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Channel Summit Raises Million Dollar Question

How long until managed services are commoditized? A tough question to answer, not least because many solution providers (if not most) are still trying to come to terms with transitioning their business to managed services, let alone it already becoming a commoditized arena. Nevertheless, this was the question posed to Dell’s channel chief, Greg Davis […]

Written By: Sara Driscoll

Feb 7, 2008

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How long until managed services are commoditized? A tough question to answer, not least because many solution providers (if not most) are still trying to come to terms with transitioning their business to managed services, let alone it already becoming a commoditized arena.

Nevertheless, this was the question posed to Dell’s channel chief, Greg Davis at the Ziff Davis Enterprise Channel Summit in Dallas today. And with Dell’s onslaught into the managed services arena, backed by its recent acquisitions and with the force of its direct sales teams, it is an exceedingly good point raised by a VAR member in the audience.

Dell has only made preliminary announcements about its managed services battle plan and Davis said more of a roadmap is expected in the next 30 to 40 days. But with any kind of assault on the managed services market from Dell, asking the question of when managed services will become thinner on margins and a commodity becomes highly relevant. Just look at the PC price war that ensued after Dell and HP threw their handbags at each other?

Dell admits after all that its business model is about driving efficiencies and driving down costs. But if Dell lowers the cost of managed services to an end user through its direct sales force, this is likely to cause competitors to do the same. And once that happens then margins are evaporated.

So this may be more of a when, and not an if, question. But what can the channel do about it? Our sector is entirely cyclical — so when hardware margins started slipping, software and services became king. And when services become commoditized, then what will become important is each VAR’s own intellectual property. Your own USP, the thing that makes your company special and different, will help to drive new business and keep your customers loyal — because after all you are the best at what you do, regardless of price, vendor or brand.

Channel Summit Raises Million Dollar Question

Sara Driscoll

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