Services with a smile

When Dell burst into the PC market in the mid-1980s with its direct sales model, it launched the era of PCs as commodities, when sophisticated corporate users no longer needed the comfort and support of buying from traditional dealers.

But things have now come full circle. Corporate users, befuddled by the complexity of today?s desktop systems, are desperate for all the help they can get.

A key factor in Compaq?s recent purchase of Digital was the latter?s global services organisation. This will turn Compaq from a hardware manufacturer into a full-blown services and software company, enabling it to meet corporates? growing demands for support.

One reason for the change has been the massive publicity given to the issue of total cost of ownership, first raised by the Gartner Group, which has driven the move towards thin clients on the desktop. The cost of hardware is now estimated as being only around 10% of the total cost of setting up, running and supporting a typical desktop PC. Companies are increasingly looking to suppliers to help them with the other 90% ? installation, support, training, systems management, maintenance and end-of-life disposal.

Another reason is the increasing complexity of desktop technology, with Internet access adding to the nightmare task of managing thousands of PCs across an organisation.

So companies are looking to buy PCs from a single supplier which can offer a range of services ? from customised, preloaded software, to flexible finance options and online ordering. Far from switching suppliers to get the cheapest deal available, as they may have done a couple of years ago, corporates are looking for long-term relationships with suppliers they can turn to when things go wrong.

?People are asking more from desktop technology, so they want someone to help them sort it out,? says Shane Gallagher, managing director of IBM reseller First Stop Computer Group.

?If people were buying purely on price, then we would not exist ? everyone would go to Dell or Gateway,? says Gallagher. First Stop has managed to win contracts with corporates such as McDonalds and Commercial Union on the strength of its services, which include leasing deals allowing customers to pay a fixed monthly cost for PCs which get replaced with the latest models at the end of their life cycle. The monthly payments cover services as well as hardware costs.

But it is not just Vars like First Stop which are wooing large companies. Even companies such as Dell, which started out focusing purely on hardware, are seeing services as the key to the corporate market. ?The perception of Dell as just a hardware vendor is something we?ve had to overcome,? says Ray Badminton, corporate desktop marketing manager at Dell.

Badminton says corporates are focusing on four key issues when buying PCs: manageability, stability, reliability and compatibility. Among the services Dell is offering to meet these needs is Bulldozer ? this involves Dell going into a customer site where there are PCs from multiple suppliers, stripping them all out and replacing them with Dell machines. ?Some companies have 30 different PC suppliers and they recognise that the support and lifecycle management costs involved in dealing with them all are huge,? he says.

Another of the company?s services is DellPlus. PCs are configured to a customer?s exact specifications, preloaded with whatever software the company requires, including non-standard software. One Dell corporate client which has taken advantage of the DellPlus service is international property firm DTZ Debenham Thorpe. The company has recently replaced its entire IT infrastructure in the UK. Dell won the #4 million contract to configure, supply, deliver and install 20 NT servers, 650 PCs and 80 laptops on the basis of its services and support.

?Dell came in at an interesting price, but the most important factor was that we wanted someone who could squirt on the software, including our own logos and security programs, so that we could plug it in and have it working straight away,? says IT director Nigel Andrews.

?We also needed support in implementing the new infrastructure ? we wanted to change our whole IT environment in 16 weeks, working at evenings and weekends.?

As well as demanding technical and logistical support from PC vendors, corporates are increasingly asking them to smooth the procurement process by offering electronic commerce solutions. ICL?s PC reseller subsidiary Tplc has recently launched a service that allows customers to order from a customised online catalogue, which they can use to find out the latest product prices and availability, place the order and track its progress. The service, called ECx, can be used for other products as well as Tplc?s, and is available over the Internet or through Electronic Data Interchange links.

Eugene Deeny, business manager for ecommerce at Tplc, says that companies using all the features of ECx can reduce the cost of their procurement process by up to 75%. The system is designed to streamline the lengthy process from raising a requisition to placing an order. According to Deeny, research done by Tplc, the Visa group and KPMG found that this whole process costs on average between #80 and #100 per transaction.

?Typically, there are around five people involved in that process ? approving budgets and so on. We decided that if we could find a way to fast-track that, it would be very attractive to customers,? he says.

Disposing of PCs at the end of their life is another headache that corporates are increasingly looking to hive off to third parties. Leasing specialist ECS offers a service called Total Asset Management, which assists at every stage of the PC?s life ? from financing to disposal.

?Many companies spend weeks or even months trying to battle down the supplier on the last 2% to 3% of the purchase price, forgetting that disposal costs between #150 and #200 per PC,? says Tony Field, managing director of ECS. This cost includes wiping hard disks clean of data and ensuring that hardware is disposed of in an environmentally friendly way.

ECS also offers a year 2000 audit service, and Field says that a growing number of customers are taking up these services. ?Total cost of ownership is becoming absolutely the first priority in corporate PC buying,? he says.

But Alan Knight, chairman of user group CMG, believes that companies should not be looking at total cost of ownership, which he describes as ?completely irrelevant?.

?People should really be interested in total value of ownership,? Knight says. ?They should ask what business value they are getting from a PC? If they are getting business value of #50,000 a year, then they shouldn?t give a stuff if it costs #8,000 a year to provide.

?For the last 10 years, the world has been ruled by accountants whose motto is ?cut the costs, trim the fat?. That is so short-sighted.?

Pulling out all the stops

As part of the P&O group, Earls Court and Olympia ? the company which runs the West London exhibition halls ? gets a discount on IBM kit. The price is negotiated by P&O and is available to all its subsidiaries, whichever reseller they go to.

Although the subsidiaries do not have to buy IBM kit, the special price and the convenience of sticking to a single hardware platform makes it the most attractive option, says PC and network manager Keith Rae.

Earls Court and Olympia has around 350 networked IBM PCs across six sites, running Windows 3.1 and Windows 95, with WordPerfect, Lotus 1-2-3 and a variety of graphics packages. Fifteen months ago, Rae decided to switch the business from an unnamed reseller, which wasn?t providing the required level of service, to First Stop, which is now its sole PC supplier. First Stop provides a range of services, from preconfiguring PCs so that they are ready to plug into the network, to planning for projects and upgrades. The company is about to upgrade all its PCs to Windows NT with Office 97, and First Stop is helping with this. ?I wouldn?t get that level of service from a direct supplier,? Rae says.