CRN Interview: Joe Tucci, EMC

“EMC” and “small business” have never really fit in the same sentence. But that is changing with this week's introduction of the company's Insignia SMB program, centered in part around its acquisition of Dantz. Joe Tucci, chairman, president, and CEO of EMC, talked about the program and EMC's first pure channel play with Editor Heather Clancy, News Editor Steve Burke, and Senior Editor Joseph Kovar.

CRN: Talk about the SMB strategy.

TUCCI: When I got here, EMC was king of high-end storage. It became evident to me almost right away that we really had to move out [of just the high end]. For all great companies, when you&'re successful at one thing, it makes it harder to move, right? Even though we bought [the midrange Clariion line], we weren&'t getting the kind of change we needed. The recession and some of the fallout from that gave the proper platform we needed to create change.

The second thing we wanted to do was capitalize on the [Clariion] acquisition and really go after the midtier. We set the goal that EMC would be No. 1 in midtier. Which is not all that obvious. I think we had about a 9 percent share back then, and Hewlett-Packard had just bought Compaq and had about a 48 percent share. It was a pretty broad claim, but we accomplished that feat in about 2005. [And] we&'ve absolutely embraced channels and partners as part of our strategy. At the same time, it did not go unnoticed that the lower-end SMB market was growing faster than the midtier market. But you can&'t do too many things at once, or you end up doing everything halfway. So in the back of our minds, SMB was the next objective. To do that we needed to acquire some talent and some technology resources. With Dantz we&'ve found a great product set, and great talent. Primarily in Larry [Zulch, vice president and general manager at EMC and co-founder and former CEO of Dantz], but also some of the people around him. So we tapped Larry to continue to really launch into the SMB market.

When we enter a market, we like to be the leader. It&'s our long-term goal, and this time as we accomplish it, we think it will be pretty much 100 percent channel. All the fulfillment and 99 percent of the selling should be done with channels.

CRN: How big a business could this be?

TUCCI: I don&'t want to give it a size. But it could be a billion-dollar business for us.

CRN: How much marketing muscle and financial resources are you putting behind this new SMB initiative?

TUCCI: Not as much as Larry would like, I&'m sure. Again, we don&'t disclose specific information, but we&'re going to put a lot of firepower in here. This will get a big chunk of our marketing dollars.

CRN: How did you decide how to handle it structurally? It&'s sort of a separate division, but it&'s not? It has tentacles in other …

TUCCI: In a company, you want three things. You want to always leverage. You want to always have specialization, hence Insignia, hence Larry. And it&'s the balance of those two things that makes it successful. If we&'re developing midtier products, and high-end products, how much incremental investment in R&D do you think takes to develop products for Larry&'s market? It&'s much smaller than if you had to do it from scratch.

That being said, you can&'t just dumb down other products. You have to develop products for this market. But there&'s a lot of pieces in the [EMC] parts bin that Larry, with Joel Schwartz [senior vice president and general manager of EMC&'s midrange systems], can pick to make the hardware. The same thing happens on the software side. Larry works with Dave DeWalt president of EMC&'s Software group]. We&'re not separating it. Larry&'s calling the shots with Dave. It&'s the leverage, and the teamwork. That&'s the third ingredient.

CRN: So how do you incent that behavior, and get the culture and everything really driving behind it?

TUCCI: It&'s the carrot and stick that always works. We spend a lot of time doing what we call cross-goaling. We basically will say, ‘OK Larry, here&'s a set of goals that you will need to meet.&' And Larry gets to say, ‘OK, for me to meet those goals, I need Joel Schwartz to do X, I need, for example, Mark Sorenson [EMC senior vice president of information management software] to do Y, I need my own people at Dantz to do Z.&' They all get cross goals, and everybody gets a certain percentage of their bonus based on meeting those goals on a quarterly basis.

CRN: Talk about your product strategy. How is this different from those of Veritas and Microsoft and the others playing in this space? What is EMC bringing to the table?

TUCCI: A tremendous amount of integration across a wide spectrum. What do you want to do with information? You need to store it. And we&'re going to give you the boxes, the arrays. And what do you do with information? You need to protect it, to secure it, to move it. We&'re going to put all that together. Each [vendor] attacks it from their strength. I think we&'re taking the broadest view.

CRN: What&'s your acquisition strategy in terms of the SMB? Are there holes you&'d like to fill with technology from acquisitions?

TUCCI: Yes, but I&'m not gonna tell you what they are.

CRN: But we can expect as you really break into this game for you to make some acquisitions …

TUCCI: One of the things I&'ve chartered Larry and Dave DeWalt with is, ‘What do you need?&' You should be clear that Larry thinks what we have now as we launch this [SMB initiative] is a pretty competitive and robust offering. That said, Larry&'s got ideas. For me to talk about those ideas would just drive prices up. I&'ve always had a policy of remaining silent. And it&'s a good policy. I personally believe that, before the year&'s up, there&'ll be an add to this market.

CRN: What&'s your channel vision as you move the company forward? Right now, 51 percent of your sales are touched by the channel. Do you see that changing?

TUCCI: It&'s going to go up. We have a great comp system now that allows our sales force, actually encourages our sales force, to work with others. You create this ecosystem that&'s not only the 27,000 people we have out there. If our partners have 20,000, 30,000, 40,000 people, we get all that help. It just makes great sense to me. It&'s something I&'ve believed from day one, and it&'s something that makes more sense now. And especially with Insignia. It won&'t work without partnerships.

CRN: Can you talk about how you see the channel developing in relationship to Dell, and how you see their channel developing with the SMB portion?

TUCCI: The channel has always, and probably will always, dislike Dell to some extent. But, on the other side, I can point to our partners in the channel who have done very well. There is room out there. I think our partnership with Dell is very strategic, very important, and I say that no matter who I&'m with, and take the boos right away from the channel side. And I say, but, look at the opportunity you have. And my word is my bond. The facts speak for themselves. The channel has grown very rapidly here, and prospered.

CRN: One more thing. What&'s your message to solution providers looking at this whole SMB initiative?

TUCCI: We&'ve done everything else we said we&'re going to do. We can&'t do it without you. You&'re going to be part of the EMC family. And you will prosper, both financially and with growth in your company, by working with us. When we enter something, we don&'t do it halfway. Pretty much, we&'ve been silent, testing, doing little things. Dantz has had great success. Now we&'re putting it together.