New Blog Address - Welcome to the Bigger Truth

Howdy,

Update your RSS readers - I've changed my blog address.  The new address is http://thebiggertruth.enterprisestrategygroup.com/

The Bigger Truth replaces my Rants blog - although trust me, I don't intend on changing my ranting ways.  My job, as it has been explained to me, is to seek out the less than obvious, the obscure, and to read between the lines - to help find the bigger truth.  Seems noble, eh?

The new blog has a few changes:

1.  It no longer uses TypePad, as TypePad sucks.  It now uses WordPress, which I hope is better, or at least sucks less.

2. It should make it easier to create comments.  I love comments.  Debates are good.

3. Give us a little time, we'll be collecting and publishing research data on ESG blogs.

4. It has a tag cloud and much better search capabilities.  Won't mean much on day one, but the new ESG website will be integrated and as soon as we turn it on search won't suck any more and finding things you care about should become significantly easier.

Give it a week to shake out, but by all means let me know what you think.

Cheers

Where's the IT Value? Services - Dell Buys Perot

Services get a bad name in the financial world, which is mystifying to me.  On Friday of last week, I was speaking with a VC about a great small IT services firm doing a round of financing - the company is self-funded, is cash flow break-even, and will most likely end the year profitable, doing about $7M in sales.  The VC I spoke with was trying to build a valuation on software they MIGHT have later on - completely disregarding their actual legitimate business value.  Did I mention these guys are locked and loaded in some of the biggest shops in the world?  

I had the same exact set of conversations ten years ago when Glasshouse was shopping for money.  A hundred VCs couldn't figure out that a service led business could generate value, but fortunately a few did.  Glasshouse will most likely be the next legitimate IPO in the space, and will be a killer one at that.

If you want to sell IT stuff in a market such as this, and you DON'T have professional services in place, you either have to have a simple appliance or you are screwed.  If it's simple enough, people can plug it in without thinking too much.  If it requires significant thought in this day and age, they will punt.

Dell has fantastic stuff (they don't get the credit they deserve for rightfully architecting some brilliant solutions IMHO), but it won't matter ultimately because in the highest-end, messiest, cluttered up IT shops, people can't add even the best gizmo on the planet today without causing a catastrophe downstream.

Shops are too overwhelmed, too understaffed, too under budgeted, and too under appreciated to be able to affect wholesale changes internally.  Enter service company X.

If you want to play in the Enterprise, the first thing you need is a seat at the table.  Perot has a seat at the table.  EDS has a seat at the table.  IBM Global Services has a seat at the table, etc.  IGS gets business for anything BUT how fast their super duper gizmo du jour is - by the time it gets to a services led conversation, it is STRATEGIC.  That's the part that VCs don't seem to get.  Gizmos come and go - like your favorite pair of sneakers - but services are the equivalent of a wife - far more difficult to disengage from, and enormously costly when it happens.

Picking up a girl in a bar is tactical and transitory.  Getting married is a much more strategic commitment. Dell could have the greatest blades ever (they might, btw) but the relationship to the enterprise is the equivalent of a casual affair.  Perot is married to the enterprise.  The enterprise has to think long and hard about breaking that relationship up.

This is why I love service companies.  They are spectacularly sticky, and when they bring real value, the customer will go out of their way to find MORE things for the service company to take over.  This is exactly how IGS came to become the 800lb gorilla in the IBM portfolio.  It's why I loved HP buying EDS, and it's why this move by Dell will prove equally brilliant.

WIth all due respect to my pals at Intel, the enterprise customer's wallet will spend according to the advice provided by trusted partners - i.e. their service company.  Why?  Because their executives don't talk to Intel guys about clock cycles, they talk about slightly higher level business constructs - and they talk about them in the board room.  No seat, no talk, no influence.  

The key to long-term success in this business is to intersect and influence strategic decisions that invariably require tactical stuff to be implemented to make it work.  Hardware/software guys make the stuff - services guys intersect the decisions BEFORE they are made, while most others fight to the death to become the victor of a decision AFTER it's been made.  

Nice move Michael.

