EMC: Accelerating The Journey To The Private Cloud

IT industry analyst meetings provide a good opportunity for analysts to gain a broader and more comprehensive understanding of a vendor.  At EMC's fall 2009 EMC North American Industry Analyst Summit in Franklin, Massachusetts, Joe Tucci, the company's chairman, president, and CEO, kicked off the summit with a strategy and vision statement. He delineated seven basic principles that EMC adheres to: staying close to customers, gaining market share, attracting talent, sustaining and deepening product technology edge, sharpening cost disciplines, making opportunistic mergers and acquisitions for competitive positioning and communicating internally and externally.

Now some critics might say that those are just platitudes, but Mr. Tucci has a positive track record of not just saying things, but making them happen. Those seven principles seem to describe well what EMC has already been doing. For example, it has had listened to its customers through customer councils for many, many years and is very likely to keep doing so in the future.

He strongly emphasized that EMC is a technology company and that its focus is the IT infrastructure. EMC invests about 12 to 13 percent of its annual revenues in R&D, which is roughly $2 billion per year. This translates into EMC remaining close to its core competencies. One example that was discussed later is services which EMC views as a means to an end and not an end in itself. That implied that EMC will expand its services business selectively and not pursue its competitors' overarching services strategies. As pointed out in a later presentation, EMC is not trying to enable yesterday's service model.

According to Tucci, IT is going through another of its periodic waves. He described what he called "IT 3.0" as x86-based, highly virtualized, cloud-like, liquid pools of resources, and X as a service (XaaS). That is, a widening variety of applications, processes and compute models presented as services. Three guiding principles of IT 3.0 are efficiency, control and choice. Efficiency is obviously about cost reductions, control means that the IT organization maintains primacy in decision-making that affects the enterprise and choice means that IT has options on which vendor products and services to choose.

This would seem to conflict with something like the Virtual Computing Environment (VCE), where Cisco, EMC and VMware are putting together tightly integrated IT infrastructure packages. However, while Mr. Tucci feels that customers can benefit from such price fixed solutions, they will still retain that ability to go a la carte with a blend of products from the VCE coalition's individual partners and other vendors, if they should so choose.The end state EMC envisions is the private cloud that can be self-contained or can span across internal and external clouds, retaining the best of an internal data center ( trusted, controlled, and secure) with the flexibility of cloud computing (dynamic, efficient, on-demand, and flexible).

Enabling the Journey to the Private Cloud
Howard Elias, president and chief operating officer of EMC Information Infrastructure and Cloud Services, extended and expanded the discussion on the private cloud. The move to the private cloud will be a multi-year journey. The focus is to make IT more OPEX-based (operational expenses) rather CAPEX-based (capital expenses).

Abstracting from a number of presentations (and not just Mr. Elias'), the journey consists of four stages that might be enumerated as follows: the status quo IT sprawl stage, the initial consolidation stage, the fully-virtualized stage, and the private cloud, or IT as a service, stage.

The end state is not a new concept. It was once called the information utility. "The information utility is a service organization that is a common provider of processing power, data, access and transport to a standard or defined customer transition point, or interface, with expected (i.e., understood and agreed) levels of quality, service and cost." (Source: "Creating and Information Utility" from the March-April 1986 issue of Stage by Stage, a publication of Nolan, Norton & Company.

Note that this concept was well espoused and articulated nearly a quarter of a century ago. Not only are we not there yet, but IT has grown much more complex in any number of ways since that time. So what is different today that will make it happen?

Well, one of the reasons is that the IT vendors want to make it happen. Now IT vendors are trying to take business from one another and feel that they have more to gain than to lose by trying to take competitors' business. Consequently, EMC (and others) are working on the technology to make it happen. Moreover, the process of transformation requires services (as a means to an end) so systems integrators (SIs) are attracted by such things as the VCE Coalition's Vblock infrastructure offerings. In the old days, pure outsourcing was the only real alternative to running your own data center.Vendor encouragement may be a necessary condition in moving enterprises from stage to stage, it is far from being a sufficient unto itself. EMC seems very cognizant of the challenges that enterprises will face in moving to the private cloud. The early reception has been very positive and that the message of dramatically decreased costs, greater flexibility, etc. was a compelling one. Again, that is a necessary, but not an entirely adequate, condition.

As an enterprise moves from stage to stage in its computing capabilities and requirements, the shift to a private cloud (IT as a service) requires both technological and operational transformations. For example, at some point, server virtualization needs to overcome technical issues as well as process issues within a data center to enable mission-critical applications to participate in the virtualization revolution.

Farther along, behavioral and cultural issues within an enterprise have to be taken into account. For example, an enterprise may never have charged back IT services to its business units and work groups, but, by definition, supplying IT as a service means that metrics have to be kept, applied and communicated effectively to those who use the services. Moreover, saving 45 percent on IT operational costs may be great, but not if anyone, other than the CFO, really cares in the sense of rewarding IT for doing a good job. All in all, an enterprise not only has to want the end state, but it has to understand and be willing to overcome the challenges that await it on its journey.

Thinking ahead can help customers consider what the next hurdle might be (such as deepening the use of server virtualization) and planning to tackle it. Some will make the leap and some won't. But the reward for those that can progress can be huge. EMC pointed out that 77 percent of IT expenses are used to simply keep the lights on and only 23 percent on delivering new capabilities. Those companies that can increase the percentage of delivering new capabilities are the most likely to develop advantages over their competitors. And that would make the required investments worthwhile.

Short Notes
EMC covered a lot of ground in the two day summit, covering present as well as upcoming developments. Let's look at just a few:

The vision thing is really in. However, EMC's vision of a private cloud is not only important as a concept to try to communicate to customers, but also internally. Internally, a strategic vision can help encourage and align employees, technology partners and channel partners to march to the same drummer. That is extremely important.

For example, take the Virtual Computing Environment (VCE). Cisco, EMC and VMware are different companies (although EMC owns the majority of shares at VMware, VMware is an independent, publicly-owned company). Getting employees from three different companies to work together in harmony over a long period of time is difficult at best. Now Acadia, which is a joint venture of Cisco and EMC, with minority investments by Intel and VMware, is dedicated to making VCE happen. However, VCE is much more than Acadia, so the issue of these three companies working in close collaboration with each other is still relevant. A shared vision, as well as more mundane things like employee evaluations, compensation packages and reporting relationships, has to take place across the entire organization from workers to executives. That's not easy, but if anyone can pull it off, these three companies can.

Customers need to understand the need to plan for the future, but they also have to be able to meet current business challenges. EMC understands this need for customers to meet both short-term and long-term needs. So, in addition to having an eye on the future in the form of a private cloud, EMC keeps it feet on the ground in the present, as illustrated by RSA, Ionix and BRS.