Dell serves up à la carte services menu

By John G. Spooner

Dell's Professional Services group is promoting a new menu of services for fixed prices that it claims are lower than its competitors'.

Dell's services will include data migration, setting up storage area networks and helping customers move from Unix-based hardware and software to technology that uses Microsoft's Windows operating systems or Linux and standard Intel hardware.

The Professional Services group will also tackle more customised jobs as well. Tasks will include setting up high-performance computing clusters - groups of connected computers that share computing power to tackle large jobs - as well as application development and electronic commerce services. Dell will avoid offering on-demand computing power or storage.

The company is hoping that companies will be more willing to buy specific, fixed-price services than to wade through proposals for custom services from its competitors. Dell is so sure of its ability to woo customers with fixed rates and an open menu that it recently made its second acquisition, the 200-employee company Plural, mainly for its capabilities in fixed-rate services.

Services currently represent roughly 10 per cent of Dell's revenue, but the company plans to increase that and hasn't ruled out further acquisitions.

Jeff Lynn, general manager of Dell's Professional Services group, said: "We're growing much faster than market revenue-growth rate for services right now. You've also seen in a small and very selective way that we're also willing to do professional services like we just did with Plural.

"So through some combination of aggressive organic growth, adding small acquisitions, and then growing that combined business very quickly, that's our plan to ramp up," he added.

The fixed-price formula was coined by once high-flying Cambridge Technology Partners, which got slammed by the tech slowdown in 2001 and was eventually acquired by Novell. But unlike pure consultants, Dell will be able to piggyback on its hardware business, one of the few segments in the technology industry that is experiencing growth.

Services vendors such as IBM's Global Services are evaluating fixed-cost offerings in some areas, but Dell won't try to tackle the large worldwide network configuration contracts that IBM and Accenture go for just yet. Instead, it will aim for more conventional engagements, often culled from customers who already purchase Dell hardware such as servers or storage.

"When people say to me, 'How are you going to compete with IBM Global Services?' I remind them we can go after the other 90 per cent of the market first and then we'll worry about IBM," Lynn said.

Aside from presenting its menu of services in package form, Dell Professional Services will also take advantage of Dell's prices on hardware and its ability to contract with partners to provide on-site technicians at lower rates to help pare the total cost of a product.

The menu method may be popular customers during these times of economic uncertainty, analysts said.

John G. Spooner writes for CNET News.com