Dell Expands Reach

Dell shows it's serious about being an enterprise IT provider with a new center in China.

Dude, youre getting an Enterprise Command Center! Thats probably a line youll never hear, but if you run a data center in China with lots of Dell equipment, thats exactly what you will be getting. If you run a Dell-centric data center in the United States, youve already got one, even if you dont realize it.

Dells ECCs let specialists watch Dell servers in your data center and see if failures have occurred or are about to occur. Armed with this data, the ECC staff can dispatch parts and support people to the scene. In the United States, the centers track events such as political conventions and hurricanes and pay particular attention to data centers in those areas in an effort to ensure uptime.

Dells announcement last week of a new ECC in Xiamen, China, shows that the worlds largest PC maker is serious about being an enterprise IT provider. The company plans to add similar centers elsewhere in Asia and in Europe later this year and will add another in the Asia-Pacific region next year, said officials. The new centers are like a facility at Dell headquarters in Round Rock, Texas, and will be able to "see" whats going on in Round Rock and vice versa, so that companies with worldwide data centers can be tracked globally.

/zimages/7/28571.gifClick here to read eWEEKs interview with Michael Dell.

The centers are run by Dell Services, a business that Dell has been building, without much fanfare, for several years. In an interview, Gary Cotshott, vice president and general manager of Dell Services, said his unit is growing 35 percent annually, roughly twice the rate of Dells overall growth. Although Dell does not break out services revenue separately in its financial statements, Cotshott said the unit is on track to earn about $3.1 billion annually, which means it earns 6 to 7 percent of Dells revenues.

At first, Dell Services was not hitting the sweet spot of value, Cotshott said. When Dell Services began deploying SANs, it took an average of eight days and cost $18,000 for the operation. Now, Cotshott said, it takes two-and-a-half days and costs $9,000.

The purpose of Dell Services is not to be a vendor-agnostic IT provider, as Cotshott said with refreshing frankness: "The services business is to advantage the sale of our own products." As a result, he said, "the service set is close to the box and tightly tied to our product business." Thus, deployment and help desk are key Dell Services functions, but youll search the Dell portfolio in vain for custom application development. And should Dell enter a mixed environment, its purpose is clear. "Our game plan is to replace all of that non-Dell gear with Dell gear because its the most cost-effective stuff out there," said Cotshott.

In addition to getting better at SANs, Dell has been weaving a web of alliances with established enterprise IT players such as EMC, Unisys and NCR, as well as integrators such as Accenture, EDS and CSC. A little-known fact is that Dell Services is part of the gargantuan EDS outsourcing contract with the Navy.

The alliances show that Dell recognizes that confrontation with big integrated hardware, software and services vendors such as IBM and Hewlett-Packard is inevitable. Of HPs outsourcing deal with Procter & Gamble, Cotshott said, "Thats probably an inefficient deal. One company cant do everything in an optimized way. You cant be focused enough." Cotshott said customers should retain architecture and product decisions. "In cases where the customer still owns the decisions, Dell will be at the table," he said.

Out and about

If youre just returning from vacation, you may have missed the news of Tata Consultancy Services IPO on the Mumbai, India, stock exchange, which raised $1.17 billion in exchange for 13 percent of the company. Tata, which boasts more than $1 billion in annual revenue, plans to use the proceeds to fuel expansion in South America, Europe and China and to beef up its business process outsourcing offerings.

In my last last Outsourcing & Services column, I identified the publisher of Edward Yourdons book, "Outsource: Competing in the Global Productivity Race," as Addison-Wesley. In fact, Addison-Wesley is a unit of the real publisher, Prentice Hall PTR. The volume will be available next month.

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