Dell has launched a dedicated services organisation, Dell Services, to focus on midmarket enterprise customers. The company formed the unit by integrating Perot Systems, purchased last month, with the enterprise services operation from its own Large Enterprise business unit.
"Dell became an IT leader through highly efficient, built-to-order, hardware solutions. Now we want to do the same thing in services, by reducing complexity and driving out inefficiencies across the service and support lifecycle," said Peter Altabef, who is president of the new organisation.
The combined units are expected to generate approximately US$7.5 billion in annual revenue for Dell.
Altabef, formerly president of Perot, said the new organisation will concentrate primarily on serving midmarket enterprise customers, those who usually proffer service contracts between US$20 million and US$50 million in value. This market was the primary customer-base for both organisations before the acquisition.
"Smaller and medium businesses have been under-served by services organisations," Altabef said. Dell plans to offer services on a more cost-effective "plug-n-play" approach than what is offered by the traditional vendors in this space, namely by increasing automation, offering services on a modular basis, executing tasks at remote, inexpensive locations wherever possible, and relying on standards.
"Many of [the midmarket] customers are not interested in doing business with the really big outsourcing firms, because they feel like they will be lost in the noise," added Steve Schuckenbrock, Dell's president for large enterprise operations. "While a lot of outsourcing companies will talk about the big mega deals and the huge billion-dollar opportunities they continue to pursue, the sweet spot for Dell Services is a contract value of up to $50 million, and terms that range from three- to six-year time frames."
Among the services that the organisation will provide include warranties and enhanced support, managed IT services, business process services, IT and business consulting, as well as applications development, maintenance and testing
Dell plans to save about $300 million in annual expenses by combining the two operations. Altabef did not say whether of not any employees from either of the companies would be laid off as part of this streamlining, though he did say some of the employees who previously worked in internal IT support might be reassigned to customer-facing projects.
The biggest areas of customer overlap between the two services organisations have been with the U.S. government and global health care, said Paul Bell, Dell's president of public sector operations. In the government space, the plan is to "expand the range and depth of the services that we can provide to these accounts, many of which we have already had many long range relationships with," Bell said.
Schuckenbrock noted that the account teams on the Dell side already have relationships with "tens of thousands" of Dell customers, though analysts wondered if these relationships were more with end-users, rather than with contract-seeking programme managers. Schuckenbrock dismissed these concerns, however. "We have a terrific number of relationships on the enterprise side," he said.
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