More Lessons from CIO Finance Summit

Cloud was a very interesting topic

• A giant bank is building their own internal cloud and do not plan to use an external provider due to the inability of providers to provide enough material to pass audits.
  • There will be no SAN in this environment and there will be no Cisco.  They are looking at 10GbE infrastructure from a startup (won't say who) and scale out file systems.  This is BIG giant, zillion user stuff, hence the 10GbE core infrastructure, but what's interesting is the no fibre channel SAN.  This is a HUGE FC/SAN shop.  They figure once it's cloud, its Ethernet - so why not go all the way.  This is the kind of thought process that gives tons of credence to the hopes and dreams of the Maxi-Scale's of the world.  (And by the way - they really need to change that name.  I think you know why). 
  • This will not replace core application infrastructures – it will be used for test and development and research and development initially.  They it will be used to support a predefined class of applications.  In other words - no one is replacing tried and true stuff with latest and greatest buzz just for sport.
• A large bank in the U.S. is using SaaS – mostly vertical market specific application providers – so they don’t have to run the software in house. They didn’t have the development expertise on staff to keep up with the integration and upgrades so they went to the ‘cloud’  This seems logical, as it's why all the rest of us go cloud too - let someone else deal with the issues.  I just care about the app/data.  Interesting to see a primary bank doing it regardless, as they tend to have the most NIH of all IT shops, along with the most legacy reasons to keep on trucking internally.
• Most attendees said that security wasn’t the impediment, it was auditing requirements.  The providers that exist today cannot meet the demands of regulatory audits – I guess this is a ridiculous process that happens regularly.  Most banks cannot afford to rely on a third party to provide certain information on IT infrastructure in a timely manner.  I personally was shocked by this - I figured security would be the number one barrier for this lot to jump to the cloud, but it just goes to show you - the problem at hand is the problem to solve.  Security is an issue LATER, once something happens.  Auditing is an issue right now.
• Service levels, or lack thereof, were also an issue.  One guy said, "we have a 2 hour a problem resolution commitment to the business for an application and associated an infrastructure.  A service provider can easily match that.  But, when a problem actually happens – we are usually demanded to fix it in minutes.  We cannot do that to a service provider.  They can work within the 2 hour agreement."  In other words, IT can give a 2 hour SLA, but when it goes down, that 2 hours is "worst case", the business wants it up in 2 minutes.  When its outside of your control entirely, it's harder to stand over someones shoulder and say "is it fixed yet?"
• Big insurance company said that they have heard every pitch from cloud providers (from IBM to Amazon) and they cannot make the economics work. 2,000 employees, 300,000 agents make access requirements to application a bit of a challenge.  Isn't the whole point of cloud wrapped up in better economics???  If this is an anomaly, ok, but if its systemic, Houston, we have a problem.

These guys couldn't have cared less about ‘storage’ and ‘backup’ and quad-cores and Nehalems. People three rungs down handle that stuff. They were all about business processes – revenue generating business processes.  These are the people I keep telling industry that you have to get to.  I love the guy buying tape cartridges as much as the next guy, but if you want to matter and you want to be successful long term, you best figure out how to intersect (and influence) decisions far earlier in the lifecycle - lest you be toast.

Vendors

• IBM and Citrix were mentioned frequently as very strategic.  IBM makes sense, but I was surprised to hear Citrix in the same breath.  Good for them. IBM has relationships will all these guys - they run most of the data centers.  Interestingly, these guys direct the technology decisions - IBM plugs in the cables and manages it.   Citrix seems to be in the cat bird seat for the previously mentioned VDI/Desktop issues in the last post.  When asked about VMware, the response was that VMware projects are tactical in nature.  Most of the firms were still doing web servers, internal applications, etc.  When you are talking about 5000 servers, these projects take a while
• Logically, it makes sense with the Mainframe bias that CA would be mentioned, but apparently they were mentioned A LOT!  Mainframe management tools are back in style.  The customers liked the pricing model and consulting expertise.  Go figure.

