New Drivers for Dell

The PC giant is bringing in a raft of new talent to lift it out of a financial slump and get it back on the path to growth

by Louise Lee

Dell, in the midst of a lengthy turnaround, is gaining momentum in attracting newcomers to help reenergize its management ranks. The world's second-largest PC maker, which in the last two years has suffered a rash of defections at all managerial levels, in recent weeks has brought in a handful of new hires to lead some key areas (see BusinessWeek.com, 11/7/06, "Dell's Executive Search").

Most recently, Dell (DELL) on Dec. 12 said it hired Steve Schuckenbrock as a senior vice-president to head the company's worldwide computer-services business. Schuckenbrock will report to CEO Kevin Rollins and serve as a member of the company's executive management committee.

Previously, Schuckenbrock was co-COO and executive vice-president of global sales and services for EDS (EDS) and was COO of consultancy Feld Group. He was chief information officer for PepsiCo (PEP) from 1998 to 2000.

Services Shine

Hiring Schuckenbrock into the newly created position, Round Rock (Tex.)-based Dell is placing bigger bets on the computer-services unit. Up to now, individual senior vice-presidents managing varying geographic regions oversaw services as well as other areas, such as hardware sales. By carving off the services business and putting it under a single SVP reporting to Rollins, "Dell is trying to send a message to both the troops and to the marketplace that it's elevating services in importance," says Bob Djurdjevic of Annex Research. The move "indicates a heightened level of awareness that it has to do more than offer just commodity-type services."

Dell, which performs largely routine hardware-maintenance work, is seeking to move up the ladder and into the more-lucrative area of helping companies manage entire computer operations. A bright spot at Dell, the $5 billion-a-year services unit grew 16.6% in the fiscal third quarter ended Nov. 3, compared with a 3.3% growth for the company overall. Analysts estimate the worldwide computer-services market at about $640 billion.

Since early 2005, Dell managers ranging from the chief information officer down to key vice-presidents and directors have headed for the exit. At the VP level, Dell has about 150 positions and is working to fill a number of them. Already, in the last few months Dell has hired four individuals into that level. It named Sona Chawla, formerly of Wells Fargo (WFC), to lead sales and marketing operations in Dell's global online business.

Fresh Ideas

It also named Richard Conrad and Rick Becker, both from Dell competitor Hewlett-Packard (HPQ), as VPs over worldwide procurement and corporate-hardware sales strategy, respectively. And Dell has hired Gang Yu from Amazon.com (AMZN) to oversee its procurement and supply chain in Shanghai. Of its international businesses, Dell's China operation, perhaps its most important growth market, has seen particularly high-level turnover with the departure of its top two executives within 10 months.

Hiring outsiders could help generate fresh ideas at Dell, which many analysts say has become overly attached to the business strategies that put it at the top of the heap until mid-2005. Even Dell's longtime strengths—managing its supply chain and assembly lines to ensure speedy delivery—have shown some holes this past year. Dell had to delay shipping its much-anticipated XPS 700 computer after it ran into problems installing the cooling system for the machine.

The infusion of newcomers occurs as Dell is working its way through a prolonged financial slump (see BusinessWeek.com, 11/9/06, "Dell Stands by His Man"). The $56 billion company has missed a financial target in four of the past six quarters. In the most recent quarter, though, it exceeded profit and margin expectations. In the last three months, too, Dell shares have risen 19%, to $26.20 as of Dec. 12, suggesting that some on Wall Street are becoming more optimistic about the company. Dell can only hope that more potential hires feel the same way.

Lee is a correspondent in BusinessWeek's Silicon Valley bureau
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