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Partners Eye Huge Services Opportunity As Dell Reaches $3.1B Deal To Sell Perot Systems To NTT

Solution providers say Dell's deal to sell its IT services business to Japan-based IT outsourcing firm NTT Data opens the door to dramatically increased services revenue.

Solution providers say Dell's deal to sell its Perot Systems IT services business to Japan-based outsourcing firm NTT Data for nearly $3.1 billion opens the door to dramatically increased services revenue for Dell partners.

"I've got to believe it creates an opportunity for partners," said Dan Serpico, CEO of FusionStorm, a San Francisco-based Dell partner. By selling Perot, Dell waves goodbye to its ability to support customers in the way it has since it bought the company in 2009. As a result, Dell "will have a greater reliance on the partner community, everything from basic integrations and pre-sales to traditional on-prem services to cloud management," he said.

Serpico said partners seeking to capitalize on the services windfall provided by the Perot sale need to have a high level of engineering expertise and ideally, a broad portfolio of services capabilities. "The more diverse your portfolio of services is, the (more) opportunity you create for yourself," he said.

[Related: 10 Things You Need To Know About Dell's Latest Financials]

FusionStorm has been very pleased with the growth in its services business, Serpico said. But he noted that the business has changed to stress more cloud management, cloud integration and custom, software-defined solutions for large-scale customers. "That has become a huge business for us," Serpico said.

Dell expects a significant opportunity for partners as a result of the Perot sale as the company leans on partners to become go-to resources for customers that want to maintain tight control of core workloads, sources said.

The company intends to use partners to make an aggressive push in enterprise solutions as customers' infrastructure ecosystems and consumption models evolve.

That will require partners to take on a broader set of capabilities, but those that step up will have access to yet-to-be-determined incentives and enablement.

Michael Goldstein, president and CEO of LAN Infotech, a Ft. Lauderdale, Fla.-based Dell partner, said Dell is smart to sell off Perot, even for less than it paid for the firm, because the market has moved away from the old-school IT outsourcing model Perot is built upon.

For that reason, LAN Infotech never did much business with Perot, Goldstein said. "We looked at it as always good to have, but we never really utilized it. It's easier to utilize your own services than those professional services. People who used it were used to utilizing it, but it wasn't anything we ever thought of as competition, and at this point [Dell] is just looking for ways to pay off the bills."

One bill in particular looms large: Dell's proposed acquisition of data storage giant EMC for around $60 billion.

Since the EMC acquisition was announced last fall, Dell has been trying to sell business units to help offset the cost. Along with Perot, the Round Rock, Texas, company has also been shopping its Qwest software unit and its SonicWall security business.


The deal, in the works for months, was announced Monday by NTT. The IT outsourcing firm will buy Perot for slightly less than $3.1 billion. Dell bought it in 2009 for $3.9 billion.

Privately held Dell was hoping to get more than $5 billion for Perot, but the $3.05 billion price NTT has agreed to pay shows that Dell is ready to concede that Perot's value is, in fact, less than what it had spent to buy the firm seven years ago.

’There are few acquisition targets in our market that provide this type of unique opportunity to increase our competitiveness and the depth of our market offerings,’ John McCain, NTT Data CEO, said in a statement. ’Dell Services is a very well-run business and we believe its employee base, long-standing client relationships, and the mix of long-term and project-based work will enhance our portfolio.’

Suresh Vaswani, head of Dell Services, will report to Dell CEO Michael Dell until the deal is finalized sometime later this year. In a statement, Vaswani said, "My leadership team and I will play a key part in the transition period. I am also still responsible for driving performance and value for clients through the close period and beyond, and I will help define the organizational structure of the combined company.’

Perot was started in 1988 by Texas billionaire and two-time presidential candidate H. Ross Perot. The company specializes in providing IT services to government agencies and health-care organizations.

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