I’m wrapping up at EMC World today and I’ve enjoyed a variety of talks and one-on-one meetings. What hits me as I ramp out of the show is how many impressive and unique best practices are showcased at this event this year. I can’t recall another event or another company that has showcased this amount of good work at one event as long as I’ve been covering tech, and I’ve been covering tech since the mid-90s.
From the Tucci keynote to the way they are addressing emerging market opportunities, doing acquisitions and partnerships, EMC World is a standing example of how to successfully think out of box. This “out-of-box” thinking is expected but becoming rare in consumer companies like Apple, and almost unheard of in the risk intolerant world of the enterprise.
Let me walk you through some of the highlights.
One of the best keynotes I’ve ever watched was the one that Bill Gates did at the launch of Windows 95. What made it great was how he recognized the people who made the product possible and often it seems CEOs forget that they don’t do it all themselves. Joe Tucci stands out as one of the very few CEOs who seem to really care about his people and he went out of his way to share credit with them during his keynote.
But, as I mentioned earlier, this was only the beginning of a set of best practices where he mixed third-party content to validate his points (IDC in this case), created a clear flow for his talk, and tied his company together so people understood how the different elements work. He avoided the silo approach that most complex companies use to make sense of their companies -- silos, pillars or any other hard separation between company components don’t showcase the synergy needed to make an organization make sense, and to organizational analysts imply that the parts not only don’t work together but they aren’t intended to, often driving moves to break the company apart. Tucci, while not the most practiced of speakers, typically is one of the most watched because he takes the time to connect with his audience and that is actually very rare.
Gartner Group I know disagrees that VCE is a powerful entity. They argue that strategic partnerships don’t work long term and in that they are generally right. What they don’t seem to get is that VCE is a company, not a partnership, and companies are wrapped with contracts that make any premature collapse excessively expensive.
There were two other examples of this approach done between IBM and Apple in the 90’s. They did fail but only because the firms failed to generate revenue or profit and both IBM and Apple stayed on until they mutually agreed the firms weren’t making progress. Taligent and Kaleida (one actually continued on inside IBM) showcased that these arrangements last as long as the related companies remain viable and currently VCE is tracking to be at $1B in revenue.
In addition, while VCE teams were being surprised last year that initial buyers were doubling their orders, reports this year are that buyers are increasing their orders by 6x largely due to the massive reduction in deployment, maintenance cost, and the massive increase in reliability and uptime. I think the connection to Taligent and Kaleida is prophetic because Vblocks are an IBM-class solution, which is also an appliance, kind of like a huge iPod. It appears even at the high end of the enterprise, folks like a plug-and-play solution. Any company can fall apart and fail, but as long as VCE is massively increasing revenue, currently without any real marketing support I might add, the likelihood it will fail is lower than some of the other companies in its space with more questionable financial results.
This is my nice way of saying Gartner, in this instance, is full of crap.
Syncplicity was acquired as an enterprise-class solution to services like Dropbox. Currently, the acquisition best practice king in the market is Dell, having taken IBM’s head of M&A and made him its own after he developed a ground-breaking process that didn’t break the acquisition. The more traditional way of doing acquisitions is to fully merge them into the company and we saw the likely result of this process when HP followed this process with Palm. Palm died an ugly, expensive and embarrassing death that contributed to the firing of HP’s then latest CEO Leo Apotheker (which was kind of interesting since it really wasn’t his fault -- I still think it was kind of a setup).
With Syncplicity, EMC has left the company separate, providing some executive support, which is required when you do need to integrate portions of the company’s line with the parent. In Syncplicity’s case, the solution needed to cover EMC’s own storage solution so it could be offered internally to employees through IT, not just as a credit card Dropbox or SugarSync-like offering. This minimal impact on Syncplicity has allowed it to retain most of the founders and allowed the company to continue to offer services as its offerings were advanced into EMC’s line.
I should add that EMC isn’t the only company demonstrating a unique and successful acquisition process. I met with CSC’s cloud team and they were bought pre-VC funding as a group and then fully funded by CSC as an independent subsidiary. As a result, they have been growing at better than 100 percent a year and ramped to market far faster than they would have had they just gotten funded by a VC and didn’t get enterprise-level support from a company like CSC.
CSC is an interesting case in how to do a turnaround well with a CEO out of IBM who is actually following Steve Jobs’ script more closely than Louis Gerstner’s, with one exception: marketing. I’ll cover this in depth at some future time, but if you want to see a turnaround done right, check out close EMC partner CSC.
This is another unique construct and showcases what may be an alternative to the approach Dell is taking by attempting to go private. Pivotal is designed to address what EMC is calling the 3rd age of computing -- one based on highly mobile devices increasingly needing very different backend resources. It is very difficult for a powerful firm during one age of the tech market to continue to lead in the following age; they are significantly hampered by typically unwillingness to change and, as a result, are generally passed by a startup, which doesn’t have this limitation. Pivotal led by Paul Maritz is focused on this next age and got significant funding from GE, a firm that has been struggling with changes in its own market for several decades. Pivotal will allow EMC to address this new opportunity with a minimum of drag from internal organizations too focused on existing markets.
Quality and Customer Loyalty
EMC continues as the company with the strongest loyalty program in its industry and the only company that is aggressively blending quality and development roadmaps into this process, and in effect getting substantial help from sales partners and customers with regard to prioritizing fixes and new offerings. It does this through a massive data analytics project that takes information from quality programs, from customers, from partners, and from their field to create a blended analytical view of their world that no other company in tech, that I’m aware of, has. This allows the company to better optimize its limited resources, address customer problems more quickly, and come out with products that better match the most critical of customer needs. It is the best example of analytics applied to customer retention on the planet and EMC has begun to capture detailed information on its competitors’ customers and know which competitor is losing loyalty (two big ones are at the moment) so it can target its sales force at opportunities that will provide the greatest return.
I had one concern with this effort, however, as EMC recently lost Jim Bampos, arguably the most qualified customer loyalty executive in the industry and, I expect, he is in high demand by firms that want to create a similar program.
Maybe it’s just me, but I think any company that puts this much effort into keeping its customers happy should be on everyone’s shortlist of preferred vendors.
Wrapping Up: EMC Squared
EMC’s logo is based on the old calculation for energy, which is mass times velocity squared. The level of organizational innovation being showcased at EMC World suggests that EMC, organizationally, may be the best positioned of the existing enterprise companies to address the new world of mobile device and that it has an organizational toolkit unmatched in segment.
EMC figured out how to apply the iPod model to the large enterprise and even major partners like CSC are providing impressive examples of organizational excellence, suggesting the combined synergy really could result in an EMC whose future size and industry power could be squared. Now that in anyone’s book is impressive.