strategies custom consulting analysis paper on dell... · it does not want to become an ibm...

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Dell Serves Up Enterprise Consulting With a Twist

November 2000

SUMMITSTRATEGIES ®

Table ofContents

Dell Serves Up Enterprise Consulting With a Twist November 2000 ©2000 Summit Strategies, Inc.


Sections Section 1 Dell’s Expanding Services Menu .............................................. 2

Section 2 The Consulting Recipe—A Pinch of the Old, a Dash of the New......................................... 5

Section 3 Adding In Some Special Sauce ................................................. 8

Section 4 Services Appetizer or Main Course?....................................... 12

Section 5 Wrapping It Up and Taking It Home....................................... 13

Figures Figure 1 Consulting Areas ....................................................................... 6

Figure 2 Dell Solutions Framework......................................................... 8

Figure 3 Dell’s Virtual Integration Model ............................................. 11

Figure 4 Dell Services Strategy ............................................................. 14

SUMMITSTRATEGIES ®

Dell Serves Up Enterprise Consulting With a Twist Page 1 ©2000 Summit Strategies, Inc.

Custom Consulting Analysis


Throughout its history, Dell has profi ted from bucking trends. Back in 1994—against the prevailing wisdom of the time—Dell decided to forsake traditional PC-retail and distribution channels and sell directly to customers via phone and the Internet. Its contrarian strategy paid off—enabling Dell to slash costs and leapfrog competitors in market share.

Before long, Dell was applying its online expertise in every facet of its busi-ness, moving well beyond e-commerce to integrate suppliers tightly with its back-end systems and streamline its own internal business processes through the Web. Together, Dell’s direct model and its automated back-end systems helped Dell soar to become the number two vendor of PCs in the United States by 1997.

Fueled by its coup in the PC market, Dell extended its direct, online model to its enterprise-systems business, which includes servers, workstations and storage products. Skeptics argued that server products, in particular, were too complex to sell direct, but Dell, obviously, disagreed—and it paid off. Coming from a server market position of number 10 in 1996, Dell ranked third in U.S. server sales by the end of 1998, notching eight consecutive quarters of triple-digit growth in its enterprise-business belt.

Since then, Dell’s revenue from enterprise computing systems—network servers, storage products and workstations—has increased an average of more than 40 percent per quarter, and Dell is now the number two vendor in both United States’ and worldwide server markets.

But those accomplishments are just the tip of the iceberg. Today, Dell also:

Is the fastest-growing server vendor in the world—with sales of its servers accounting for 40 percent of industry-wide growth;

Earned revenues of $28.5 billion during the past four quarters;

Supplies approximately 90 percent of the Fortune 500;

Dell Serves Up Enterprise Consulting With a Twist ©2000 Summit Strategies, Inc.

Ranks number one in the U.S. business workstation market and number two in the worldwide market;

Consistently tops leading customer-satisfaction surveys;

Ranks in the top fi fth of Fortune 500 companies; and

Increases its total revenue by the equivalent of a Fortune 500 company every quarter.

Yet, Dell has a dilemma. The further upstream it moves into the complex server, networking and storage areas, the more guidance and services its customers need. While no one disputes the fact that Dell has mastered the hardware game, the company’s largest customers are now demanding more than just hardware: They want solutions.

So what’s Dell to do? Well, its fi rst order of business will be to show custom-ers that it is more than a very good, very effi cient hardware manufacturer. In other words, Dell wants customers to know it more as a systems partner than as a hardware vendor. By providing customers with a single point of contact for all the hardware services they need—including testing, imple-mentation, integration, development and even outsourcing—Dell can be a better long-term partner to them. But, while Dell has provided break-fi x and online services for some time, its image as a true enterprise services provider has yet to be fully established.

How successful will Dell be in elevating its position in the professional services arena and in using services to create deeper relationships with customers? In this report, we discuss Dell’s professional services history, its strategy, its plans for the future, and the differentiators that Dell brings to the table as a consulting provider. We examine what’s on the Dell services menu today and outline the role Dell plays, the roles its partners play, and the way in which Dell intends to weave third-party services together with its own. Next, we analyze the opportunities and challenges Dell faces in launching new service offerings and positioning itself in the professional services market. Finally, we outline Dell’s long-term service objectives and analyze the steps that Dell must take to achieve them.

