Once the number one PC maker in the industry, known for
its outstanding customer service and well-oiled supply chain,
Dell is now struggling to win back the confidence and
admiration of Wall Street and its customers. The company
reported disappointing quarterly
financial results in 2006, lost market share and its title
as the largest computer manufacturer in the world. It’s now
number two behind HP. Also in 2006, the SEC began investigating the company’s
accounting practices. (In August, Dell acknowledged that it had falsified
quarterly financial statements from 2003 to 2006 to meet
Wall Street’s expectations.) More recently, the company has
had its hands full dealing with irate customers whose orders
for flashy new laptops have been repeatedly delayed due to
paint and display shortages.
Oh how the mighty has fallen. Dell is now at the center of a
very public turnaround effort.
Steve Schuckenbrock is playing a key
role in Dell’s revitalization. As CIO and president of the
company’s global services business, he’s responsible for
several components of Dell’s turnaround strategy: expanding
the Round Rock, Texas-based company’s $5 billion enterprise
consulting and managed services offerings, overseeing the
integration of companies Dell acquires into its IT fold,
making it easier for customers to do business with Dell by
standardizing on business processes, and building the
systems that will support Dell’s new retail business with
Wal-Mart. Schuckenbrock, who reports to CEO Michael Dell,
joined the company as its senior vice
president of global services in December 2006 from EDS, where he was co-COO. He recently
assumed the CIO role after previous CIO Susan Sheskey retired on August 10, 2007. Schuckenbrock
moved to EDS when it acquired his previous employer, The
Feld Group, where he served as COO. He previously held the
CIO role at Pepsico and Frito Lay.
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Schuckenbrock tells CIO why he joined the beleaguered
company, discusses his role in the turnaround and shares
lessons learned from the laptop debacle.
CIO: How did the opportunity to join Dell as its
senior vice president of global services come about for
Schuckenbrock: Michael called me and asked
if I would be interested. I told him I’d be glad to talk about
What was the draw for you?
Schuckenbrock: The opportunity to do
something new with the services model that not many companies
other than Dell can do because of its direct relationship with
its customers. Global services is a $5 billion business at
Dell. Two-thirds of that is warranty support type work and the
other third is a mix between professional services, consulting
and managed services where we manage our clients’ distributed
infrastructure. (For example, we manage 170,000 workstations
for Boeing and do similar work for Citigroup, Unilever and
AXA.) We think we can grow professional services much more
Dell has historically sold hardware and is [now] placing a
significant emphasis on selling solutions. We’re building a
consulting capability to help our customers optimize x86 in
their environments. Most CIOs run their companies off of the
x86 infrastructure. We believe we can provide our customers,
especially our small and midsize customers, with a lot more
than hardware. We can help them manage their infrastructure,
provide patch management and software distribution
When did you take on the CIO role in addition to
your services position?
Schuckenbrock: When Susan [Sheskey]
retired. The executive leadership team didn’t want to wait to
hire a replacement for Susan or bring in an unknown. I told
them I’d do it. I took on both roles.
Being CIO seems very different from being president
of the services business. How do the two roles match up? Are
there any synergies between the two roles?
Schuckenbrock: The global services strategy
is very dependent on IT. The infrastructure we run Dell on is
the same optimized x86 infrastructure that we expect to provide
As CIO, what’s your role in Dell’s turnaround? What
specifically are you doing to get the company back on
Schuckenbrock: Driving to consistent
business processes and consistent systems that underpin those
business processes globally. Consolidating our infrastructure
to fewer, larger [data] centers. And building new systems’
capabilities. For example, we’re now selling directly to
retailers. Wal-Mart is our first major retail customer. So we
need our own point of sale capability. We need the ability to
do store order and just-in-time planning and inventory
management. We need to do more sophisticated work around price
optimization in retail.
Are the efforts to consolidate infrastructure and
standardize on business processes cost-cutting
Schuckenbrock: Global consistency is not
about cost savings. It’s about serving customers better. If a
customer wants you to do something for them in Europe, they
expect you to do it the same way that you do it for their
business in Asia or the U.S. That is something we have to get
much better at.
Dell is also looking to grow through acquisition.
Will you play a role in those activities?
Schuckenbrock: We’ve made three
acquisitions in the last three months. [ZING Systems, ASAP Software and Silverback Technologies ] IT is a very
important part of the integration process, and we expect
we’ll do more as we go forward.
Dell has had some problems getting its new line of
colorful notebooks to market due to paint and display
shortages—and the overwhelming demand for the product.
How are you using IT to address that?
Schuckenbrock: We’re grateful for the
demand, and we are working as hard as we can to deliver on our
normal fulfillment cycles. Matching demand forecasts with
supply all the way down to the component level is a very IT
intensive process, and we’ll do anything we can to get better
Didn’t Dell have the forecasting systems in place to
realize demand would be so great?
Schuckenbrock: We had them in place. I
think they worked properly and everybody would say we saw more
demand for new very exciting products than we anticipated. When
you get that level of demand with the degree of customization
around paint colors you sometimes miss your predictions. We’re
recovering pretty well. We certainly have taken stock of our
learnings and built them into our plans to make sure we don’t
have the same problem in the future.
What are the lessons learned?
Schuckenbrock: We could have had better
buffer systems for the great demand we were fortunate enough to
receive. For example, we needed the ability to queue up enough
inventory in areas like colors where we had uncertainty [about
the demand] so we can flex more easily. Also, we could have had
better alignment between the business and IT in where and how
we plan new product introductions and where and how we plan
inventories. We assumed what worked in past would work in the
Dell admitted in August that it had falsified
quarterly reports from 2003 to 2006 to make it look like the
company was achieving its sales goals. Wasn’t Sarbanes-Oxley
supposed to prevent this kind of thing? How did this
Schuckenbrock: I really don’t want to
comment on that. There are people who are closer to it than I
am who are more qualified to comment.
You must be playing some role as CIO to enhance or
put in place the financial controls necessary to prevent such
fraud from happening again in the future?
Schuckenbrock: Absolutely. It’s one of the
most important aspects of all of the systems development we’ll
do going forward.
Can you tell me something about Michael Dell that no
one really knows about him?
Schuckenbrock: I don’t know if I can.
He’s pretty transparent. He’s smart. He pushes hard. He asks
tough questions. You need to be prepared when you present an
idea to him because he always already had that idea and two
others you haven’t thought of.
I’m amazed we’ve been able to cover this much ground
in 21 minutes.
Schuckenbrock: That’s how I do two