EMC Does SaaS -- Reading Between The Lines

A relatively big announcement from EMC today, not so much on what we're doing specifically, but how we see the IT marketplace is evolving in very important ways.

The press release looks innocuous enough, doesn't it?  EMC announcing an enterprise version of Mozy-based backup.  Sure, that makes sense, sort of.

But I think there's a much more interesting story here ...

What We Announced

It looked like we announced only one thing, but we really announced three or four separate things.  Put them all together, and I'd offer we're making some pretty bold statements about how EMC sees the future of IT and information management.

When you look at EMC's new MozyEnterprise remote-backup offering, it's attractive enough on the surface -- reliable, secure, simple, and -- of course, cost-effective.

What Are We Saying Here?

First, we're saying that certain information management services (backup only being the first one) may be more appealing delivered as a service, rather than a product. 

Why? 

Besides the usual cost elements, there's a flexibility argument about being to react more quickly to new requirements.  Imagine that you now have to backup 500 more desktops, or 50 more servers, and your current backup environment can't do that easily. 

When backup is consumed as a service, the reaction time to new requirements is almost immediate as compared with traditional approaches.

And, if you work out the costs (included in the press release) for a decent-sized environment, you'll probably realize that it's a whole lot cheaper to do things this way than trying to do it yourself.  The way I figure it, at the published prices, it's about $6 per month for every desktop/laptop, and something like $20 per month for every generic server.

Given the costs of backup software, backup targets (disk or tape), and (most importantly) people, I think people will be hard pressed to position this service as "more expensive" than do-it-yourself alternatives. 

Of course, handing over backup to someone else implies a certain degree of trust, doesn't it?

And, if you're very focused on IT headcount (who isn't?), the idea that using those scarce resources for value-generating activities, rather than housekeeping, will warrant a bit of consideration.

Second, we're saying that to be good at information management provided as a service, you're going to need a platform (e.g. EMC Fortress) to do it on.  You'll need common ways of provisioning, accounting, securing, monitoring, etc.

Every such offering will need basically the same things to be successful: (1) a product designed for a multi-tenancy service provider environment, (2) an environmental platform to run it on, and (3) a route to market.  That's true whether or not you're doing backup, or archiving, or ... all of the above.

That's the logic behind EMC Fortress -- a common platform to provide information management as a service.  Whether we sell it, or our partners sell services on versions of our platform, the notion of a standardized service provider platform is appealing.

The third thing we're saying is that we believe that we'll need to think about reaching customer a bit differently.  Sure, EMC will sell a reasonable amount of this directly using our traditional channels, but we are firm in our belief that we'll see service providers and outsourcers from a variety of disciplines want to get into this market.

And, finally, if you really read between the lines, we're saying that this is so different than our traditional businesses, and such an important trend in the industry, that we believe we need a semi-independent business unit, entirely focused on information management service delivery models, to be successful.

What Does This Mean?

Let me get something off my chest ... I think the industry term SaaS (either software-as-a-service, or storage-as-a-service) misses the point entirely.  Being a marketing guy, names matter to me.

I prefer the term IMSP -- information management service providers -- as a more descriptive name of what we're seeing here.  And I wrote a while back about why I think this will be an important trend to watch in the future.  Simply put: an IMSP is someone who manages your information as a service. 

And it only starts with backup, doesn't it?

But what I really think is that we're seeing a fundamental shift in how IT will be thought of -- more of a service, less of a technology stack.

Whether you agree with Nicholas Carr's latest book or not, the economics and strategic advantage of selectively outsourcing portions of IT to focused, competent service providers is inevitable.

There will be an economic advantage, due to scale.

There will be an expertise advantage, due to focus.

And, finally, for larger enterprises, there will be a flexibility advantage to react quickly to new requirements without traditional IT lead times.

And I think this trend affects just about everyone in the ecosystem to a certain extent.

If you're a technology vendor, you're going to have to start thinking about your products delivered as a service, and not as a product sale.  That's a pretty big shift when you seriously consider the ramifications.

If you're already in the outsourcing business, there will be a new category of services customers will be interested in that don't look like the traditional outsourcing offerings.  Again, a pretty big shift.

If you're already a service provider for, say, telecommunications, you'll be interested in value-add over the network, and information management services will look pretty attractive.  Another big shift.

