VCE Stars in EMC Financial Results

Eleven Key Challenges for CEOs in 2014

I’m going through some of the financial results this week and what really struck me is how well VCE is doing. In the latest EMC financial results, VCE appears to be a real star, moving beyond the trial stages and overcoming what was a perception that customers couldn’t build VCE solutions easily with components. This unique firm has proven, as most of EMC’s acquisitions and partnerships are currently doing, to be an ever more valuable asset.

Let’s revisit VCE and talk about why it is doing so well and what continues to make this unique partnership so powerful.

Partnership vs. Merger

Joe Tucci is kind of a wizard when it comes to creative organizational structures. He recognized early on that the problems of huge conglomerated companies tended to overcome the advantages of control such structures provide. This is because complex companies, as they push out responsibility and power to the working groups, create excessive competition between them, and deeply penetrated practices like forced ranking combine with that to assure that most complex firms are constantly tearing themselves apart.

However, pure partnerships are often not worth the ink on the news release that announces them. There is no deep commitment. Invariably, neither party puts in the effort needed to assure success over an extended period. It is kind of like dating someone for convenience; the relationship only lasts while it is still convenient. Tucci found a way to create a structure that had the advantages of a partnership in that the parties would be mostly focused on competitors and still be competitive in core markets. It also had the advantages of a full merger in that there would be centralized management and control, assuring that the partnership could operate as a functional unit. That was VCE, and it is only one of the amazing business structures he has invented during his term as CEO of EMC.

EMC gains the benefits of a conglomerate without the risks.

VCE

VCE has clearly become one of Tucci’s stars. The reason is that the firm provides a large-scale computing appliance that can be implemented in days rather than the more typical year or more. The biggest problem with systems in this large class is that often, by the time they are in production, they are also obsolete. In effect, the day the system is powered on is long after it has been replaced in the market by one or two versions that are vastly improved.

By having a very fast time to implementation, VCE customers get the benefits of the advances they pay for shortly after they pay for them, not months later. And because the system is fully tested as a system, they get support help from VCE that hits the ground running and doesn’t have to spend 70 percent of the engagement figuring out the unique aspects of a one-off implementation.

This not only improves time to use, but uptime and time to repair, and standardizes the skills needed to staff the implementation, allowing trained employees to more easily move between like systems because they are truly like each other.

Wrapping Up: Joe Tucci’s Lesson

The real lesson in VCE, VMware Pivotal and Tucci’s other creative endeavors is that just doing whatever everyone else does is not only no fun, it is suboptimal. There are massive numbers of options on how to build a company, how to do partnerships, and how to best take care of customers. If you start with the problem to be solved and keep the customer’s needs, their real needs, firmly in your sights (EMC does the best work on analyzing customer needs and loyalty), you can create amazing corporate entities that can be like no other and are very successful. We often talk about thinking out of the box; I don’t think Tucci can spell “box,” and that for EMC, VCE and EMC’s customers has proven to be incredibly valuable.