You could call a recent journey of mine a tale of three cities—or a tale of three companies that once produced their revenues by selling hardware but are now focusing on selling software that configures, measures and allocates hardware resources. Such a model is a big change for the three companies—EMC, American Power Conversion and Hewlett-Packard—which still expect to sell a lot of hardware, albeit more as a result than as a starting point. This is also a big change for users who built their careers on being able to tune hardware boxes to keep them running. It is the best of times, it is the worst of times to be in IT.
First stop on my three-city tour: New York and the Equitable Center for EMCs annual Analyst Day gathering. EMC is the storage company that climbed a big mountain, fell off a cliff and is now the comeback organization of the year in high tech. In an era in which most CEOs are unwilling to predict what they will have for breakfast tomorrow, EMC President and CEO Joe Tucci predicted 2004 revenues of $8.1 billion and profits of $850 million. This is from a company that lost $500 million in 2001.
This growth rate is about double the expected growth rate of the overall data storage market. For EMC to make those numbers, it will have to execute on three strategies. The Hopkinton, Mass., company will have to persuade the world to buy its information lifecycle management systems, rather than simply storage boxes, to manage ever-increasing structured and unstructured data. EMCs newly created Software Group under executive vice presidents David DeWalt and Mark Lewis will have to become an organization in more than just name and leverage a set of acquisitions led by those of Legato and Documentum into a $1.5 billion business. And, of course—like the rest of the industry—the company will have to convince users that it has abandoned its proprietary ways for the "open, modular" mantra.
Storage—once the sleepiest of all IT topics—is now at the top of the list of systems you want to manage, protect and allocate based on need. "No company has ever saved their way to health," said Tucci, explaining why EMC has to expand its software operations to make his aggressive revenue projections.
Second stop: APC, in West Kingston, R.I. If ever there were a hardware company, APC would be it. The racks, backup power and other data center equipment compose the skeleton on which IT infrastructures are built. In the past, data centers were constructed on three principles: overbuild, overdesign and overcost. The data center design was often handed off to an architect, who would create a one-of-a-kind room that required a host of contractors. APC is now promoting an open, modular plan where you can do a lot of the design work on the Web. This model is also a big change for the company and the industry, but at least it seems in accord with the open, software-first theme now at hand in the technology industry. "You need to standardize on open, scalable and modular building blocks," said APC President Rodger Dowdell, sounding as much like a Linux advocate as the head of a data center infrastructure company.
Third stop: Montreal and the HP Software Forum. HP is taking its old standby OpenView network management tool upmarket. Through acquisition and development, OpenView is becoming the central nervous system for administering not just hardware components but software as well. At the companys annual software meeting, the central theme was turning OpenView into a software management tool that can be used to provide CIOs with a way to meld their technology assets with business goals. Aligning technology assets with business needs is a consistent theme in the current economy. This is also a big change for those system administrators who grew up with and used OpenView as a reliable but limited network administration tool. The challenge for HP is to keep its current users happy while providing not just the tools but also the training to make OpenView a player on a much larger field. According to Nora Denzel, senior vice president of HPs Software Global Business group, the future IT infrastructure will center on building open, modular and linked systems tied to business needs.
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