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2/25/2005
07:40 AM
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EMC Wants Your Data

Information-life-cycle management is at the heart of the powerhouse storage vendor's new strategy. Now comes the hard part: keeping buyers satisfied.

The end of the old EMC Corp.--the one clinging to its core business of providing proprietary, large-scale, and costly storage systems--might not have happened if Joe Tucci hadn't been willing to eat his own children. In September, CEO Tucci predicted that 2004 would be the first year that software and services would account for more than half the leading storage vendor's revenue. He was right: Software and services last year made up 53% of the company's $8.2 billion in revenue, up from 46% the year before, while hardware and systems sales made up 47%, down from 54% the previous year.


"Transformation is never done," EMC CEO Tucci says.

"Transformation is never done," EMC CEO Tucci says.

Photo by Zack Seckler/Bloomberg News
"In 2002, we realized that no company ever became great just saving itself," Tucci says. And thus began a rejuvenation strategy that hinged on both record research-and-development investments in software--nearly 15% of its $5.4 billion revenue in 2002--and a $4.3 billion buying spree of 25 assets and companies, including content-management vendor Documentum, backup-and-recovery provider Legato Systems, and virtualization specialist VMware.

But in many ways, the work of leveraging these investments is just beginning. "Transformation is never done, because customers always want more, and the competition just gets better," Tucci says. "The moment you think you're done, you are done."

The plan ahead for EMC revolves around building out its information-life-cycle-management strategy, which involves automatically managing documents across storage tiers from creation all the way to deletion. That's critical in an era when companies must track files and unstructured data in order to satisfy regulatory-compliance mandates or quickly meet government demands for information. The Documentum software provides the platform for managing those files, Legato offers the hierarchical storage-management framework, and VMware could play a part by helping companies get more efficiencies out of existing servers. Key to the strategy is that customers can have access to all these capabilities, regardless of what vendor's storage hardware they use.

Customers using such offerings will generally require services to get the most value from them, Tucci says. "It's like M&M's --you don't go out and buy only M's," he says. "Our services will be totally focused around ILM."

Information-life-cycle-management services introduced in the last year range from analysis and design to ongoing storage management. Customers' ILM strategies, EMC says, must be business-centric, tied closely to key business processes, applications, and initiatives, and must provide an integrated view into all information assets. So EMC's services identify business service-level requirements, develop a service catalog and supporting tiered-storage architecture, and align applications to storage tiers for cost optimization. Additional services include developing policies to manage and automate the movement of data to meet business requirements. For instance, EMC ILM Acceleration Services helps organizations define storage tiers and data policies, align applications, and improve their storage operations. The result is 20% to 40% cost savings within 12 months, along with higher service levels, EMC says.

DeWalt heads up EMC's growing software group.

DeWalt heads up EMC's growing software group.
"We want to own information-infrastructure protection, versioning, and collaborating," says Dave DeWalt, the former Documentum CEO who's now executive VP of EMC's 4,000-person software group. "We'll help customers manage the storage around the information objects, and we'll help customers with compliance." The software group's revenue was $410 million in the fourth quarter of 2004, up 23% on a year-over-year basis, when all software acquisitions for both years are included. The group is responsible for product lines such as EMC ControlCenter for managing EMC and non-EMC storage environments, as well as software-license and service revenue from its Legato and Documentum products, among others.

The new technologies and services EMC has added make it clear the vendor is laying the foundation to meet the demands of next-generation data centers, which "will be about utility computing, policy and service-level management, and workflow," says Stephanie Balaouras, an analyst at the Yankee Group. "This new EMC is doing a good job bundling systems, software, and services" to meet those requirements.

"EMC has evolved into a total solution provider," concurs Ed Smart, VP of systems support at MasterCard International Inc. A customer of EMC storage hardware for six years, MasterCard wants to develop an ILM strategy to deal with, among other things, a flood of E-mail that takes up 20% of total physical disk space across its 450-terabyte architecture. As part of its nascent strategy, MasterCard has switched from tape storage for aging documents to low-cost disk storage from EMC, saving $66,400 annually.

But it's the other things that EMC now brings to the table that really get Smart's attention. MasterCard didn't seriously consider Legato as part of its strategy until EMC's purchase of the vendor, he says. A lot of vendors talk about data management, but EMC is one of the few to have the technology and foresight to provide it, he says. EMC can give MasterCard the information-life-cycle-management tools it needs to help deal with regulatory and other compliance requirements, Smart says.

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