This week, I’m at the EMC annual analyst meeting. One of the things that struck me during the opening talk was the impression that CIOs were now getting a look at their 2009 budgets and saying, “Oh my God, I can’t run my organization on this.” I think that is probably an accurate statement; the IT organizations I’m seeing are having minor coronaries as they see a combination of decreasing funding and increasing requirements for IT to do more to save the operating units money.

It's moments like this that make me very happy I’m not a CIO. It's also times like this that force massive industry changes. With large multi-nationals failing, being acquired, going into bankruptcy, and massively downsizing, the fear of death is rampant across most industries, even the oil industry, which has seen a dramatic decline in oil prices and has received a huge wake-up call. At this event, EMC is repositioning itself to address the need to both increase IT agility and dramatically reduce IT cost.

Before I get into some of what EMC is doing to address these challenges, I want to mention that at the event, Steve Bardige, the head of Analyst Relations for EMC, received an award for 15 years of exemplary service. That’s a lot of years to demonstrate excellence and I wanted to take a moment to congratulate Steve.

Customer Loyalty

One of the interesting changes is EMC’s massive investment to change from a vendor to a strategic business partner. Vendors sell products, business partners work broadly with their customers to integrate their offerings, and strategic business partners are vendors that are so integrated and trusted that they can’t be displaced. IBM, prior to the '90s, was the best example of this, as it was almost impossible back then to displace IBM. EMC is focusing on creating that level of loyalty.

Part of this is a shift from measuring customer satisfaction, which generally is a self-serving set of surveys that are designed to achieve the highest overall score, to a focus on assuring the customer experience. For instance, the company measures the stability and competence of its sales people as part of what it tracks, which forces training and assures sales and relationship stability.

This has driven the company to focus on creating best practices kits dealing with EMC and connected third-party products, a massive focus on interoperability, and a laser-like focus on improving ease of doing business with the company. A vendor sells products, but a strategic business partner is trusted to provide assistance that cuts across the customer’s business and includes third-party offerings.

EMC appears to have a Net Promoter (NPS) score that is up sharply from the last time I met with the company on this. As a result, EMC reports its customers are less likely to focus on product features or price and more likely to be aware of the importance of the relationship.

Two of the changes in EMC are assured single points of contact that almost never change and the ability to go back seven years and demonstrate the actual benefits a customer has achieved by using EMC offerings. This last addresses the industry problem of promised benefits that no one is ever able to prove, making subsequent sales difficult and seriously damaging vendor trust. This also shifted ease of doing business to the number-one priority for the company.

Security

RSA is arguably the most powerful technology security firm in the market, and EMC owns it. It forms one of the primary lines of defense against identity theft and cyber attacks on financial institutions. Innovation in the security space often happens more on the offense than the defense side in the security segment, and RSA is one of the few firms working to counter this trend.

As we entered this decade, security requirements expanded beyond theft to governance, risk management and compliance issues as regulation after regulation was put into effect to protect consumer, customer and company information. This doesn’t mean security has been sidelined; RCA pointed out that one Trojan alone, the Sinowal Trojan, now has a related database of 500,000 compromised credentials. It has compromised over 2,000 band domains, and has been growing since 2006 but spiked massively in August of this year. This Trojan has been collecting passwords for banking systems, corporate systems, even military and government systems.

Earlier this month, RSA and Microsoft announced a joint project to integrate RSA’s data classification component from the RSA Data Loss prevention suite into the Windows Server 2008 infrastructure. This was a major coup for RSA and ties it much more closely to Microsoft going forward. For example, its security solution for Microsoft’s SharePoint offering is arguably the most comprehensive in the segment.

The interesting part of all of this is that RSA is vastly more than user authentication; it is a key portion of how companies, particularly in the financial industry, protect critical records and comply with critical regulations. This is important because the economic collapse is expected to greatly increase the number of unemployed, trained IT people. A percentage of them will, driven by declining personal finances, drift to the dark side and into crime. RSA is one of the strongest organizations positioned to offset this rapidly increasing related risk.

It's also interesting that RSA’s technology, as you might expect, is being driven across EMC’s offerings and provides a level of security that is difficult for anyone else to match.

EMC ATMOS: Targeting the Cloud

EMC has an interesting definition of the cloud: “The promise of the Cloud is to enable frictionless economy by lowering the barrier for entry and reducing the penalty for failure. Cloud promotes an unleashing of ideas enabling business to aggressively innovate.” Mike Feinberg, who presented this section, used Animoto as an example of a cloud-based service. Animoto is a kind of PowerPoint for this generation that ramped from nothing to 25,000 new daily users in a matter of days and then backed down to a more reasonable number without crashing the company or bankrupting it. That’s the advantage of cloud computing -- flexibility with very small risk.

At the core of all of this is a vision of massive systems where people sell excess capacity to others dynamically. ATMOS is a policy-based cloud platform (they asked for a simpler way to say “A policy-based information management solution for building cloud storage infrastructure”), and EMC is one of a very small number of companies that could even build something of this scale.

Wrapping Up

From customer satisfaction to addressing the massive increasing need for ever more capable IT security to embracing and powering the cloud, EMC is changing itself to address a rapidly changing environment. I’m left with the impression that EMC understands what it needs to do to survive, and maybe even flourish, in the coming year, and that is probably all we can ask from any company at the moment. It actually seems to have a plan for dealing with the “OMG budget,” and given that we all are likely to get at least one of these, that has to be a good thing.