Michael Ruettgers - Storage High Roller

In the mid-1990s, when a high-flying EMC made a bet-the-business move to build open storage systems that could provide intelligent, centralized networked storage, some EMC board members thought the company might fall on its face. And even now, as EMC makes an aggressive move into more powerful storage management software, skeptics still abound.

Yet one believer has stood tall throughout it all: EMC Executive Chairman Michael Ruettgers. The Oklahoma native, who grew up around the globe as the son of an Air Force officer, helped transform storage technology from an add-on into the central nervous system of corporate IT infrastructures. In the process, he helped create the modern-day intelligent networked storage market.

And Ruettgers, 59, is still running hard to keep EMC atop the storage- industry pyramid. Last month, for example, he flew to Washington, D.C., and met with six customers in one day. As the executive sponsor for 15 major EMC clients, he can usually be found on the road meeting with customers or at EMC's executive briefing center.

The foresight and imagination of Ruettgers,who was initially hired as an executive vice president in 1988 and led the company as CEO from 1992 to January 2001, when he became executive chairman,have separated EMC from a pack of competitors that have scrambled to deliver storage breakthroughs. The list of firsts that Ruettgers delivered to the market includes multiplatform storage systems, storage management applications and the precursors to today's complex business-continuity and storage virtualization software.

A poker player known to wear cowboy boots, Ruettgers has never expressed the slightest doubt about where to place his chips in the fast-moving technology marketplace. Maybe that's why Richard Egan, EMC's founder and former chairman and the current U.S. Ambassador to Ireland, calls him "Cool Hand Luke" Ruettgers.

"I've never seen him get flustered," said Egan, who remembers being "awestruck" by the off-the-charts growth that followed Ruettgers' networked open-systems storage gambit.

At the time, when Egan privately expressed his amazement at the sharp growth, Ruettgers merely gave him a "small smile," or maybe "more of a smirk," Egan said.

For his part, Ruettgers said his moves had less to do with taking a gamble and more to do with listening closely to customers. That approach allowed EMC to beat IBM handily in the storage game and then march into the open-systems and storage management software markets.

"Where people didn't see markets, I was absolutely convinced they were there," Ruettgers said. "I didn't have any hesitation in betting. It's like picking up a hand and you've got four aces. So it's a sure thing from that standpoint. You don't even have to draw a card."

Don't tell that to EMC insiders, who recall the controversy surrounding the open-systems hand that Ruettgers chose to play. It came at a time when EMC was wildly successful, racking up huge market-share gains against IBM with systems that IBM salesman had once called tinker toys. Going against the conventional wisdom at EMC, Ruettgers set up a separate unit for building an open, distributed networked storage system that could run Windows, Unix and IBM mainframe platforms all on one box.

For solution providers, Ruettgers' open-systems move opened up a world of opportunity, paving the way for the billions of dollars in storage hardware and software now sold through the channel. Grady Crunk, executive vice president at Central Data, a Titusville, Fla.-based solution provider, said Ruettgers' vision for centralized network storage changed the way businesses compete by allowing them to store and manage mountains of information.

"That helped drive a lot of other innovation," Crunk said. "It's hard to know where we would be if not for Ruettgers and EMC."

Sitting in a conference room at EMC's Hopkinton, Mass., headquarters, Ruettgers recalled the resistance he encountered when he championed open systems. "I had trouble convincing almost all the parts of the company,even some people on the board [of directors] were wondering whether this was the right decision," he said. "It was one of those, 'Well, you're doing OK now, and the track record is pretty good. We'll give you this one.' So there wasn't a lot of enthusiasm that this was the right thing to do."

In fact, after a weeklong road trip meeting with customers, a top EMC executive told Ruettgers that nobody wanted a product that could provide distributed storage for multiple platforms in a single box. Still, the product,the Symmetrix 3000, the world's first independent storage system for multiple platforms,posted sales of $200 million in its first year. Ruettgers said the genesis for the Symmetrix 3000 came from the frustration that customers experienced when trying to manage storage resources running on multiple operating systems.

