Profit Magazine - August 2011

PROFIT: What do you mean when you talk about “ rationalizing the core?”

JOHNSON: “Rationalize the core” is our big IT strategy around really globalizing on best-of-breed applications. It was about the ability to make an IT change once and have it deploy globally.

Before, Dell was organized by regions. We grew very quickly, and one of the big aspects of growth was geographic expansion. The fastest way for IT to support that kind of growth is to copy code, create an instance, and off you go—you’re in business in a new country. The regions understood their geographies, which was good and noble, and they would tune things for their geographies. And that worked fabulously for us.

Well, over time those systems got tuned 100 different ways. As the company grew, this approach started to inflate our costs. At one point, there were actually five dell.coms, one for each region.

Then you have to start spending money to make the customer experience similar across all five platforms. And then along comes something like PCI [Payment Card Industry] compliance, and you have to go apply changes five different times. Well, we don’t need five; we need one.

As customers have globalized, their requirements have globalized. Look at the time it took to deliver a feature in dell.com three years ago; we would’ve rolled out in the U.S. for a month or so, in western Europe for a month or so, and then probably would have rolled out into the rest of Europe over the following three-month period. By then, we’d be working on something new. Now that code hits the entire world in dell.com land—there are 130 countries—simultaneously. That’s a huge pace difference.

The “rationalize the core” program was aligned with Dell transforming into a solutions company. It did save us a lot of money, and that was great, especially through the recession, but it was really about agility and transforming Dell.

Oracle is a big part of that program. Oracle executives did their own rationalized core a few years back, and we studied that and learned a lot of lessons. I’ve spoken to a number of Oracle execs about it, and that informed our approach. We’re a big company with a lot of diverse needs. So we tend to look for vendors who’ve got a broad range of products where they’ve already done a lot of the integration between those products. That approach tends to work well in a large corporation like Dell.

“At the end of the day there’s a business strategy, and my job is to use technology to enable that strategy. . . . I think that’s massively important.”