Why heresy is good business strategy: Dell’s Armughan Ahmad

Digital disruption is intensifying IT democratization, and is responding with a datacentre strategy which some competitors likely consider heresy, but which believes is the wave of the future.

Armughan Ahmad Dell 300

, Vice President, Global Enterprise Solutions & Alliances at Dell

“IT democratization” is a term much in vogue at Dell these days, and the concept seems to have few more enthusiastic supporters than Armughan Ahmad, Vice President, Global Enterprise Solutions & Alliances at Dell.

“When I talk about democratization of IT, this shows what Dell has done in the last 30 years,” Armughan said. “We DID democratize the PC industry. We made it easier for customers to have a choice, by letting them configure their PCs the way they wanted. We gave them the power to do more – the power to select what they wanted. Then we did the same thing to servers, and customers loved that choice, because they weren’t compelled to buy a proprietary mainframe. It’s not just bringing the price down. Today, it’s giving them the freedom to become a digital company.”

Ahmad said that while they have brought IT democratization to PCs and servers, they now want to do that in the datacentre.

“If we provide networks and storage that are completely virtualized, you can turn those into a virtual storage array,” he said. “If we can democratize these siloes to support digital first, customers can still run the applications they need to run, but we will move them to a digital transformation that improves how they interact with technology.”

Ahmad, who previously ran Global Networking Solutions at Dell, is now responsible for global solutions and alliances, leading both direct and channel enterprise workload-oriented solution sales in partnership with other vendors like , Nutanix, Red Hat, Intel, Oracle, SAP and Microsoft.

“Without partnerships with disruptive vendors, we don’t feel we can democratize IT,” Ahmad said.

While all vendors partner with others, Ahmad stated that the particular way that Dell utilizes its alliances provides a differentiation from other Tier One players like , HP and EMC.

Ahmad said that Dell Blueprints – which optimize Dell integration with partner ecosystems – are a critical part of their strategy. Dell Blueprints comprise five separate disciplines: and Collaboration, like Skype for Business (formerly Microsoft Lync); Enterprise Applications such as OLTP, CRM and databases; ; ; and high performance computing.

“Underneath these, we have these vendor partnerships, and all these companies power these solutions for us,” Ahmad said. “We let them put their hooks deep into our products, and we are willing to democratize the IT for that.”

Here’s where the heresy comes into play. Dell’s model embraces a willingness to wipe Dell’s own technology off the partnered products, sacrificing short term CAPEX profits, in the interest of longer term benefits from reducing customer OPEX costs.

“IDC says that while $88 billion worth of CAPEX is spent on customer environments for datacentres, $270 billion is spent on OPEX – people, power and cooling, and resources,” Ahmad said. “For networking in particular, there is a huge amount spent on OPEX relative to CAPEX. Cisco wants customers to continue to buy their gear because they make 61 per cent margin on it. They don’t want to be a 20 per cent margin company. It’s considered heresy to do what we do with Cumulus and Big Switch – wipe the Dell software off the switch and put Linux software on it. We can do that, democratize it. We can lead with open networking, which Cisco refuses to do, and that means we can drop down the ratio of OPEX costs.”

Dropping OPEX costs is a game changing moment to the customer,” Ahmad said.

“These customers have CCIE specialists, who they are paying a huge amount to run these siloes,” he said. “With Dell, they can replace the $250,000 a year CCIE with a $70,000 a year Linux admin, and their OPEX costs plummet. That’s a great thing for customers, and it’s a great thing for partners, because it lets them come in and easily manage things for the customer.”

Ahmad said digital disruption in the IT industry is now so pervasive that other companies are willing to join with Dell in this strategy.

“The Nutanix guys – who were actually Google guys – thought ‘why can’t I virtualize hard drives so I don’t need a storage array anymore, and can offer it for next to nothing,’” he said. “That’s disruptive. VMware knows the same thing will happen to them. They know the cost of hypervisors is high and they know other companies will find a way to democratize that. That’s why they are partnering with us now on their NSX platform and their VSAN platform.”

Ahmad said this digital disruption requires bold moves, because it is so endemic. He alluded to Netflix, and the way they were able to disrupt and quickly destroy Blockbuster, and the entrenched video distribution system, with a digital-first model. Now the same thing may be happening to Netflix in turn, with broadcast television networks launching their own digital endeavours, expressly targeting Netflix.

“This is why we feel that Dell is perfectly right in the middle of IT today,” Ahmad said. “We have this IT framework laid out as a compute platform, where we can have all these companies run on it, and this brings the storage and network fabric closer to compute, in our strategy.”

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