Tucci Admits Internal Friction In EMC Federation, But Tells Investors It's OK

EMC has, perhaps, allowed too much friction between different parts of the multiple businesses that comprise the EMC Federation. The company, however, continues to pin its future on the unusual organization that is trying to bring together multiple different technologies into a larger solution, EMC's top executive recently told investors.

EMC Chairman and CEO Joe Tucci late last week told investors at the Wells Fargo Securities Tech, Media & Telecom Conference that the EMC Federation, by focusing on a software-defined world, is already resulting in new business for the company.

The EMC Federation includes EMC Information Infrastructure; virtualization leader VMware; big data and custom app platform developer Pivotal; and security technology developer RSA.

[Related: EMC CEO Tucci: VMware Could Be Spun Off Very Quickly]

EMC in October moved to absorb VCE, its joint venture with Cisco Systems to develop preintegrated Vblock converged infrastructure solutions into EMC by purchasing much of Cisco's equity in VCE. That move makes VCE the newest part of the EMC Federation.

Tucci, responding to a question from Wells Fargo Securities analyst Maynard Um, said that the EMC Federation, by bringing together some overlapping technologies being developed under the overall EMC umbrella, has caused some friction between the various parts of the company.

"I think some friction is good," he said. "And, to be honest, there is more friction than we should have today."

With the EMC Federation, EMC has developed a model that continues to morph over time even as it has produced a lot of value, Tucci said.

The EMC Federation model has three tenets, Tucci said. The first is a similar vision among the different components about where the market is going. The second is a common strategy for building software-defined data centers. In both cases, EMC is doing well, he said.

The third tenet is the separate missions of the different parts of the EMC Federation, some of which overlap by design, Tucci said.

"Think of [VMware's] VSAN and EVO: RAIL being a good [example]," he said. "It sounds like it’s competitive, but it’s not. But underneath it, on the third level, which we haven't done very well, a good enough job -- it’s my fault -- is you need to operationally align and say, 'When are you going to operationally align around sets of customers? When are you going to operationally align around new market activities?'"

NEXT: Understanding the EMC Federation

EMC's customers have already started taking advantage of the EMC Federation.

The company last month unveiled the first of five planned integrated solutions based on technology sourced from multiple parts of the EMC Federation. That initial solution, the Federation Software-Defined Data Center, combines EMC and VMware technology into a flexible platform upon which further EMC Federation technologies can be built.

EMC in late October also launched the EMC Hybrid Cloud, which brings together VMware's management orchestration suite, EMC's software-defined storage, and VMware's software-defined networking and compute.

"There are several big banks around the world, several big telecom companies and several big just other kinds of companies where we are implementing these right now in realtime," he said. "And these are all significant size wins that we are having with our strategy."

EMC also uses the EMC Federation to give customers choice, Tucci said.

"Together we have our edition of the cloud, which uses all our technology. But, again, if you want to use OpenStack technology or Microsoft technology or other technologies that are available, we are glad to use components of our strategy and our capability in our arsenal to help you build and give you choice," he said. "And this choice is really critical to customers."

EMC has placed a lot of big bets on investors' behalf that will pay off very handsomely in the future, Tucci said.

"So, the proof of the pudding is, is this working?" he said. "And last quarter, we produced 9 percent consolidated results. EMC information infrastructure grew at 6 percent, VMware grew at 17 percent and Pivotal grew 24 [percent], and [with Pivotal], we are actually moving to a subscription model. So by the time we take Pivotal public, it will be all subscription, all software and very high-margin services. So some of that growth is actually understated."

The EMC Federation is actually a very important strategy for the channel, as well, said Jamie Shepard, regional and health systems senior vice president at Lumenate, a Dallas-based solution provider and long-term EMC channel partner.

Lumenate has already closed an EMC Federation deal with a large customer that used parts from EMC, VMware and Pivotal, Shepard told CRN.

"We went in and discussed software-defined, not product," he said. "We used everything except RSA."

NEXT: Trying To Cut Through The EMC Federation Confusion

The EMC Federation is perfectly positioned to help develop complete solutions, but it is widely misunderstood, even by EMC people, Shepard said.

"I was talking recently to an EMC sales rep who was going up against Nimble Storage," he said. "I told the rep to sell the Federation. He didn't understand. I told him to not sell EMC, but sell the Federation. The EMC Federation is not a product. It's an ecosystem. People think of the different parts as a few business units in a company. It's not. It's a software-defined ecosystem."

EMC, VMware, Pivotal and RSA customers already have the basic foundation for EMC Federation solutions, Shepard said. "Everybody already understands EMC, VMware and Pivotal, although they often think of RSA as an afterthought. But when EMC talks about the Federation, customers still think it's confusing."

It is the same with EMC investors, Shepard said. "Investors are trying to productize something," he said. "The Federation is different. It's a concept of how to build solutions, of how to build a platform for the future."

PUBLISHED NOV. 19, 2014