Most spin doctors will tell you that if it were not for the current recession Dell would be doing gang buster business. The fact is Dell was in trouble before the recession. The recession made it worse. The spin doctors are correct in saying that Dell would be better off without a recession but then again so would everyone else.

I like the new Dell Latitudes. In fact I have always liked the Dell line. The Latitude product line has improved email access, mobility features, and even reduced time in system booting. I consider those features huge. However, in a recession the problem is that businesses stop spending money on any IT products and individuals spend less on upgrading systems. Even SOHOs (small office and home office businesses) stop spending money on IT during a recessio.

I applaud what Dell was and is trying to do to save his company. The restructuring effort in Dell has been going on for the last 2 years. The company has been facing an uphill battle in competition. Dell’s original business model was based on low manufacturing costs and time to market (onsite servicing/selling directly to the consumer). Dell is no longer the Dell that made it famous and profitable. Unfortunately, that is the nature of business; change.

The innovation could not have come at a worse time but then again it could not have come at a better time. This is the nature of restructuring. Innovation is important but unless it has a profound impact on the nature of how a customer does business it will not result in increased sales.

Dell needs to conserve cash, which is obvious. However, what is not obvious is what Dell needs to do next. The company is obviously looking to rapidly reduce manufacturing costs. The company is probably going to all of the usual countries for outsource manufacturing; India and China. My suggestion is that Dell consider other countries like, Taiwan and Viet Nam. I hate to shift work away from the United States but what Dell can do to ensure there is some American input to the product is do level of final component assembling and all R&D (research and development) in the States. Manufacturing is what will keep the U.S. economy healthy. However, financial restructuring does not change a company, operational restructuring changes the company. Change is what will be needed. When all is said and done, Dell will not be the same Dell of 2007 – accept this fact and move on.

Things will get increasingly worse for Dell and other computing companies. The objective now is not only to survive but also to position the company for the recession to end. The standard methods of conserving cash include cutting employees, eliminating bonuses, closing buildings, and cutting salaries. What do you do after that? The answer is what Dell has been doing – a deep restructuring of the management team and tactics. I believe Dell would have been worse off if Michael Dell himself had not returned. Now this is time when the changes that had to be made during the mid-2000s should have been made.

In a time of recession and corporate crisis it is absolutely necessary for the executive management team to look like a team and a team that inspires. The employee base is already depressed and a confident management team will help remaining employees stay focused.

Dell has reduced the number of his direct reports, which is good. Micro-managing is good during a corporate economic crisis but there are limits. Dell has taken that next step in restructuring – he is performing operational restructuring of the company.

Next Dell needs to survey its customers to determine what they like and do not like about their enhanced product lines. Dell needs to be responsive to the customer base’s input and make changes if they make sense and could improve sales for 2009.

Next Dell needs to continue focusing on innovation. Currently Dell has been promoting a bunch of new features:

* Battery life of 19 hours with a semi-rugged laptop called the Latitude E6400
* Software called Dell Latitude ON, which allows access to email, calendar, attachments and contacts without booting the operating system;
* Intelligent backlit keyboard that adjusts to ambient light levels;
* ControlVault, a sub-processor and storage system that protects user credentials in an area away from the main hard drive.
* You can charge your PDA and phone whether the PC is on or not. The AC power adapter is now half the size of the previous one.

Innovation cannot stop because all of the above new features are now being promoted or will soon be promoted by other computing device manufacturers. Remember in technology everything is eventually copied by competitors. Dell will need to continue its innovation work, which means not only top technology talent but also top marketing talent on the payroll.

The company’s Green initiative is good for the company. If Dell can snatch up government or large corporate contracts (if there are any left out there) being Green will be important to staying viable. The fact is many nations are having enormous difficulty with garbage. Yes, garbage is not a sexy investment but it is a growing one and one that will generate cash. Any company that is using environmentally friendly components will likely be looked upon favorably.

The company’s digital community known as Digital Nomads speaks to a rapidly growing and never to fade marketplace known as the consulting marketplace. Professionals on the move will continue to grow. Our country and others are facing an aging workforce that will need to continue to work into old age and will likely have to hold down at least 2 jobs to survive. This community is not gong anywhere and will grow. Then again there is also the growing mobile workforce that most mid-size and large corporations will be employing from now on in order to stay competitive. Teleworking may come back, however, during a recession many corporations can easily intimidate workers to travel to work from home as far away as a 100 miles. Hence, I would say Teleworking will not come back this year for healthy companies. However, Teleworking does play a role with distressed companies.

What does this mean for Dell? Constant vigilance, flexibility, and action.

P.J. Louis LLC is an independent advisory and turnaround firm providing operational restructuring leadership to companies and their stakeholders. We serve clients in the telecommunications, technology, Internet, media, and network security industries with creative solutions and ideas that enhance corporate value during adverse periods. P.J. Louis LLC possesses in-depth expertise in operational and technology management. Our expertise enables us to manage due diligence efforts that only professionals with deep insight in the industry can perform. The firm views intellectual property as a key component of any technology company’s value. Companies need to find new ways of generating value out of their intellectual property portfolios – our firm is dedicated to making that happen. We support private equity investors and creditors. We support USPTO patent re-examinations. We support intellectual property attorneys in patent infringement and copyright infringement litigations. For more information, see: www.pjlouis.com