RealTime IT News

Dell Touts Standards in Fresh SAP Pact

UPDATED NEW YORK -- Trumpeting a combination of completely standardized systems, professional services and its famous low-cost delivery model, Dell enlarged its eight-year pact with SAP to bring servers and applications to the enterprise.

Dell is battling rivals IBM and HP, both of which are also gunning for more considerable market share in the SMB market. For Germany's SAP, the upgraded agreement gives the company, known for its clout among large enterprises, an open window into a smaller but no less lucrative market.

CEO Michael Dell made the announcement Wednesday during a press event at the Nasdaq Marketsite building, with SAP CEO Henning Kagermann joining Dell on stage for the first time ever, in a deal aimed at shoring up Dell and SAP's reach into the small- and medium-sized business market.

"We do see right now that the technology spending is increasing and companies are becoming more confident in their businesses," Dell said. "We see a pretty remarkable shift going on in the enterprise market to the use of standards-based hardware."

Dell promised to accelerate the growth of standards-based computing in the enterprise through partnerships, such as those with SAP, Oracle and EMC, while stressing that his outfit's direct model has provided "unparalleled value" to customers.

"Recent IDC research shows that approximately one half of SAP's 70,000 installations are in transition in one form or another to standards-based platforms," Dell said. "That represents a huge opportunity for Dell. More and more companies are recognizing the cost and the lock-in associated with proprietary technology."

Dell also predicted the increase in demand for low-cost 2- and 4-way Linux and Windows-based systems will continue to cannibalize UNIX market share from its competitors.

Using this infrastructure, Dell said customers will be able to take advantage of Dell's "scalable infrastructure," which is essentially the company's equivalent of a utility computing strategy. In this plan, customers can procure computing power at a rate that is commensurate with the growth of their businesses. Dell said he expects the deal with SAP to help drive this.

The Round Rock, Texas-based Dell has optimized its PowerEdge servers with SAP's host of applications for some time; the companies currently count over 5,000 enterprise installations together.

The latest agreement is largely an expansion of professional services, with UNIX to Linux and Unix to Windows migration now offered to SAP customers, according to Linda York, vice president of alliances for Dell.

York told internetnews.com that the difference between the professional services from Dell/SAP is that while the companies previously did some customized services for customers, Dell and SAP have decided to make it a standard offering open to all clients -- existing and new.

"We'll customize those larger installations for customers that need something special, but the first line of support for SAP through Dell is new," York said. "The migration services, in terms of planning and assessing, sizing, and installation and the care thereafter of the SAP solution are new."

York also said Dell and SAP are collaborating on Dell/SAP "competency centers," where the companies will help customers improve the deployment of SAP software with performance engineering for applications and networking; support services, including planning, training, and problem-solving; product testing for consistency and reliability; and proof-of-concept testing and optimization.

The Dell SAP Competency Centers are located near SAP's worldwide headquarters in Walldorf, Germany, and at Dell's SAP Center of Expertise (COE) in Austin, Texas, and in Kawasaki, Japan.

York also said the very nature of the deal will help SAP gain traction in the SMB space, where Dell is already entrenched. Forrester Research said in a recent survey that SMBs plan to increase their IT spending for 2004 by 6.6 percent over 2003, compared with a 1.7 percent increase among larger companies. Roughly 79 percent of SMBs prefer to buy PCs from Dell, and it is also on the shortlist for SMBs' server and storage purchases, according to the research firm.

York also explained how Dell's focus on lowering total cost of ownership by employing only standards-based technologies helps them stand out in a market where vendors such as HP, IBM and others still maintain proprietary systems.

"If you look at Dell, we are a pure-play in that sense," York explained. "We're all about standards, we only sell standards and we have no legacy to protect, no proprietary systems with large margins and therefore we can partner with someone like SAP, which has a similar approach, we can go full steam ahead in that market and expanding market. Our competitors obviously don't have that capability."

Dell has been busy lately, bolstering partnerships with companies such as Oracle and inking new deals, such as one with Intel server virtualization(define) provider VMware to use the company's software in new configurations of its servers.