An Ignoble Experiment

2. Zenoss: More than half of IT professionals consider adopting converged infrastructure

In a filing with the Securities and Exchange Commission about its proposal to go private, Dell (Nasdaq: DELL) predicted the continuing decline of the PC market.

Dell said that there have been "fundamental changes in the PC market" that have necessitated the need for a major restructuring of the company.

These changes include "a decline in worldwide revenues for desktop and laptop PCs and lower shipment forecasts for PC products; rapidly declining margins as demand for PC products shifts from higher-margin premium products to lower cost and lower margin products, particularly in emerging markets; significant and increasing competition from efficient, low-cost manufacturers relying primarily on a build-to-stock business model; ... general lengthening of the replacement cycle for PC products, the uncertain adoption of the Windows 8 operating system and unexpected slowdowns in enterprise Windows 7 upgrades, increasing consumer interest in tablets and smartphones, [and] the potential substitution of these products for PC products."

These troubling predictions, made by a special committee set up to review Michael Dell's proposal along with J.P. Morgan, Evercore and BCG, are bad news not only for Dell but for other PC manufacturers, as well as companies that supply software and components for PCs, such as Microsoft (Nasdaq: MSFT).

These were factors in a move by Michael Dell and a group of investors to take the firm private through an offer to pay $13.65 per share for Dell's stock, or a total of $24.4 billion. The company's founder is contributing his stake in Dell along with cash through his private investment firm MSD Capital. Silver Lake is contributing $1 billion in cash, and Microsoft is loaning the group $2 billion.

However, during a "go-shop" period triggered by the board's acceptance of Michael Dell's officer, Blackstone Group and billionaire investor Carl Icahn made counterproposals to acquire Dell.

According to a report by Bloomberg, Dell, who owns a 15.6 percent stake in the company, would only consider backing the Blackstone Group's offer if he could remain as the chief executive officer of the company.

In a letter to shareholders on Friday, the special committee said: "While we continue to recommend the current Silver Lake/Michael Dell transaction, and to work toward completion of that transaction, we will also work with Blackstone and Icahn to seek to develop a definitive alternative proposal that provides an even more compelling value proposition for Dell's shareholders."

The special committee did not provide a deadline for its discussions with the alternative bidders.

For more:
- see Dell's SEC filing
- read the Bloomberg report
- check out the special committee's letter

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By Fred Donovan

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3. Gartner: Organizational pressures creating 'schizophrenia' within IT

More than half of 340 IT professionals surveyed by network management and converged infrastructure provider Zenoss said they are actively considering adopting converged infrastructure.

Close to one-third of respondents have already adopted converged infrastructure, and three quarters of those said that it has resulted in better customer service, according to the survey.

"Converged infrastructure was more prevalent than we had expected …People are happier when they have fewer tools that they have to use to manager that infrastructure and delivering on the services they promised," Jennifer Darrouzet, director of product marketing at Zenoss, told FierceEnterpriseCommunications.

Converged infrastructure puts multiple IT components, such as servers, data storage, networking equipment and IT management software, into a single, optimized networking product.

"Converged infrastructure is the pooling of compute, network and storage resources," Darrouzet explained.

Two-thirds of respondents who have adopted converged infrastructure said a major benefit was network provisioning via automation; 57 percent cited faster delivery of resources; and 51 percent cited lower operating costs. The leading technical driver that prompted enterprises to adopt converged infrastructure was virtualization, with VMware (NYSE: VMW) accounting for between 37 percent and 43 percent of deployments, according to the survey.

Technology companies are the largest adopters of converged infrastructure; education and telecommunications rank second and third in industries that want to adopt the technology. North America leads in adoption of converged infrastructure--representing 57 percent of those enterprises who have it and 55 percent of those who want it.

The C-level suite is looking for agility and reduced capital expenditure from converged infrastructure, while the IT operations staff is more interested in greater efficiency, the survey found. "That could be a recipe for disconnect," Darrouzet noted.

"We saw a lot of disconnect up and down the command chain about what people were trying to accomplish ... We saw a lot of misalignment in terms of what personnel were trying to accomplish," she cautioned.

For more:
- check out the Zenoss survey (reg. req.)
- see the IDC report (sub. req.)

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By Fred Donovan

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4. VSG: BT Global Services zooms past Verizon, Colt in Ethernet services market

The pressure to develop new IT services while maintaining high availability and integrity of existing services is threatening to cause a "schizophrenic" breakup of IT departments, warned George Spafford, research director at Gartner.

Only 10 percent of infrastructure and operations departments will be able to step up to the plate and deliver the speed of change needed for enterprise communications, judged Spafford.

"Over the years, I&O has become risk-averse, and with the introduction of new and changed IT services viewed as critical, the risk aversion of I&O has become problematic. At the same time, business and IT leadership continue to pressure I&O to ensure high availability and integrity, which lead I&O to implement controls that take additional time to ensure production is protected. These opposed pressures are creating an organizational schizophrenia wherein parts of IT, notably development, want to go faster than I&O can support," Spafford observed.

Spafford advised enterprises to form cross-functional teams to review IT change management processes. The teams should include representatives from IT departments and business units to provide differing perspectives on change management.

In a recent blog, Jeff Durr, senior managing consultant at Gallup, and Craig Kamins, subject matter expert at Gallup, offered four rules for effective change management: do not delegate large-scale organizational change to middle management; actively solicit feedback from employees before change occurs; do not let organizational culture dictate the intensity and breadth of change; and clearly communicate the change strategy and the reason behind the change.

"Senior leadership's real job, regardless of their individual title or job description, is to develop and implement successful change initiatives. Many senior leaders fail because they aren't able to help an organization evolve. The more effective you are at change management, the higher your value to any organization," Durr and Kamins concluded.

For more:
- see the Gartner release
- read the Gallup blog

Read more about: IT services
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By Fred Donovan

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5. Enterprises should find middle way on social media use, says Forrester analyst

BT Global Services (NYSE: BT) zoomed past Verizon (NYSE: VZ) and Colt to take second place in the global Ethernet services market, according to a market share ranking by Boston-based research firm Vertical Systems Group.

France's Orange Business, a unit of France Telecom, retained its number one ranking, according to VSG, which calculates market share using the base of enterprise Ethernet services installations and input from VSG's survey of global Ethernet providers.

Verizon took third place, while Colt took fourth. AT&T (NYSE: T) placed fifth and NTT was sixth.

Fueling the BT Global Services rise were recent contracts from large enterprise customers. According to BT's latest financial results, BT Global Services signed contracts in 2012 with Novartis to provide new collaboration services and connect additional global locations; Visa Europe to provide managed solutions for its payments processing and corporate services; KPMG for the provision of managed network, voice and conferencing services; HTC for a global customer contact management solution covering 60 countries; and Clarins Group to upgrade its global IT infrastructure and improve the management of its critical applications.

Rick Malone, principal at VSG said, "Orange remains the market leader; however, BT Global Services gained significant share to move up to second position ahead of Verizon and Colt. The outlook throughout 2013 is heightened competition for market share in this demanding customer segment."

In a VSG market share ranking, released in February, AT&T bested Verizon as the top United States incumbent carrier providing business Ethernet services based on billable port share.

For more:
- see VSG's releases on global Ethernet services and U.S. incumbent carrier Ethernet services
- check out BT's latest financial results

Read more about: Colt, bt global services
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By Fred Donovan

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