THE FRIDAY INTERVIEW Dermot O'Connell, Dell:CONSIDERING THAT Michael Dell started the PC company that bears his name in a Texas college dorm room at the age of 19, it's fitting that the company gives opportunities to talented young staff. He may no longer be that young, but Dermot O'Connell is not the typical bean counter that multinationals entrust to run their Irish operations.
A self-confessed gadget-lover, the 38-year old general manager of Dell Ireland is still in his first job out of college. He started with Dell in Bray 15 years ago in technical support, answering calls from home PC users struggling to get to grips with their new purchase. He worked his way up the ranks and earlier this year become the top man in the computer manufacturer's Irish operations.
While he may be 15 years with his current employer, O'Connell can't have been bored in recent years. Dell has been a roller coaster ride since 2005, suffering everything from a major laptop battery recall to a restatement of financial accounts following a federal investigation. The company also lost its crown as the world's number one PC manufacturer and even more worryingly for a company that sells directly to consumers developed a reputation for poor customer service.
The problems prompted the return of Michael Dell as chief executive in early 2007.
"Dell is all change," says O'Connell, referring to the sweeping changes in business model that have been introduced in the last 18 months. It has embraced retail and is now selling its wares in 13,000 retail outlets. The design of products - never a strong suit for a company that competed aggressively on price - has been radically overhauled. And it has also added a formal partner programme so that third-party technology providers can sell Dell products to their own customers.
"For a lot of our early days we were the guys who did the PCs - we advertised them in brochures that went out to everyone in the country, and we sold them on the phones and online," explains O'Connell. "The part that probably isn't that well known about Dell is that about 85 per cent of our business is with corporate customers. Getting into things like software as a service and managed services, which is a big push for us now, is a complete change."
Sales to home users is one area that Michael Dell has earmarked for growth, particularly in the emerging Bric nations (Brazil, Russia, India and China), which O'Connell says are home to the next billion PC users.
He concedes that while Dell is well known as a PC brand in Ireland and Britain, the further you push east, into eastern Europe and Asia, Dell is not a household name.
That's partly the reason it opened a manufacturing facility in the Polish city of Lodz, a move that led to lots of speculation about the future of its only other European manufacturing plant in Limerick.
"That's all about moving east and selling east and how close can we get product to customers," says O'Connell. "Because shipping product from Ireland with diesel costs and everything else becomes a large part of your cost base."
After a couple of years in the doldrums, Dell's unit shipment last year grew 22 per cent - impressive for a company with annual revenues of $60 billion (€38 billion).
The Limerick plant supplies markets in western Europe and, with that kind of growth, O'Connell expects there to be plenty of work for it in the coming years.
He also points out that only about a third of the Limerick staff are involved in manufacturing. Support services such as HR and finance are carried out there for both sites, while it has added high-end products to the mix as well as branching out into other areas such as a proof-of-concept centre, research and development, a logistics centre and a customer visitor centre.
Dell's market share in Ireland, for which O'Connell is responsible, held up even when it was eclipsed by HP globally. Two out of every five PCs sold in Ireland carry a Dell badge, according to analysts at IDC, and it has grown over 10 per cent in the last year - not bad against the backdrop of a market that declined 1.5 per cent. HP has less than a third of the market and its sales are down over 20 per cent year on year.
O'Connell attributes Dell's performance to the strength of its corporate and public sector business and believes there is room for growth in consumer sales.
He admits that Dell's long and significant investments in Ireland - it employs 4,250 staff and accounts for close to 6 per cent of GNP - help with sales, but the flip side is that it operates under intense scrutiny. A recent round of 250 redundancies was front-page news.
"It was quite amazing the amount of media coverage it got when we did announce that we were going to reduce workforce," says O'Connell.
"I suppose the thing is, from our perspective, that all the change we've done meant it was probably inevitable there were going to be some roles that were not required any longer."
Despite having had to trim his own costs, O'Connell is optimistic about the country's economic prospects.
"I think people think a recession in Ireland is dole queues 50-people deep and all this kind of stuff. Definitely there is a slowdown but I think we will have to redefine it," he says.
"We're in a very different place than we have ever been before, that's for sure."
In his own business he sees customers being more careful in their spend and looking for more value for money in what they do spend.
"We're seeing a lot more sign-off required," he reveals. "The discretionary spend that customers had has been pulled back somewhat. But a lot of the key projects people are doing are continuing on."
He says customers are increasingly looking at how to save money by investing in new infrastructure
"What was happening for a long time was the more computing power you got the more electricity you used," he says. "What is happening now is there has been a huge amount of work by ourselves and others that has turned that. Now a faster system that is newer actually consumes less power."
Today senior management at the many US multinationals based here will gather at the Four Seasons hotel in Dublin for an annual fourth of July lunch, which will be addressed by the President, Mary McAleese. O'Connell says the cluster of multinationals based here is extremely helpful, particularly when it comes to hiring senior staff.
"If we were the only big American multinational in Ireland and we needed to get people into senior roles, that would be a huge issue for us," says O'Connell.
"It is very important to us that the other guys are here - both as customers but also from a talent pool perspective. It's also a reaffirmation for the corporate guys in headquarters that those other companies are here and continue to move here."
:quality(70)/cloudfront-eu-central-1.images.arcpublishing.com/irishtimes/VR3765MFOBH2NMV2QNICYDF67M.png)