Section 1 Dell’s Expanding Services Menu

For most of its existence, Dell has not relied on consulting services to differentiate its products. Instead, it has focused on making it easy for customers to do business with Dell. The convenience of buying custom-confi gured systems via the Web, of getting 24-hour online technical infor-mation and support, and of being able to access accounts without going through a sales representative serves a dual purpose: Customers like it, and

Dell Serves Up Enterprise Consulting With a Twist Page 3©2000 Summit Strategies, Inc.

it helps Dell keep its operational costs the lowest in the industry. Strategically, the company chose to capitalize on this advantage by using its automated systems to manufacture, market, sell and support as much hardware as possible, as quickly as possible.

In keeping with this focused strategy, Dell provided only the services needed to support hardware sales directly. It eschewed providing many high-end, specialized support services itself, and chose instead to broker those services for customers to third-party providers. But, while this allowed Dell to focus on its core business, the enterprise business has grown to encompass higher-end server and storage products, as well as more complex solutions. These “scale-out” and “scale-up” architectures demand more robust consultative services. Historically, Dell often had to turn away cus-tomers that wanted Dell to provide more in-depth consulting. In effect, Dell was passing up a strategic opportunity to expand its customer relationships and address a larger portion of its customers’ IT needs.

A little less than two years ago, however, Dell began fortifying its internal services organization to address this gap. Today, Dell Services actively identifi es, sells and manages an expanded selection of Dell-branded consulting offerings to its existing and potential enterprise-hardware customers. Whereas hardware implementation and support were once the only choices on the menu, Dell has added several new items, including infrastructure design and implementation, capacity planning, B2B integra-tion, storage assessment and customer-relationship management—just to name a few.

Dell based its decision to put more muscle into its services offerings, and to develop new services offerings, on a combination of factors, including:

Increased size and complexity of Dell’s product mix. With Dell’s increasingly large footprint in the server market and its growing presence in the storage market, the balance of hardware it sells is tipping towards higher-end, enterprise products—which also provide it with much higher profi t margins than lower-end products. These sophisticated solutions require trained personnel to optimize, tune and maximize system effi -ciency. At this level, customers often need additional assistance in the design and implementation stages of the more complex network archi-tectures like server clusters and storage-area networks;

The need for third parties to supplement customers’ IT resources. The current shortage of IT personnel increases Dell’s and its customers’ dependence on third parties to handle IT projects. These third parties act as trusted advisors, exert signifi cant infl uence over hardware sales and ultimately impact the returns a customer can expect from its hardware purchases. By taking a lead role in managing these third parties, Dell can


reduce complexity for its customers, continue to stay in touch with their needs, sell more products to them and better manage their IT experiences;

Dell’s desire to increase its value-add to customers. Although Dell operates much more profi tably than its competitors on hardware alone (which translates into cost advantages for its customers), the more upstream Dell takes its consulting services, the more opportunity it has to add value for its customers. Dell prides itself on the effi ciencies it drives throughout its business. These effi ciencies have helped Dell provide cus-tomers with top-notch products. In today’s growing Internet economy, however, Dell needs to extend its hardware effi ciencies to a menu of consulting services that provide customers with the knowledge base and resources to implement more complex enterprise architectures. While it does not want to become an IBM (wherein consulting services are completely unbundled from hardware sales), it does see the benefi t of handling more complex engagements than it has in the past. After all, as Dell goes up the consulting food chain, the price of services and, most important, the value they provide to customers goes up; and

Customer demand for Dell to take on more service responsibility. Customers routinely ask Dell to provide services “beyond the box.” So, Dell’s expanded ability to manage these projects means it can respond better to customer demand and enhance the overall customer experience.

Dell still works with best-of-breed partners to deliver most of its services. The difference is that Dell will now propose and sell complex engagements (such as storage design) and take the primary customer-facing role to ensure the engagements’ success.

