For the sake of human progress, it’s a good thing that technology keeps improving. People buy the new technology if it gives them more benefit for less money. But for the companies that produce the technology, progress presents problems.
In each generation of new technology, the lead often changes. Blockbuster was the king of renting out VCR tapes through retail stores, but Netflix introduced DVD-by-Mail and Blockbuster went bankrupt. Then Netflix decided to do to itself — what its DVD-by-Mail business had done to Blockbuster introducing online streaming over which it sold original programming
Not all incumbents can pull off the neat trick that Netflix did or reinventing itself to profit from a new wave of technology. My first book, The Technology Leaders, described four traits of organizations like Netflix.
An example of an incumbent that struggles with self-reinvention is EMC. The data storage company saw its stock peak at about $100 in 2000 and still struggles to reach a quarter of that value 13 years later. When a new storage technology gets some market traction, EMC acquires the company and attempts to sell its product to EMC customers.
But EMC creates separate divisions for those acquired companies, gives those divisions sales targets, and sends them out into the field in an effort to bring in enough business to meet those goals. This does not work so well for customers because they end up having to deal with multiple sales teams from EMC all competing with each other to make a sale. Solving customers business problems in the most effective way can take a back seat in the process.
Meanwhile, EMC’s dance with such upstart competitors follows a fairly predictable path. After ignoring an upstart for years assuming it will go away, EMC starts to pay attention if it takes customers and grows fast.
As Enterprise Storage Group’s Steve Duplessie explained, EMC then begins a five-step dance with the upstart, noting, “First EMC acknowledges that the upstart’s product category is relevant; then it announces it will introduce a product in six months “ hoping to slow down the challenger’s momentum; third, EMC releases something terrible; fourth, the upstart keeps growing and within 18 months is big enough to sell its shares in an initial public offering; finally, EMC or one of its big rivals IBM, HP, Dell, or Cisco, acquires the upstart for $2 billion.
This brings me to Waltham, Mass.-based Actifio that sells an appliance to companies who want to save money on storing their corporate data. CEO Ash Ashutosh explained that for every dollar a company invests in Actifio technology, it saves $15 in data storage costs. The result is that Actifio is selling in 22 countries and growing at nearly 300 percent a year said Ashutosh.
In 2009, Actifio introduced the idea of Copy Data Management (CDM) to the business world. As Gartner Group analyst Dave Russell explained, “Companies keep 30 to 40 copies of their business data and managing those different copies is expensive and complicated. The reason they do it is because the data is used for different purposes: backing it to satisfy regulators, letting the business recover from a fire or flood, testing and developing new applications, and analyzing the data to find meaningful business insights. Actifio introduced CDM as “ the idea of keeping one golden copy of the data and making it available to a company without needing to store a separate copy for each use.
After five years of selling the CDM concept, EMC recently began the five-step dance that Mr. Duplessie described. In a November 20 blog post, EMC Chief Operating Officer, David Goulden, announced that EMC would combine its VMAX enterprise storage development team and VNX midrange storage development team as part of a new division called the Enterprise and Midrange Systems Division. [And EMC’s software organization would combine EMC’s VPLEX, RecoverPoint, and Backup & Recovery Systems teams into a new Data Protection & Availability Division.
Actifio believes that EMC’s reorganization is an acknowledgement of the importance of CDM. As Ashutosh said, “I congratulate EMC for recognizing the importance of CDM. But EMC’s ˜Copy Cat strategy is more about protecting EMC market share than it is about protecting customer data. The big storage vendors created the Copy Data problem and they benefit and profit the most from it. It is naive to think that that EMC and others are truly invested in solving the exploding data problem.”
EMC begs to differ. Rob Emsley, Senior Director, Marketing at EMC said, “With the formation of EMC’s Data Protection and Availability Division, we’ll be addressing the new problems customers face as they transform their IT environments, and taking an even more holistic approach to delivery of an all-encompassing data protection strategy. Enterprises will have to choose who they entrust their data and data protection to. We believe we are in a unique position to deliver what they need.”
Moreover, Actifio echoes Duplessie’s belief that EMC is initiating the five-step dance. According to Ashutosh, “It will take EMC at least six to nine months to launch a copy data product. While it is great to have EMC on board with the copy data management vision Actifio launched in 2009, four years and 22 patents later, hundreds of customers in 22 countries are already taking advantage of the technology they now see on the horizon.”
While CDM might lead customers to buy fewer EMC boxes one organization that buys from both EMC and Actifio sees both benefiting. According to Boston University Medical School Assistant Professor of Medicine and Director of Technology, John Meyers, “When I took over BU Medical School’s computer system, I wanted to replace it with the best of breed in each product category. That meant taking a chance on a startup. Meyers continued. In 2010, Actifio was a 20-person startup but it offered a solution to a problem that I had recognized but could not solve so I took a chance. We are also a big EMC customer and thanks to Actifio’s product, we are able to free up EMC disk storage for higher purposes than making extra copies of our data. EMC’s reorganization will get me closer to dealing with one division to buy all its products. And I think EMC has all the puzzle pieces to do CDM.”
EMC is clearly going to take its time when it comes to CDM. “There are no changes to any products, product road maps or the way we take our products to market or how we support our customers. But we believe that bringing these teams together will make our portfolio and our business even stronger,” wrote Goulden.