Dell Technologies Launch Shows It’s Reinventing Its Services Business

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The new Dell Technologies stepped onto the worldwide stage last week (week of Sept. 7, 2016), bringing with it a new “take” on how to do IT services in the cloud computing world. The newly formed Dell Technologies services group, Dell EMC Services has a new mission: It will provide strategic advice and guidance for building out new infrastructure related to cloud and hybrid cloud.

Dell Technologies CEO Michael Dell and Dell EMC president David Goulden said the new combined company will help customers to consolidate traditional IT infrastructure – even as they also help customers modernize and expand their use of private, public and hybrid clouds.

As Michael Dell said in the Day One launch announcements, services will be a key component to achieving the company’s digital transformation projects with customers: “We have the products, services, talent and global scale to be a catalyst for change and guide customers, large and small, on their digital journey.” This digital transformation will spur a new level of partnership with Dell Technologies’ new services unit and its partners.

A closer look at the Dell EMC Services group – a new services unit, created for the new Dell Technologies company – reveals a different focus from the earlier Dell Services unit, as we describe in this blog post. The new emphasis on next-gen architecture and digital transformation is the approach Dell is taking to generate more revenue and profits from the company’s services group.

Dell EMC Services Group

The scope and mission of the new company’s services unit appears to represent a change from the focus of the IT services business unit Dell sold to NTT DATA, as announced in March, 2016. Dell Services – now part of NTT DATA – had originated as Perot Systems, and had 28,000 employees. Dell had acquired Perot Systems for about $3.9 billion in 2009, but sold it for about $3.1 billion in March.

The new Dell EMC Services unit will be increasing its focus on higher-level strategic advisement and transformational consulting, in addition to continuing its focus on support and deployment.  We expect this to span all aspects of IT environments, including opportunities with next-generation infrastructure and cloud enablement. Howard Elias, who was EMC’s president and chief operating officer of EMC’s enterprise services group, will now be the president of Dell EMC Services and IT.

The launch announcement indicates that the services unit will have more than 30,000 employees, that is a major part of a merged company of about 140,000 employees. It appears that the new services unit has a different mix of skill-sets than the Dell Services group that was sold to NTT DATA, which is focused in systems integration (SI) projects. And, it seems likely that some Dell customers would continue to work on longtime projects that are tied to the NTT DATA group’s services.

A Major Contributor to Dell Technologies Revenue

The new company’s dual-mode approach to infrastructure and cloud services is expected to evolve into a multi-billion-dollar unit – and to be a large slice of the new company’s expected annual revenue of $70 billion. Although this was not emphasized in the launch announcements, the services headcount is high enough to represent substantial new revenue for Dell EMC within Dell Technologies. Its importance is underlined by the fact that it will be managed by Howard Elias, who was EMC’s president prior to the Dell-EMC merger via the Dell Technologies launch.

Hurwitz expects to see the Dell EMC services unit taking an energetic approach to the new services goals of transforming customers’ traditional IT infrastructure – and linking it with a variety of public cloud services. Hybrid cloud technology will be a major focus for the new services group’s engagements with customers—including those who started with Dell and EMC, and net-new customers. This will result in direct competition with other systems companies, such as IBM and HPE.

 

New Approaches to Building and Delivering Services

The services group, which will work with both enterprise customers and cloud service providers (CSPs), will likely take a green-fields approach to building net-new cloud-based technology. This will mirror the cloud-native approach taken by the hyperscale cloud-centric companies, (e.g. Google, Amazon, Facebook, Rackspace), which built their infrastructure from the ground up. At the same time, the services group can be expected to engage with longtime customers, regarding enterprise data center infrastructure – and updating it for mobile, Big Data/analytics and cloud.

The merged product portfolio frees the new Dell organization, which is privately held, to leverage many of the business units that originated in EMC’s Federation of companies. Examples include Pivotal for cloud application development, RSA and SecureWorks for security, and Virtustream for management and automation of cloud-enabled workloads. VMware, a public company, will remain a freestanding tracking stock, which is 80% owned by the new Dell Technologies company.

 

Hybrid Clouds Will Take Center-Stage

One key focus area of the new services group will be hybrid clouds linking enterprise datacenters and cloud data centers. That’s because most large companies will retain many of their traditional IT resources (e.g. large data repositories), while shifting net-new applications and databases to outside cloud service providers.

By way of background, in its Sept. 7, 2016 launch materials, Dell Technologies said it will lead with end-to-end workloads that span the enterprise and the cloud, as follows: “The hybrid cloud that powers today’s digital business demands a new kind of infrastructure, new delivery models, and entirely new IT processes and culture. With a comprehensive portfolio of products and capabilities uniquely targeted to transforming your IT from the edge to the core to the cloud, we’ll help you build a modern infrastructure that’s ready for the challenges of a digital world.”

 

Going Forward

Examples of the workloads Dell EMC Services can be expected to be include net-new computing areas—such as mobile-enablement, cloud-to-cloud peering, real-time analytics, deep learning, IoT (Internet of Things) and real-time support for end-users tapping into cloud computing (private, public or hybrid).

The presence of a brand-new services unit shows how much Dell has changed: many years ago, Dell had frowned on scale-up technology for servers and storage. Today, it embraces customers’ earlier choices for scale-up and scale out – and seeks to harmonize them with net-new infrastructure by weaving together the elements of hybrid clouds linking data centers and cloud services.
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