More Than Half of Companies Aren’t Prepared to Use Today’s Top Technologies

In 2013, Michael Dell shocked the world by taking his namesake computer company private in the largest leveraged buyout since the Great Depression. He shocked it again in 2015 when he announced that the Texas company would merge with Massachusetts’ EMC, another tech industry stalwart, in one of the biggest deals in business, worth $67.7 billion.

Today’s Dell is a behemoth by every definition: $74 billion in annual revenue, 140,000 employees, and worlds away from the design-your-own-PC shop that its founder established as a teenager in 1984.

Jeff Clarke has been there for nearly the entire ride. As Michael’s right-hand man and possible successor, Clarke—who joined Dell in 1987 and is not to be confused with the Kodak CEO of the same name—has held countless roles at the company.

Ahead of Dell Technologies World, held this week in Las Vegas, Fortune sat down with him to discuss artificial intelligence, the Internet of Things, and why most businesses aren’t yet prepared to embrace them. (The conversation has been condensed and edited for clarity.)

Fortune: So you’ve got a new job.

Clarke: Yes. In mid-September Michael tapped me on the shoulder and expanded my responsibilities. My three major responsibilities are to oversee our operations organization, our client solutions group, and our infrastructure solutions group. So essentially that means all of the product and solution capability at the company and the supply chain that delivers it to customers, from consumers to the largest multinational corporations.

Is that all?

Yes, I don’t have a lot of extra time. It keeps me hoppin’. I’m in my 31st year here at Dell. I’ve been in R&D for 28-plus years. I’m a product person who led many different businesses and led innovation at our company. So it’s kind of a humbling role and at the same time an unbelievable opportunity. I have the opportunity to link two large organizations that build products from the edge to the core to the cloud.

I’ve always been on the product side. It’s my passion; it’s what I love to do. At some level I work in a toy shop and I have a lot of toys to play with. And these “toys”—products—run much of the infrastructure at many of the world’s largest companies.

What’s changed at Dell over three decades? What hasn’t?

Let me start with a couple of things that haven’t changed. It starts with Michael. We’re a customer-first company. We built what customers wanted—our configure-to-order business that Michael pioneered. And the EMC culture was very much customer-first, too. So that deal brought two companies together on that, event though the heritage was different.

What’s changed is our capability to respond. Back in the day you could argue that we were a fast follower. Today we’re a market leader.

And changes since the Dell-EMC merger in 2016?

We’ve been able to integrate this thing pretty quickly. Did everything go exactly as planned? Of course not—things of this scale don’t do that. But we were able to service customers. And we were able to build a strategy that was resonating with them. That’s galvanized what were two individual companies.

What’s R&D mean to you?

Applying precious resources to respond to customer needs and help them solve the associated problem statements they give us. Where you can’t get a differentiated result, you should limit your exposure there.

The evolution of our R&D spend over years has continued to shift to addressing customer pain points. Even for the basic PC, the way we design them today is materially different than we did 30 years ago. Take our XPS series—it’s fit and finish, materials, battery size, not who can get an extra 2% performance. That’s not differentiation that you can get paid for today in that business.

What trends are you seeing among your customers?

It is clear that IT as a competitive advantage for business is what is driving motivation to invest. So how do we drive better business outcomes for our customers? I’m in the better outcomes business, which ultimately makes customers more competitive. How do we do that in real time? Take latency out of the path? Improve decision-making? That’s the pivot I’m certainly driving the organization to.

What’s fundamental is, our world is digitizing at a rate that’s unimaginable in my mind. After 30-plus years doing this and seeing how much it’s digitized? We’ve seen nothing yet. We’re at 30 billion connected devices. I see 100 billion, 250 billion, even a trillion in my lifetime. Think about what will be created when that happens? And what we do? Man, I like what we do. I’m in the business of devices that compute and store that data. And increasingly data is the most important asset of those companies. It’s how they’re going to derive business value. We’re all over that.

You’re indirectly referencing the “data is the new oil” argument.

When you think about this digitization, and smarter devices, and more sensors creating more information…say I’m an oil company drilling a well, and I have that well sensor-ed in many different ways. I can process that in real time, on the edge, with no latency, to slow down the drill bit or speed it up. That’s real stuff today. Or, the ability to look at buildings more intelligently and make tweaks in real time for temperature or water. Or what we’re going to sensor-ize in the manufacturing process.

There will be a lot of data to go through. Think about how much data, and how many sensors, an autonomous car has to know where the heck it’s at? Everything is going to the cloud right? Not a chance! Do you really want latency to figure out if a deer just jumped in front of the car? You’re going to want to be able to process that in real time to take the appropriate action.

These are some of the big macro trends coming our way. The Internet of Things really means a bunch of decentralized data are going to be created that ultimately has to be processed and stored and done something with. We’re going to live in a multi-cloud world with more work moving to the edge because you can’t afford latency.

This is really driving where we’re putting our R&D.

Do you feel that companies are ready?

Our research would tell us that more than half of the industry’s organizations aren’t ready today. They have outdated technology. They can’t work fast enough. They can’t handle the data that’s coming. They’re challenged by privacy and security concerns around this data. So no, I don’t think they’re ready. We have to modernize. You’re going to need a modern datacenter and modern infrastructure to be able to deal with this. Otherwise I think you’re going to struggle.

Why are so many behind? Is it a lack of knowledge? Resources? As a tech provider, you have every incentive of saying that they are. But if they are, don’t they know it?

Many are in different stages of their digital journey, coupled with what you said. The prime catalyst is where they are competitively. Have they come to the conclusion that modern applications and data is where you drive business value? Do they moved from a perception of IT as a cost center to IT as a competitive advantage from which to drive differentiated value for their business and customers? Those who’ve embraced that are pressing us. Those who are working through that, we’re helping them do so.

You’re going to have to invest in new architecture that takes advantage of state-of-the-art technologies. Game on.

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