EMC CEO defends federated business model, debunks storage myths

"Any choice a customer makes, we have an opportunity someplace in the federation," Joe Tucci says.

Joe Tucci, CEO of BMC

There's EMC and then there's EMC.

Confused? Well, there's EMC, the vaunted storage and converged infrastructure company. But then there's EMC, the capstone of a corporate federation -- including VMware and big-data startup Pivotal -- that has positioned itself quite nicely to capitalize on the critical trends reshaping corporate IT. (Think mobile, cloud, big data, etc.) This summer, EMC's federation model came under fire from activist investors who claim the company would be better served by bringing assets like VMware in-house.

In this installment of the IDG Enterprise CEO Interview Series, EMC's Joe Tucci spoke with Chief Content Officer John Gallant about the federation model's value for IT leaders and how the partners -- including security provider RSA -- coordinate strategies to deliver innovation and choice. He also debunks what he views as nonsense being spewed by newcomers to the storage market and talks about how EMC is empowering customers to build private/hybrid clouds that stand up to the best the public cloud has to offer.

Computerworld: Let's start off by discussing your federation model. That's been in the business news this summer, but I want to talk about it from the perspective of the IT buyer. What is the benefit of that approach for IT and why is that better than, say, having all those capabilities under a single roof?

Tucci: It starts off with focus and how you build the best products. To build the best products you've got to have the best people. If you have a focused mission, one that can make a difference, something that really captures your attention, you'll get more directly rewarded for what you actually are doing than being part of a big company. You're likely to pull in better talent, which we have. Then I go back to where I started there, which is on what we're going to build. You say: Here is my mission. I'm going to build the best software, best solutions, and the best technology for this set of problems or opportunities.

Then it goes to giving customers choice. The principles of the federation are [that] it's highly strategically aligned with a little bit of overlap, because if you don't have overlap then you have seams and that's where all the competitors go. You align the missions of the companies in the federation and then we operationally align so we can bring all that technology together as if we were one company. But if a company says: Hey, I love this piece of VMware but I want to use another storage product or I want to use another converged infrastructure product or I want to use another security product, we say go ahead. Giving customers that choice is critical.

So it's all about, again, how do I get the best talent to focus on their mission? How do I align the missions with the different companies in the federation? Then how do I say to customers: We've got a whole stack for you. It's incredibly compelling but I believe in the right of choice. I think that's what the federation does for us.

Computerworld: One big challenge of that federation model is getting customers who deal with these individual companies to understand the whole federation strategy as well as how all the pieces come together. How do you deal with that challenge?

Tucci: The last piece of it is -- and this is the piece, in hindsight, maybe we should have done earlier or better -- is operational alignment. How can we go together to a customer? One of the things I should have done, which we're taking steps [to address], is for the larger accounts, have one global account manager that each of the federation works with to make sure that where the customer wants it we can appear as one. Where they want more point solutions, we can also [do that]. Any choice a customer makes, we have an opportunity someplace in the federation. It's kind of a fine-dining menu. On the left side you've got the prix fixe and on the right side you've got a la carte, and if you want it all blended and matched together with wine, delivered elegantly, we've got that. If you say: Well, today I only want the salad and a pasta entrée -- you can do that.

Computerworld: How do you and the leaders in this federation set direction? If you look at the model most people are familiar with, a big tech company buys other companies, blends them all under one roof and the CEO sets the direction. How do you do that in that federated model where you have multiple CEOs working together?

Tucci: That's the strategic alignment. That where you're saying: Okay, here's a set of missions you're going to work on. Here's a set of missions that the second CEO is going to work on. In our case we have kind of three-and-a-half companies in the federation. Basically we run it as if we had a security company, a storage/converged infrastructure company, a virtualization and end-user computing company and a big data company. Paul Maritz runs Pivotal; Pat Gelsinger runs VMware; David Goulden runs EMC Information Infrastructure; Art Coviello, who reports to David, runs RSA. Each of them is developing their strategy and what you're doing over the front is saying: How do these strategies fit together with a minimal amount of overlap? But I'm a big believer in the overlap theory, or else you're going to leave seams and, as I said before, that's exactly where your competitors will exploit those seams.

Computerworld: Today, the entire IT stack we've known for years is being changed, with mobility, cloud, big data, etc. Lots of massive shifts, massive opportunities. Today I think if you talk to any customer, it's deeply ingrained in their mind that EMC owns that storage layer of the stack. But what do you want people to think about EMC? How would you position EMC in their minds if you could start fresh?

Tucci: I think part of the problem is EMC is used twice. Once it's used as EMC, which is the federation, then it's used as EMC II, as the business that has the storage. For EMC, people think of EMC II. I'd like, when they think of EMC, they say: You've got tremendous offerings in cloud. Basically, as you said, what's driving the future is in no particular order; mobile, cloud, big data, social networking and then security is just the key enabler across everything. If you look at those drivers, we're basically focused on those metrics.

On end-user computing, we've given that to VMware. They just bought AirWatch and they're doing more on the mobility side. If you think of cloud, VMware is doing a software-defined data center, but EMC II is doing ViPR - a big piece of software-defined storage. You put that together and I think we have a better story than anybody. You think of big data, it's exactly what Pivotal is doing. They're doing it with the HDFS new-wave scale-out big data approach. RSA traditionally came from IPV -- identity protection and verification -- then security analytics, which assumes that bad guys have penetrated your system and stolen IDs and then you basically look at every packet for activity and either allow it or don't allow it or ask more questions based on what you're seeing against real profiles. Then, of course, are we adhering to policies and good governance against the policies that we've set, either as an enterprise or set for you by a government. That's what RSA is.

