EMC Makes Big Move in Expansion Campaign
EMC has acquired no fewer than 13 separate companies since it kicked off the acquisition campaign spree in 2003 with the acquisition of document management specialist Documentum and data backup software producer Legato Systems.
These acquisitions have allowed the company to become the worlds sixth largest software company, while controlling a commanding share of the data storage market.
But it pulled out all the stops with its plan to spend $2.1 billion to acquire RSA Security of Bedford, Mass., with its portfolio of enterprise identity and access management, encryption and key management software.
On the face of it, the acquisition certainly makes a lot of sense. Data management and security go hand in hand. Its hard to imagine offering the market a complete array of storage and data management technologies without offering customers integrated security services.
EMC could not claim to be a full-service enterprise IT infrastructure company without adding a security arm to the array of data management technologies it has as painstakingly acquired over the past three years.
It has been talking about the importance of security to its overall technology strategy during its buying spree. The acquisition of RSA at a stroke enables EMC to achieve this objective.
A year ago, EMCs CEO Joe Tucci said its security strategy would involve a combination of cross-product integration, in-house development and "partnerships" where it made sense.
It was unclear at that time how this approach would produce enterprise-scale data security infrastructure.
EMC has taken a major shortcut toward this goal with the RSA acquisition. As one of the top companies in the security field, RSA has a major presence in the banking, financial services, government, health care and manufacturing industries.
The acquisition also made sense because EMC already had a technology alliance in place through the integration of Documentums eRoom content creation and collaboration workspaces and RSAs ClearTrust Web access management technology.
Another basic factor that will simplify the integration of the two companies is that they are located in close proximity in Massachusetts metropolitan Boston area.
But as always, the real test in any major corporate acquisition will come in terms of product integration.
Even here EMC will likely have an easier time of it than some other companies in the enterprise software market.
EMC doesnt face the same sort of challenge as Oracle, which is currently wrestling with the Herculean task of merging multiple enterprise resource planning software suites into a single integrated product line under the Oracle brand.
Instead, EMC will be able to take advantage of standard network and Web interfaces to link RSA identity and access management technologies with its data management product line.
With this technology in hand, EMC will be able to go to its enterprise customers with a coherent data management and security offering, which Tucci has said is exactly what customers have been demanding.
A tightly integrated data management and security package stamped with the EMC logo will be bad news for its competitors, particularly CA, which competes in much the same markets.
CA has been struggling to return to consistent profitability after being hit by a scandal that has forced it to restate earnings and resulted in a number of former top executives pleading guilty to a variety of federal charges relating to accounting fraud.
CA has also tried to modernize and expand its product line with its own strategic acquisitions in the fields of record and systems management.
But if EMC succeeds in smartly integrating its myriad technology purchases, it stands a good chance of fielding one of the most modern and advanced product lines in the data management market.
In the process it will also demonstrate that it is a worthy player alongside Oracle in the software industry consolidation competition.
This is a high-stakes game in which the largest companies are cherry picking the smaller companies with promising new technology to try to build profit-rich product lines.
Oracles Larry Ellison became the premier proponent of this strategy because he recognized that in the post dot-com era, software ventures can no longer expect a big payday from monstrous initial public offerings or look forward to a long, profitable existence as independent vendors.
It remains to be seen whether this strategy will deliver the rich rewards that EMC is expecting.
John Pallatto is a veteran journalist in the field of enterprise software and Internet technology. He can be reached at firstname.lastname@example.org.
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