Dell services not a threat to the channel, execs claim

Dell services not a threat to the channel, execs claim

Dell has been busy blowing its trumpet about the rollout of its direct services sales model, but insists it will maintain its existing partnerships with third-party service providers.

Dell’s president and chief operating officer, Kevin Rollins, recently announced the company would apply the same direct sales methodology to computer management and support services that brought it so much success in the hardware market.

And the strategy appears to be working: Dell’s services revenue grew 45 per cent in the last quarter.

According to Dell, the commoditisation of hardware products would enable the vendor to simplify the services it offers and therefore deliver them at a lower cost than its competitors.

"If you look at what's happening to hardware, it's commoditising," Rollins said in an interview with the Australian Financial Review on May 22. "When a hardware product commoditises, the services get more simple to offer. As we commoditise additional categories, as they standardise, the services offering you put around them are getting less and less complicated. A lot of it is delivered over the web, a lot of it is delivered by phone.”

"And we have a very low-cost structure, so we believe we can commoditise services -- reduce prices, expand the volume, simplify the service offering and thereby bring new price points to services."

Dell is currently in the process of rolling out a professional services business – made up of technical consulting and deployment services - that focuses on its enterprise products, such as its server and storage range. Dell will provide deployment services such as project management, custom factory integration and will act as a single point of accountability. However, Dell’s third-party channel partners will continue to provide on-site support and installation services.

“Some of the new enterprise services we’ll be offering include server and storage consolidation, Microsoft consulting including things like Exchange migration”, Dell’s director of enterprise solutions, Australia/NZ, Simon Johnson, said. “We’re doing some work with Oracle on some of their 9i racks and we have a number of offerings around high performance computer clusters (hppc).

“We’re adding consultants, deployment engineers and project managers plus making significant investments in marketing, training, laboratories and equipment.”

The development of product-based alliances with other vendors, like storage vendor EMC, could provide the key to Dell’s success in the enterprise services space.

Dell recently announced it had extended its strategic alliance partnership with EMC.

The most significant product of their marriage to date is the Clariion CX200, a mid-range data storage device designed by EMC but assembled by Dell and branded with a Dell-EMC label.

Dell supplies enterprise consulting and support services for the CX200, such as 7x24 engineer-to-engineer support.

EMC’s high-end service provider partners didn’t get a look in.

Dell would not be expanding its range of SMB services, Johnson said. However, it would invest in the existing services its channel partners provided, that includes customised installations and warranties.

For more on this story, see this week's issue of ARN.

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