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July 20, 2009

Dell builds momentum around managed desktop services

Global delivery centres and M&A driving enterprise business

By CBR Staff Writer

Inward investment and a series of company acquisitions has put Dell Inc into a position where it can ramp up and round out its managed desktop offerings and deliver software and support as a service from the cloud.

That’s the pictured being painted by Steve Schuckenbrock, President of the Large Enterprise division at Dell, who told us today the intention is grow the arm disproportionately to the PC client trade by chasing enterprise services and data centre refresh business.

The services arm is currently driving just 13% of Dell’s overall enterprise revenues, but the former CIO and past VP of EDS believes growth will come from providing solutions that release some of the pressures being exerted on big business IT budgets.

“The biggest line item on the budget is labour and the cost of IT systems management, and we can squeeze these by doing as much infrastructure management remotely as possible, and by taking software and delivering that as a service through the cloud.”

Dell maintains that some enterprises seem to think that they can save money by not refreshing their desktop client infrastructure. The reality is, keeping laptops/desktops in circulation for over 4 years leads to more operating expense lost in maintenance, energy and productivity than the cost of replacing them.

“Enterprise market opportunities for Dell are best characterised as driving down the cost of infrastructure and infrastructure management. We believe it should be south of 50% of the total costs. We have made a dramatic shift that way ourselves internally through a massive consolidation and virtualisation programme, and by embracing cloud services, like” Schuckenbrock told us.

“Latest 11th generation Dell servers, that use the Intel Nehalem chipset, allow a 9:1 consolidation ratio of servers without virtualisation, and with virtualisation that ratio goes out to 30 to 40 physical servers to one. That makes for tremendous cost efficiency.”

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The themes of consolidation, virtualisation and cloud are to be found echoed in Dell’s enterprise service strategy, he said. “We have invested in a global command centre operation, and we’ve acquired eight companies in the past 18 months, four of which are specific software businesses that are relevant to our cloud-based services strategy.”

The takeover of Everdream provided Dell with an integrated offering of on-demand software and managed services for desktop management built around policies that are managed from the cloud, he noted.

Silverback, which Dell bought for its IT service delivery monitoring software, provides a means by which the company can supply proactive support and maintenance of managed IT services.

The hardware-maker also paid $340 million for ASAP Software to strengthen its capabilities in software licence management, licence purchasing, renewals and compliance, and stumped up $155 million in cash for MessageOne and its e-mail business continuity, archiving and disaster recovery services SaaS offering.

One outcome has been the development of an enterprise-strength platform for the delivery and management of infrastructure management services, delivered on demand, suggested Schuckenbrock.

“We believe managed enterprise services should be as easy to configure, as it is to order a desktop or laptop PC online. Customers can configure a service in which Dell tracks an asset, maintains it and manages all software patches, backs it up on a daily basis, archives all emails sent to and from that client, and all the while monitoring it remotely with support provided when it is needed from the global service desk that is best suited to deliver it,” said Schuckenbrock.

He explained that the company has as many as 10,000 call centre operatives addressing the needs of Dell’s commercial business. “The investment made in our global command centres is a really important delivery muscle for the enterprise services business.”

The company claims to have won over 5,000 customers to date and says it now has 2.5 million PCs under management as part of some kind of managed services contract.

The Large Enterprise division is one of a quartet of operations, which are centres of gravity for Dell’s Public Sector interests, SMB markets and its mainstay Consumer business. Dell last week said that year-over-year demand for its products appears to have stabilised, and is targeting 5% to 7% compounded annual sales growth, based on market expectations of improving IT spending.

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