Global CIO: Dell, Perot, And The Future Of Outsourcing
Its new deal with the AMA to sell electronic medical record systems and related consulting will test its vision.
It sounds simple enough: Dell said this week it's partnering with the American Medical Association to sell hardware, consulting, and software to help independent doctor practices adopt e-medical records and other heath IT systems.
It's not at all simple. In fact, it sounds to me like one of the first great tests of Dell's new vision of outsourcing, which includes combining Dell, a hardware-centric sales and services company, with Perot Systems, a classic IT services company that Dell bought in November for $3.9 billion.
For Dell to execute, on the AMA plan and its broader strategy, it has to answer a lot of questions, such as:
Can Dell really profitably deliver IT consulting and other services from the Perot organization to small businesses--including tiny medical practices as small as three physicians?
Can the Dell.com systems that so effectively deliver hardware to small businesses translate to marketing consulting to small or even mid-sized businesses?
Will Perot's deep experience with large healthcare organizations translate to the nuances of running small practices?
Will the new model work beyond healthcare? Does Dell-Perot have the know-how to replicate this kind of hardware-software-services package in other industries, or does Dell need to buy more consultants with the depth in, say, retail or manufacturing that Perot has in healthcare and government?
Last month, I spoke with Peter Altabef, the head of Dell's services division and CEO of Perot Systems until the Nov. 3 acquisition, about what the Perot team could do now under Dell ownership that it couldn't before. He didn't tip off the AMA deal, but that deal fits many of the the themes we discussed. Here is some of Altabef's thinking on how Dell-plus-Perot changes what each can deliver:
Sell To Smaller Businesses
Using Dell.com, Dell's support channels, and its marketing ties to small businesses, Dell "really opens up that world to us in a much more cost effective way than we could've before," he says. Altabef noted that it has deployed electronic medical record systems for practices as small as three doctors.
Small business is a potentially huge IT services market, but it's been completely impractical for most big IT services companies. Even for a mid-sized services firm such as Perot, with about $2.7 billion in annual sales before the acquisition, the economics of marketing to small businesses to reap more, smaller deals didn't add up. "That's somewhat unchartered territory for some services organizations to reach out to businesses of all sizes," admits Altabef.