Kevin Rollins talks services
- 24 November, 2004 10:50
Eight years after joining the company, Kevin Rollins was appointed president and CEO of the US$41.4 billion computer juggernaut Dell in July. He has seen the company transform itself from a desktop supplier into a server powerhouse that is expanding its printer, storage, and services armadas as well.
Rollins sat down to speak with InfoWorld News Editor Tom Sullivan, Editor at Large Ed Scannell, and Senior Writer Bob Francis about Dell's progress and plans in the services arena.
Dell's services business has been growing at a rapid pace. How aggressively do you want to match IBM's Global Services?
We are not trying to match them at all. Our services business and strategies are really very different (from IBM's). Consequently, we do not bump into them very much on the services front. We are usually selling enhanced services that surround the hardware, versus outsourcing or architecture design engagements.
Can you give a road map of your ambitions for the services and support business?
Our goal is to leverage what is already in the field in terms of partners, then hire in project management capability and a bit of technical capability. Just a little of that can go a long way in terms of leveraging field resources. It has been growing at about twice that of our hardware business and is now in the US$4 (billion) to US$5 billion range, so it is reasonably good-sized.
We are going to continue that, but it will grow in tandem with the hardware and at a multiple, because we are penetrating more accounts and are adding more menu items to the list, whether they are professional services or managed services. They are very much tied to hardware. We rarely go after a services-only deal.
As the services business grows, do you plan to get into the grid-utility game or hosted hardware?
No, generally not. We might get more into the utility area if we are helping (a customer) set something up. But we are not looking to outsource that. There may come a time when we will, but it is not even on the map for us now.
What would be the indicator that Dell should offer utility computing?
Frankly (the utility model) is not that profitable. It would have to be a lot more profitable than it is today. History would suggest that as more people get into that, the profitability of that type of business will actually go down. There is a lot more profit made on the close-to-the-hardware service offerings. In fact, we believe that two-thirds of the profitability in the services industry comes from the close-to-the-hardware stuff, and only one-third comes from the stand-alone or highly consultative areas.
What opportunities are out there for Dell to pursue in terms of software integration services?
We are working on that now with Dell Professional Services. We will grow it as we need to in order to facilitate overall hardware installations, rather than just grow the professional services capabilities independently. We are never going to do that.
But if Dell were to make a concerted effort to become more of a software integrator, wouldn't that drive hardware sales?
It actually does today. We are not able to do that in a vacuum. When we go into a large hardware bid, there is usually a services component that is part of that. So as we enter these deals, we tend to talk about the capabilities and what needs to be done, and from there the bid might expand beyond hardware to services. But we do not lead with services and then come back to the hardware like some of our competitors.
Does Dell have any plans or ambitions to get more into systems integration software?
We have Dell Open Manage, our systems management suite used in conjunction with EMC and its systems management capabilities. We are looking toward a vision of combining systems, storage, and network management into one console. We are not there yet, but that is what we want to push toward.
Do you have a timeframe?
It is quite a ways away because we really don't have good standards yet on storage or network management. But customers are telling us that they are really sick of needing multiple systems to mange hardware and (to manage) software on each one of those networks.