk about gen AI, there are things that you do that aren’t necessarily related to generative AI, that I mean…

Daniel Newman: Regular AI? Machine learning? Deep learning?

Patrick Moorhead: Well, maybe. What other things other than gen AI are you helping customers with?

Doug Schmitt: Well, I think it’s a lot of what we’ve talked about. I remember in our last Six Five session we had… Look, cybersecurity, we always talk about it being important, it still is for our customers and helping them through that journey. And clearly AI both helps, and then it can also be obviously used by people for not so good of means, and we want to help protect our customers from that. Cyber Vault is a huge offer for us to help our customers through their journey, it’s a good solution for them. We also have our managed detection and response, and that runs right now with Secureworks as well as CrowdStrike, and we’ll have other partners inside of that. So that’s a managed service around there.

And then, look, if all else fails, which we hope it doesn’t, but look, it’s a real world, we have an incident response team that can help our customers through that. So look, cyber security is also… To me, when you talk about gen AI, AI, that’s literally very, very close to it right there, and it’s clearly part of it. And then the second piece is data modernization and the hybrid model. You hear a lot about this, but the data centers are going to have to change as well. You talk about model resets and services, this transformation of where and how data centers get the GPUs, how we’re going to be setting those up, deploying those, helping our customers through that journey.

And then the third one is sustainability. Look, we have to leverage this as well to keep with our goals that we have for 2030, both in terms of energy consumption, recycling. And we’re leveraging AI to help us with that journey, but also then to show and help customers on their journey for sustainability as well. So I’d say those three things, cybersecurity, multi-cloud, the data center modernization, and as well.

Patrick Moorhead: Interestingly enough, I could all map those back to gen AI if I had to.

Doug Schmitt: Yeah.

Patrick Moorhead: Well, if you think about sustainability, I mean, we’re using a ton of GPUs, that drive so much power, and then these amazing AI PCs that we’re going to want new ones. I mean, it’s definitely a bold and audacious 2030 goal. And actually with AI in a way has made it more of a challenge for you.

Daniel Newman: Yeah, I was at an event last week in Chicago for a big consulting firm, it was a future of products event. And it was interesting, Dell had some leaders there from their supply chain group, and there was a big sustainability panel. And I kind of came to these conclusions in my presentation kind of design for AI, design for sustainability. But these two things are actually somewhat of diametrically opposing forces right now, because to design for AI, it’s very compute intensive right now. To design for sustainability, you’re trying to use less.

And so there’s going to be a huge services opportunity, Doug, to figure out how to help companies do both. How do you help companies efficiently implement AI and still meet the governance and the compliance? And even when you’re talking about data modernization, how do you stay modern, keep people’s cyber secure and private, use AI, and help companies be successful going forward? These are all going to be opportunities for you, which is really exciting. So love to wrap, got just a couple minutes left here on a bit of a… Give us a bit of the future outlook here, what’s the services business evolution look like, Doug?

Doug Schmitt: Yes. Well, first of all, I’m very excited about it. I mean, when you look at the future of what AI allows us to do, you said this, it’s a generational model change. And I think the possibilities are really unlimited. In terms of being able to customize the experience for our customers, the AI is going to help us really turbocharge that and give them what they’re looking for, in a way that they’re looking for, the way they want it. And when you get down to that, that’s what we’re really all about. And then I just look at it on a broader context. You hear this around here this week on healthcare, which impacts all of us clearly. And I think about ways that we’re going to see our healthcare systems improve with the AI capabilities.

And I look at things like the digital twin. I’m a data guy, I love data. Of course, you probably… So with that twin data of mine, you’re going to be able to read whether or not I’m allergic to something right away. The doctors are going to be able to see all this information and test things out. I just think the healthcare industry is at the beginning stage of what we’re going to be and see to improve. And then look, education, the way we deliver education services, I think, again, it comes down to customization. So I think, look, the future holds a lot of great possibilities for us to leverage to make… And by the way, that goes back to the sustainability, I think you’re going to see great improvements on that. Using power and energy, how do we improve our efficiency? And I’m not just talking for Dell, I’m talking our customers and the planet.

Daniel Newman: Design for and design with. I often talk about using the Pat Bot to get great analysis and insights, the Doug Bot’s going to be helping us all get our health assessments.

Doug Schmitt: Exactly right, I love that.

Daniel Newman: I do really appreciate that, Doug Schmitt, thank you so much for joining us here on the Six Five. I’m sure you’ll be back again soon.

Doug Schmitt: I hope so.

Daniel Newman: You’ve been a regular, we love having you here.

Doug Schmitt: Great.

Daniel Newman: All right, everybody hit that subscribe button and join us here for all of our coverage of Dell Technologies World 2024 in Las Vegas. For Patrick Moorhead and myself, we’re going to sign off, but we’ll be back with you soon.

Patrick Moorhead
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Patrick founded the firm based on his real-world world technology experiences with the understanding of what he wasn’t getting from analysts and consultants. Ten years later, Patrick is ranked #1 among technology industry analysts in terms of “power” (ARInsights)  in “press citations” (Apollo Research). Moorhead is a contributor at Forbes and frequently appears on CNBC. He is a broad-based analyst covering a wide variety of topics including the cloud, enterprise SaaS, collaboration, client computing, and semiconductors. He has 30 years of experience including 15 years of executive experience at high tech companies (NCR, AT&T, Compaq, now HP, and AMD) leading strategy, product management, product marketing, and corporate marketing, including three industry board appointments.