Dell to Offer 'Managed Services' to Small Biz

Dell this year will begin selling pre-packaged technical services to mid-sized companies and plans to make similar offerings to small businesses soon thereafter.

The services, known in high-tech parlance as "managed services," include system design, deployment, technical support, and asset management. While these services are available piecemeal from Dell today, the Round Rock, Texas, PC maker said it hopes to create "relationship umbrellas" with SMBs by offering all the services in one contract.

"Soon we'll be coming out with support for 500 to 1,000 seats, and then we'll be moving downscale," said David Ornelas, director and product executive for Dell Managed Services. Dell defines small businesses as those employing 200 or fewer workers.

The systems maker said it will focus its efforts on businesses that are primarily Dell equipment users. As such, it would not compete with Hewlett-Packard and IBM, whose semi-autonomous service units offer technical services to businesses whether or not their computers are present.

The SMB strategy follows closely on the heels of a significant push by Dell to sell managed services to large enterprises. In October Dell signed a five-year service pact with Boeing and in recent weeks signed a contract with an unnamed multibillion-dollar international financial services firm.The strategy also reflects Dell's desire to derive a larger portion of its revenue from margin-rich service and from sales of other vendors' goods. Service revenue rose 35 percent for the fourth quarter, ended Jan. 30, from the year-ago period, with a $3 billion annual run rate. And revenue from software and peripheral products -- only half of which are Dell-branded products -- rose 36 percent in the fourth quarter, including huge sales of storage products from EMC and printers from Lexmark. In January, Dell announced it would expand its imaging line through new technology partnerships with Fuji, Xerox, Eastman Kodak, and Samsung.

Dell expects to automate managed service by mimicking the efficiency and metrics found in its product manufacturing and distribution model, according to Ornelas. "If we can create a centralized manufacturing process, we can do the same for managed services," he said. "We're creating a portfolio [of solutions] around a common set of problems customers face." The commonality of the problems has arisen because of "the standardization of technology in the small business environment, with Microsoft being pervasive, routers being deployed, and telecom being fairly generic," he added.

Dell's expansion of its managed services business would not require the computer maker to restructure its business divisions in any way, said Ornelas. However, he declined to say whether Dell would add employees.