It's almost three missions apiece. VMware is working on end-user computing, they're working on software-defined data center, they're working on a hybrid cloud. EMC is working on storage, software-defined storage and converged infrastructure. Pivotal has a developer's platform called Cloud Foundry, developers' PaaS. On top of that they have big data capabilities on the back of HDFS and then they have Pivotal Labs, which helps you develop programs very rapidly to use these big data stores. RSA is IPV, security analytics and EGRC [enterprise governance, risk and compliance].

Now, within that, under vSphere, VMware has done a little bit in VSAM, but that's for a specific use cases in a vSphere environment. That's a little bit of the overlap and everybody, of course, writes about the overlap. But again, if you look at what we have and the way we're approaching it, [the overlap is] way over-hyped. You know, all the press about VMC and VMware, aren't they competing at the edges? But we have these swim lanes and I think it's very clear which technology you should use for which swim lane.

Computerworld: At that upper federation level, what would you like people to have seared into their brain about it?

Tucci: If I really believe that cloud, big data, social networking and mobility is driving my future as an IT executive, which company so much believes in that, has leading positions and leading technology and great people in each of those categories and they're providing me what I demand in this new world, choice? These are whole new worlds and I don't want to get locked in. I don't want to get locked in on what phone I use. I don't want to get locked in on what cloud I'm going to use. I could go on and on.

The [federation] was set up to do that. Then again, go back to the first premise, when you give people clarity of mission and they can get more direct reward for what they're doing. The VMware people get paid on what VMware is doing, not the big EMC. The same thing with EMC II, the same thing with RSA. You attract a better talent base to accomplish your missions.

Computerworld: Often, when you hear executives talk at EMC they will refer to EMC becoming more of a software company. Why is it important for people to know that about EMC?

Tucci: The margin is much more in software. Technology is much more software-based. If we have 15,000, round numbers, engineers in the company -- the developers who develop these great products - 500 do hardware, 14,500 do software. We try more and more to use as much COTS (commercial off-the-shelf) as we can. For instance, in our latest storage products, we've taken all the ASICs out. We're using as close to vanilla as we can. But don't get me wrong. There's a lot of value in the packaging, serviceability, how you design for reliability, so those 500 engineers do great things, but we're not using different components. Ergo, the value that a customer sees is very software-driven.

Computerworld: Some pundits talk about private and hybrid clouds as kind of a myth, or at least an interim myth, because corporate IT won't ever really be able to match the economics of public cloud. They say it would make sense for most customers to really start making a more aggressive move to the cloud as opposed to trying to put that off through private or hybrid. What is your view on that? Are these real workable, viable models for the long term?

Tucci: Well, I agree with what you say. Customers should have plans on how they're going to move 100% to the cloud. Obviously, that's a long journey. But I would define the cloud differently than you would. You would define a cloud as something that sits on the public.

Computerworld: By cloud I mean highly scalable up and down, the economics are great, prices going down as opposed to going up, very easy to manage, easy to deploy, self-service. Those seem to be capabilities that are difficult for companies to match internally compared to public cloud providers.

Tucci: I disagree. The reason it's tough to match internally is because if you go to, say, a big bank, what do they have? They have mainframes, probably two or three flavors of UNIX, etc. And you're right. That's not homogenized, and to help get some standardization they've bought all kinds of management tools. Not unusual for a big Fortune 500 company to have 100 different tools they use to manage their infrastructure. It's hard. But say I'm going to standardize; every cloud that I know of is standardized on x86 technology, all the successful big clouds. I mean Amazon, Google, Facebook, Twitter, on and on.

Secondly, you want to abstract. You want to pool your resources. I've got pools of memory, pools of storage of different kinds with different capabilities. I've got pools of network capability and then basically, based on what the application actually needs at that exact moment, I will pull those resources out of those pools, assign them to that application and then as soon as the application lightens up or is done, there's a whole different load. You're throwing the cores, the memory, everything back into the pools and something else is using them.

If you do that it's very, very efficient, incredibly inexpensive, and it's kind of seductive. Some of our guys call it the California Hotel. It's easy to check in but it's very difficult to check out. You use more and more and more and when you get the bill you go: Holy cow.

I believe that if you're of some size -- I won't even define "some" -- but if you're of some size, you could build a very compatible, very cost-effective, maybe more cost-effective [private cloud]. And then when you hit a peak you don't want to go buy more infrastructure, you can federate some workloads into a compatible public cloud.

That's hybrid cloud computing. I think a big reason to do that for a long time would be security. There is nobody that will be able to protect your data like you will. You get a denial-of-service attack, you can shut down. It's yours. It's under all your control. You can do what you need to do.

Economically we can prove it to you. You can stand up a cloud that is very cost-effective [compared] to anything you can buy publicly. But what you don't want to do is what customers are doing who grew up in the client-server environment or the mainframe environment, where you're overprovisioning, buying for the peaks. That's what hybrid cloud computing is.

We believe there's a huge opportunity in private clouds, huge opportunity in public cloud, but what customers really want is hybrid cloud. You design your base for lower than the midpoint of your workloads and when you hit peaks you'll federate into a public cloud.

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