Dell Evolves Into a Small Business IT Services Provider

Wednesday Jan 19th 2011 by Gerry Blackwell
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Dell's transformation from hardware vendor to a complete small business IT services company has evolved over the past three years. We look at what Dell offers small business today.

Most small businesses know Dell as an online seller of low-priced, customizable computer hardware. But Dell has in recent years evolved into something more. It’s now a complete one-stop shop for small business IT needs.

“Customers kept asking us for different things, kept telling us they needed more help,” said Erik Dithmer, vice president and general manager of Dell's Small and Medium Business group in North America. “For some things, we had to go out and build the capability.”

The company committed itself three years ago to meeting the challenge from its small business customers. Today, IT services and solutions tailored to SMBs represent more than half of revenues in Dithmer’s group.

The portfolio includes consulting, systems integration -- especially in the vital area of application and server virtualization – IT management and support, and increasingly, cloud-based software and services.

Dell’s earliest successes came in helping small business customers scope and manage server virtualization projects. Customers have saved tens of thousands of dollars following Dell’s advice and using its products, Dithmer said.

From Hardware to Small Business IT Services

You might wonder, though, how a giant corporation like Dell could know much about, or be sensitive to the needs of, small businesses. The short answer is: it learned. The transformation started with the establishment three years ago of a separate SMB division with its own general manager -- Dithmer -- and dedicated staff.

“I only worry about SMB customers, nothing else,” Dithmer said. “I talk to [SMB customers] regularly, and every offering we provide is custom-built for small businesses.”

Dell also undertook an intensive, weeks-long research project to pinpoint the top “pain points” SMB customers were experiencing. A few things came out of that work, said Mike Blood, senior strategist for SMB solutions at Dell.

One is that small businesses felt Dell didn’t understand their specific industries, which inspired the company to drill down and focus on key verticals, such as retail.

Dell Retail IT Solutions

Dell now offers “a comprehensive solution for retailers from storefront to back office,” Blood said. It includes new point of sale (POS) terminals based on Dell’s Optiplex server line that make it easy to integrate third-party retail software solutions.

Dell is also building relationships with developers, most importantly Microsoft around its Dynamics customer relationship management (CRM) and ERP (enterprise resource planning) solution.

More generally, small business professionals wanted reliable, easy-to-maintain systems. They said they needed help to more efficiently maintain IT infrastructure and integrate disparate systems added over time. And they particularly wanted help with virtualization and cloud computing strategies.

Pain points concerning IT arise in part, Dithmer said, because small businesses lack adequate internal IT resources. Hence the need for simplicity, ease of maintenance, and outsourced consulting and integration services.

One other thing came out of the research. “We realized that to do a really good job on these things, we would have to own the technology,” Blood said.

Targeted Small Business IT Acquisitions

That realization touched off an acquisition binge that continues. Last year Dell acquired Boomi, for example, a company that provides Web-based services for integrating cloud-based applications with on-site systems.

Boomi exists "to make it easier for small and medium business owners to port from on-premise to cloud-based systems,” Dithmer said. In other words, Boomi's technology does the work to make the applications a small business has installed on its servers integrate and play nicely with cloud-based applications.

“That’s the dirty part of the process [of transitioning to the cloud] that nobody talks about,” said Dithmer. Typically that transition can take up to a month or two. Boomi’s technology reduces the transition time to 2 to 5 days, Dithmer said.

Dell also acquired EqualLogic, a maker of small business storage array network (SAN) products. Kace, another 2010 acquisition, is a maker of systems management appliances, that among other things, automate the process of keeping software patched and up-to-date.

“Kace has solved that [software maintenance],” Blood said. “It’s a nice home run for a number of verticals, but it’s key for retailers.”

Most recently, Dell announced its intention to acquire SecureWorks. “SecureWorks does only managed security services for small and medium businesses,” Dithmer notes. “And Gartner ranks it as one of the best in the world next to IBM.”

The acquisitions -- and there were others -- are an indication of Dell’s “razor focus” on helping SMBs address their pain points, Dithmer said.

The acquisitions also come, though, from a recognition that small business owners typically begin acquiring systems by deciding on software. If Dell wanted to “own” those customers, it realized, it would have to become a software and services provider as well.

