Dell Inc.'s acquisition of Perot Systems opens a broader range of services to take on health, cloud computing, outsourcing and data centers in the government market.
Not known as an acquirer, Dell Inc. made a big splash in the market with the largest acquisition in its history when it picked up Perot Systems.
In a deal worth $3.9 billion, Dell bought Perot which will let the company more aggressively pursue opportunities in health information technology, cloud computing, IT outsourcing and data center virtualization and optimization, said Frank Muehleman, vice president and general manager of Dell’s North American Public Business Group.
Now sometimes referred to as Dell Perot Systems or still simply as Dell, the company enjoyed particularly strong success in the federal market in 2009, leapfrogging four slots from No. 15 to No. 11 on the 2010 Top 100 list, as it grew its prime contracting revenue from $1.9 billion to $2.7 billion in one year.
Muehleman said the addition of Perot Systems’ strong capabilities in applications, technology, infrastructure, business processes and consulting will complement Dell’s ability to deliver integrated IT solutions that help agencies focus on their mission and make the most cost-effective use of limited IT budgets.
The companies share synergies that could enable them to be a real powerhouse, particularly in the burgeoning health IT market, said Ray Bjorklund, senior vice president and chief knowledge officer of FedSources. “You take a Dell and Perot combination, where they’re leveraging domain expertise and an ability to deliver sophisticated services along with all the IT infrastructure, and that could be a pretty strong play in a niche market like health IT,” he said.
However, the new Dell will need to work to prove that its solutions will be platform-agnostic and use best-of-breed components, not just Dell hardware. It’s a message that HP, Xerox and IBM — all of which have acquired major IT services and solutions firms — also must prove in the public sector.
“That’s very, very important because if you’re going to expand a services business to hopefully bring on more revenue, you can’t have that services business perceived as being prejudicial to one platform versus another,” Bjorklund said.
Muehleman noted that Dell excelled in 2009 by recognizing and addressing the changing needs of its federal clients. He cited the push of the company’s federal team last year into new areas by providing digital forensics and multilevel security solutions to public-sector clients.
“The need to balance innovation with the requirement of optimizing IT expenditures, cutting costs and achieving energy savings remains top of mind for our customers,” Muehleman said, noting that Dell is also supporting agencies as they adapt to a more virtual and mobile computing environment.
Moving into 2010, Dell is focused on providing thought leadership in cybersecurity, data center efficiency, rugged solutions and health care information exchanges.
In a key win this year, Dell was awarded a $120 million outsourcing contract to process citizenship and immigration applications for the Homeland Security Department. Dell was also selected to serve as the Army Corps of Engineers’ Knowledge Online Service Desk provider and had its contract with the Rock Island Arsenal renewed for another five years after successfully accomplishing several IT consolidation and migration initiatives.
In another significant development, Muehleman said, Dell announced an alliance earlier this year with Integrity Global Security to provide a secure, consolidated client solution through which “government employees can access data of varying security levels on a single Dell system."
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