Dell rushes to ramp up enterprise services

Dell is aggressively expanding the portfolio and size of its high-end IT services division as it attempts to diversify into...

Dell is aggressively expanding the portfolio and size of its high-end IT services division as it attempts to diversify into enterprise hardware, according to Jeffrey Lynn, vice-president at the company's services division.

Dell's increasingly aggressive drive into services will be product led. "Our [professional] services are designed to push and pull hardware products," said Lynn.

"Don't expect to see us getting into service lines and offerings that are perhaps viable, profitable, growth-oriented and can stand on their own, but that don't push or pull hardware," he said.

Dell will, for example, avoid strategy, management and business-transformation consulting, according to Lynn.

"We're focusing on a subset of services that also help the rest of the company and that look like a bundled product-and-services solution to our enterprise customers. As we get into other hardware offerings, look for me to wrap services around it," he added.

Gartner analyst Ted Kempf said, "We're seeing a lot of traditionally product-based companies developing professional services arms."

Kempf did not find Dell's sense of urgency surprising, given the services strength of enterprise competitors such as IBM and Hewlett-Packard.

"Dell is taking a look around and realising its competition has strong professional services portfolios, and saying 'I need to get one as well'," he said.

Dell had about $3.5bn (£2.3bn) in services revenue in its financial year 2002, which ended in February, with most of the money coming from support services. But the professional services division is growing fast - both in sales and staff - and expects its revenue to double this year over last year, Lynn said.

Lynn added that the division will grow "organically" through internal development and small acquisitions and will also continue to partner with other service providers such as EDS and Accenture.

Gartner's Kempf warned that Dell's expansion of its professional services could damage its relationships with its existing partners. "It certainly can be done [well]. But partner conflict could be a major issue."

Dell has focused its professional services division into six areas:
  • Server and storage consolidation;
  • Storage design and deployment, including disaster recovery, business continuity, data migration and backup;

  • Migration services;

  • High-availability and high-performance computing clusters;

  • Training, education and certification on Dell products and some third-party products;

  • Application development, mostly around Microsoft's .net platforms.

Read more on IT risk management