Dell ‘very bullish’ on buying more companies to boost fed sales

Company will continue to buy IT firms to grow sector

Despite tight federal budgets during the next several years, Dell Computer Corp. will continue to acquire companies with the goal of further deepening its footprint as a government services provider.

“We think this has been a really good approach for Dell,” said Paul Bell, president of Dell’s Global Public and Large Enterprise sector. “Our integration of our very biggest platform, Perot Systems, is going incredibly well compared to a lot of people’s experience in that [government provider] space.”

Bell characterized Dell as “still in the early stages” of M&A activity, but he said the company is gaining confidence that this is a really good use of capital.

Having become an enthusiastic acquirer of technology companies, many of them former channel partners, Dell’s marketing strategy will be to serve its federal clients with the “unified face” of one company, Bell said.

“That won’t change even if we add 25 more companies, which is likely in the coming years,” he said, but he declined to go into specifics about future M&A activity.

Among Dell’s most recent acquisitions, Bell cited KACE, SecureWorks and Compellent Technologies.

“And we now have about $15 billion of cash after having made these acquisitions. So as a strategic direction, we’re very bullish about it,” Bell told a group of reporters April 28.

Earlier this month, the computer giant announced that it will invest $1 billion in new technology solutions and services including cloud-based delivery options that include data center consolidation.

He said Dell’s Data Center Solutions started five years ago more or less as a side business serving massive data centers such as Yahoo, Microsoft and others.

After developing specific devises to meet the needs of those servers, Dell is ready to leverage that expertise to meet the government’s need for data center consolidation, he said.

“The whole wave of data center consolidation that’s going on in the federal government that is a massively positive opportunity isn’t just about scaling cost. It’s also that the security practices of a lot of these data centers were not optimized. If you move them into a world-class, high-scale data center you can get a lot of benefits,” he added.

“All of these strategies need to be brought together now around [Federal CIO Vivek Kundra’s] cloud initiative,” he said.

Speaking of the federal budget, Bell said, “We are seeing, and saw last year, much higher rates of growth in corporate [business] and less in public. It was a reverse of the prior year. But when you come out of a cycle like this, they rebalance themselves,” he said.

Nevertheless, he added, “It’s probably a good year and a half to two years out before we start to get back to some kind of steady state on the public side. But, yes, we expected this year that the federal budgets would be very tight.”

Dell, of Round Rock, Texas, ranks No. 11 on Washington Technology’s 2010 Top 100 list of the largest federal government contractors.

Reader Comments

Fri, Apr 29, 2011 evan scott Washingon,DC

I find your article about Dell buying more IT Services firm to be facinating.It would be interesting to know how well Dell thinks the acquisition of Perot has gone?There have been very few companies who can turn a product legacy company into one that is viewed as a services provider.Unless Dell leaves their acquisitions alone it is clear that the motivation is always to drive hardware sales.As the owner of an executive search firm here in DC i saw the toll the acquisition of Perot took on senior management...They are no longer there to the benefit of other services focised client's around the beltway...

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