How New CEO Revived NetApp Without Upsetting Its Culture

NEWS ANALYSIS: NetApp has joined the all-flash storage generation and continues to improve one of the industry's highest-regarded data management systems.


LAS VEGAS—For an agonizing window of time in the past few years, NetApp was like an all-star hitter in a debilitating batting slump. It wasn't connecting often enough in clutch sales situations, even though in seasons past it was known for getting big hits with key products at the right times in the major-league IT marketplace.

Like a favorite hometown ball club, the Fortune 500 company has its diehard fan base, the flag-waving customers who bank on it to come through with wins in the form of products that it knows and trusts. That fan base is now starting to see a rebirth of what was once known as a "nice little file server company" that grew into the No. 2 network-attached storage (NAS) provider in the world behind EMC.

Change usually does not come without discomfort. Fifteen months ago, on June 1, 2015, NetApp's board named Executive Vice President George Kurian (pictured) as its interim CEO, replacing respected longtime storage veteran Tom Georgens. Changes in several of NetApp's other leadership positions followed.

Top Execs Always Get Credit and Criticism

Georgens certainly wasn't the sole reason NetApp was slumping. However, as in any business, the top guy gets the credit when things are going well and criticism when they aren't. After Georgens was shown the door, NetApp's board decided to stay in-house with its management change, naming Kurian to the job. He became permanent chief executive three months later.

So far, so good. Kurian, an unfailingly polite man with a background that includes degrees from Princeton and Stanford and high-level management tours of duty at Cisco Systems, Oracle and Akamai, has brought a new, understated energy to the CEO suite. He also has hired some fellow industry veterans who have some progressive ideas on where NetApp should go next.

Since the change, the company has made an about-face toward the "playoffs": the promised land of increasing revenue and profits for its shareholders. In the last year-and-a-half, latecomer NetApp has entered the storage-area network (SAN) market with a bang, joined the all-flash storage generation and has continued to improve one of the industry's highest-regarded data management systems (ONTAP). It also acquired a hot new-gen, solid-state storage company in SolidFire, and now it has two promising solid-state storage product lines with very different user bases.

Revenue Downturn Has Stopped

The total revenue numbers have stopped their skid and leveled off, and NetApp is suddenly No. 2 in the all-flash SAN market, a segment that the company had not penetrated previously. NetApp now has a $750 million-per-year business where it had none two years ago. Analysts now expect the 24-year-old company to rebound completely by next year—if not this year—back into growth mode.

What has been Kurian's guiding philosophy in the first few innings of his CEO tenure?

"It was important for us to recognize the changes in the industry, and quickly move the company to address those changes," the soft-spoken Kurian told eWEEK here at the NetApp Insight conference. "We have certainly pivoted our product portfolio to the fast-growing parts of the market; we've addressed the efficiencies of our business through a series of cost actions, which are necessary but difficult.

"But I think the most important part of the change that CEOs often don't address is that when you talk about transformation, the essential part is to recognize that you have to change yourself. It's easy to talk about transforming innovation, business process and so on, but the real essence of transformation is the recognition that you need to change yourself."

Kurian Appreciates Work of Previous Leadership Team

Kurian said he's thankful "for the team that got us here; they've done a phenomenal job," but a new leadership group was necessary for the transformation to take place. "We have a new team at the top, with new experience and new energy, and I think you can see that here at NetApp Insight," Kurian said.

Kurian knew that while he had to make management changes throughout the company, he had to be careful not to upset the well-known and widely beloved NetApp company culture. NetApp is a regular resident on the Forbes annual listing of "best companies to work for," and it's because the company has a famously employee-friendly culture that is the envy of others in the IT industry.

"When I think about culture, it's really about the mission and purpose that you have as an institution," Kurian said, "and the values that you demonstrate in delivering upon them. There's a lot of window dressing that goes around it in most institutions [that] is also amalgamated into the term 'culture.' Some of that can be habits and behaviors; they're not necessarily the right thing.

"So we had to peel away the parts of the culture that weren't progressing the institution, and I would say that is a work in progress. What I really needed to get the institution focused on is that the core mission of what we're doing—which is to help the world's leading institutions manage data, derive insight from it, for the betterment of mankind—is as powerful and relevant today as it's ever been."

Re-energizing NetApp's Core Mission

By re-energizing NetApp's focus on that core mission, and its values around customer success and the urgency of doing the right thing, "we have been able to bring back a spark of the original NetApp," Kurian said.

Kurian and his hand-picked team also recognized that transitions that were happening in the market would eventually position the company well. That equates to being in the right place at the right time, with the right types of storage products; NetApp had been out of sync for a few years while companies like EMC, Pure Storage, Fusion-io, Nimble and others bolted ahead with flash arrays.

"For example, the movement from hard disk to solid state storage allowed us to participate in parts of the market that were craving for the data management feature sets and expertise that we brought," Kurian said. "And where solid-state gave us a leg up on the competition, we've been fortunate to become the fastest-growing player in the SAN market.

"Who would have ever thought the CEO of NetApp would say that? It's because we are re-imagining SAN. We've been successful in growing into parts of mission-critical data centers that we didn't really participate in [previously]."

Next Up: Building On-Premises, Cloud Fabrics

Cloud is the next phase of innovation and growth for NetApp, Kurian said.

"We see what customers will need for the era of multi-cloud and hybrid IT. Their own data centers need to be well-integrated and simple to manage, but those data centers need to be connected to public and managed cloud environments. So putting all of those pieces well-architected together is what we have called 'data fabric,' and we are delivering on that road map," Kurian said.

Stay tuned. There's a lot more to come from the "nice little file server company" that is beginning to circle the bases again and score runs.

Chris Preimesberger

Chris J. Preimesberger

Chris J. Preimesberger is Editor-in-Chief of eWEEK and responsible for all the publication's coverage. In his 13 years and more than 4,000 articles at eWEEK, he has distinguished himself in reporting...