Dell Buys Its Way Into the Managed Services Business

Posted on July 18th, by thinkstrategies in Dell, managed services, MSPs, SilverBack Technologies. Comments Off on Dell Buys Its Way Into the Managed Services Business

Dell announced today it plans to acquire privately-held SilverBack Technologies, Inc., one of the original managed service providers (MSPs) who has transitioned its business to offer a service delivery platform that enables MSPs to deliver remote monitoring and management services.

This acquisition is important because it clearly shows that Dell is serious about strengthening its service delivery capabilities as part of its overall effort to regain its momentum in the market. It also adds further validation to the importance of managed services as a key component of today’s vendor and channel strategies.

I expect Dell to leverage SilverBack’s capabilities to add a new layer of managed services to its product portfolio. I believe Dell is in a unique position to capitalize on SilverBack’s capabilities because it has a strong relationship with customers as a result of its direct sales heritage. This relationship permits Dell to deliver managed services that can demonstrate a greater commitment to ensure the reliability, security and business value of its products.

However, achieving these objectives isn’t a ‘slam-dunk’. Cisco Systems and Sun Microsystems, among others, have also tried to buy their way into the managed services business with limited success. (See, my 2004 and 2005 NetworkWorld commentaries.)

In addition to having the right enabling technology, being successful in the managed services business also requires an entirely different set of management skills and operational processes. Rather than reacting to customer problems as most vendors and channel partners do in the old world of tech support, managed services requires a proactive approach which reduces the risk of system failures or performance issues. Not only does this require different skills and processes, but it also forces the MSP to develop different methods of demonstrating their value.

Complicating matters for Dell is its initiative to add more channels-to-market to its direct sales approach. This effort will require Dell to segment its managed service offerings to fit its direct and indirect channel strategies. As Cisco, Sun and other vendors have learned, this is not an easy balancing act.

Leaving these challenges aside, Dell’s acquisition of SilverBack is still a significant bellweather of the changing nature of the IT market. As I’ve said many times before, we are moving away from a technology centric industry to a services driven business.

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