Will a private Dell be able to make progress in IT services?

I sometimes forget that Dell has an IT investment arm. In 2009 it bought Indian IT services firm Perot Systems for £2.4bn.

And let’s face it the big hardware firms that have acquired services firms have not done too well of late. We all know about the car crash that is HP’s acquisition of EDS and the $7bn downgrade.  And Xerox hasn’t done much better with its ACS acquisition.

But in November 2010 Dell did say it will grow services through acquisition. So perhaps going private will mean it can invest in a few more acquisitions?

Now that Dell is private it will be interesting to see how it invests in services. With the PC market tough and shareholders to please Dell has probably held back investments. But it can now invest for long term gain by spending money on IT services. Perhaps another acquisition?

Dell made some brave claims to me at the beginning of 2010 about the opportunity for its services business following its acquisition of Perot Systems.

Dell claims:

“1 – The IT industry remains fragmented with only 4 companies offering a set of integrated service offerings (IBM, HP, Fujitsu, and now Dell).
2 – Dell is powerfully positioned as one of the 10 largest IT services providers.
Industry comment: “In terms of pure services turnover maybe number 15-20 worldwide.”

3 – From a customer point of view, we know IT budgets are pressured, and customers want technology that offers best value solutions.

4 –   We want to help organisations innovate and focus on strategic objectives while spending less on routine IT management.”

This is why Dell says it bought Perot:

1 –   Dell became an IT leader through highly efficient built-to-order solutions.

2 – Now, we want to do the same thing in services, reducing complexity and driving out inefficiencies across the service and support lifecycle.

3 –    We believe that the new Dell Services (Dell’s legacy services organisation combined with Perot Systems – which we acquired last November) is big enough to be credible, yet nimble enough to lead a transformation in the services industry.”

This is what Dell says about the merged services organisation:

1 – We are a $7.5bn global services organisation with more than 42,000 employees.

2 – The organisation generates approximately three-quarters of its revenue from infrastructure and related support services 18% from applications and consulting services, and 7% from business process services.
3 – We serve the entire spectrum of potential clients, from large organisations to consumers.

4 – We see the combination of our solutions and teams creating enhanced growth opportunities through cross-selling opportunities as well as being presented the opportunity to participate in a broader range of sales activities

5 – This is a very exciting time and we’re stronger together

6 – We can fill out capabilities that neither company owned by itself

7 – Qualify for more RFPs and win more deals
8 – Sell more products and services at existing accounts.”

This is what Dell claims to do?

1 – In addition to scale, the components that now form Dell Services have a comprehensive range of complementary strengths … and a consistent history of creating an award-winning customer experience.

2 –   Together, the companies support nearly 15 million systems and manage over two million seats

3 – Consistently, Dell Perot Systems has ranked number one as healthcare IT contractor and number one by KLAS for Clinical Implementation Services

4 – The combination of solutions and teams from each company creates growth opportunities through cross-selling, but even more significantly presents the opportunity to participate in a broader range of sales activities.

5 –  Dell Services offer best-in-class suite of intelligent, end-to-end services and business solutions to reduce IT complexity and lower costs

6 – From our knowledge of industry requirements, we then tailor industry-specific solutions that solve business problems and deliver the best value for the resources invested.

7 – The strength of our combined business model rests in several areas:

–  Intense customer focus – committed to top customer success
–  Domain knowledge – Industry expertise in healthcare, government, and large enterprise is a competitive advantage that allows us to add long-term value through industry-focused solutions 
– Breadth of services – Integrated technologies, IT and business services, and industry-specific consulting are combined to create services that transform organizations
– Global delivery model – Modular services delivery put customers in control, allowing them to select only what they need, which means lower cost for customers
–   Recurring revenue – Over $13 billion in annuity-like revenues.”

So lots to digest there but I haven’t heard much from Dell Services about the businesses it is doing.

Also read:

Dell plans acquisitions to expand global services

Who will Dell buy in services push?

Don’t act like outsourcing services is something new, says Dell

How did EDS lose $8bn in value?