Reinvention helps Dell steer path through stormy waters

Aongus Hegarty has seen a lot of change at Dell. As one of the company's top executives on this side of the Atlantic, he has witnessed it move from being the world's top PC maker and a publicly-traded entity to a private firm concentrating on providing everything from hardware and software to services to its customers.

And then there are the current trends – big data and cloud services – that everyone in the sector is keen to get involved in. Dell is no exception and the move has seen it try to compete in what is an increasingly crowded space.

As Dell's president for Europe, the Middle East and Africa, the Munster man has guided much of this transformation in his region, and witnessed the company's push to go private as founder Michael Dell looks to show that the former tech giant could thrive once more out of the glare of Wall Street and the tyranny of the quarterly results cycle.

It’s been a difficult journey, in Ireland in particular where there has been plenty of change for Dell – and not all of it good.

The company announced in 2009 that it would begin winding down the manufacturing operation in Limerick, where it was a major employer, with the loss of 1,900 jobs. Dell was instead shifting its manufacturing to Poland, seen as a lower-cost economy and established with the help of know-how from key executives at the Irish operation. It is now the company’s centre for desktop and server manufacturing while notebooks and tablets are manufactured in China.

Dell’s loss was a major blow for employment in the area, and one that caused a considerable amount of backlash for the firm, which found itself slipping from the top of the list of PC brands in Ireland as consumers voted with their wallets in the wake of the news.

Hegarty is understandably reluctant to dwell on the events of the time. It was a dark spot in Dell’s Irish history, one that was difficult for him personally as somebody from the area. And it is one that he has been questioned about a number of times in the intervening years.

“It was most certainly a difficult time for our employees that were impacted,” he says.

But he notes that Dell is still one of the biggest employers in the region, and points to the company’s successes. Instead of pure manufacturing, Dell has branched out through hiring, and through acquisitions such as Quest software in Cork.

At the moment, Dell has 100 open positions in Ireland, and the Irish operation remains “extremely important” to the group as a whole, he says. “Ireland as a country and a set of locations employs more staff than any other location across my region in EMEA. So it’s pivotal,” he explains.

Key to that is the depth of experience at the firm; Dell has been in Ireland for 23 years. Despite the closure of the manufacturing operation. the company is among Ireland’s top exporters.

It and employs 2,500 people in Ireland across software and support services. About 1,000 of those are in Limerick where it has its European solutions centre and proof of concept labs. That may be short of the 1,900 jobs it once held in the county, but the company would argue that Dell and its workforce has concentrated on growing skills for the future.

“We’ve moved up the chain. I think that has created a lot of opportunity for people to grow and develop careers with Dell, it’s given the opportunity to attract into the company new people with new talent, skills and experience, and that’s still a key focus for us,” he says.

“As a business, developing from within is the best way for continuity of service and support and business for our customers, as well as ensuring that we’re building broader and deeper experiences and skills. Of the 1,000 people employed in Limerick today, a significant proportion of them would have grown and developed through the manufacturing operations.”

Hegarty’s own career could be seen as a similar transformation. An accountant by trade, he made a change early on and widened his experience, moving across different functions and areas of the business – procurement, business development, marketing and so on. “I’ve enjoyed that breadth and variety of learning; I describe it as building up the foundation stones of your career,” he says.

After a stint with Digital in Galway and RR Donnelly, he joined Dell 15 years ago, taking on responsibility for small and medium business in the UK and Ireland.

Since then, he has moved on to a number of European roles, from running Dell’s business in the Benelux region, to consumer and small business sales in Europe, before turning his hand to marketing and finally into pan-European roles. Three years ago, he was appointed president of Dell in the EMEA region, in the midst of a severe economic downturn.

Revenue from PCs, once its main source of business, has fallen considerably as the PC market is undermined by the growing trend towards tablets and continuing economic difficulties. While the latter may be on the turn, it’s clear that the tablet revolution has changed the landscape for both consumer and business devices to the extent that companies need to diversify.

Competitive markets
And diversify Dell has. The firm now prides itself on being what it refers to as an "end-to-end solutions provider". What that means to the rest of us is that it wants to supply everything to businesses, from the hardware they use in-house to the services they run and even the finance to back those purchases.

With such a broad remit, the company puts itself at risk of being accused of spreading itself too thinly. Rivals such as IBM have sold off their hardware units, with Lenovo buying its PC business in 2005, and more recently making a bid for IBM's server business, as the company seeks to concentrate on providing services to customers and continues to extricate itself from hardware.

And companies such as Cisco are making big investments in cloud services.

Hegarty dismisses any notion that Dell’s diversification into so many new areas could be viewed as a bad thing – moving away from its specialisation and into hotly contested and competitive markets.

