EMC Looks To Generate Channel Velocity

CRN: For 2005, what's EMC's vision for bringing together the software and hardware channel?

TUCCI: The theme of this conference is One. That is, "One EMC," because EMC is truly not a hardware company. It is truly not a software company. It is truly not a services company. We are focusing on storage information management. We call our strategy ILM [information life-cycle management]. Basically, we are going to have best-of-breed products, hardware and software. The strength comes when you package those products together and form solution sets with services around those packages.

The EMC of old, the EMC of the 1990s, they used to do all of that themselves. They really didn't use channel partners--not in a good sense of the way you use channel partners. Our strategy now is exactly the opposite, which is we are going to keep a strong direct sales force. I won't apologize to anybody about that. As long as I live and breathe and am heading this company, we will have a strong direct sales force, both on the software and hardware sides in regard to ILM. Our strategy is to really grow with partners. Every time I look at the results--and I won't give you the percentages because we don't make them public--the percentages keep ramping up in terms of partner involvement. It is just phenomenal how many times they show up. So it is one of the real pillars of our company.

CRN: What was the message to partners here at the show?

TUCCI: A lot of stories are being written now on the transformation of EMC. I shared it with the audience. In 2001, this company lost $508 million, and that was after making $1.8 billion. We were in the hole, and our revenue was declining. So we had to take some action. Of course, the first set of actions were all around cost-cutting and right-sizing ourselves. Anybody that is worth their salt understands that no company ever saved its way to greatness.

The real partner transformation, and the real story of the transformation, is what we were going to do. I talked to them about the several pillars we put in place. One pillar was we were still king of high-end storage, but midtier was getting bigger and growing much faster. So we wanted to move downmarket into midtier storage. Our revenue was 73 percent hardware. I wanted a better balance. One of the pillars was to make software and services more than 50 percent. Today, it's 53 percent, to be precise. So, obviously, to do that came down to growing software and focusing on acquiring software companies and building out--pretty much organically--the services around that. Another pillar was ILM. Another pillar was to execute with partners. I talked to them about the six major pillars we built our transformation upon, and they are one of the six. And the way we constructed this house is if you move any of those pillars, a major piece of the house is going to fall down. I tried to give them a sense that they are a critical piece of the EMC family, as I call them.

CRN: How important is the partner community as you go forward with the "One EMC" vision of hardware, software and services?

TUCCI: It is incredible. One of the things that I showed graphically is the staggering growth we are having in what we call our commercial business. We have just had incredible growth, hardware and software, in that commercial business, which is again one of the pillars. If you look at the percentages of channel partners in there, it is huge. Now we are coming down, and actually David DeWalt is heading the entire [software] effort for the company. Obviously, as we go downmarket, we want to package again and look at how we could use the channel to put more power in EMC. So maybe you sell an AX-100 with Retrospect from Dantz for backup and replication management software. Those are all good products for the SMB market.

CRN: How many EMC partners are selling software, hardware and services today, and how many will be selling that as a result of the "One EMC" effort?

DEWALT: A large percentage of existing EMC partners that are part of the Velocity program sell software, services and hardware. Typically, it is the multiplatform and platform storage base software today, not as you think of Documentum, and Legato sometimes, and VMWare and some of the others. The big theme we wanted to talk with partners about is "One," this overall, arching program we call Velocity. The market is moving toward vertical stacks and vendors who can provide complete infrastructure. It is hardware, software and services. A lot of our partners have asked us to be able to resell or get certified on other areas of our software and hardware platforms. So this overarching program is [designed] to allow them--if they were selling hardware and software from EMC--to start selling Legato, Documentum, or Documentum and Legato. It is really not about having Documentum and Legato anymore. It is all one group from EMC. We want the partners to feel that and allow them access to all of the EMC products. We have set up some very detailed certifications and levels.

TUCCI: It is different structure for different folks. We don't tell the partners what to do. You have to know your own business, where your value is and what your model is. So there is going to be a set of partners that really want only to do the software, and then they could team with another partner that could provide some of the hardware assets. We do see a lot of cross-fertilization [with] Legato and Documentum partners. Some of them are now picking up some of the hardware because it is easy to sell that solution set, especially as we brand it. And there are a number of hardware partners now all over software.

CRN: Do you think a lot more of the hardware guys will jump into the software space?

TUCCI: I think you'll see the hardware guys jump into the software space more. The software guys ... some will and some won't [move into hardware]. I think all of the software guys will do more services.

DEWALT: If you look at different market segments, you'll see a proclivity to do more hardware and software bundling. The more you get into SMB and commercial, the other part of the big theme is these Express solutions. The Express solutions are really a combination of all the products, packaged and bundled as a single SKU. So it is hardware and software, all as a single SKU. It is more germane in the SMB and commercial markets, where you can put together a turnkey solution for Exchange, an AX-100 bundled with some products for storage administration and configuration, bundled with some replication and backup. We can give you a full solution.

TUCCI: That is what the Velocity program is all about. You can pick and choose within that Velocity program, but you don't feel left out. You know why we did that? Our channels wanted it. This wasn't an EMC brainstorm. Maybe it should have been, but it wasn't. Basically, a number of channel partners really requested it, and obviously we listened.