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Customer focus, innovative structure prep EMC for success

Rob Enderle | May 12, 2014
Most tech companies, not surprisingly, focus on engineering. This fosters innovation, yes, but not all of it's necessary. Witness all the firms trying to become cloud service providers. EMC, however, has always put customers first. That approach will help the firm emerge largely unscathed from a changing market.

EMC Won't Become a Cloud Service Provider Because It Wouldn't Make Sense
Let's look at the cloud service provider decision. An engineering company would see the tendency for companies such as Amazon, Google and Facebook to build their own products as a product problem to solve. Thus IBM is licensing its processor technology to Google and going into the cloud services business. Its fix is to buy or build a competing product to address the threat.

A customer-driven company, however, sees this as a customer satisfaction problem: We must not be building the right product, or else the customer would be buying it. Thus EMC is building a platform it thinks will appeal to, not compete with, companies such as Amazon. Neither strategy is inherently wrong, and both remain consistent with each firm's focus. Both paths require the firms to learn the new business, to change organizational structure and product make-up, and to make a major acquisition to get to market timely.

The engineering approach means getting a competitive product to market and then remaining competitive in what's likely a new market segment. The customer approach means finding or creating something cloud services providers find interesting and then creating demand in what's now a "not invented here" environment. Once successful, the customer-focused company has a lasting advantage: The ability to leverage a variety of sales partners. The tech-focused company, on the other hand, will have to staff up to fulfill this requirement - and that typically means hiring out of the established firms.

Success generally depends on the customer set. If it's the same, then creating a competing product may bring more long-term success because the vendor can better control the outcome. When going after government business like the CIA, the IBM approach should be more successful. If you go after end users, where AWS has historic success, then the EMC approach makes sense. Its solution leaves a working sales process in place — and EMC's strength isn't consumer-facing services.

EMC won't become an AWS-like cloud services provider because it's against its model. From the standpoint of EMC's approach to the problem, it doesn't make sense.

One part of this does require additional attention. To succeed, both approaches must re-architect hardware and software to address the reason Web services firms didn't buy the solution. EMC's approach forces that up front, while engineering-focused firms tend to force fit what didn't sell into their solution. This seems like an easy fix, since the vendor defined the solution, but this can reduce substantially the competitiveness of the resulting effort. In effect, the easy fix often seems to be to just go into the business, but this often turns out to be more difficult path, as it puts off the hard decisions.

 

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