Managed Services: Dell’s Next Disruption?

What do you get when you combine an industrial-strength managed services platform, a software-as-a-service (SaaS) desktop management solution, and a hardware vendor that transformed the PC and server industries with its direct, Internet sales model?

The answer is Dell’s ProManage Managed Services, which is built on Dell’s Silverback and Everdream acquisitions, web-based technologies, and Dell data center expertise.  After a year-long pilot in Dallas and New York, Dell announced the nationwide rollout, which offers SMBs web-based, standardized services on a pay-as-you-go basis (full details at http://tiny.cc/IxZlA)

Back in the day, Dell made it’s mark in the industry and transformed the PC and then the industry-standard server market with its direct, build-to-order business model. By streamlining supply chain, inventory, ordering and manufacturing processes, Dell gained enormous cost and efficiency advantages over competitors with inventory-laden two-tier distribution models. Dell’s ability to pass cost savings on to customers, and give them a faster, more consistent buying process ended up revolutionizing the hardware business. Over the years, of course, competitors streamlined their own operations and sales, and Dell lost many of the cost, pricing and time-to-market advantages that had set it apart in the PC and server industry.

Today, however, Dell is aiming to bring many of the same business model principles to a messy managed services market that has plenty of room for improvement. While SMBs increasingly depend on IT to run their businesses and stay competitive, they are also increasingly overwhelmed by complexity of the systems and solutions they depend on. Dell estimates that for every one dollar SMBs spend on hardware, they spend two dollars to manage it. Even so, most struggle with outages, security threats, data loss, inadequate desktop support and other issues because their small or even non-existent IT staffs can’t keep up with the care and feeding their systems require. 

While SMBs can turn to VARs for help, not all VARs can provide proactive, 24/7 services and expertise across a myriad of different applications and devices, or provide consistent support for customers with multiple locations. Consequently, most SMBs remain stuck on the treadmill of firedrills and break/fix, without little time left to think about how they can put IT to work to help the business survive and grow in this tough economic climate.

ProManage Managed Services addresses this problem with subscription-based, proactive 24/7 services designed to lift the IT maintenance and management burden off SMBs’ shoulders and help them spend more timing running their businesses. Current offerings include:

·      Alerts, for 24/7 remote monitoring of networks, severs, PCs, mobile devices and applications—including non-Dell brands. If a problem occurs, Dell alerts he customer or their channel partner so they can repair before it causes serious harm.

·      Resolution provides the monitoring above, plus proactive remote repair. Dell notifies the customer and/or partner of the problem and flxes it. If Dell can’t fix it remotely, it will send a local Dell or certified partner onsite for the repair. During the pilot, Dell indicates it resolved over 90% of problems remotely.

·      Management supplements alerts and resolution with 24/7 help desk support (for a wide range of SMB applications), additional security features, asset tracking and management and assessment services. With this offering, Dell also provides a designated account team.

The service model is flexible, requiring no upfront investments or long-term contracts.  Customers can add additional services or devices (pretty much anything with an IP address) at any time, and scale down with just 30 days notice. Dell also offers additional services on a pay-as-required basis to help with more random issues that may crop up.

While ProManage Managed Services will set off alarm bells in the channel, Dell is encouraging partners to participate. First, Dell Silverback partners can sill offer the Silverback platform to customers—with Dell pledging a hands-off approach. Other partners can operate as sales agents, garnering 15% in recurring revenues for selling through Dell’s managed services. Dell promises to keep these partners in the loop via regularly scheduled customer status meetings and reports. This should appeal to VARs and others that simply don’t have the resources to build out their own NOC, or want to supplement their main focus (such as business applications) with additional services. In the future, Dell says that will provide another option for an integrated co-delivery approach, with details to be announced towards the end of the year.

That said, the direct model and improving operational efficiencies are a large part of Dell’s DNA. Dell has always been a business model innovator, focused on providing price performance and consistency, and giving customers a better shopping and buying experience. With ProManage Managed Services, Dell is again taking a similar approach. As with its hardware business, partners are welcome, and can play a vital role, but are not the lynchpin in Dell’s formula.

While the launch was a great start, Dell must keep the volume level high to get and stay on SMB radar and get partners engaged. On the customer front, it needs to develop an ongoing campaign to enlighten SMBs about ProManage Managed Services, fueling it with the types of tangible proof points and measurable benefits that propelled Dell Direct in the early days. Dell must also keep a close pulse on SMB requirements, and continually test, refresh and refine its offerings in to meet market requirements. (After typing it so many times, it also occurs to me that Dell should come up with something a bit less clunky than “ProManage Managed Services” as well!) From a partner perspective, Dell needs to do a better job of communicating how partners can benefit from each of the options,  and evolve their services around them. 

While it won’t reinvent the managed services model overnight, Dell is setting the stage to reset SMB expectations about IT service and support, and in my opinion, it’s about time.

Will CPAs Bring the Cloud to Earth for SMBs?

Just last week, I blogged about how some IT pundits and vendors are falling into the trap of turning the cloud into yet another confusing and over-hyped industry buzzword, and the need to bring cloud conversations down to earth for small and medium business (SMB) customers.

A couple of days after I wrote this post, I had a briefing with Intacct, the American Institute of Certified Public Accountants (AICPA) and it’s subsidiary, CPA2Biz. The three organizations have just announced a significant partnership designed to do just that (http://us.intacct.com/corporate/news_events/2009/040709.php)  through some of the most down to earth people I know—accountants.The gist of the alliance is that AICPA and CPA2Biz have designated Intacct as their preferred provider of financials applications. Together, they will educate AICPA’s 350,000 members about the benefits of moving their financials solutions to the cloud. The deal will give all AICPA members—both CPA firms and their clients—discounts on Intacct solutions, and encourage accounting firms to use Intacct as a platform to provide services for their clients. In addition, AICPA will layer its best practices and vertical templates on top of Intacct’s solution to give accountants additional tools, guidance and content to create a unique CPA version of Intacct. The partnership is a big coup for Intacct, which currently has about 100 accountant partners. By joining ranks with AICPA and CPA2Biz, Intacct gains the potential to dramatically scale its accountant channel–and reach thousands of SMB customers through them. 

Not only does this alliance pose a strong threat to Intuit QuickBooks’ dominance in the small business accounting market, it has the potential to pull SMBs into cloud computing in vast numbers. Intacct, AICPA and CPA2Biz did a lot of homework beforehand, including research that showed online accounting solutions boost productivity by as much as 50%. By dramatically reducing the need for travel, and the necessity of exchanging paper and email files, CPAs have more time to spend providing guidance to clients to help them improve financial performance and decision-making.

Accountants are rarely bleeding edge technology adopters. But AICPA’s backing will give them more confidence in recommending cloud computing to their clients. The fact that Intacct uses IBM for its primary data center, a SunGard facility as a hot standby, and has exceeded all uptime guarantees for the past year should help mitigate concerns about security, reliability and performance. As important, the message that AICPA, and eventually its accountant members, are communicating to SMBs—that cloud computing can help them “improve financial performance, take better advantage of financial advice, and make better, faster business decisions”—is framed in business terms, not cloud speak!

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