Long story short - check out what other events CDM Media puts on, this one clearly was a good one. Second, listen to me for the love of god - get yourselves elevated.  Be you a vendor or an IT dude, raise your game up to higher levels.  BPM is a nice acronym - but it has meaning.  It IS meaning.  It's why we are all in this game - to codify processes that make us money or save us money.  Simple as that.  If you can't see the forest through the trees, you'll never realize that you are building your tree fort while the forest is being bulldozed down.  Bad analogy, but you get my drift.

Lessons Learned at CIO Finance Summit

Brian Babineau recently attended CDM Media's CIO Finance Summit and moderated a few different panels.  He had some excellent observations, some of which I will share here.

First - since I tend to bash crappy events, I shall give kudos to the CDM folks on this one - Brian said there were 120 very senior IT exec's there - legitimate CIO's and VP/IT types - all from financial services so they all had huge budgets, huge staffs, and huge problems.  (Side note:  Brian suggests that it's worth any smaller company paying whatever the fees are to get into this event - speed dating with this crowd is hugely valuable.)

Takeaway 1: VDI

VDI and virtual application delivery are critical components for these firms due to the distributed workforce. Instead of managing and refreshing individual desktops, many firms are simply centralizing the desktop builds and delivering them to thousands of desktops. Sound like a familiar problem?

• Business continuity is an enormous driver as they want employees to be able to work from any desktop if something bad happens
• Audits are another driver – it’s much easier to secure desktops and execute reporting requirements with centralized application management
• M&A is also a critical driver for a VDI. Some of the firms are being forced to buy banks while others are capitalizing on the economic crisis to buy smaller banks. These transactions have become such a regular occurrence – with many deals occurring in disparate geographic areas – that centralized IT departments on the buy side have no choice but to find ways to simplify the integration as regulators are watching very closely. Many use VDI to get data off of desktops and virtualize application delivery so they can monitor security for auditing purposes

Mainframe is making a big comeback. This, according to almost every attendee, is the easiest way to consolidate systems right now. Almost everyone I spoke with said that they were going to run / upgrade to the largest Mainframes they could buy and separate them into Logical Partitions. They then planned to run Linux on these LPARs to consolidate applications. Most people are using little pieces and virtualizing them to build a virtual mainframe - these guys are using a physical mainframe to create virtual pieces. Interesting.Many attendees commented on how much of a mess certain applications and associated business processes were because of distributed systems.  Server virtualization, and the success of VMware, is actually teaching them how to leverage the mainframe.

• Several attendees also said that the mainframe was going to be their ‘private cloud." Hmmmm.
• Brian also commented on the true meaning of mission critical applications – we are talking billions of dollars passing through a system every day.  One guy said that if a farm of 100 servers slows down – we cannot clear local bank deposits for all of Canada.  And there is no way they are going to run these on ‘virtualized’ servers – way too risky.  If they aren’t on a mainframe, they are on AIX and UNIX.   Meet the new boss - same as the old boss!!

There is a bunch more on Cloud - and why it's mostly horseshit - at least in this type of environment - along with a few other surprising points I'll bring up shortly in a follow on post.

Good stuff, Brian.

Interesting Management Moves from EMC

EMC announced that Pat Gelsinger of Intel would become President of Information Infrastructure at EMC - Dave Donatelli's old gig.  He is a techy chip guy, which is interesting in and of itself - but clearly, he's a volume producing commodity guy and EMC is going to move its infrastructure products toward that end sooner or later.  Now it seems sooner is the order of the day.

What I find more interesting, however, is that EMC put Gelsinger, Howard Elias, and Dave Goulden into the "Office of the Chairman" along with Joe T. and Bill Teuber.

We've all been speculating wildly about Joe T.'s successor for some time now.  Does this make it more obvious or more cloudy?

