Computerworld - HONG KONG -- Veritas Software Corp. CEO Gary Bloom discusses the impact of Sarbanes Oxley on the storage industry, information life-cycle management and industry standards in this interview with Computerworld Hong Kong.
Despite an improving economy and increasing IT budget, Veritas, like many software companies, had a weak second quarter. Why? There are several reasons, and one is the expectation being too high. As a company, we are on a revenue growth plan -- as we stated earlier this year -- of 14%. At this moment, we are well ahead of that. In fact, for this quarter, we were up 19%, and we are actually up 23% from the first half of last year.
The business condition that created the difficulty was very much isolated in one segment -- the U.S. enterprise software marketplace. IT spending has not increased as much as some people believe. We expected IT to have a measured recovery, meaning it's not skyrocketing like during the [dot-com] bubble, and it's not depressing as we saw in the downturn. It's more an average speed of recovery, but the expectations have gone beyond that.
In our view, Sarbanes-Oxley compliance is diverting management's attention and spending. A number of our major accounts must certify their process and IT systems by the end of this year, making it difficult for them to implement any new software.
But with the need for data retrieval in the Sarbanes-Oxley Act, there should be higher demand for storage management software. Are you seeing a loss of momentum in this sector? Sarbanes-Oxley represents an opportunity for our business, and I continue to believe that. It's going to drive demand for storage and storage software in the long term.
I think that the unexpected short-term impact was that companies complying with Sarbanes-Oxley have stopped buying new software. It's like going back to the Y2k era -- somewhere around six to nine months before Y2k, companies stopped changing their systems so they could ensure continuity when the clock ticked over. This is really no different.
This timeliness issue has two phases. Companies don't want to make changes because, first, the system may not pass compliance, and secondly, they will spend lots of money documenting new software implementation. That's why we have not seen Sarbanes-Oxley lead new demand for software.
Meanwhile, EMC had done well in the second quarter and met market expectations. Do you think that's a result of a successful transition to a software company? We don't believe there has been any material shift in our
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