Not familiar with Alien Respawn as I don't buy factory-built desktop computers, I have mine custom-built locally.
Full description on how to use it is here:
http://www.dell.com/support/troubleshooting/us/en/19/KC...
Indeed it can restore the computer to it's factory state, even the basic version can do that.
It can also backup your data,
but the data is backed up to a proprietary Dell back-up file, so it's no good for restoring that data to a different computer which doesn't have Alien Respawn installed (ie a non-Dell computer).
You will therefore have to back up your data manually to another location before performing the Dell Factory Recovery, or use third-party backup software.
I'm surprised you don't already back up your data routinely as hard drives can fail at any time - even without any warning.