So Dell finally made its major play into the IT services enterprise arena announcing a $3.9bn deal for the Texas-based Perot Systems. Unlike the HP/EDS mega-merger of last year, there is a lot less overlap between the merging entities, however, you have to assume this is more of a play by Dell to transform its commodity hardware business by refocusing its future strategy on services-led engagements.
However, while there isn't much overlap, there also isn't a lot of synergy. Why should Perot customers want to buy Dell equipment all of a sudden? Most CIOs today are looking to move away from hardware-centric IT delivery models, and onto more on-demand cloud computing models. If anything, it's more of a play for Perot to push services onto Dell's customer-base. It also opens up the lucrative healthcare IT market to the newly-merged entity.
While I applaud a bold move by Dell to transform its business model, work has yet to be done to elevate Perot's IT/BPO services business to the top echelon of service providers at a global level. Namely, Perot hasn't yet fully exploited its presence in healthcare to position leading edge IT/BPO offerings in that space, especially with the market ripe for exploitation in light of the new government initiatives, namely ICD-10 compliance and digitization of patient records. If Dell can quickly leverage this merger to make a further strategic acquisition in this space, then you can see a new player emerging. However, if they spend a whole year trying to restructure these firms and take their eye off the ball with regards to broadening the service offerings, this could present a window for several of Perot's services competitors in the healthcare space to step in…
You also have to wonder whether the largely US-dominated vendors are going to continue to consolidate in light of fierce competition from the Indian-dominated global providers. ACS-CSC anyone?