DELL IRELAND is aiming for double-digit growth in its services business this year, following the integration of Perot Systems.
Dell Services is the new business unit formed by the computer maker’s $3.9 billion (€2.9 billion) acquisition of Perot Systems last year. The deal marked the latest move by Dell to diversify from being a pure hardware company or “box shifter”. Now it plans to provide more IT services to large businesses like its biggest competitors HP and IBM.
Services contracts are attractive to IT companies because they offer recurring revenue, usually at a higher margin than pure hardware sales. In its most recent financial results, Dell reported lower profits due in part to its dependence on sales of PCs and servers.
Changing customer perceptions may prove a trickier bet, as Dell has to compete with the reputations of other heavyweights built up over years. “We’ve built up a huge amount of trust with customers that is not project-based. We’re saying that we can now help with developing new applications,” said Dermot O’Connell, Dell Ireland’s general manager.
Liam O’Reilly, director of applications with Dell Services, said the company would not look to differentiate its IT consulting business on price alone. He said a combination of remote management tools and best-practice IT management processes would allow Dell Services to offer cost efficiencies to customers.
Mr O’Reilly claimed the nature of many long-term IT services contracts makes providers less inclined to innovate for the customer. “We see an opportunity for ourselves that can be quite disruptive,” he said.
Initially Dell Services will look to cross-sell to existing Perot and Dell customers but in the longer term it hopes to win deals from other providers. “We have no complicated Unix or mainframe heritage. We don’t have tens of thousands of people in client sites delivering that. Where customers are looking for change, that’s where we see a lot of opportunity,” said Mr O’Connell.
In its home base of the US, Perot Systems has traditionally been strong in the healthcare sector and Mr O’Connell said Dell would try and apply that expertise in Ireland. To begin with, the company is likely to focus mostly on private healthcare providers where it already has customers, as well as the financial services and education markets.
Prior to its acquisition by Dell, Perot’s Irish operation employed 150 people at offices in Dublin and Limerick.
