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When Dell launched its foray into services a few years ago, it did so in typical Dell fashion: It found a market thats mature enough to be commoditized and entered it cautiously yet energetically.
If a recent contract win is any indication, Dell Inc. is executing very well on that strategy; TRW Automotive agreed to a three-year expansion of an existing relationship with Dell in a deal that runs the gamut from desktop to data center.
The term “services” in some ways seems barely to apply. What TRW is using in the way of services are basically add-ons to a major hardware engagement.
But thats what Dells strategy is all about.
For example, Dell will build a standard image for the companys Windows desktops, which will be preloaded with TRW applications. Dell also will burn the asset tracking number into each machines BIOS for easier life-cycle management.
“We used to manage those images, but [this will save] us a lot of time and energy,” said Joe Drouin, CIO of TRW Automotive, in Livonia, Mich.
Dell also helped design and configure a SAN (storage area network) environment using EMC storage devices, which Dell resells. And TRW is using Dell services to help consolidate two North American data centers to one in Livonia.
But whats most striking is TRWs adoption of Dells Linux-based servers, which displaced HP-UX machines in the companys North American data center consolidation.
“Were moving to a Dell cluster versus a high-end Unix box,” Drouin said, explaining that the cluster will enable higher availability than the single point of failure of the prior architecture.
Dells prior presence at TRW was as provider of Intel-based file, print and e-mail servers. The fact that Dell could capitalize on that toehold to displace HP and hold off IBM—both of which are Linux proponents—speaks volumes about Dells ability to execute on its game plan.
“We did go out and benchmark,” said Drouin. “Cost was part of the equation.” But also, “Dell has been flexible in defining the level of service. There are different levels of service even in one data center,” he said.
One deal does not a trend make, but one observer said the Dell win is emblematic of the companys strengths as well as HPs weaknesses. Forrester Research analyst Julie Giera said HP has been targeting companies that dont have HP gear, particularly at the high end, only to have Dell sneak up and eat its lunch at the low end.
“HP has been trying to build up a data center focus by hiring people from IBM. Then comes Dell,” said Giera. “They beat HP in an area it has been focusing for two years. And it signals some question about the future of HP.”
Did Dell lowball the deal to get the business? We dont know. In fact, TRW declined to disclose the value of the contract. And even for winners, danger lurks. Giera said the relatively short three-year contract length might be an expression of caution regarding the relatively unproven data center skills of Dell.
And even if Dell does prove itself, it could face challenges as offshore providers attempt to manage data centers remotely. “Wipro and Tata are thinking they can do remote management. They can monitor and send updates from India,” said Giera. “Those guys could sneak up on Dell and out-Dell Dell on price.”
Out and about
Computer Sciences Corp. won a task order to provide engineering, technical and operational support services to the Naval Surface Warfare Center, Corona Division. If all options are exercised, the deal could last four years and be worth $161 million. Some 300 CSC staff will assess the fighting capability of ships, aircraft, equipment, weapons and adequacy of training. NSWC Corona is an independent analysis and assessment center.
Accenture won a deal to provide NewPage with IT and HR services under dual outsourcing contracts. In the IT deal, Accenture will handle NewPages enterprise IT operations, applications and systems integration. The HR contract covers payroll, benefits, health plan and contact center management.
E-mail Stan Gibson at [email protected].