IT Financing Options

Rounding out Dell’s pitch to SMBs is a range of financing options, an area where it has always been strong, because, as Dithmer said, “Liquidity in small businesses and medium businesses is a huge issue.”

So, does all of this mean Dell should be your small business’s new best friend?

It depends, in part, on how small your business is. Dithmer said Dell is targeting companies with from 10 to 500 employees, with the bulk in the sub-100 range. But the retail solutions, according to Blood, are aimed at those with 10 or more stores, which would seem to indicate a skew more to medium-size companies.

Dell’s Small Business Heroes

Will Dell conquer smaller companies? We asked some of the “SMB heroes” Dell addressed (and feted) at its Take Your Own Path (TYOP) event in December in Austin, Texas.

PensionsFirst

Pensions First Group, for example, is a UK-based start-up that provides Web-based risk management software to the global $20-trillion defined-pensions industry.

When it was still a small group of 12 entrepreneurs, PensionsFirst went looking for a major league IT partner to first help it figure out how it should build the IT infrastructure needed to run its business, and then help build it.

“We started talking to three [companies],” said chief technology officer Fiona Page. “But it very, very quickly was short-listed down to Dell. They just had by far the most impressive approach to the kinds of problems we were trying to solve.”

As importantly, Dell was respectful of PensionsFirst’s aspirations. “Right from the word go, they treated us the same, gave us the same kind of commitment as if we were a big multinational,” Page said.

Dell provided the consulting PensionsFirst needed to chart its course technologically and opened up its labs in Limerick, Ireland -- facilities mainly designed to help enterprise customers -- to stress test the PensionsFirst proof-of-concept software and proposed Dell-based infrastructure.

Today, Dell provides the hardware in PensionsFirst’s data center as well as also ongoing support and maintenance, including Dell’s proactive IT management services.

The relationship with Dell is not exclusive, but it has been crucial to the company’s success, Page said. “Sometimes [the Dell equipment] goes wrong, sometimes it’s delivered late. But in terms of the service provided, it’s very difficult for us to fault it.”

Since its launch in 2007, PensionsFirst has taken off in the UK. Its customers have a combined total of £30 billion in liability (the amount a pension fund could end up having to pay out to pensioners). It’s in discussions with another 150 companies representing about £150 billion in liabilities. And it recently opened a U.S. office in New York.

Cakelove

Warren Brown, president of Washington, DC-based Cakelove, another of Dell’s SMB heroes, had similar praise for the company. Cakelove is a trendy seven-store chain of artisanal cupcake bakeries in the DC area. Brown, a lawyer by training, launched it five years ago.

He had long been a user of Dell hardware, because of price and perceived reliability. When Dell took a shine to his company and offered him a complete technology makeover in return for public relations support, Brown jumped at the chance.

There has been the odd bump along the way -- a new point of sale (POS) system Dell proposed that couldn’t, in the end, be adapted to Cakelove’s business processes, for example -- but there have also been signal successes, including a cloud-based remote surveillance system, built with gear from Dell partner Digiop Technologies.

The system includes two to three video cameras in every store, with video fed to a cloud-based server. Brown and his managers can arrange multiple feeds on their screens to see what’s going on in the stores. “It’s no substitute for being in the store yourself,” he said, “but it comes a close second.”

The system helps him be sure employees aren’t goofing off, or spending too much time on visits from family and friends, but more importantly, it helps determine when he’s over-staffed and could let employees go home, and when he’s getting dangerously low on cake ingredients -- or has too much.

“It saves time,” Brown said. “It saves payroll. I save myself some trips. And it gives me this kind of intangible sense of security, of reassurance, because I have an eye in the sky.” He figures the system would pay for itself in a year to a year-and-a-half -- if he was paying for it.

Dell acted as general contractor on the project, sourced equipment and software from Digiop and subcontracted the installation work.

So, will Dell conquer small businesses? The answer appears to be a resounding yes, and it has a lot more to offer its conquests than small business notebooks and PCs.

Gerry Blackwell is a freelance technology writer based in London, Canada. Read his blog, AfterByte

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