“I think the opposite is true,” he says. “If we, like many technology companies, had stayed focused on one aspect we’d started with, whether it’s hardware or PCs, I think we would have missed a significant request and requirement from our customers. This strategy we’ve developed over the last four or five years has been very focused on our customers.”

Dell is resolutely hanging on to the hardware side of things, remaining firm in the belief that customers prefer to deal with a single company instead of negotiating with five different suppliers. It’s all part of that “end-to-end” solutions philosophy, and something that it doesn’t look like it will be giving up in a hurry, despite the doom-laden predictions for the PC sector.

The PC unit creates scale for Dell’s business, Hegarty says. Meanwhile, Dell is planning new investments that will help broaden and enhance the business.

That’s been helped in part by founder MIchael Dell’s recent victory in taking Dell private in the face of objections from high profile activist investor Carl Icahn, which has had a knock-on effect for its corporate culture.

“We’re six months a private company. I think, in many ways, we’ve probably reenergised within our organisation those entrepreneurial roots we started off with – that high energy, speedy decision-making, a little more risk taking in our activities,” Hegarty says.

“In a public company, a lot of the decisions in the short term are driven on short-term results. For us as a company, instead of a 13-week cycle, we [now] have a much more medium- to long-term view of our plans and business. Michael as our CEO and owner of the company is clearly driving that philosophy from the front.”

Banking element
Dell has already seen strong growth in recent months, both in its business and in the share of the market it is taking in areas such as client PCs and servers. Despite the difficulties in the market, PCs are is still a large chunk of the company's business.

Hegarty attributes the growth to a renewed focus on the customer, but notes that the changing fortunes in the European economy have translated into a lift in spend on technology as companies realise the potential of new technology.

The latest string to that bow was the Dell Financial Services operation, which took the company into the banking sector. Last year, it was awarded a banking licence in Ireland and opened its EMEA headquarters here, employing 200 people in the first phase.

Adding the banking element to Dell’s business has been a major catalyst for the company since it has gone private, not just in Ireland but across Europe, Hegarty says, noting that it has allowed the firm to unlock more of the working capital investment for customers.

The benefits to the business are clear: Dell can offer clients finance to invest in its products without having to run the gauntlet of the regular banking system. But that doesn’t mean that the firm is handing out money recklessly. Hegarty points out that the service is subject to all the same rules and regulations around risk management that any other credit institution would be.

“But it allows us to determine where we want to grow and invest to support our business and our customers,” he says .

Start-ups and entrepreneurs are a key part of this strategy, and last year Dell opened its Centre for Entrepreneurs in Ireland, a programme based on a US initiative that aims to provide start-ups with access to funding, mentoring and Dell’s technical expertise.

The company’s philosophy and growth could lead to further new opportunities for Ireland, Hegarty says, as the skilled team develops its business and Dell explores new markets, opening up the possibility of new investment and jobs in the future.

At the heart of everything Dell does these days is data. The company not only offers ways to store and access business data, but is now moving into ways that businesses can interpret that data and make decisions based on it. Its most recent acquisition was Statsoft, a data-mining and predictive analytics firm that will help strengthen its offering in this regard.

However, this does not come without challenges. It's a tricky topic to tackle. Recent events have put data privacy and security front and centre in the minds of businesses and consumers around the world, particularly when it comes to US-based firms. The reach of the National Security Agency and its power to snoop into the data that they hold has become a source of concern.

Dell, which has data centres for storing information around the world, says it operates to the rules and requirements of every country in which it is located; Dell was recently voted the world's most ethical company for 2014 by the by independent research centre Ethisphere Institute.

But events may overtake it. Earlier this year, Microsoft began to offer customers the option of choosing to store data outside the US. A US court has since ruled, however, that Microsoft had to turn over email data stored in Dublin subject to a US search warrant.

It is understandable why customers would begin to eye their US partners a little more warily, but it’s unlikely that the battle will end there. “We’ll continue to operate to the rules and regulations at a country level,” assures Hegarty.

Looking to the future, Hegarty says there is a lot of work still to be done in the EMEA region.

“It’s probably one of the most important regions for us, due to a number of aspects: our position in the market, we have a lot of opportunity to grow and expand our business.

“There’s also a broad set of new markets we are growing and expanding in. And as we broaden and continue to add to our breadth of technology, that opens up new areas of opportunity.

“It’s been exciting,” he says. “At the end of the day, I’m challenged every day. It’s such a broad area, and constantly changing.”

CV: Aongus Hegarty
Name: Aongus Hegarty

Age: 46

Position: President of Dell EMEA

Something you might expect: He has stayed with Dell for 15 years mainly due to the changing nature of his role and how the company itself has changed. "Over 50 per cent of our profitability is in areas we weren't really in five or six years ago."

Something that might surprise: He comes from a family of lighthouse keepers, and his mother was born at Ballycotton Lighthouse.