Dell Technologies is in the process of rolling out as-a-service consumption-based models for its massive portfolio of PCs, servers, storage, networking, end-user computing and hyperconverged infrastructure solutions.
“You’ll hear more about this at VMWorld and Dell Technologies World, but we’re in the process of moving the vast majority of our offerings to consumption and as-a-service,” said Dell Technologies founder and CEO Michael Dell in an interview with CRN.
“That’s the direction we are heading,” said Dell. “That doesn’t mean we are going to force customers into buying it that way, but for customers who want On Demand and consumption as-a-service, we’re going to roll that across all of our offerings.”
IT giants and Dell competitors like Hewlett Packard Enterprise and Cisco have unveiled similar as-a-service strategies as the COVID-19 pandemic disrupts businesses across the globe.
Eighteen months ago, HPE pledged to transform its entire portfolio by 2022, while Cisco CEO Chuck Robbins just one month ago said COVID-19 forced his company to “re-examine” its entire portfolio and will transition the majority of Cisco products to an as-a-service consumption model.
“Having the ability to offer more as-a-service is important for OEMs because it’s going to become table stakes,” said Scott Miller, senior director of strategic partnerships at World Wide Technology, an US$12 billion channel powerhouse. “Certain CTOs will only consider OEMs that provide SaaS buying options. A lot of them will consider it as one of the ways to consume their assets, but just because they offer it doesn’t mean all of a sudden the majority of people will consume their hardware that way. But it needs to be an available option.”
Miller, whose global company is a top Dell Technologies, HPE and Cisco partner, said Dell making its portfolio available in a consumption-based way will enable the company and channel partners to “get into the negotiation table.”
“Sometimes, part of an RFP [request for proposal] might require you to have a SaaS-enabled option, for example. Then in those cases, Dell’s competitor can be at the negotiating table but not Dell. So Dell just keeps themselves blocked out of a portion of the business,” said Miller, a longtime data center and channel expert. “And in the end, the customer might not even buy in an as-a-service way anyway, but since Dell wasn’t in the RFP, they couldn’t make the cut. … So this is great news for Dell and Dell partners that they’re moving to make everything available as-a-service.”
Last year, the US$92 billion infrastructure giant launched the Dell Technologies On Demand program to provide what it dubbed as “the industry’s broadest consumption-based and as-a-service model” enabling channel partners to sell different types of flexible consumption offerings for Dell solutions. Partners who leverage the On Demand program can receive a 10 percent upfront margin of the committed contract value of the deal once the solution has been deployed.
“Obviously in an environment like this, an offering like Dell Technologies On Demand makes it possible for customers to more efficiently deal with their resources,” said Dell. “Let me give you a sense for the growth in this: so our deferred revenues at the end of the last quarter were US$28.8 billion dollars, up 14 percent year over year. That was driven by subscriptions, software licenses, maintenance and as-a-service. So we’re definitely seeing a big uptick in those.”
Additionally, shortly after the coronavirus pandemic the U.S. in March, Dell launched a new Payment Flexibility Program to help fund customers’ capital technology needs. The program, which was revamped last month, includes zero-percent interest rates, 180-day payment deferrals and a one-year term to flexible consumption offerings.
Both the On-Demand and Payment Flexibility Program are part of Dell Financial Services (DFS), the company’s financial arm.
“Our overall DFS originations in the second quarter were up 31 percent year over year, said Dell.
Both Dell Technologies World and VMWorld this year will be virtual events due to the coronavirus pandemic. Dell Technologies World runs from Oct. 21 to Oct. 22, while VMWorld 2020 will take place virtually Sept. 29 to Oct. 1.