It believes that this approach will create a win-win-win scenario for its customers, its partners and itself. Namely:

Dell’s customers win because they get a single source for end-to-end services, standardized project management and a single point of accountability through a trusted brand—Dell;

Dell’s partners win because they gain access to consulting engagements with Dell’s clients, with Dell doing most of the upfront work, closing the sale and managing the customer relationship. Additionally, they are able to partner with a company that does not compete internally for the same consulting services; and

Dell wins because it elevates itself to a more strategic role with its current customers by providing them with a single source for all their IT needs; it expands to reach new customers; and, it does so without the expense of rapidly scaling a large, internal consulting organization.


Above all, Dell wants to respond more effectively to its existing government, education and corporate clients that have sophisticated service and consulting needs. By expanding the menu of services available, and becoming the single point of accountability for these services, it can make its clients’ total IT experience more seamless and hassle-free. In particular, Dell’s expertise with its own hardware and its tight relationships with independent software vendors (ISV) and implementation partners, such as Microsoft and IBM Global Services, make it a logical extension for Dell to provide such services.

Section 2 The Consulting Recipe—A Pinch of the Old, a Dash of the New

So how does Dell actually execute and deliver on its services vision? Today, Dell has two enterprise-system consulting groups—one called the “Advanced Systems Group,” or ASG, and another called “Dell Technology Consulting,” or DTC.

The ASG is a non-fee-based consulting organization that consists of Dell’s existing hardware sales and support network—hundreds of internal presales consultants, systems-support engineers and technical sales representatives. The ASG supports Dell’s enterprise customers by:

Providing presales technology consulting and custom confi guration support for Dell’s enterprise hardware products;

Providing infrastructure-level consulting for customer technology proj-ects; and

Collaborating with customers on an ongoing basis to implement and maintain Dell enterprise hardware systems as part of their standard computing environment.

In addition, the ASG works closely with Dell’s account teams to provide in-depth knowledge of the customer’s environment and IT organization, and to help identify customers’ upstream consulting needs. Once those needs are identifi ed, ASG engages Dell’s growing group of custom-consulting specialists—DTC.

Established in March 1999, DTC supports Dell’s PowerEdge Server, Power-App Appliance and PowerVault Storage customers by providing solution services “beyond the box.” Originally, its focus was on hardware consulting, so its offerings were very similar to those of ASG. As DTC developed, however, it began to inch up the food chain—adding ever more complex consulting services.

Today, this relatively new division is the main ingredient in Dell’s enterprise-consulting recipe. By taking on projects that go beyond hardware support, DTC gives customers more options for working with Dell Services than


they’ve ever had before. For example, customers with consulting needs can now request proposals or quotes from DTC, regardless of whether the work is directly tied to a hardware sale. In addition, DTC will create proposals for extended work when ASG or Dell’s account team observes an opportunity around a hardware sale.

Figure 1 Consulting Areas

Currently, DTC offers services in the following three areas:

1. Infrastructure. Services to aid customers in the design and planning of their infrastructure or e-infrastructure, such as Dell.com workshops, infrastructure design assessments, architecture design and implemen-tation, knowledge transfer, capacity planning and business-continuity assurance planning;

2. Servers/storage. Services to help customers successfully design and deploy their Dell server and storage solutions, such as storage assessment and design, backup and recovery consulting, production readiness, SAN, NAS, backup and recovery, SQL cluster, Dell OpenManage systems management solutions; and

This figure depicts the three separate service practices that exist today within Dell Technology Consulting. Dell Technology Solution Centers and its workshops support all areas.

Source: Dell Computer

DellTechnology Consulting

e-infrastructureMicrosoft BusinessSolutions

ComplexStorageServices

Workshops/Training

Dell TechnologySolution Centers


3. Microsoft products. Services to help customers utilize Microsoft Win-dows 2000-based products and Dell server and storage technologies, such as active directory planning and design services, Windows 2000 integration and migration services, Windows 2000 TCO services (Intel-liMirror, RIS, GPO, etc.), Windows 2000 server capacity planning and consolidation services, Windows 2000 security planning and design services, and server- and storage-consolidation services.

