Enterasys CEO: Total cost of ownership sets us apart

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.

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.

Talk more specifically about how you’re helping customers deal with virtualization sprawl, as well as the desire to get to a private cloud environment.

One of the nice things in our solution set is that we have a very flexible switching engine. We’re on the fifth generation of the chipset that supports a flexible policy engine inside the hardware. It’s allowed us to be very flexible and configurable as things evolve. A virtual server can bounce from physical server to physical server and one of the early problems was trying to match that physical switching infrastructure with the virtual switching infrastructure. Our engine was perfectly suited for that. One of the demonstrations we like to show when customers come in and we walk them through our data center is that we could move our main SAP application from one physical server to another physical server and there’s absolutely no reconfiguration of the network required.

Give readers a roadmap of where you’re going in the areas of network management and security.

For us, network management continues to drive toward simplicity of management. We all know that the IT user is being asked to do more with less. We’ve all heard that and all the vendors say, “We’re going to try to fix that.” But from a management perspective nobody is really addressing that. Enterasys is always focused on it and when we win we hear from buyers: “Your management tools are so far better than the other guy’s.” So we’re focused on driving simplicity in management, ease of deployment, ease of maintainability, for the administration burden to be reduced. One of the beautiful stories for us is a big installation at University of North Carolina. The number of users on that network that are supported by less than half a dozen IT staff is absolutely amazing.

BACKGROUND: NAC saves University of North Carolina money, keeps illegal file sharing in check

Automation and simplicity go together. The tools have to be easier and easier to use and they have to be within an interface that is more and more comfortable for the generation of administrators that is emerging. When IP was invented, everybody that was associated with networking was intimately involved and engaged with what a network is and how to set it up. Today, there are way too many configuration capabilities and requirements and it’s not as sophisticated a user with that network. They didn’t grow up with networking. They learned it in school as a sidebar. Making the job of configuring and administering the network easier is something that we’re trying to help our installed base with.

Let’s talk about your Isaac technology, which is pretty cool stuff. Explain the evolution of Isaac and then talk about what early customers are experiencing with it.

With Isaac there are a lot of different things coming together. You have the next generation of users, consumers of IT. We talk about the consumerization of IT. The next generation is used to a different interface that’s more and more about social media, whether it be Facebook or Twitter or whatever. These tools make it so easy to reach so many different people at so many different times. [We’re in the midst] of an evolution of machine-to-machine and machine-to-human communication. Putting all those ideas together our engineers asked: Why can’t we talk to our machines? There’s no reason why we can’t talk to our machines. We do it through traps and alerts already, but why can’t we do it in a proactive way and use social media interfaces which people are already accustomed to using to bring that ease of deployment, ease of implementation, to the next generation of IT users? That’s really how it came about.

Is Isaac still in a trial phase?

It’s still on trial. We offered anybody who was willing to take it on trial up to the end of this year, the calendar year — you could have it for free and then after that we’ll look at monetizing it. But the idea here is really the simplification of IT and that’s what Isaac represents to us. Isaac is just the first part in a move to bring social media to the forefront of administering, controlling, using.

Where does it go from there?

We have some things in the works that we haven’t announced yet. I’ll give you just a little insight into it but the ability to use social media interfaces, whether it be Salesforce.com’s Chatter, or Twitter, or whatever to proactively communicate with the user in combination with the underlining infrastructure. With Isaac today you as an administrator can communicate directly with the machines, back and forth. But those interfaces allow for three-way conversations, four-way conversations. Now you pull that all together and we can share data and information in a group setting. [For example,] from a service perspective, I can be servicing my customer at the same time both of us are able to view and see configuration information on the machines. It takes serviceability of the underlining infrastructure to the next level.

So you are you linking it into your customer support operations?

Yes, the knowledge base, the database. We can do this already today but in the future for the typical user I can store in the cloud the configurations running on their boxes. I can make recommendations on what they should be running based on what I see or observe in their network, all dynamically. From a support perspective, I can communicate to them proactively, if they choose. I don’t have to go through a long list of questions and say, “OK, what firmware version do you have? What do you have turned on? Can you give me this data?” I don’t need to do that anymore. I can do that all proactively.

Speaking of the cloud, tell me about Enterasys’ Cloud Computing CRM framework. What does that mean and how does that help you with customer service and support?

