Dell Goes Direct with Managed Services for Small BusinessBy Jessica Davis | Posted 2009-04-14 Email Print
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Dell rolled out its direct managed services offering, available today, and targeted it at small businesses. Dell says Dell-certified managed services providers and resellers can also offer the service to end customers. Non-Dell solution providers say the service doesn't pose a competitive threat, but could erode the price of managed services.
Dell has announced a managed services solution designed for small businesses
and medium businesses that became available April 14 across the United
States. The nationwide rollout is the next
step in Dell’s
direct managed services strategy, which began as a trial in the Dallas
and the New York area.
Like when it introduced those trials, Dell says the new nationwide rollout will target small and midsize business directly, but it will not pursue existing customers of its Dell managed services-certified PartnerDirect channel partners—about 200 globally—and Dell will back off of customer prospects if one of these managed services-certified partners has already registered the deal.
That said, the rest of small business customers out there are fair game. But managed service providers with established businesses aren’t worried about a potential competitive threat by Dell.
"In typical Dell fashion, this may have the potential to commoditize these services and hurt pricing, but if you look under the covers, I don’t think they are offering anything compelling," says MJ Shoer, president and virtual CTO of Jenaly in Portsmouth, N.H. "The pricing for any services beyond pure monitoring alerts is not truly in line with the market. I think it may be overpriced, depending on the market."
Shoer points out that Dell’s recent moves show the company is trying to reach out to what it thinks will be a lucrative market—small business. However, small business customers generally prefer the high touch approach that most often comes with dealing locally.
"Like all major corporations, Dell is trying to 'get’ the SMB space, and this is just their latest attempt," says Shoer. "In the long run, I suspect it will improve opportunities for companies like ours as we still have the ability to develop the local, personal relationship. That’s something Dell and the other national organizations are not able to cost-effectively accomplish."
New Jersey solution provider Silicon East agrees, saying Dell just can’t offer the same level of service that solution providers can.
"We’ve learned through experience that SMB clients want and need a combination of managed service, on-site support and strategic consulting," says Marc Harrison, president of Silicon East. "Dell is not going to be able to offer this essential combination unless they partner with providers like us. If and when they do, they become yet another managed service solution provider, although one that we’re very unlikely to partner with."
Dell’s ProManaged-Managed Services start at $9 a month. The service levels start with alerts alone and move up to include services with resolution, management, service desk and network operating center (NOC). Dell’s help desk is located in Kansas City and its NOC is in Guadalajara.
Dell says additional services, available on a pay-as-you-need basis, include troubleshooting and repair, virus and spyware issues, software support, data migration, data storage and backup, installation, network assessment and design, and security assessment and design.
Dell’s offering is based on technology the company got when it acquired Silverback and Everdream, among other companies.
In announcing the new service during a Webcast April 14, Dell pointed out that worldwide IT spending by small and midsize businesses is not expected to dip as low as corporate IT spending, and is expected to exceed corporate IT spending when the economy recovers as well, according to IDC research.
Dell executives assured channel partners during the Webcast that they would be able to differentiate themselves by integrating Dell’s offering into their own branded offerings. Others may choose to act as a sales agent for Dell’s services, executives at Dell said.
"It would not replace you," says Ray Boggs, Dell vice president of small business and medium business and home office research. "It would be in partnership with you. Our intent is to enable you rather than replace you."
But others advise solution providers to watch out when dealing with any vendor who also sells direct.
"My general advice, regardless of the vendor, is if solution providers are dealing with vendors who sell services or product direct to end users, and they partner with them for channel relationships, you won’t get much sympathy from anyone if those vendors eventually behave badly," says Justin Crotty, vice president of services at IT distribution giant Ingram Micro, which recently announced a distribution deal for a selection of standard products from Dell.
"If you are rolling the dice with your client base being targeted by any form of vendor-direct strategy simply to garner a few extra shillings of margin or a cut-rate price, you are stepping over dollars to pick up nickels."