Within each category, DTC offers a wide range of products—from one-day training courses to yearly outsourcing arrangements. It also operates a network of six worldwide solution centers, where customers and partners can get hardware training, services and support. Right now, the majority of DTC’s projects are still very focused and last fewer than four weeks. Dell’s goal, however, is to change this scenario so that at least 50 percent of DTC’s projects last from several months to a year, or more. Since the most labor-intensive part of Dell’s work is in the beginning stages of a project, Dell believes it can quickly add these downstream services. Overall, this shift is part of a larger Dell strategy to grow its total set of service offerings—including the work of ASG and DTC—into a $10 billion business within the next fi ve years.

Since Dell relies so heavily on partners, communication and collaboration are central to its implementation methodology, which it calls the Dell Solutions Framework (DSF). The illustration in Figure 2 graphically depicts how Dell integrates these elements into its services offerings.

As a rule, Dell leads every project it proposes and establishes a one-to-eight ratio of Dell heads to partner heads. This ratio ensures fl exibility and allows Dell to respond quickly to increases or shifts in demand. Partners must buy in on all aspects of the project, so they help Dell outline both the scope of the engagement and the fi nal price to the customer. This process is accelerated by Dell’s tight relationships with its partners, such as Microsoft, Unisys and IBM Global Services, which Dell pre-certifi es on its platforms. Some partners, such as Immediant and Getronics, also deploy personnel to work at a Dell location on an extended basis.

To supplement its existing partner network, Dell is also investing in several startup storage and services fi rms through its Dell Ventures arm. Investments ranging from $3 million to $20 million each have been made in fi rms such as StorageNetworks, Corio, Interliant, NaviSite, Netyear Group and Xuma. In return, these fi rms agree to set aside resources to work on Dell projects and get regular training to support Dell hardware. Dell’s main objective with these investments is to add value to its existing partner mix and ultimately to benefi t Dell’s mainline hardware business. Therefore, it limits investments to late-stage startups that have established models in growing niches, such as Internet applications hosting, e-business strategy and storage hosting.


Section 3 Adding In Some Special Sauce

While a focus on upstream services is certainly not unique to Dell, it is adding some special sauce to its consulting recipe. Dell believes that its customers can benefi t from its experience managing projects and building

Figure 2 Dell Solutions Framework

The Dell Solutions Framework calls for open communication and collaboration, with Dell managing the process and acting as a single point of accountability for both its partners and its customers.

Source: Summit Strategies, Inc.www.summitstrat.com

Dell Solutions Framework

DellCustomers

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out complex, Internet-based infrastructures, in addition to its expertise in implementing industry-standard hardware and operating systems.

As discussed in the introduction, Dell prides itself on being able to create operational effi ciencies and profi t from the competitive advantages this cre-ates. From its effi cient operations alone, the company generates around a $1 billion in cash fl ow each quarter ($1.2 billion in the second quarter of fi scal year 2000) and has virtually no debt. This additional money is a powerful tool for Dell, enabling strong investment. Dell intends to benefi t its custom-ers too by helping them apply its expertise in streamlining operations to strengthen their own businesses. Just as Dell once cracked the code to a winning online-distribution model, it believes this approach will enable it to crack the code to building a winning enterprise-services model. The three keys, according to Dell, are:

Standardized products;

Ability to win customer trust; and

Single-point accountability.

Standardized Products

Dell’s overall product strategy is to focus almost exclusively on industry-standard Intel-server platforms that run Novell, Windows 2000, Windows NT and Linux, which account for more than 80 percent of the OS market. By employing a standards-based “scale out” approach, Dell can build and support 24x7 implementations like Dell.com, satisfying the majority of customer business requirements. Meanwhile, Dell’s major competitors—IBM, Hewlett-Packard, Sun and Compaq—each promote their own com-peting UNIX platforms (AIX UNIX, HP-UX, Solaris, and Tru-64 UNIX, respectively). Dell contends that participating in the UNIX performance race requires substantial investments in R&D and resources, which can become diluted when spread across multiple product-development teams, each trying to optimize platforms for multiple fl avors of operating systems.

