Dell Evolves Into a Small Business IT Services Provider

Most small businesses know Dell as an online seller of low-priced, customizable computer hardware. But Dell has in recent years evolved into something more. It’s now a complete one-stop shop for small business IT needs.

“Customers kept asking us for different things, kept telling us they needed more help,” said Erik Dithmer, vice president and general manager of Dell's Small and Medium Business group in North America. “For some things, we had to go out and build the capability.”

The company committed itself three years ago to meeting the challenge from its small business customers. Today, IT services and solutions tailored to SMBs represent more than half of revenues in Dithmer’s group.

The portfolio includes consulting, systems integration -- especially in the vital area of application and server virtualization – IT management and support, and increasingly, cloud-based software and services.

Dell’s earliest successes came in helping small business customers scope and manage server virtualization projects. Customers have saved tens of thousands of dollars following Dell’s advice and using its products, Dithmer said.

From Hardware to Small Business IT Services

You might wonder, though, how a giant corporation like Dell could know much about, or be sensitive to the needs of, small businesses. The short answer is: it learned. The transformation started with the establishment three years ago of a separate SMB division with its own general manager -- Dithmer -- and dedicated staff.

“I only worry about SMB customers, nothing else,” Dithmer said. “I talk to [SMB customers] regularly, and every offering we provide is custom-built for small businesses.”

Dell also undertook an intensive, weeks-long research project to pinpoint the top “pain points” SMB customers were experiencing. A few things came out of that work, said Mike Blood, senior strategist for SMB solutions at Dell.

One is that small businesses felt Dell didn’t understand their specific industries, which inspired the company to drill down and focus on key verticals, such as retail.

Dell Retail IT Solutions

Dell now offers “a comprehensive solution for retailers from storefront to back office,” Blood said. It includes new point of sale (POS) terminals based on Dell’s Optiplex server line that make it easy to integrate third-party retail software solutions.

Dell is also building relationships with developers, most importantly Microsoft around its Dynamics customer relationship management (CRM) and ERP (enterprise resource planning) solution.

More generally, small business professionals wanted reliable, easy-to-maintain systems. They said they needed help to more efficiently maintain IT infrastructure and integrate disparate systems added over time. And they particularly wanted help with virtualization and cloud computing strategies.

Pain points concerning IT arise in part, Dithmer said, because small businesses lack adequate internal IT resources. Hence the need for simplicity, ease of maintenance, and outsourced consulting and integration services.

One other thing came out of the research. “We realized that to do a really good job on these things, we would have to own the technology,” Blood said.

Targeted Small Business IT Acquisitions

That realization touched off an acquisition binge that continues. Last year Dell acquired Boomi, for example, a company that provides Web-based services for integrating cloud-based applications with on-site systems.

Boomi exists "to make it easier for small and medium business owners to port from on-premise to cloud-based systems,” Dithmer said. In other words, Boomi's technology does the work to make the applications a small business has installed on its servers integrate and play nicely with cloud-based applications.

“That’s the dirty part of the process [of transitioning to the cloud] that nobody talks about,” said Dithmer. Typically that transition can take up to a month or two. Boomi’s technology reduces the transition time to 2 to 5 days, Dithmer said.

Dell also acquired EqualLogic, a maker of small business storage array network (SAN) products. Kace, another 2010 acquisition, is a maker of systems management appliances, that among other things, automate the process of keeping software patched and up-to-date.

“Kace has solved that [software maintenance],” Blood said. “It’s a nice home run for a number of verticals, but it’s key for retailers.”

Most recently, Dell announced its intention to acquire SecureWorks. “SecureWorks does only managed security services for small and medium businesses,” Dithmer notes. “And Gartner ranks it as one of the best in the world next to IBM.”

The acquisitions -- and there were others -- are an indication of Dell’s “razor focus” on helping SMBs address their pain points, Dithmer said.

The acquisitions also come, though, from a recognition that small business owners typically begin acquiring systems by deciding on software. If Dell wanted to “own” those customers, it realized, it would have to become a software and services provider as well.