Dell Expands Direct Managed Services Pilot To New York

Dell sent a letter to 500 of its Registered and Certified solution providers in the New York area Monday, explaining both its direct plans as well as the new channel strategy.

"A cornerstone of Dell's strategy is to enable customer choice," states the letter, from Greg Davis, vice president and general manager of Americas Channel Grop at Dell, and Pete Klanian, global channel sales manager, SaaS, at Dell.

Dell launched its direct Managed Services for Small Businesses pilot in Dallas last April and has made adjustments that it says provide plenty of opportunity and protection for solution providers.

"The process, the communications we put in place [in Dallas] have served us well. We look to replicate that in New York," Roberts said. "As we did in Dallas, we will be very open in talking with channel partners," said Tom Roberts, global manager of channel services marketing for Dell.

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New for New York are deal registration as well as the option for partners to resell Dell-delivered managed services, said Roberts.

The managed services offered by Dell include remote monitoring, resolution or full 24x7 IT management, coverage for most major hardware brands (non-Dell products), software and employee support. Additional customizable plans and add-on services can also be purchased, according to Dell. The services are a combination of technologies from Dell's SilverBack Technologies and Everdream acquisitions, as well as enhancements to the integrated platform it is building, Roberts said.

Dell now has 150 MSP Certified partners across the country, up from 100 in April, Roberts said.

Dell believes the deal registration process will allay any concerns its channel partners may have about Dell encroaching on its customers.

"If [Certified] partners have a prospect, someone they are currently working with, they're saying 'I want Dell to protect my access to this process.' Through deal registration capabilities through a broad set of offerings, we will manage the conflict to give the partner that opportunity," Roberts said.

Dell declined to say what percentage of managed services sold in Dallas are direct and through partners. "There was interest on both sides of the coin," Roberts said. "Our direct sales efforts are looking to work with those customers who are working with Dell directly. For customers that have an exiting channel partner relationship, we are looking to honor that relationship."

Dell's direct sales force will ask end users if they have an existing MSP. The sales force will have a list of current Dell Certified MSP partners in the area and screen for that, Roberts said.

"If we find a [partner], we'll exit the sales process at that time," he said.

Roberts said the price on managed services offerings to partners is "significantly less" than the price end users pay, but he declined to offer specific discount examples. "We've talked to partners with their own offerings that are similar to ours. The feedback from partners has been favorable. Their pricing and our pricing reflect capabilities we're delivering," he said.

Dell is using a spreadsheet to determine end user pricing, which is based on the type of device (client, server or networking) and level of service (alert, resolution or management, according to the company.

The monthly cost for the alert level is $9 per client (desktop or notebook), $29 per network device and $59 per server. For resolution service, it's $39 per client, $89 per networking device and $199 per server. Management-level service is $59 per client, $119 per network device and $299 per server. For example, a services contract for 50 employees with 50 PCs, five servers, five network devices and the resolution level of service will cost about $40,000 per year, said Ted Colpo, Director, Dell SMB Services.

"One customer told us he was tired of throwing hardware at the problem and not even knowing if he needed to. The investment is returned with planning, end user productivity and more focus on their core business. It frees up IT staff for more strategic priorities," Colpo said.

The Dallas pilot was held with a couple of dozen customers and the company's plan is to continue the rollout one city at a time, according to the company.

"We've put a lot of energy into this. It's something new into the SMB space, across thousands of customers. It's not a one-size fits all [program]. SMB is too broad for that. But it's also not an a la carte menu with 500 functions for you to choose from. In that case, we become part of the problem," Colpo said.

One of the things Dell found in its Dallas pilot program was that the market is there for managed services in the SMB market.

In one instance, Dell found 1,000 patch and network vulnerabilities in a customer, an auto parts store with 20 employees, according to Colpo. Three months later, the company had closed more than 90 percent of those vulnerabilities, he said.

"[SMB] customers have limited insight into their IT performance," he said. "They say 'I want to focus on my business, not my IT.'"

The biggest challenge Dell -- or any MSP -- faces is educating the customers on how the model works. Dell executives said the sales cycle in Dallas was longer than they anticipated because explaining the services to customers required more work.

"To be honest, I was thinking of the sales cycle of the duration that we'll see when this offer is more understood and more proliferated within the industry," Colpo said. "I was thinking four weeks or something like that. It's been longer than that. The resason is there's a lot of education of what it is. It's new. Enterprise-wide remote monitoring is pretty cool stuff and there are not many benchmarks out there."

One customer peppered Dell with questions for 90 minutes straight during a meeting, Colpo said.

"And there were none repeated and no dumb questions," he said. "The encouraging thing is those dialogues have been very fruitful and led to more business. We had one customer it took a while to get through the sales cycle. But they referred us to another customer who went through the sales cycle in 1/10th the time of the first customer."

Dell's direct offering should not affect partners who create their own offerings, Roberts said.

For example, some partners integrate services on medical imaging equipment. "They monitor traditional IT assets, but also unique customer technology. They're delivering a unique tailored solution," he said. "That's a real benefit of a dual strategy."

Dell plans to hold an advisory council meeting for some managed services partners Nov. 3-5 in Austin, Texas.