In contrast, Dell concentrates on the biggest part of the pie—the operating systems that most companies use most of the time. By following the 80/20 rule, Dell can invest its resources in areas that will yield a sure—and greater—return for itself and its customers.

Extending this model to the services arena, Dell will focus its consultants on architecting, implementing and supporting the most prevalent, standardized technologies. It expects this approach to yield faster, more predictable and more trouble-free deployments than those targeted at up-selling customers to more proprietary offerings.


Customer Trust

Cementing customer trust and loyalty is also central to Dell’s strategy. As a brand, Dell enjoys a reputation for being highly responsive to its customers’ needs. In April, for example, Dell’s customer-support team for server products measured a 90 percent success rate for fi rst-time, on-site resolutions, based on internal audits. Of those resolutions, Dell took 75 percent less time to solve the customers’ problem than the industry average. Furthermore, it has held a number one ranking for nine consecutive quarters in server, desktop and notebook customer satisfaction, according to surveys by benchmarking fi rm, Technology Business Research.

Dell is also strongly committed to acquiring and incorporating customer feedback as part of its product and service design and development process. It holds multiple customer events every year, at which clients provide input on what Dell’s future products should be, and Dell, of course, solicits and receives continual customer input via its Web site, as well as through ongoing focus-group activities. Dell believes the relationships it has forged, and the customer trust it has built through those relationships, will engender customers’ trust in it as a supplier of extended IT services.

Customers such as Healthcare.com (a health-care enterprise-application integration vendor) agree. It chose to engage with DTC largely because of its four-year ongoing relationship with Dell. The company participates in focus groups to help design Dell products and closely monitors how upgrades in Dell’s product line might be best integrated within their existing systems. So, when Healthcare.com needed help planning a move from Novell Netware to Active Directory on Windows 2000 and migrating to Dell storage platforms, it was a natural fi t to call on DTC.

From a marketing perspective, Dell will capitalize on its status as an Internet poster child to build awareness and credibility for its new service capabilities. After all, the company can boast internal experience with one of the most robust e-commerce sites in the world, Dell.com. Dell.com operates within a three-tiered architecture, runs on 300-plus servers, handles 2.8 million hits per day and accounts for more than 50 percent of Dell’s total sales volume—handling transactions worth an average of $50 million every day. All of this is accomplished on Dell hardware in an industry-standard environment. This internal experience, and the corresponding reputation it has brought Dell, has primed customers to trust it as a solution provider.

Accountability

Finally, the third and most important key lies with single-point account-ability. Dell has always preached this doctrine, and it will continue to do so


with its more upstream consulting services. The company takes a leadership position in every project it sells and assumes sole responsibility for ensuring the project’s success. As the front-face to the client, Dell can mask the complexities of working with several consulting fi rms and allow the client to focus on what gets done—not which company does the work. Dell’s practice of vertically integrating partners within its business is illustrated in Figure 3. In addition to cost advantages, the vertical integration model allows Dell to pick and choose resources with the most appropriate skill sets for each assignment, instead of having to rely only on the skills of its internal, non-deployed consultants.

Figure 3 Dell’s Virtual Integration Model

Dell and Dell service providers

Dell

CommonMethodology

• Dell acts as the single point of accountability;

• Partners are best in class, aligned by core competency and geography;

• Partners have automated, integrated links to Dell; and

• Partners’ commitments are measured and managed via detailed metrics.

Dell Technology Consulting is just one of several services in which Dell virtually integrates partners to extend its capabilities and provide customers with more complete solutions. Each service area uses the same methodology to manage relationships.

Source: Dell Computer and Summit Strategies, Inc.

Web hosting

Technology consulting

High-availability services

On-site installation

On-site maintenance

Image management

Custom factory integration

24x7 technical support


With Healthcare.com, for example, Dell worked with Microsoft to help Healthcare.com scope out a multi-year project, managing account hardware and software upgrade schedules, production requirements and future per-formance capabilities. ASG handled day-to-day issues and product needs, while DTC focused on the project management, ongoing implementation and the interface with Microsoft. Although Healthcare.com could have hired both Dell and Microsoft separately, Dell’s ability to provide a single source of accountability made this customer’s experience more seamless and hassle-free. It also cut time out of the engagement process, since Dell works with Microsoft on an ongoing basis and knew exactly which resources would be necessary for the job.

