December 6, 2013

Growing at 300 Percent Actifio Spurs EMC Reorganization

For the sake of human progress, it’s a good thing that technology keeps improving. People buy the new technology if it gives them more benefit for less money. But for the companies that produce the technology, progress presents problems.

In each generation of new technology, the lead often changes. Blockbuster was the king of renting out VCR tapes through retail stores, but Netflix introduced DVD-by-Mail and Blockbuster went bankrupt. Then Netflix decided to do to itself what its DVD-by-Mail business had done to Blockbuster – introducing online streaming over which it sold original programming.

Not all incumbents can pull off the neat trick that Netflix did or reinventing itself to profit from a new wave of technology. My first book, The Technology Leaders, described four traits of organizations like Netflix.

An example of an incumbent that struggles with self-reinvention is EMC. The data storage company saw its stock peak at about $100 in 2000 and still struggles to reach a quarter of that value 13 years later. When a new storage technology gets some market traction, EMC acquires the company and attempts to sell its product to EMC customers.

But EMC creates separate divisions for those acquired companies, gives those divisions sales targets, and sends them out into the field in an effort to bring in enough business to meet those goals. This does not work so well for customers because they end up having to deal with multiple sales teams from EMC all competing with each other to make a sale. Solving customers’ business problems in the most effective way can take a back seat in the process.

Meanwhile, EMC’s dance with such upstart competitors follows a fairly predictable path. After ignoring an upstart for years – assuming it will go away, EMC starts to pay attention if it takes customers and grows fast. 

As Enterprise Storage Group’s Steve Duplessie explained, EMC then begins a five-step dance with the upstart, noting, “First EMC acknowledges that the upstart’s product category is relevant; then it announces it will introduce a product in six months – hoping to slow down the challenger’s momentum; third, EMC releases something terrible; fourth, the upstart keeps growing and within 18 months is big enough to sell its shares in an initial public offering; finally, EMC or one of its big rivals IBM, HP, Dell, or Cisco, acquires the upstart for $2 billion.”

This brings me to Waltham, Mass.-based Actifio that sells an appliance to companies who want to save money on storing their corporate data. CEO Ash Ashutosh explained that for every dollar a company invests in Actifio technology, it saves $15 in data storage costs. The result is that “Actifio is selling in 22 countries and growing at nearly 300 percent a year,” said Ashutosh.

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