Perhaps the most telling line in the release is this (from Joe Tucci): 

"Bill Teuber, the EMC Board and I extend a warm and heartfelt welcome to Howard, David and Pat as they join us to form the EMC Executive Office of the Chairman. These are three world-class leaders at the top of their game. We look forward to the impact of their combined vision, strategic view and operational excellence. Together we will strengthen EMC's position as a major player in some of the hottest and fastest-growing market opportunities in all of IT and take EMC into its next phase of growth and market leadership

Is the fact that Bill Teuber is specifically called out merely protocol?  I think it says something.  Could Mr. T be the next CEO?  He is a Babson guy, and therefore is clearly qualified.  If the theory that John Chambers is really Joe's succession plan is inaccurate (i.e. we'll sell it to Cisco), then sooner or later EMC needs a clear successor.  Teuber fits the bill as he's been there forever, knows where all the bodies are, and has been trusted by Joe at the top of the pile.  It remains pure speculation, but I suppose he fits the bill as well as any.  My guess is we won't know until the fat lady has sung.  I don't think this will be an orderly NetApp type succession.

Maybe that's the plan - EMC has done nothing but win with Joe at the helm, so perhaps that is the board's idea - keep him longer by NOT finding the right successor.  He's going to be a tough act to follow regardless.

Come Learn Some Interesting Stuff about Virtualization - Right Down the Street

We've teamed up with Dell, Microsoft, Symantec, VMware, and Intel on a traveling circus and medicine show that's coming to town near you (if you are in North America - for now) soon!  From September 29th pretty much every day through the end of October, we'll be in a city near you!

The content is excellent - based on some killer ESG research and analysis and the attendee feedback has been great.

Here are some of the issues we address:

• Why virtualization is more important than ever in helping IT professionals gain approval and funding for a wide range of IT initiatives.
• What IT managers believe the business is looking for as they approve or reject potential IT initiatives and how it can accelerate or decelerate virtualization deployments.
• Best practices and customer experiences to help guide attendees through the virtualization lifecycle from server/storage consolidation and systems management, to backup, disaster recovery and cloud computing.
• How a networked storage infrastructure is an important building block to consider when deploying server virtualization, and the significant impact it has on deployments.

And a ton more.  ESG presents, hosts a panel of smart folks to discuss and debate real issues from relevant vendor communities, and participates in Q&A - all designed to give IT people more insight into what's real versus theory, and how to actually execute on this stuff.

You can find a complete list of cities and dates at www.virtualizationtour.com

Come on down and say hi!

8 Years Ago Today

Right around now, the world changed.  It was a bad time for humanity.  It was confusing and horrific and gross.  I'd like to tell you the world is a better place 8 years later, but I'm not sure it really is.  Shitheads never really stop being shitheads.

On a positive note, this day always makes me smile as well.  About thirty minutes from now, 8 years earlier, one of the phone calls I got was from my eternal friend Jacob Herbst.  Jacob, some might recall, was meeting at ESG on Sept. 10th in the afternoon, leaving the next morning for NY, early.  Jacob was looking for a VP of Sales at his then new gig, Files-X.  Tony Prigmore reminded me of our mutual friend Mike Beaudet as a possible candidate.

I stopped Jacob in the parking lot as he left ESG to tell him to speak with Mike.  Mike and Jacob met at Logan airport for breakfast, and got along tremendously.  Jacob missed his plane - flight 11.

You get a little perspective on life during chaos and terror filled times.  Hearing a 60 year old Israeli army officer sobbing into my phone was one of those forever moments.

I'd like to take the time to acknowledge the bigger truth, no pun intended, and suggest you appreciate your fortune for a while and forget your misfortune.  Life is hard - but life is good.

I wish the world well today.  Shalom, Jacob.

Cheers

FUD and the Art of Rumor Marketing

I read an interesting blog by Martin Glassborow this morning on FUD in between various rumors about EMC and Cisco in joint venture.

Martin contends that those who spread FUD should have their sh*t together and know of which they speak - that they should know the facts before starting their campaign.  I respectfully disagree, or I should say that while people SHOULD know what they speak of, the whole point of FUD is that you don't have to.  Fear, uncertainty, and doubt is the objective, not just the acronym, and as such, the whole point is really to create those thoughts or feelings.  HOW you create them isn't covered in the rule book (the book of life cheats) - thus, creating them with innuendo, misinformation, or just plain lying is part of the game.