"Nobody was pointing us in this direction," he said. "It was coming from being out [on the road] with customers, listening to customers, and trying to understand what they were trying to do and what their problems were, and then matching our technology with the problem." In retrospect, Ruettgers said he believes the open-systems project would have failed if he hadn't set up a separate division for the technology.

The leader of the open-systems team,David Donatelli, executive vice president of storage platform operations,said that at the time, he thought the cool, new technology EMC had developed would either revolutionize the market or "crash and burn." But Ruettgers wasn't taking any chances, and gave his sales team a strict goal to double sales each year, Donatelli said. The first quarter that the sales team missed the target, Ruettgers filled each and every salesperson's office with unsold systems.

"Obviously, we were highly motivated to get them out of the offices," said Donatelli.

At the same time Ruettgers was pushing open systems, he also was rallying his engineering team to deliver the first storage management software products for Fortune 1000 accounts. Although many independent software companies have since rolled out storage applications, it was EMC,with its Symmetrix Remote Data Facility (SRDF) and TimeFinder software,that pioneered the market.

Al Shugart, a hard-disk technology pioneer formerly at Seagate Technology and other companies, said Ruettgers' biggest impact was bringing storage management to the market. "I think Ruettgers recognized that that was a big requirement and that it was a big deal," said Shugart, who is now a venture capitalist. "Recognizing it was No. 1, and then actually doing the job was No. 2. But a lot of people didn't recognize that storage management was going to be that big a deal."

Before Ruettgers led the revolutionary storage management software and open-systems efforts, he was first tasked with fixing a quality problem that nearly drove EMC into bankruptcy. Egan initially hired Ruettgers to fix that problem and to deliver higher levels of service to EMC customers. Ruettgers got to the heart of the matter by bringing in airline sickness bags and handing them out to his team, telling them, "Our products make me sick."

"Mike quickly took charge of that and freed us up to pursue our entrepreneurial instincts," said Egan.

Since joining EMC, Ruettgers has helped it grow from a company with about 850 employees and annual sales of $125 million to one with roughly 18,000 employees and annual sales of $7 billion. During the 10-year bull market that ran from October 1990 to October 2000, EMC's stock achieved the highest performance of any New York Stock Exchange issue. Today, EMC is the largest technology company in Massachusetts.

Ruettgers said one of the things that keeps him motivated is seeing EMC navigate the stormy seas currently swamping the storage business.

"Right now, we are kind of like an old sailing ship that has hit rough weather," he said. "Everybody is. When you are on a boat and in rough weather, the idea [is to try to] sail through the storm and get to harbor and then, once you do that, maybe you can relax. But we are trying to get it to safe harbor right now."

Speaking before a standing-room-only audience of EMC employees recently, Ruettgers said that even though EMC might not be sailing at the 30-mile-per-hour clip that it was a few years ago, the company remains ahead of the other boats. "Today, it is not as much fun in a sailboat at 6 miles per hour, but the key thing is to just lead everybody else," he said.

Ruettgers said he's looking forward to seeing the winds pick up. He believes that in three or four years, no corporate customer will buy storage attached to a server. "It is all going to be networked into a pool," he said.

That's a long way from the conference-room-size boxes that IBM once sat beside its mainframes,the boxes that EMC effectively replaced with its small-tower systems and later with centralized network storage. In those days, EMC customers were so taken with the technology that many invested in the company. Ruettgers said he remembers one Christmas season during which he received a call from a customer who had taken all of his savings and used it to buy EMC stock,without telling his wife.

"I thought, now I'm not only responsible for this guy's data center and company, but I'm also responsible for his marriage," Ruettgers said.

At the time, the customer simply wanted Ruettgers to tell him that he had done the right thing. "I told him, 'I think you're going to be OK,' " Ruettgers said. OK indeed. That was one helluva good bet.