Dell eyes growth in public sector and managed services

  • Public sector, oil and gas, and managed services to be key growth segments
  • Bundled solution offerings, from hardware to software applications, to play bigger role

Dell eyes growth in public sector and managed servicesDELL is targeting and expecting increased business via the public sector, oil and gas, and managed services segments for the coming year.

At a year-end wrap-up with members of the media, Pang Yee Beng (pic), managing director of Dell Global Business Center, said that these were the areas that the company has identified as having the highest growth potential.
“This year has been an eventful one, not just for the company but the industry at large. It’s been tough for all of us and we are looking forward to 2013,” he said.
When asked about the prospects of the commercial PC market, Pang said that regionally, single-digit growth is expected in the coming year as many companies scale down their IT spend and more look towards the outsourcing of IT functions and infrastructure.
He added that the outlook for 2013 is especially promising for Dell in the midmarket category where it claims a leadership position. The midmarket segment is defined by the company as companies with 499 to 5,000 employees.
“These are organizations that do not have a large IT team in-house and are best suited in terms of what Dell can offer,” he said.
When asked how Dell intends to maintain its market position, as other competitors roll out enterprise solutions at lower price points aimed at medium-sized businesses, Pang pointed to the Dell Direct Model as a key differentiator.
“We have deep intelligence into a customer’s purchase history and infrastructure requirements, which informs our services and support. We also deal directly with our customers while with the competition, many businesses will be directed to a reseller or channel partner,” he said.
Pang reported that according to IDC, as of the third quarter of this year, Dell maintained its No 1 position in the PC market in the public and large enterprise segment in Malaysia with a 30.5% market share (by units).
The company also reported, citing IDC figures, that in the third quarter its x86 servers took the No 1 position in the Asia Pacific region with 22.2% unit share and claimed positive unit market share growth worldwide in the same quarter.
He said that more bundled solutions can be expected from Dell in the coming months, especially on the software front, as part of the company’s commitment to its mission of being an end-to-end solutions provider.
In keeping with the company’s approach of being a “serial acquirer”, since 2010, Dell has announced 18 acquisitions and this year alone has invested US$5 billion in seven acquisitions.
Pang highlighted the acquisition of system management tools provider Quest Software earlier this year, which is touted to as the “foundational platform” for the company’s evolving software strategy, as one such example.

However, according to an IDG News Service report, Dell’s global revenue for the most recent quarter ending on Nov 2 was US$13.7 billion, a fall of 11% compared to the same quarter a year ago. Net income also dropped to US$475 million during the quarter from US$893 million a year ago.

Speaking to Agam Shah of IDG, Roger Kay, principal analyst at Endpoint Technologies Associates, said the company could be biting off more than it can chew with its dozens of acquisitions, but it is trying to expand its sales reach by bringing together a wide range of products.
“A transition like this is not easy, and inevitably there will be a period where the gap is glaring. It could take another five years for it to reach some kind of critical mass that will support the company’s cost structure.”

Dell eyes growth in public sector and managed servicesStaying relevant to customers

K.T. Ong (pic), general manager of Dell's commercial business in Malaysia, said the the key to staying relevant in the highly competitive IT space is to know the needs of the customer and add value to their business.
“The Dell of today is different from the Dell of five years ago. To realize our ambition of being a total solutions provider, the company embarked on an aggressive strategy three years ago with an increase in research spends, keeping an eye out for promising and innovative new technologies,” he said.
With the SME segment a key market for Dell, Ong shared some of the top priorities SMEs will be on upgrading current infrastructure, addressing security concerns and increasing the use of virtualization.

He added that the market’s interest in accelerating cloud computing adoption has increased, with Dell consulting many of its clients on building a roadmap to the cloud. “Cloud computing requires a fundamental shift to on-demand delivery of IT services, beginning with virtualization. The mix of organizations which have completed this first step in Malaysia remains lower than other markets in the region.”

The company has also seen an increase in the number of private cloud queries from customers, highlighting the persistent apprehension over the security of public clouds and the limitations faced by certain industries regarding regulation compliance and data sovereignty.
When asked about Dell’s managed services business, Ong said the offering has been in the Malaysian market for the last two years but declined to share any figures.
However, he claimed that the recent win of a local conglomerate has given the division a boost in terms of queries and visibility in the market. He declined to reveal the company in question.
Ong noted that leveraging managed services only makes sense for “certain-sized businesses”, with the first motivator being not cost reduction, but cost control.
“By outsourcing and using managed services, companies are better able to cater to changing business needs and address capital expenditure challenges,” he said.
Ong added that CIOs (chief infromation officers) are now under extreme pressure to add value to their organizations and are expected to innovate.
“It’s no longer about keeping the lights on, via outsourcing or leasing IT infrastructure, PC costs are now a lower priority and CIOs are looking into strategically diverting resources to meet the demands of business,” he said.
The use of managed services, said Ong, was especially beneficial to companies on an aggressive growth path via multiple acquisitions.
“It’s a challenge for companies to streamline processes, networks and infrastructure. By getting an outside specialist to handle the IT infrastructure and operations, it becomes an easier task,” he added.
However he added that this outsourcing trend currently only holds true for lower risk IT assets such as PCs. “The data center is still very close to the heart of companies and its operations to be outsourced at this point.”

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