We’re a bleeding-edge company when it comes to business optimization tools. In fact, in our CIO’s office his wall is painted with clouds because we really are on the leading edge of cloud computing. A little-known fact is that Enterasys was once the biggest customer that Salesforce.com had way back when. We’ve got a complete integrated tool set, from ERP, CRM, customer service and support. It’s all connected. My salespeople are connected into the service organization through the tool set, the finance people are connected into the sales organization. It’s a complete sharing of information with full transparency. It’s our use of tools that facilitates the transparency that exists in our organization with our customers to be able to do things and provide data in an interactive way that’s unique.

You have been in secure networking almost from the start. Where do you see that going and how do you see the challenges of secure networks changing, particularly around developments like mobility?

The word “secure” was always supposed to mean two things for us. One meaning was around the security of the network, but the other was that you can be secure in knowing that your network was doing the job it was designed to do. That is based around our technology and that ease of configuration and automation that’s built into the solution set.

When it comes to mobility, if you plug an IP phone into our network we have the ability to know where that phone was plugged in. We can notify you automatically and say, “Hey, a phone was just plugged into your network on this port. Should it be?” Or you can automatically configure a policy that says, “That’s a phone. That’s all it can be is a phone. Don’t allow it to exchange protocols that aren’t a phone.” Those are the types of things that we can do automatically in our tool set.

What we want to do — and what is built into our next-generation chips — is to go to Layer 7. Now, with my cloud applications, with my SAP applications, I can dynamically know the conversation that’s happening on the network. For example, that’s an SAP conversation to which I apply certain quality-of-service parameters and security parameters associated with that.

Talk about the wireless network market. How is that evolving, and what kind of opportunities do you see emerging there for you?

Mobility comes in a variety of ways. You bring your own device — you’ve got tablets and smartphones and they’re connected through the corporate infrastructure more and more when they’re inside the building. They’re in the enterprise. They’re going to be on the Wi-Fi network. So wireless LAN is a tremendous opportunity. The need to support mobility inside the enterprise wireless LAN is growing fast. That’s no secret. The mobility associated with that user doesn’t end inside the building but you have [more] control inside the building. I can assign a control mechanism, a policy mechanism, to what you can do and who you can access. You have a whole different level of security outside the building. You’ve got to give them access to applications that traditionally are only accessed inside the enterprise. It’s a whole other level of security you’ve got to apply to that connection.

Do you see that we would ever get to a completely wireless enterprise?

I don’t think so. For the average user that wireless connection is probably good enough for most things they’re doing. In higher-bandwidth applications like engineering, you’re transferring large files and images and that’s going to be a wired connection for some time. When you can do a download in a matter of seconds versus minutes or even hours, that’s a huge difference. For some applications, you can’t get away from the wired connection.

Are you seeing a big uptake of wireless because of 802.11n?

Oh yeah. 802.11n has the security, coverage and speed that have really opened the doors for enterprises. Some of the verticals like healthcare and education were already doing wireless but now the students or the user, the professor, the doctor, the nurse, they want faster access. They want to be able to do not only business applications but personal applications.

The tech industry has actually done pretty well with the downturn in the sense of people looking to squeeze more productivity out of teams, more collaboration out of teams. Do you expect that to continue or are you worried about economic conditions?

I’m worried about certain regions. Europe is a big unknown and I’m definitely worried about it. In North America we’re seeing a lot of growth. I just read a report, I believe from Forrester, saying we’ll see a slowdown in North America and then you’ll see Europe start to pick back up because they weren’t spending as much in 2011. So, we’ll see a shift from 2011 to 2012. I’m not as worried about Asia Pacific and North America as it pertains to us.

I’m a firm believer that when the economy is down is when good companies invest in infrastructure. It’s no different than a country. You invest in infrastructure and the road systems and transportation systems. When things start to turn back you’re well prepared to handle it. I think a lot of companies are trying to get ahead by investing in their infrastructure so that when that economic boom returns they will be in the best position to take advantage of that.

Talk about the integrations with Siemens Enterprise. How has that benefited Enterasys? What are you able to do that you might not have been able to do without that partnership?

I used to have a boss who said that when you’re yay big, you only get yay deals. When you’re bigger, you get bigger deals. Certainly, the Siemens name has allowed us to get into bigger opportunities. Certainly, with the backing of Siemens — Siemens is a well-known brand throughout the world — people are less concerned about the viability of the entity, so it’s brought strength.

For those customers that are looking at a convergence purchasing decision, a converged managed service offering, we’re being sold together — that is, voice, video and data is all being sold and managed together — so that’s brought deals to us. Also from a go-to-market perspective it’s allowed us to develop some relationships and partnerships that we hadn’t been able to crack before. We’re now building relationships with many divisions within Siemens — Siemens Building Technologies, Siemens Industrial Automation — so it’s allowed us to branch out and actually expand upon that reach.

