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Enterasys CEO: Total cost of ownership sets us apart

Enterasys' Crowell on battling Cisco and HP, the emergence of fabrics, and a not-so-secret weapon named Isaac

By , Network World
October 06, 2011 05:09 PM ET
Chris Crowell

Network World - How's this for a challenge? The CEO dies suddenly and you're tabbed to take his place -- on the heels of your network infrastructure company entering into a major new strategic partnership and in the midst of the worst economic downturn since the Great Depression. Oh, did I mention your competition includes some companies named Cisco Systems, Hewlett-Packard and Juniper Networks, among others? That's life for Chris Crowell, CEO of Enterasys Networks, who took over in 2009 shortly after predecessor Mike Fabiaschi's untimely death. Since then, Crowell has refreshed Enterasys' product line, pushed for the development of innovative new social media-based network management capabilities that promise to make life easier for network admins, and achieved record sales in the last financial quarter. In this latest installment of the IDG Enterprise CEO Interview Series, Crowell spoke with IDGE Chief Content Officer John Gallant about how Enterasys is competing against networking's big dogs, explored an upcoming fabric launch expected in October and talked about the company's partnership with Siemens Enterprise Communications. He also explained why "Isaac" is so important and where Enterasys plans to take the technology.

What is the unique selling proposition for Enterasys? How do you position the company to customers versus the companies that they hear about a lot more about, like the Ciscos, HPs and Junipers?

We compete with everybody, every day, and when we win, we win for a variety of reasons. We like to think our biggest differentiation is total cost of ownership. I can list technical differentiators -- there's customer service differentiation, there's value differentiation -- but our total cost of ownership across our complete offering is going to be better than the next guy. A key part of our sales cycle is demonstrating that our total cost of ownership is better than the next guy's.

Juniper talks about that a lot and tries to use that as a wedge against Cisco, talking about having a single software platform, for example. What do you hinge your TCO story on? What are the elements of making that case?

The first part, obviously, is the initial capital expenditure and I think we're very competitive there. You know we're not at the Cisco or Juniper end [of the price spectrum] and we're not at the HP end in terms of the actual cost of acquiring the capital in the first place. But our cost per box is very competitive, certainly when you compare it to the big guys. But more than that is the longevity of that box, the value in that box, the quality of that box -- and that's just the hardware side.

The management piece is the most important part of the story. At Enterasys -- and before that at Cabletron -- we put a lot of value and a prioritization on building out management solutions that make the job easier for the administrator. We have built-in automation capabilities in the firmware that allow the hardware to do things in a less burdensome way than the other guys do.

CASE IN POINT: Enterasys bolsters switches with automation, access control

The last piece of TCO is really on the service side of things. Most of the vendors now are carrying lifetime warranties on their products. Our lifetime warranty on our hardware is very competitive, but the longevity of our box is going to be better than the next guy's. We're building hardware to last five to 10 years, not three to five years. We take a different angle on customer service and support and we have some things we live by. We assume the problem is ours until it's not and the other guy assumes the problem is yours until it's not. All of our support here is insourced, it's not outsourced. Our guys are highly tenured and understand the market, understand the competition, and we're there to help.

If you put all those pieces together, the cost of the box, the lifetime of that box, the manageability, the less burdened overhead and the serviceability, it's going to be a better experience for you.

Let's talk about the competitive landscape these days. HP has become a stronger competitor by pulling its networking group more tightly into the company than it had been in the past. It seems for the first time that Cisco is stumbling a bit. There's a perception that its management structure wasn't working, that it got into too many markets. How are you dealing with, and capitalizing on, what's going on in the market?

We just had an earnings announcement release for last quarter where we demonstrated 25% year-over-year growth. If you look at the big guys, they're not anywhere near that. They are single digits at best and some are actually declining and we are taking advantage of that. One of the ways we do it is that we're much more nimble and flexible than the big guys. We can do things more aggressively. We can price more quickly. We can demonstrate value-add more quickly than the other guys and we have a demonstration capability that is unique in the market. It allows us to get in there and show value much better than the next guys. Not all bids give you that opportunity, though. Some of these bids are just pure auction-type bids so you're competing against everybody. You've got to demonstrate value in total cost of ownership without the ability to really sell. That is a harder challenge.

