What could drive a traditional hardware company like EMC to spend roughly $3.6 billion on three big software companies over the past nine months? Consider an IT customer like CareGroup Healthcare System in Boston, which uses EMC systems to store data on 9 million patients across six hospital sites.
What could drive a traditional hardware company like EMC to spend roughly $3.6 billion on three big software companies over the past nine months? Consider an IT customer like CareGroup Healthcare System in Boston, which uses EMC systems to store data on 9 million patients across six hospital sites.
“We’d like to put everything on the highest-end EMC Symmetrix, but frankly we can’t afford to keep 70T bytes on that particular system,” says CareGroup’s CIO John Halamka, referring to EMC’s flagship array, which starts at $400,000.
To more cost-efficiently distribute its data, CareGroup has bought into the concept of information life-cycle management (ILM), a software-driven approach to organizing and storing the vast amounts of data created within companies based on the data’s value. CareGroup uses Symmetrix for “need it now” data, EMC’s Clariion gear for less frequently used data and EMC’s Centera for data that must be kept but is rarely accessed.
EMC has also bought into ILM and in a big way, as its buyouts of Legato Systems for $1.3 billion in July, Documentum for $1.7 billion in October and VMware for $635 million in December illustrate.
“These acquisitions were central to EMC’s goal of being known as the ultimate life-cycle management company,” says Howard Elias, executive vice president of corporate marketing and new ventures for EMC.
The deals also let EMC shift more of its revenue to high-profit-margin software, a key strategy for the company given the tight squeeze on hardware margins (see related story).
EMC’s challenge this year is to digest its acquisitions from a product and a business standpoint.
ILM strategy
From EMC’s perspective, the basic tenet of ILM is to provide tools and services companies need to maximize the value of their information while reducing costs at every point along the way, Elias says. That means understanding every piece of information and its importance within a company and then placing it on appropriate storage, rather than simply throwing data on disk drives.
Gaining this additional intelligence is where the software acquisitions come in, EMC executives say.
David Goulden, executive vice president of customer solutions, marketing and new business development at EMC, cites six levels of ILM, starting at tiered storage at the bottom and finishing with integration and management services at the top.
The first is tiered storage, which makes the best economical and business use of all EMC’s hardware products: the high-end Symmetrix, less-expensive Clariion and least-expensive Centera storage arrays.
The next level involves protecting, managing and migrating data dynamically, Goulden says. This is where Legato’s software comes in for EMC.
Legato’s NetWorker data protection and recovery software, and NetWorker PowerSnap and RepliStor enable rapid recovery, Goulden says. EMC plans to integrate its mainframe protection product, EMC Data Manager, with NetWorker longer term.
The third and fourth levels of ILM are intertwined, according to Goulden. They are the ability to implement policies that can classify data and applications based on business rules; followed by the ability to manage structured database, semi-structured e-mail and unstructured file data based on those rules.
This third area – the ability to move data based on rules – is one that EMC still needs to work on, analysts say.
“EMC needs to have some additional storage technologies that tie together their ILM process, almost a policy engine,” says Jamie Gruener, a senior analyst for The Yankee Group. “Documentum software will provide some of that.”
Documentum says its software is especially good at classifying and managing unstructured data, such as documents generated in Microsoft Word, Adobe or HTML. EMC estimates that up to 80% of data is unstructured.
“We brought capabilities EMC did not have before,” says Documentum CEO Dave DeWalt. “One is called content-awareness. We have the ability to tag and track the life cycle of content. By tagging it, we can determine how long the article will be good for, who can see it and what type of storage it should be saved on.”
Documentum’s Content Server, Document Control Manager and other products provide a repository for storing, managing and retrieving documents, scanned images, Web pages and reports based on rules IT administrators set. They also feature access control mechanisms, search, workflow and versioning so data can not only be retrieved quickly but also categorized for movement from one storage device to another. EMC says these products will remain as independent offerings, although the company is evaluating how best to integrate them with its management tools.
To address how to handle the 20% of data that is semi-structured and structured, EMC will point customers to its Legato software, such as ArchiveXtender, DiskXtender, SANXtender and EmailXtender. EMC also has announced a database archiving product, DatabaseXtender, from technology obtained via Outerbay Technologies.
The fifth level of ILM, Goulden says, is more future-oriented.
“If we look a year out, we see an environment where the entire storage system and the servers attached to it will be virtualized,” he says.
“There will be a pool of resources, [and you’ll be able to] dial in your service levels based on the need of the applications,” he adds.
EMC is working on software for release next year that combines storage virtualization technology the company has been working on with VMware’s server virtualization technology.
“There is networking virtualization, storage virtualization, compute virtualization, and for the customer to have all that start being seamless is a great thing,” says Diane Greene, president and CEO of VMware.
VMware’s products include VirtualCenter, which is a management interface; VMotion, which lets live servers be moved from one virtual machine host to another; and ESX Server, which allows server partitioning.
From EMC’s standpoint, the top level of ILM consists of integration and management services. Analysts speculate EMC could look to acquire companies with expertise in this area.
“Services will be a huge component of ILM to help customers assign values to the data and set up their data life-cycle processes, which is a bear to do,” Gruener says.
While EMC’s Documentum, Legato and VMware deals have been its highest-profile software buyouts, the company has snapped up 13 other software vendors over the past five years. Together, they have moved EMC into broader-based competition with companies such as HP, IBM and Veritas Software.
“Until now they’ve competed with these vendors on a set playing field – the storage market,” Gruener says. “Although this is pretty risky for ‘EMC classic’ to undertake, the rewards could be significant – transforming EMC into more of a data center management company that also sells hardware.”
Senior Editor Jennifer Mears contributed to this story.
