Dell Technologies emerges as a new compelling challenger in the as-a-service market

HPE is not the only game in town. Dell had announced its entry into the aaS arena in 2017 with PCaaS on the client-side. Dell Technologies, the only IT supplier with an end-to-end portfolio, announced its latest foray into the "as-a-service" (aaS) arena with Project Apex, which it hopes will take Dell Technologies' aaS capabilities to the next level. Its objective is to unify Dell's as-a-service and cloud strategies to provide a consistent experience wherever a workload runs - on-premise, at the edge, or in the public cloud. Project Apex aims to simplify customers' and Dell Technologies partners' access to Dell's as-a-service portfolio. The first product, Dell Technologies Storage as a Service (ST-as-a-service), delivers a pay-per-use model and elastic capacity and is deployed on-prem but fully managed by Dell at the initial launch. The key enabler of Project Apex is the Dell Technologies Cloud Console. This single web interface enables customers to manage their cloud workloads and services, available to a few select early customers with a wider roll-out in 2021. Dell has a long road ahead with "everything-as-a-service" as a final destination. After STaaS, Dell is expected to roll out compute-as-a-service (COMPUTEaaS), PCaaS, Data-protection-as-a-Service (DPaaS) and vertical solutions (SAPaaS). PC-as-a-Service (PCaaS) is already available. Apex will enable it to move from a bundled, "leased" offer tying software and services to each device in an annual price per seat to modern, flexible aaS capabilities providing customers with tailored offers of hardware, software and services delivered over the air and accessed/ managed through a single portal enabling customers to seamlessly scale up and down specific to their unique needs and renew effortlessly, with one simple price per month.

HPE may have the lead, but nobody can claim a victory lap as yet. It is too early to declare a winner. Dell is a compelling challenger. It matters to SMBs, Midmarket firms, Enterprise customers and Partners.

Cloud, private cloud, and conventional infrastructure are three parts of a whole. Dell Technologies is currently betting on it by providing simplicity, consistency, and flexibility. However, the current branding of solution offerings of Dell Technologies Cloud Platform and Dell Technologies On Demand will need to merge quickly to avoid digressing and having complex customer conversations on the merits of each. And then, there is the VMware Cloud, which adds to the choice complexity.

Let us discuss why the as-a-service challanger status matters to SMBs, Midmarket firms and Dell Technologies' Partners.

Why the announcement matters to SMBs and Midmarket firms

Dell has always been relevant for small and medium business and education markets. Small and midmarket businesses are two of the fastest-growing segments for Dell. Its small business tech advisory has witnessed tremendous success. Dell's Tech Advisor team offers technical expertise, in-depth product knowledge, and a consultant to guide Dell customers through their refresh and expansion needs. Each advisor goes through 160 hours of in-person classroom training. Dell has built a progressive hierarchical advisory structure based on "needs complexity" to help SMBs learn, identify, buy, and deploy technology solutions. Dell knows how to create simplicity within complexity. With the recent APEX announcement, commercial and enterprise businesses can customize and select their on-demand path from Pay As You Grow or Pay As You Use for the Edge, Core, or the Cloud. Pay As You Grow is for committed workloads. The usage-based Flex on Demand solution's metering coverage is at the technology level, including processor, memory, and GB consumed. Dell's Data Center Utility adds metering at the enterprise level.

Announced in 2019, Flex on Demand was initially applicable for firms with a minimum $250K 3-year contract-value. A 1-year option is now available, but end-points, including PCaaS, are available for SMBs (at lower committed contract values). Flex on Demand, a usage-based payment solution, is offered with custom and pre-configured options. Minimums for the custom packages start at $100K for PowerStore, and pre-configured bundles with approved pricing start as low as $34K in committed contract value (CCV) for a 12-month contract. Pricing for a smaller configuration ranges from that point to $116K CCV for a 5-year agreement.

Regardless, the global SMB and midsized market for "as-a-service" is currently at an early stage, but the market is likely to snowball. An adoption beachhead is already in place. "Land and expand" is an overused term in today's IT market, but it is an appropriate description of "as-a-service" marketing objectives. IT suppliers that establish initial relationships with leading-edge SMB & midmarket buyers will be poised to expand within these accounts and benefit from longer-term interest from less advanced firms. HPE has already put a stake in the ground. It recently announced the availability of HPE GreenLake packages from as low as $70,000 with storage (HPE Nimble Storage) and compute (HPE ProLiant servers). However, using just an entry point does not tell the whole story. Comparing Dell Technologies with HPE can be misleading since the contract value depends on the equipment, commitment level, and contract term. Some of Dell Technologies' storage and data protection solution with Flex on Demand are available at lower commitment levels through its pre-approved pricing program.

Techaisle expects "as-a-service" adoption to increase because of the wide range of benefits it provides to SMBs and midsized firms. Techaisle research shows that SMBs are increasing their migration to OPEX-based IT acquisition models, making "as-a-service" a natural next step beyond traditional CAPEX-based (or expense-based) purchases. Additionally, flexible contracts allow firms to scale resources with a requirement, enabling them to exert greater control over resources to support organizational digital transformation requirements.

The core of Project Apex is the Dell Technologies Cloud Console, the control layer for multi-cloud deployments and procuring on-premise systems managed by Dell as-a-service. The Cloud Console will connect to the big three public cloud providers and be a single Web interface to compute, storage, and other resources that play very well into the SMB and midmarket needs. For example, 71% of US midmarket firms and 23% of small businesses are currently using multi-cloud. 49% of midmarket firms and 17% of small businesses are using multiple public cloud providers. The cost and complexity of implementation inhibit 36% of SMBs from accelerating their cloud adoption and moving along their digital transformation initiatives. Between 30% and 56% of firms want their IT suppliers to provide a console for usage optimization, seamless visibility across multiple platforms, and self-service portals.

The Cloud Console can be ideal for the SMB and midmarket firms to view the marketplace, transact, deploy workloads, manage multi-cloud resources, and monitor costs.

Why the announcement matters to Dell Technologies partners

Dell Technologies partners represent the full partner ecosystem across multiple tracks from solution providers (historically referred to as channel partners), distributors, Cloud Service Providers, Systems Integrators, and Strategic Outsources. All of its partners will have a role to play with both aaS and DTCC with different use cases on how they acquire Dell technology today and into the future. Cloud's ability to substitute 'pay-as-you-go' OPEX expenditures for 'pay-before-you-start' CAPEX budgets is clear. There is a belief that the cloud is less costly than conventional IT alternatives. These advantages, though, don't accrue automatically to the buyer. Buyers need to be able to frame like-to-like comparisons of cloud vs. conventional options. When is cloud truly the best (economic) answer, and what financing terms and offerings might affect this evaluation? Once they commit to the cloud, buyers need to be able to rationalize various pricing models. Dell Technologies partners can support and accurately compare alternatives to identify services that deliver the best value. Dell Technologies partners can help provide capabilities that can de-risk cloud migration. The Dell Technologies partner program provides benefits and capabilities that all partners can take advantage of and help reduce acquisition variance and risk for their customers. Dell Technologies partners can offer real value to buyers by providing capacity planning and budgeting services that align with the cloud.

Increased incentives matter too. Dell announced an incentive of 20% of the committed contract value on storage and data protection offers and 10% on servers.

Final Techaisle Take

A comparison with HPE GreenLake is inevitable and necessary. Next in line will be Cisco and Lenovo. All of its main competitors, including HPE, Cisco, Lenovo, focus on customer success, experience, and outcomes. But Dell's advantage is to make technology accessible to drive better business outcomes. Instead of being challenged in the market, it is the challenger. Dell has a broader and deeper portfolio.