And, of course, if you're a consumer of IT (as many of you are), the idea of having a choice between a focused service provider, or doing it the traditionaly way, creates new options and new flexibility.  Whether you decide to do this or not, you'll have more choices to choose from in the future.

And more choices is always a good thing.

Comments

[Dan Murphy]

I sure hope it works better than the home edition. I haven't been able to do a backup for two weeks due to software problems.

Dan Murphy

[Shibin Zhang]

Chuck,

My name is Shibin Zhang. I could not help reading between the lines when I saw the title. Yes, I really get something. This is something I like to call "innovation".

Shibin

[Chuck Hollis]

Hi Dan

Sorry you're having problems.

I was surprised at your comment, since I've talked to literally hundreds of people who use Mozy at home (including me) who have nothing but positive feedback.

[jason arneil]

Hello,

Couple of comments:

responding to Shibin first of all, I think the register http://www.theregister.co.uk/2008/01/22/emc_mozyenterprise/
has an interesting take on how much "innovation" is really going on, beaten to IMSP by an online book seller?

My 2nd comment is regarding the line:
"There will be an expertise advantage, due to focus."

Interesting, though there is always the danger that if you have outsourced to several companies all focusing on their one area, how joined up is your IT going to be? And of course if something goes wrong that needs a multi-disciplinary approach to solving do you have to go to multiple points of support?

An IT future whereby us techies all work for outsourcing companies may or may not be great for the bottom line, but there is something to be said for working for a company that does more than just support other peoples businesses!

cheers,

jason.

[Dan Murphy]

Chuck,

I've seen many favorable reviews, too, so I'm also a bit surprised. Support has been frustratingly non-responsive. Still no backup as of last night...

Anyways, what type of market does EMC hope to capture with this service? I can see it being very useful for smaller companies that don't quite have the IT staff they'd like to have. Would Fortune 500 companies subscribe to this type of service? Frankly, I have no idea.

Dan

[Michael Reagan]

And who would have thunk EMC actually had a level-headed game plan with their purchase of Mozy?

Certainly not me. The purchase had all the earmarks of a "lets jump on the SaaS backup bandwagon like everyone else since we're flush with cash from the VMWare IPO" feeling to it.

But maybe I was wrong. Your piece makes me think you guys do get it (no offense intended). But articles are easy; execution is the chariot of genius.

Nice thoughtful post though. And there's not many of those in this space.

[Chuck Hollis]

Hi Jason -- you bring up some interesting points.

First, I'd offer that Amazon S3, Google et. al. are targeting an underserved market of primarily individuals and very small businesses. I don't think their intent is to target medium-sized or larger enterprises that already have in-house IT.

And, of course, innovation is in the eye of the beholder, isn't it?

Second, I see an opportunity for IT professionals to move up the value stack in the corporations they serve. It's already happened in other corporate functions (e.g. marketing, HR, finance, etc.) where the people in those functions use service providers extensively. Why would IT be excluded from this?

Additionally, if you are serious about being a technologist, I think the real opportunities ahead will be at companies that specialize in technology, including a fair share of service providers and outsourcers.

Thanks for writing!

[Chuck Hollis]

Jason, one further point.

It seems that the writer at The Register was generally favorable towards EMC, until we gave an early exclusive to the WSJ on the enterprise flash drive story, and he was very ticked off at us.

Since then Austin Modine has been a bit cranky on us. If you're interested, go search on what he's written before and after that event, you'll see a remarkable difference.

Guess we can't please everyone ...

[Chuck Hollis]

Hi Michael -- thanks for writing.

Yes, we do try to have well-thought-out plans. And, if it looks like we're bandwagon jumping, it belies a fundamental belief that alternative delivery models for IT services will be very important in the near future.

We think we came up with a good, step-wise plan -- the first part of which you see here. And there are more chapters coming.

But, you're right, the key will be execution, and no one -- not even EMC -- has a lock on that one. But we're going to give it our best shot, and -- if we get a few things wrong, and have to try again, we will.

We don't think the trend is going away anytime soon.

Thanks again for writing!

[Shibin Zhang]

Oops. I forgot to mention "(no offense intended)" when I said "I really get it". In fact, I almost never offsense people in my life. I only got mad for a couple of times in years when my friends or other people got offsensed because of me.

In fact, I planed only to comment on Chuck's last article about the flash disks, but I was attracted by this title when I saw it. What I really meant was that it's an innovation.