Michael Dell’s $200 Billion Promise

Michael Dell on Tuesday outlined an ambitious — and self-serving — plan that he said would help reduce total enterprise IT spending by $200 billion a year.

The comments came today during his keynote address at Oracle’s OpenWorld 2009 conference in San Francisco.

Unsurprisingly, the savings he claims are in offing will be derived from buying the products and services that Dell and other technology partners, including Oracle, are selling — and using those savings to invest in even more products and services sold by it and other vendors.

“Today we’re making a public commitment to take $200 billion of inefficiency out of the $1.2 trillion in total IT spend each year,” Dell said during his keynote. “The economic downturn has challenged the way customers use and manage technology.”

“It’s not just about reducing cost,” he added. “It’s about improving productivity and efficiency and making technology work harder for the customers. It’s the efficient enterprise.”

Dell said market researchers recently pegged total enterprise IT spending at just north of $1.2 trillion a year, with $800 billion of that devoted solely to labor or, as Dell put it, “keeping the lights on, maintaining all the apps and legacy systems.”

Only $400 billion was spent on new hardware and software, he said, and only a small portion of that was spent on new, innovative projects designed to improve business performance and differentiate enterprise customers from their competition.

Where are these savings going to come from? Dell said it boils down to three key themes: standardization, simplification and automation.

On the standardization front, Dell — the company and the CEO — stand to continue benefiting from the unfettered embrace of the x86 platform and the servers and applications that run on it.

“Twenty-five years ago, we bet it was all about the economics of open standards,” Dell said. “IDC research has found that the significant majority of businesses use x86 servers and 90 percent of applications are running on it. The numbers don’t lie. x86 is the standard architecture in the datacenter — and it’s still evolving.”

On the simplification front, Dell extolled the virtues of application reduction and virtualization, two markets that his company has made significant investments in recent years and ones that he expects will drive sales for the foreseeable future.

The third prong, which Dell characterized as automation, will be achieved with computing services delivered through the cloud, self-service IT models and remote infrastructure management.

Thanks to last month’s $3.9 billion acquisition of Perot Systems, Dell thinks his company is uniquely positioned to benefit from this new services-delivery model.

With this projected $200 billion in savings, Dell said IT departments will then have the budget to buy more of his companies servers, virtualization products and services and application stacks from the likes of Oracle to improve their day-to-day performance and grow new revenue streams.

“We see a future with drag and drop functionality for IT administrators to manage workloads,” he said. “IT will have complete visibility to consume what they need when they need it.”

Oracle’s vision; new BlackBerry and social apps

Perhaps no company in the world lives and breathes consumption the way Oracle does.

Thomas Kurian, Oracle’s vice president of product development, spent the entirety of his hour-plus presentation taking attendees on a hypothetical tour of IT hell.

His aim? To demonstrate how Oracle’s integrating all the business intelligence, storage management, database management and customer relationship management applications its acquired over the years into a handy application suite that leverages its core Fusion middleware and database software.

“Our development organization has been very busy this year delivering new products and software releases,” he said. “Now we want to show you how we’re bringing them together to fulfill the vision.”

As is the wont of every major software vendor these days, Oracle used the occasion to introduce its latest Web 2.0 gizmos with the release of Oracle Mobile Sales Assistant 2.0 for BlackBerry.

The company today also unveiled Oracle Social CRM Applications Release 3, which adds new Oracle CRM Sales Campaigns On Demand as well as new features to Oracle CRM Sales Library On Demand and Oracle CRM Sales Prospector on Demand.

Along with supply chain management and real-time CRM applications that tap into the ubiquitous Oracle middleware and database applications, Kurian outlined how all these applications will leverage the company’s Exadata Database Machine Version 2—the online transaction processing (OTLP) and data warehousing product it developed with Sun Microsystems.

“This combination of a technology platform and business applications solve some very important problems for our customers,” Kurian said. “These are all best of breed applications that are now delivered in an integrated stack.”

Kurian said Oracle shipped 3,000 applications this year — including 190 new titles — that included more than 17,500 new features.

During “every second of every working day in the last year, someone was downloading one of our products off the Oracle network,” he said.

News Around the Web