Dell Goes Direct with Managed Services for Small Business

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."