Section 4 Services Appetizer or Main Course?

In ramping up its consulting practice, the company has both created new opportunities for itself and taken on some new challenges. Dell’s strategy will better position it to:

Serve as a single point of accountability. By assuming the prime con-tractor role with the customer and being a single source of accountability for end-to-end IT projects, Dell can own more points of the customer relationship than it has in the past;

Become a higher level strategic advisor. By tackling higher-end services projects and taking an advisory role with customers, Dell can expand its position as a thought leader and strategic advisor to customers;

Be more responsive to customer needs. By developing a deeper under-standing of its customers’ strategic business objectives and by managing solution design and implementation, Dell can better anticipate and respond to customer needs;

Reinforce Dell’s close ties to its services partners. Dell’s services strategy is still very much partner-centric, in contrast to some its rivals, many of which often walk a fi ne line between partnership and competition with their service partners. Dell’s model also gives it the fl exibility to source services from various third-parties to fulfi ll global and niche market needs; and

Capitalize on industry-standard expertise and volume effi ciencies. Dell’s exclusive focus on Intel-based Microsoft-, Novell- and Linux-based solutions enables it to concentrate services resources in these high-volume markets and build expertise for them more rapidly. It also negates the need for Dell to invest services resources to build practices to support less pervasive platforms.


But, the proof is in the pudding. No matter how comprehensive or well planned its offerings are, Dell will have to continue to raise its visibility as a services provider and refi ne and expand its services capabilities. Dell’s leadership in delivering hardware could prove harder to translate into con-sulting services. Consulting is a high-touch, highly variable activity—not something that can easily be distilled into a standard set of processes and automated or commoditized, as Dell has done with its other offerings.

Dell’s competitors also have more visibility in the services market. Most provide heterogeneous operating-system and platform support, and some are establishing practices in emerging areas such as e-marketplaces, portals, wireless computing, e-services and Internet applications hosting. As Dell ramps up its own services capabilities in these areas, it will need to leverage the expertise of its partners effectively in order to boost its association with these cutting-edge trends.

Particularly as Dell continues expanding its storage business, it will need to deepen its UNIX connectivity and expertise, since UNIX is the platform upon which most current storage-area networks are built. To ready itself, Dell is partnering with services vendors, such as IBM Global Services, and UNIX product vendors, such as Softway Systems, and is simultaneously building internal capabilities to connect with, and support, heterogeneous storage networks.

Lastly, since Dell doesn’t do all the design and development work itself, it will be an ongoing challenge for Dell to manage projects effi ciently across multiple organizations.

Section 5 Wrapping It Up and Taking It Home

Dell has recognized that it must expand its enterprise services organization to support its increasingly high-end product mix, and its customers’ demand for end-to-end services from a single source. In addition, it realizes that cus-tomers want to learn from its successful, internal e-business experience, and that it can use a professional-services organization to elevate Dell’s strategic infl uence in the market.

In contrast, however, to most of its competitors, Dell will not run a soup-to-nuts consulting factory by itself. Instead, it will play the role of a master chef—directing and synchronizing its partners to pull together a menu of integrated services. Though Dell will add resources to its consulting team, it will concentrate its energies on hiring people who can manage partner relationships in order to provide a complete services offering.

As in the past, Dell’s consulting services are still chartered to support hard-ware sales. With DTC, however, Dell is becoming much more fl exible


about how it executes on this charter. Dell will, for example, evaluate con-sulting projects based on the total opportunity, not just on the hardware sales component. The difference between this strategy and a pure product strategy is further illustrated in Figure 4.

Figure 4 Dell Services Strategy

This figure shows pure product-businesses on one end of the spectrum, and product and services businesses on the other end. In a pure product-business, services play a product warranty role. In a product and services business, services become a distinct profit center. Dell Computer’s strategy lies between these two models. It is a product business, with services to enable the product sale.