"Oooh, I'm not sure you want to do that, I heard rumors that their CEO was a cross-dressing showgirl on the weekends and that he hates girl scouts AND kicked a puppy" is a statement that likely has no factual basis whatsoever, nor any relevance to the issue at hand (namely, should I buy a server from company X) - but it just might create enough fear, uncertainty, or doubt in the decision making process to circumvent company X from winning - or at least slow down the process.

FUD in technology is like thinking about Jerry Springer as educational television.  Facts have little to do with attaining the intended result.  And the result is all that matters.

I completely agree with Martin about what "should" happen - people should behave like actual humans and should NOT flagrantly lie or mislead simply because that is an easier way to get to a desired outcome than to stand on your own merits, or the merits of your product.  However, whenever money is involved, "right" takes a back seat, unfortunately.

Which gets me to the next point: if FUD is how one company/person tries to alter the trajectory of a decision heading the wrong way (according to the FUDer, not necessarily the FUDee), then rumor marketing is how we start a trajectory.  VMworld is all abuzz about "Alpine" (rumors with code names are taken far more seriously), a supposed joint venture between Cisco and EMC.  EMC is irritated at the noise, but let's face it, the noise works for them.  People are talking about EMC and Cisco doing some magical deal - which is causing panic in some circles and wild speculation in others.  The fact that 99.9% of whatever the rumors are will be proven completely false is irrelevant - the buzz meter is off the charts.  At the end of the day, logic tells me that any deal between these two will be far less exciting than the speculation - which is just great marketing.  Isn't' that what we all aspire to in marketing?  We want everyone talking about us.  We want to take all the attention away from anyone else who might be grabbing the spotlight and refocus all the ADD laden lemmings back on what matters - us!!

So, just like FUD isn't based in fact, neither is rumor marketing.  Spinning yourself around and around trying to stop either is an effort in futility.  You are better off starting your own campaign!

P.S. I just heard about "project death star" - Microsoft and the Latvian government are in serious discussions about invading Red Hat.  Microsoft will kill the code, and Latvia will move to North Carolina. Seriously.

NY Times article on Dick Egan - minor clarification

Ashlee Vance did a nice piece on Dick in the Times yesterday.  In it, I was quoted a ton, which is cool.

One of quotes was this: "He had nothing,” Mr. Duplessie said. “He was a Dorchester punk growing up in a poor, immigrant family. He was maniacally driven for whatever it was he saw, and carried a lot of people with him. He’s that self-made, violent, ruthless, tenacious, brilliant type.”

While I realize how hard it is to listen to a meathead like me spouting a thousand words a minute, I just wanted to clarify the "violent" element of my comment.  What I intended to portray was that Dick was the guy who taught me that a "mediocre plan executed violently was much better than the perfect plan screwed up".  In no way did I mean to imply that he, the person, was violent.  He was ruthless, tenacious, driven, and brilliant.  He expected the same from others.  He wasn't easy to work for, he probably wasn't easy to be pals with either  - he was what he was.  He practiced the art of business violently.  That would have been a better way to say it I guess. He kicked ass in the market, and in the office.  I don't want anyone to interpret my commentary as anything but respectful and in total admiration.  The guy was a god to me.

HDS answers RecoverPoint with InMage

HDS did a deal with InMage for replication/CDP technology, which in a nutshell, was a good idea.  EMC has been out marketing RecoverPoint replication solutions in the midrange market very successfully for the last few years.  HDS has been missing the right stuff in that space, so I'm glad to see they were able to get a deal done with InMage.

Long story short, I dig the InMage technology - it works great.  It is also gives HDS a great set of tools that make it really easy to move stuff from where it is - competitors - to where they want it - on HDS stuff. InMage is really good at doing that all over the place - for primary data, tiered data, archived stuff, disaster recovery, etc.

The deal may seem small, but it opens up a ton of possibilities for HDS - which of course means a ton of opportunities for InMage.  I, for one, will be watching how this plays out, as I really think it gives HDS a whole set of new reasons to go pitch the mid-market again.