In laying out the details of their blockbuster first quarter, EMC's CEO and CFO sounded at times more like tour guides rather than information-infrastructure executives as they repeatedly pounded home the message that EMC's "the best guide for customers' journeys to the private cloud."
And in so doing, EMC has shined a very bright light on what I think is the #1 strategic issue for CIOs in 2010: what is your cloud-computing strategy? What are the business problems it will solve, what are the business opportunities it will create, and what is your timetable for delivering those capabilities?
Or, if you're a non-believer, how do you manage the competitive risk bubbling up from the unmistakable reality that so many other companies—probably including at least some of your competitors—are heading for the cloud? Here at Global CIO, we think the cloud should be a an indispensable core element of every CIO's strategy, which is why it took the top spot in Global CIO: The Top 10 CIO Issues For 2010.
With EMC's own Information Infrastructure business plus its 80% ownership stake of virtualization leader VMware, you'd expect CEO Joe Tucci and CFO David Goulden to hammer away at their core themes like virtualization and security and disaster recovery in the earnings call with analysts. And the EMC execs certainly met those expectations as they described how the company's Q1 revenue jumped 23% and outlined why they think growth for the full year will continue at nearly that same pace.
But EMC's leaders reserved their highest levels of enthusiasm for the potential of cloud computing and the desires of global customers to leverage the cloud model to reduce the complexity and cost of their IT operations and liberate more precious IT budget dollars for growth-oriented projects rather than squandering them on internal treadmills.
CIOs can interpret in one of two ways that relentlessly bullish cloud message from EMC—and in a moment I'll offer numerous examples—but I think one of those interpretations is wise and forward-looking while the other is short-sighted and primarily an exercise in rationalization. Here are the choices:
The wise outlook: Tucci and Goulden, while unmistakably looking to position EMC in the most-favorable light in a presentation to analysts, were describing with perfect accuracy what their customers are interested in, what they're buying, and where they're headed. And in each case, that's cloud computing. Maybe all those customers are nuts—but do you really believe that? If you do, I'd suggest that a better place to find the nuts is by looking in the mirror.
The short-sighted outlook: Pull out your list of anti-cloud concerns and repeat again and again: security is a problem, it's fine for Facebook but not for the enterprise, the platforms are poorly defined, it's just a trend, my board won't go for it, and who owns the data. If this is the path you're choosing, I hope you've got a lot of career interests and prospects outside world of IT leadership.
Here are some of cloud-centric comments from EMC CEO Tucci and CFO Goulden, and I'll start with the real money quote from Tucci and follow it with multiple supporting comments from Goulden (and all of these verbatim comments are courtesy of the earnings-call transcript from SeekingAlpha.com):
** "Our first and largest opportunity is help CIOs transform their data centers into private clouds. The attribute of a private clouds that this will give CIOs the ability to truly offer their internal and external customers IT as a service. IT as a service is an IT environment where application workloads are truly policy and service level driven. IT as a service is an IT environment that is far more automated, flexible, and dynamic than today’s data center environment. IT as a service is an IT environment that advanced security, availability, and control to a higher level. IT as a service is an IT environment that will deliver significantly lower costs." – Tucci
** "As this recent survey shows, almost every single CIO spending priority this year is either on technology that puts customers on the path to the private cloud or is a benefit of having a private cloud." -- Goulden
** ". . . we believe there is no company better positioned to guide customers along their journey to their private cloud and there is no doubt that’s exactly where customers are heading." – Goulden
** "All three of these drivers benefitted us in the quarter as EMC is a trusted partner not only for customer’s requirements today but also going forward as they embark on their own journeys to a private cloud." – Goulden
** "Customer interest in cloud computing is really picking up. At EMC our strategy to bridge internal private clouds and external public clouds is spot on." -- Goulden
** "Our partnership with Cisco continues to gain momentum. In Q1 our VCE coalition was up and running. Its focus on helping customers accelerate their move to cloud infrastructures has really struck a cord and interest has been outstanding." -- Goulden
** "Customers are embracing the new security paradigms that are necessary for private cloud infrastructures to proliferate. As you saw in the quarter, EMC, RSA and VMware are working hard together with partners like Intel on approaches to information centric security that will accelerate the adoption of private cloud infrastructures." -- Goulden
** "There is no vendor with a broad and innovative technology solutions set, the depth of experience and a proven track record to provide information infrastructures that can [match our ability to] safely and securely transition customers' data centers at their own pace to private clouds."
There were more such comments—lots more—but I think you get the picture. Yes, it's just one company's view, and yes, EMC sure has a vested interest in seeing lots of CIOs adopt this outlook because that would help lead to many more buoyant earnings announcements for EMC.
But the issue is bigger than EMC, and it's bigger than any one vendor. Coming out of the IT nightmare of late 2008 and almost all of 2009, many CIOs know all too well that their infrastructures simply cannot meet the soaring information demands of 2010 and beyond. And so the question is, what do I do to fix this?
EMC says the answer is simple: cloud computing.
More important, EMC's customers are saying the exact same thing, and EMC's got the best-ever first-quarter results as proof.
Bob Evans is senior VP and director of
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