User pain may be eased by EMC realignment

EMC plans 1,250 layoffs that include management

Users frustrated by EMC Corp.'s  somewhat disjointed sales and service process may get relief in a new project aimed at streamlining more than a score of businesses the storage giant has acquired in recent years.

EMC said during its earnings conference call last week that it was going to take a breather from its buying spree -- after 21 acquisitions in three years -- to better integrate acquired companies and streamline its business processes.

One user said he hoped the reorganization will help prevent situations like the one that has left him with 15TB of storage sitting on the floor of his data center for six weeks, waiting for someone from EMC to come install it. "I've dropped $100,000 on SAN storage, and it's just sitting around," said the user, who asked not to be named. The user also wondered to what degree staff from the acquired companies would be allowed into the executive team to help make strategic decisions.

John Hegner, vice president of technology services at Liberty Medical Supply Inc. in Port Saint Lucie, Fla., said the EMC purchasing process is currently rather cumbersome, involving multiple people who add no value and featuring extensive design documentation requirements that are usually unnecessary and annoying. "Any direction toward streamlining and reducing overhead would be a good idea," he said.

Because EMC’s first goal in acquiring a new company is “don’t break anything,” EMC tends to be conservative when integrating business processes such as billing operations, according to spokesman Greg Eden. The result, however, is that sometimes users need to submit multiple purchase orders to buy products from the different groups, he said. Eden would not specify how many different billing programs and other processes the company was using.

Eden admitted that EMC’s users are asking the company to simplify its approach in serving them. The company is beginning to implement an IT project it calls Synergy across all divisions to help retool customer-service-oriented business processes, such as sales transactions and service agreements, Eden said.

EMC also expects to lay off about 1,250 employees as it consolidates and streamlines its many lines of business. VMware will not be included in that reorganization, a spokesman said.

While the Hopkinton, Mass-based company wasn't specific about the areas in which the business process streamlining will take place, Chief Financial Officer David Goulden said during the earnings call that the reorganization will focus on management, non-customer-facing positions, such as those in human resources and finance, and non-core research and development positions.

Part of the reason for the company’s reticence in revealing details is that EMC employees were hearing about the layoffs for the first time during the conference call, said CEO Joe Tucci, who added that the company was not likely to make any additional major acquisitions for a while.

EMC also plans to announce more products like its information life-cycle management software, Infoscape, which is made up of components acquired through purchases of several different companies, Tucci said. While Tucci said one future area of focus would be security, and that initiative will be based on technologies acquired in the company’s purchases of RSA Data Security Inc. and Network Intelligence Corp.

Mike Fisch, an analyst at The Clipper Group Inc. in Wellesley, Mass., said the layoffs, which amount to about 4% of the company's 31,000 employees, represent an organizational fine-tuning as opposed to something bigger.

Melissa Webster, an analyst at IDC in Framingham, Mass., agreed that layoffs are a predictable part of digesting acquisition and noted that EMC has almost doubled in size – from 17,500 employees to 31,000 – in the past three years, mostly as a result of its acquisitions. Integrating the acquisitions more completely should improve EMC’s ability to serve its users better so they don’t feel like they’re dealing with several companies, she said.

Users from another EMC customer company that had been using VMware, eRoom and Documentum products before those companies were acquired by EMC, said they hope EMC will consider more bundling of products under a single license in order to reduce the total cost of ownership. The users, who asked not to be named, said bundling products -- instead of charging the premium prices that new customers have to pay -- would make it more attractive for existing customers to buy other EMC products.

Lev Gonick, CIO at Case Western Reserve University in Cleveland, said he hasn't run into as many problems as some users have reported, but he credited his EMC district sales manager with that. Recently the university purchased an EMC Symmetrix DMX storage array, Networker software and Documentum software, and the purchase process started out with three pitches from three sales teams. "We made it clear to the district manager that it had to be one PO and it had to be simple, and he made it happen," said Gonick.

Scott Saunders, director of MIS at Ion Media Networks Inc., a broadcast television network based in West Palm Beach, Fla., said that although his organization uses EMC storage products, the hardware comes from Dell Inc. and the support is from Unisys Corp. He said he hopes that EMC's streamlining will help improve the company's record-keeping, and that he would like to be able to have direct contact with the company again so he can have access to EMC's full breadth of products.

Copyright © 2006 IDG Communications, Inc.

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