Dell promotes Salesforce.com, eager for a taste of consulting cash

Posted Oct 12th 2009 9:00AM by Tom Johansmeyer
Filed under: Dell (DELL), International Business Machines (IBM)

Salesforce.com (NYSE: CRM) has a new champion: Dell (NASDAQ: DELL). The PC manufacturer is promoting the online sales force-enablement platform as a way to gain access to the hefty sums available in the technology services business. The deal would give Salesforce.com access to Dell's clients in the small and medium-sized business categories. Dell would sell Salesforce.com products and provide consulting services to help clients integrate the solution with their other enterprise applications. The dollars and cents of this union weren't disclosed.

Dell sees the margins of the services business and wants a piece of the action, particularly since the PC sector is low margin. Also, sales have been hit pretty hard as a result of the financial crisis. With PCs accounting for 60% of Dell's top-line, a bit of diversity isn't a bad idea. Currently, services account for only around 10% of Dell's sales.

The sales management sector seems like a pretty good place to be. It totals $9 billion a year in sales and is one of the fastest growing sectors in the technology industry, according to research firm Gartner. This must have made Dell's eyes widen. And, the web-based sales management software space is expected to see sales double from $1.9 billion in 2008 to $4 billion in 2013.

Big and growing -- these are two good signs that it's worth entering a particular market.

Dell has 10 million customers around the world in the small and medium-sized business category, which gives it a hell of a pool from which to draw potential Salesforce.com customers.

The deal with Salesforce.com follows the announced acquisition of technology services company Perot Systems (NYSE: PER) for $3.9 billion. This overall strategy to move into the consulting space is expected to help Dell compete with giants Hewlett-Packard (NYSE: HPQ) and IBM (NYSE: IBM).

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