Source: Dell Computer and Summit Strategies, Inc.

Product business

Servicesrole:

warranty management

Product business with

service

Servicesrole:

enables the product sale

Product and services business

Servicesrole:

profit center

Dell strategy: services enable the product sale

Although the group is still in its early stages of evolution, DTC already manages a wide variety of projects and has full support from Dell’s senior executives, who are committed to developing it into a robust services orga-nization that offers customized engagements and recommendations. Over time, DTC should be able to engage in more involved, complex projects, deepening its strategic position with its enterprise clients.

But conventional wisdom—and many of Dell’s competitors—suggest that it is necessary to build a large, internal consulting organization to provide the types of integrated services that Dell hopes to offer in combination with its partners. Several competitors, in fact, are rapidly scaling internal capa-bilities. IBM, for example, has expanded its services division, IBM Global Services, to the point where, with over 100,000 employees, it’s become the largest consulting organization in the world. While IBM Global Services operates independently of IBM’s hardware sales divisions and even partners


with IBM competitors, such as Dell, IBM’s internal investment in consult-ing has cemented IBM’s market positioning as a solutions vendor. Fur-thermore, HP is also working to build its internal service capabilities via acquisition, and Compaq acquired Digital, in large part to boost its internal service and consulting ranks.

Can Dell defy conventional wisdom yet again? To do so, Summit Strategies contends that Dell must:

Invest in serious branding efforts to bring awareness and credibility to Dell’s services capabilities. Dell offers a strong complement of services, but these services are still among the company’s best-kept secrets. It must launch a major campaign to bring its new business to customers’ attention—and earn consideration in the RFP process. In addition, it must sell its services offerings at a much higher level within its target customer organizations, and provide ongoing metrics that attest to its ability to deliver services more effi ciently and effectively through its model than that of its competitors;

Communicate a clear message to partners about its goals for Dell services. Dell must reassure partners that its new consulting emphasis does not mean it will try to compete with them in the future. In reality, Dell’s strategy can give partners greater opportunities to provide more services to more customers;

Ensure high quality of services. Dell must ensure a high quality of services from Dell, through its partners, to its customers. Specifi cally, it should continue monitoring and assessing partner performance, and rewarding and renewing those partners that do a good job. Open lines of communication, certifi cation programs, frequent training on Dell equip-ment and regular performance assessments for partners will be critical to ensure that Dell’s partners can represent the company in the best possible light; and

Build its skills and thought leadership in areas related to e-business. Dell must leverage its own e-business experience and build on it with new thought leadership in e-business. It could, for example, market joint offerings with fi rms in the Dell Ventures investment portfolio, such as webMethods, NeoForma.com and Interliant.

Overall, we believe Dell has a cohesive services vision and the ability to execute on that vision. In just the past year, Dell has demonstrated that it can use DTC to handle upstream engagements, and to drive increased value to its partners and customers. In particular, for customers that use an indus-try-standard architecture, Dell is a strong candidate to provide higher-level services because it has already “been there and done it.” It built the multi-


billon dollar e-business infrastructure for Dell.com on industry-standard plat-forms and can offer customers the value of learning from that experience.

The entire set of DTC offerings, when combined with Dell’s existing ASG technical-support services, positions Dell as more of a total-solution vendor, as opposed to a box-pusher. This is an important strategic move for Dell, since it will pave the way for it to forge better relationships with its customers and partners, sell more hardware, and ultimately grow its business and infl uence in the market.

What’s your opinion? E-mail the authors:

Marilyn Muller Laurie McCabe [email protected] [email protected]

NOTE: This report is based upon information believed to be accurate and reliable. Neither Summit Strategies, Inc. nor its agents make any warranty, express or implied, as to the accuracy of the information or the opinions expressed. We shall have no liability for any errors of fact or judgement or for any damages resulting from reliance upon this information.

Trademarked names appear throughout this report. Rather than list the names and entities that own the trademarks or insert a trademark symbol with each mention of the trademarked name, Summit Strategies uses the names only for editorial purposes and to the benefi t of the trademark owner with no intention of infringing upon that trademark.

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