It used to be that you were competing against one other vendor. Now you're competing against three, four, five -- but because of that dynamic we are invited into more bids. People used to say: "OK, going into this bid it's the top one, two, three guys." Now they are looking at five, which makes it more challenging but it also means you're in more opportunities.

How would you say the buyer's mindset has changed toward the big players? Is there an opening against Cisco that there hasn't been in the past?

It depends. There is an opening, but Cisco is obviously closing a lot of business that none of us see. There's still the Cisco mindshare. I do my own calling campaigns to try to open doors and there's this mindset: "We're Cisco. We're not changing. We're not looking at anybody else. It's just Cisco." That's where Cisco is earning most of their money today. But for those that are willing to look at other opportunities I think the mindset is that it could be anybody. It's not just, "OK, we're going to look at HP." It could be anybody. I think HP is getting more shots than the rest of us right now but all of us are in a position where we can be competitive against Cisco.

ANALYSIS: Enterasys looks to head off Cisco, Brocade data center plans

Would you say this is the first time you've seen a real opportunity against Cisco because it seems vulnerable?

I'll relate a quick story about a nice win in Turkey. I congratulated the salesperson and his comeback to me was, "Just like the good old days," because we were only competing against Cisco. What he meant by that is if you're competing just against Cisco you only had to beat Cisco and you could beat them on any one of the fronts [described earlier]. If you're competing against three or four other vendors now, it's like you're fighting some of the goodness of all the three or four other vendors. There was always an opportunity to compete against Cisco if you break through that brand recognition. But the dynamic has changed. There are more people competing but there are also more doors open for others to compete.

So how would you characterize the change of mindset among the network buyers? What are they looking for today and what are the big hot-button items for them?

Data center is a big build-out opportunity. Storage is going through the roof, as well as the advancement of the data center with green initiatives and virtualization and lower costs. Those are all big buying decisions. We're focusing the messaging around the data center because people are building out from the data center. It has become the center point for all things that are evolving: virtualization, cloud computing. People are looking for that as an enabler in most of the commercial enterprise. In higher education, in K through 12, they're doing things to enable the mobile user -- the mobile user being the student, the teacher. Healthcare is much the same. The data center is important but mobility is becoming more of the buying decision than the data center.

When it comes to the data center, the big thing seems to be fabrics these days. What's the Enterasys position on fabrics and do you think customers really get what the fabric delivers?

Fabric to me is just the flattening of the layers. Today we have a multi-mesh, multi-hop network and it's the flattening of that. The term has been around for a while but it's the hot term for the industry right now. The biggest reason for its development is that the data center is all moving over IP. The SAN days are over; IP-attached storage is the new way. You have high-end servers with 10G connectivity, going to 40G, going to 100G, and you want to have this completely flat network. That's the reason fabric is so important. For the user it's less complexity, being able to have multi hops of connectivity, redundancy, without the complexity of the old mesh technology like spanning tree. There's a lot of value in that direction.

We haven't formally announced our next-generation fabric architecture, which we'll be doing shortly. Our approach is to remove the silos, because if you look at what a lot of the vendors are doing they say, "OK, here's our fabric architecture and then over here I've got my connectivity, the edge access architecture, and then I've got my core architecture." What we're going to do is bring to the market a simplified, unified approach -- same set of tools, same OS, everything the same -- and it can span from the edge to the data center.

The big challenge, it seems to me, when you pitch a fabric is how do you get someone who already has a big network that has other vendors in it to commit to the fabric architecture that you're laying out for them?

At the size we are, we have to be interoperable and standards-based so we can operate within any network. It doesn't matter. There are very few networks where there isn't another vendor. Some of the fabric designs you're seeing will lock you in to a single proprietary design. That's not our approach. Our approach is very standards-based and we'll be looking to the IEEE and IETF, for example, for new standards for data center bridging. We're not going to try to lock customers into a proprietary solution.

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