Symantec CEO: IT Budgets Will Be Down This Year

Symantec President and CEO Enrique Salem spoke at Everything Channel's VAR500 conference with Everything Channel Senior Vice President and Editorial Director Robert C. DeMarzo, Vice President, Channelweb.com Editor Larry Hooper and Editor News Steven Burke about the IT spending climate, EMC's hostile bid for Data Domain, his recent visit to the White House and other issues. Below are excerpts from the interview.

Talk about the IT spending climate with regard to much tighter budgets and a demand for greater ROI.

I don't remember a time when IT wasn't trying to manage costs. Maybe in a very short period of time in 1999-2000. We had the confluence of what was going on in the Internet and the Y2K phenomenon. That was a brief period where I think we were more focused on how we built things more quickly than managing costs.

As long as I can remember, IT has always been thinking about how we manage costs. We have become more focused on that right now because we are probably going to see 2009 be a year where IT budgets will be sequentially down.

Historically, IT as a percentage of revenue in businesses has been coming down. In absolute dollars it is going up, but in percentage terms going down. I think this year we will see IT budgets be down broadly speaking.

Is security one of the areas where people are still spending?

I actually do believe security continues to be more robust than many other sectors. If you think about how companies think about their budgets, they start by cutting capital costs. They say we are going to buy less servers. That is why you have seen server sales down. That is the first thing that gets cut because a CFO says, 'Do we need that new piece of hardware?'

I think we are in a better spot because of the phenomenon that security is always important and data is growing rapidly.

Different than other times, people are hypersensitive about ROI. They are looking for returns in their fiscal year. So, meaning if I go and spend a dollar or ten dollars today I am not looking for an ROI that says in two or three years I might get it back. It has got to be really short term.

We used to have ROI. Then we went to return in quarter. Now the thing people are saying is return on yesterday: 'How do I get a return on what I already purchased?' which is a distinction. Before it was: 'I am going to buy more stuff and get a return over a period of time.' Now it is, 'I have bought a bunch of stuff. I need more value out of what I bought.'

What is your response when customers ask about return on yesterday?

What we focus on, especially on the storage side, is utilization. What we see in the storage area is storage continues to be underutilized. You have got utilization anywhere from 30 to 40 percent. Meeting with CIOs over the last several months that has been one of our themes and they are starting to say, 'You know what. You're right. That is a big opportunity if we can get better utilization."

The second thing that we talk about is that utilization is not just driven by using what you have more completely. It is also about how do you become more efficient. Don't store things 10 times. How do you only allocate storage when it is needed? How do you reclaim storage when things are deleted? So there are a range of things that you can do to get better usage of what you've got.

The challenge for partners is a lot of our partners make money [just by] by selling storage. What I talk to partners about is if [customers] are not going to buy storage, you have got to be able to sell them something. I try to explain to them some of the [software] tools to [help their] customers use storage better.

That gets to the fact that many solution providers are seeing services growth but not product growth.

It's growing partially because you have the scenario where people are saying, 'We don't have the people to do everything.' So they are saying, 'Can partners be my arms, eyes, legs to get specific tasks done?' The service component is where [solution providers] are seeing some resilience.

What do you think of EMC's hostile bid for Data Domain?

I think EMC probably felt what they currently had in that area wasn't sufficient.

How important is data deduplication as we move forward?

I think data deduplication is critical. Critical. We have block-level dedupe rather than at the presentation level, which isn't nearly enough. You want to go down to the block level where you can say, store it once. We are seeing some folks getting 50 to 1 or 100 to 1 in dedupe [essentially saving the data once vs. 50 or 100 times based on the number of copies of the data stored on systems].

We absolutely compete with everybody in the dedupe space. But we also partner with folks who see our NetBackup engine as the way of figuring out what needs to be deduped. If you look at what Data Domain does is they write to the OST Symantec interface so they can figure out what to dedupe.

Does Symantec have better dedupe technology than EMC and NetApp and why?

The key is it is block level and done at the source. Those are the two big differentiatiors for us.

You are seen as the engineering leader in that storage space. What is the next vista there as you move forward?

I think a lot of our customers are absolutely moving to a new data center and their new data center is horizontally scaled. They want commodity x86 hardware.

What we have to do is basically help our customers in the data center scale horizontally. The first big innovation was volume management and file systems. Volume management and file systems become even more important in a highly distributed, horizontally scaled environment, and we are the best at doing that.

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