One year ago today, Dell launched a new phase in the company's history with the creation of Dell Services combining the capabilities of Perot Systems and Dell. This combination broadened Dell's portfolio of services capabilities and offerings, deepened domain knowledge in several key industries globally, and led to new opportunities for Dell to deliver total solutions that help our customers succeed. 

Prior to becoming part of Dell, Perot Systems had annual revenue of approximately $2.6 billion, generated primarily from business process outsourcing, consulting, applications development and management, and IT infrastructure outsourcing.  Dell's pre-existing services-related revenue of $5.1 billion came primarily from "close-to-the-box" areas of hardware support, managed services and IT consulting.  

The integration of the two companies is going well.  As we combined the two organizations, we committed to delivering $300 million in cost synergies and now expect to exceed our year-one target of $100 million in savings.  In the first quarter of FY11, Dell Services implemented a new business structure that aligns with Dell's vertical BU organizations.  This organizational change optimizes collaboration and engagement across Dell and positions Dell Services for growth.  In Q2, we launched a program to migrate approximately 23,000 legacy Perot Systems users to a common network and set of applications.  We continue to streamline infrastructure, and other support processes and functions, all of which continues to track to our integration plan and timeline.  

Today, the new Dell Services represents:

  • 41,000 team members in approximately 90 countries
  • 60 tech support centers worldwide and seven global command centers
  • IT management for 2.5 million customer seats and 36 customer data centers
  • Technical support for 14 million client systems
  • More than 10,000 Software-as-a-Service (SaaS) customers
  • Approximately 65 million claims processed annually on behalf of healthcare payers
  • Approximately 3 million life insurance policies administered for insurance customers

The new Dell Services is one of only four integrated hardware and service providers in the world, and yet nimble enough to embrace change in the industry.  We see the industry moving to shorter contract lengths and smaller project engagements with customers demanding more flexibility and faster ROI from their technology providers.  These trends bode well for Dell Services, and customers have responded enthusiastically to the combination and Dell's greatly enhanced industry domain knowledge and deep technology expertise. 

Among numerous significant developments:

  • For second quarter FY11, Dell Services generated $1.9 billion in revenue with approximately 70% of this revenue coming from recurring sources (combined deferred revenue and contracted revenue balance of $13.9 billion).
  • In August, Dell Services signed a five-year deal with BNSF Railway to provide end-user computing support, fully-integrated service desk support, field services, and managed print services.
  • Last July, Dell and Microsoft announced a strategic partnership in which Dell intends to use the Windows Azure platform appliance as a part of our Dell Services Cloud to develop next-generation cloud services.
  • In April, Gartner ranked Dell as the No. 1 healthcare information technology services provider in the world and No.2 for computer hardware support in the Education market.

Across all of Dell, our teams are working hard to expand our enterprise solutions and services business by delivering open, capable and affordable solutions that help customers succeed.  The creation of Dell Services was a vital element towards that goal. 

Look for more from us regarding Dell Services on our earnings call.  As always, we appreciate your comments.