Dell Exploring On-Site Services - InformationWeek

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4/12/2006
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Dell Exploring On-Site Services

Dell is exploring ways to branch out into on-site IT support and repair services.

Dell is exploring ways to branch out into on-site IT support and repair services.

The Round Rock, Texas-based computer maker is in talks with Reliable IT, Springfield, Va.; OnForce, New York; and ServicePower, Louisville, Ky., according to executives of the services companies. Reliable IT, in conjunction with OnForce, offers direct, nationwide IT services. ServicePower is a field-logistics automation company that optimizes the scheduling and deployment of field-service calls.

Dell declined to comment. However, a source familiar with Dell's plans said the company is "very serious" about finding a way to add new revenue through services and isn’t ruling out any options.

Reliable IT, which performs next-day, on-site IT support in tandem with OnForce, could give Dell a comprehensive IT services offering without having to pay a middleman, such as a distributor, said Scott Shaul, president and CEO of Reliable IT.

"We are in conversations with Dell right now. They definitely want to run a test with us in certain territories,” Shaul said. "If you put OnForce and Reliable together, it's one of the largest Dell technical forces out there. If you put both of us together, it's probably over 1,500 Dell-certified technicians," he added.

Former Hewlett-Packard channel chief Kevin Gilroy, who in January was named senior vice president of sales and general manager of OnForce, said his company has discussed its services deployment model with a number of OEMs. Gilroy declined to give details about talks between Dell and OnForce. Onforce has more than 12,000 nationwide service providers on call.

Dell also has been in discussions about how to do business with ServicePower, said Chris Smith, CEO of ServicePower Field Service Solutions. "How we fit together with Reliable is we have an artificial intelligence-based routing solution. We allow field technicians who might do three or four jobs a day to do seven or eight jobs a day," Smith said.

Reliable IT can deliver services at a low, fixed price by working directly with customers, reducing transaction costs that sap profit, according to Shaul. The company was founded by Reliable Computer Parts, a 15-year-old computer repair and parts vendor that spun off Reliable IT with OnForce about nine months ago, he said.

Reliable IT's direct-services model would give Dell a way to optimize the services revenue it could get using a subcontractor, Shaul noted. "Dell's service model is so constricted by their providers, and in my opinion, it's time for them to change that model a bit and utilize an open network that gives them the ability to make some money," he said. "Everyone knows it's just not the healthiest business in the world."

Jon Whitlock, vice president of marketing development at CBE Technologies, an MSP and Reliable IT customer in Boston, said Reliable IT is a solid subcontractor, and CBE taps the company for on-site IT services in areas outside its reach. CBE is typically able to mark up Reliable IT's price by an average of 20 percent to 30 percent, he said.

Dell has long said it aims to boost services revenue. During its fourth-quarter earnings call on Feb. 16, company executives said revenue growth had waned, and CEO Kevin Rollins said news of changes to Dell's business model could come in April.

Last month, Joseph Marengi, senior vice president of Dell Americas, said at a Morgan Stanley conference that Dell plans to roll out a printer managed service offering. And several weeks later, news emerged that Dell is mulling plans to sell an OEM appliance that provides an inexpensive way to offer managed services.

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