In this North American market, where most of our readers are, what’s the perception of Siemens? Does it carry the same weight as it does in Europe or other parts of the world?

It doesn’t carry the same perception. In North America, from an IT perspective, Siemens is not as well-known as in Europe. Siemens as a brand is extremely well-known in North America for power, utility, lots of other things. Siemens Enterprise Communications has a strong business in North America, absolutely, but they are not typically viewed as the IT company in North America.

How do you see the relationship evolving? How does the business develop with Siemens?

Today, we continue to operate under the two brands of Enterasys and Siemens Enterprise Communications. When Siemens Enterprise Communications is selling voice and video solutions into an existing enterprise, let’s face it, most of those networks are Cisco and HP networks or somebody else’s. They have to have the flexibility to go in and sell a solution that sits on top in an interoperable way. We also need that same opportunity so when it’s a Cisco voice environment Enterasys can be the underlying infrastructure. The relationship also gives us flexibility in terms of who we’re able to partner with and who they’re able to partner with. So I see the relationship, at least for the foreseeable future, continuing to operate the way that we’re operating, which is meant to really get the most out of the opportunities that exist in the market.

A major theme for Siemens Enterprise is unified communications. How do you help deliver that and how do you see UC evolving?

UC means a lot of different things to a lot of different people. UC to some people is just that messaging that sits on your desktop. Some of it is presence to know whether they’re connected or not. A lot of people when they think of UC are just thinking of what they get out of Microsoft OCS. [Ed. Note: OCS is Microsoft’s Office Communications Server.]

But UC can mean much more than that. Unified communications is meant to be a vehicle for integrated applications around voice, video and whatever else — your CRM tools, your ERP tools. It’s not just about voice and video on a network. The development of UC is going to continue and grow dramatically and you need open interfaces. You’ve got to be able to partner with a lot of different vendors — application vendors — to deliver that complete solution. Siemens Enterprise Communications has taken a holistic view of it, not just a desktop point of view. They get how you and why you would want to embed communications inside that complete application solution set up.

Let’s shift over to marketing. What are you doing to get more visibility in the marketplace and gain more customer awareness? How is your marketing and communication strategy evolving?

It’s evolving. Calendar year 2009 was a tough time and we, like everybody else, hunkered down and pulled back on discretionary spend. One of the areas was marketing. We focused on the R&D side. We knew that we had to do a complete product refresh so that when the economy came back we were ready to take advantage of it. We’re demonstrating that now with our year-over-year growth. We’ve been investing heavily the last year on the marketing side of things. When I say heavily, you know, we’re not Super Bowl advertisers. But driving that brand awareness about innovation, about customer service and support, is a big part of our strategy. Visibility and awareness has been a problem for Enterasys. We are trying to address that problem very proactively.

How will you go about doing it?

More shows, more press, more events. We have to proactively go out and get our names in front of a lot of different people in a lot of different ways. Take Isaac, for example. We need to leverage that to its fullest. Marc Benioff [CEO of Salesforce.com] in his keynote at Dreamforce in front of 44,000 registered users and live streaming to many tens of thousands [of others] sandwiched Enterasys [Isaac] between [demonstrations about] Toyota and Coca-Cola. That’s an example of us leveraging our capabilities in a much bigger way. We made ourselves bigger by demonstrating our technology in an innovative way.

To sum up, what’s the message about Enterasys you want burned into the minds of IT buyers?

First of all, we want people to know who we are and what we do, so that goes back to the awareness side. We want to take that question off the table, “Who is Enterasys?” People know who Cisco is. People know who HP is. Our value proposition is focused on total cost of ownership and that total cost of ownership is about the technology, the serviceability, the manageability and our total customer approach. We’re going to give you the best experience that a customer can have when you’re buying from a vendor in this space.

I took over as CEO on the heels of the prior CEO passing away, unfortunately, in the midst of the worst economic conditions. That first quarter I was CEO is when the market dropped 25%. Not only did we weather that storm, we came out of that storm stronger than when we entered it. We just completed the best quarter this company has had since 2004. Enterasys is strong. We’re one of the early innovators in this space. We had to rebrand from Cabletron to Enterasys but we’ve been in this business for over 25 years. We’re demonstrating, by far, market-leading growth in this space. We’ve done some very good things. We’ve had a product refresh. We’ve had a complete redo on our marketing to drive awareness. We’re back and we’re strong. That’s the most important thing I want to get across to the marketplace.