Microsoft Vista Hits New Problems

Microsoft's love of operating systems is a direct result of its bottom line, with probably 40% of its revenue owing to the product line. Key to any successful operating system introduction is business acceptance - companies buy in bulk, and if you're Microsoft, they also condition people to use the latest version. Only, evidence continues to mount suggesting that's not how things are going this time. According to this Computerworld UK article, studies on both sides of the Atlantic suggest that IT professionals are not keen to introduce Vista into their companies:

The survey, echoing one from Forrester last week, shows most IT professionals are worried about Vista and that 44% have considered non-Windows operating systems, such as Linux and Macintosh, to avoid the Microsoft migration."

Clearly many companies are serious about this alternative, with 9% of those saying they have considered non-Windows operating systems already in the process of switching and a further 25% expecting to switch within the next year," the report "Windows Vista Adoption and Alternatives" reads.

Microsoft has been concerned about Linux for a long time, and that has only grown as some versions of Linux have become more user-friendly. But this is the first time I can remember seeing that large a part of the IT world considering not just Linux, but the possibility of moving back to the Mac, which would have its own slew of problems, as would trying to manage a selection of operating systems - and the versions of business applications they'd need.

Study Suggests Key Ways for IT to Drive Competitive Advantage

Last month the results of a study done by the Hackett Group, a strategic advisory firm, suggested that IT really can be a strategic tool to companies and isn't just a commodity. Based on benchmark data from over 2,100 companies, those that led in IT operations spent more 7% more per end user than the average company. For the average Fortune 500, that would mean an additional $29 million a year.

However, the investment seems to pay off with lower average operational costs of $134 million a year, with IT playing a critical role in attaining the gains, so the total savings is significant. There are five key strategies that the best in class companies use:

• Streamline the number of ERP and other applications and standardize data so you don't spend too much time and money trying to get everything integrated.


• Do risk/reward analysis to find the areas where the greatest gains exist. Be ready to implement process reengineering at the same time if you don't want to simply pave over the cow path.


• Maximize value at the lowest achievable cost rather than simply cut costs across the board. If you just spend less, you might also end up sending less in the areas that can provide real return.


• Make data available in a coherent way to those who aren't computer experts. Let management have access to information that they can use to direct better performance.


• Outsource only to improve effectiveness, not to increase efficiency. In other words, outsource IT systems and functions to increase how well you do something, not how inexpensively you do it.

According to Hackett, these principles can keep executives from seeing IT as nothing but a cost that needs to be trimmed without regard for wht it can provide. If you're interested in more details of teh study and don't mind putting yoruself on a mailing list, use this link.

Michael Dell Says Changes Are Necessary

According to a Financial Times article on April 28, 2007 (sorry, no free link), a leaked memo from Dell has the company's founder and current CEO stating that the company is “a defining moment in its history and in [its] relationships with customers.” Dell replaced his former hand-picked replacement, Kevin Rollins, in January because of disappointing results. The memo suggests some pretty significant changes in direction:

He said their plans were to simplify IT for business and the consumer and to innovate beyond its traditional hardware business. They would also work to fix
their core direct-selling business. “The direct model has been a revolution, but
is not a religion,” he said n the e-mail. “We will continue to improve our
business model, and go beyond it, to give our customers what they need.”

The company apparently wants to "radically simplify IT' for corporate customers and go beyond its direct sales model for consumers, which has done well but that is a limiting factor in growth.

I'd like to suggest that these changes are not what the company needs. Consumers aren't moving to HP because of store sales. Dell has developed a recipe for atrocious customer service. (Disclaimer, I once got so frustrated in trying to get a PC from the company on a timely basis that I cancelled the order.) Trying to chase expanding sales before management really fixes this problem is setting up the conditions for business calamity, because customer service that functions poorly now is only going to get worse with greater demands. And the idea that the company will change IT for companies is a level of arrogance that smart corporations won't tolerate - because they don't have the time, money, or inclination.

Then the Dell memo discussed how the company would "take our supply chain and manufacturing to the next level of efficiency." I've done some pieces on Dell's supply chain in the past and have heard from analysts who closely follow electronic manufacturing that Dell is already pushing so hard on its vendors that some are walking away from doing business with the company.

The amount of efficiency increases in the past could not explain the company's profit level growth compared to the rest of the industry. What seemed far more likely, according to the experts I've interviewed, is that it was beating up suppliers and pulling out every last penny of increased profit it can and telling suppliers to use the increased economies of scale that Dell can offer to make more money off their other clients. But those clients are reportedly starting to balk, because essentially they pay for Dell's ability to make more money.

The short prediction: within the next three to five years, major business magazines will be running "What Ever Happened to Dell?" stories, because you can only push your clients and vendors for so long, and then, as the poet W.B. Yeats noted, things fall appart.