By Ed Attwood
EMC Corporation CEO Joe Tucci explains how his firm can help cope with ‘Big Data’
Joe Tucci has the patient look of a teacher explaining a complicated concept to rather a slow student. It’s only a few minutes into the interview, and Tucci – one of the IT industry’s most highly regarded veterans – is already talking about zettabytes.
What’s a zettabyte? If, like me, you were blissfully unaware of the term, then prepare to be bamboozled. It’s a unit of computer storage that’s equal to one sextillion bytes, or to make that slightly more manageable, the equivalent of the storage capacity of a billion terabyte hard drives. To put it another way, a zettabyte has been variously equated to 36 million years of high-definition video, 250 billion DVDs, or everyone in the world posting Twitter updates continuously for a century.
That’s a lot of data. And data is the life-blood of EMC Corporation, the Massachusetts-based Fortune 500 firm of which Tucci is CEO. As the need for secure information has skyrocketed in a world where data is ever-increasing, EMC has carved out a niche that is both vital to its thousands of big-name clients and happens to be pretty lucrative as well.
If the global recession had threatened to hurt the fortunes of the biggest IT firms, Tucci clearly hadn’t read the script. The tech blogs have been unanimous in their praise of EMC’s numbers last year; record revenues of $20bn (up 18 percent year-on-year), while profits jumped to $2.5bn (up 30 percent).
“We’ve got a model that we’re sticking with,” Tucci says, with admirable understatement. “On a cash basis, we’re spending about 12 percent of revenue on research and development. The other thing we do is to take a big piece of our cashflow and we’re very acquisitive. If you look back over the past five years, we’ve spent a little over $2bn a year buying tech companies – that’s our model.”
But why has the interview segued so quickly into a discussion about zettabytes? In 2010, according to a study by the independent International Data Corporation (IDC) and EMC, the world created 1.2 zettabytes of information, breaking the 1 zettabyte barrier for the first time. In 2011, there is predicted to be 1.8 zettabytes created – an astonishing rate of growth. In the decade between 2010 and 2020, IDC projects that data growth will soar 50 times over.
It’s easy to cast aspersions on a study that predicts what will happen in the IT industry ten years into the future. After all, in 2000, there was no Facebook, no Twitter – not even iTunes had been released. But Tucci points out that the same group also produced a study for the last decade – and their projections had been “eerily on target”.
“They look at how many people are going to be connected, and ask what the trends are out there,” he says. “What are oil companies doing in terms of geoscience? Look at Hollywood, how are they making movies? To create a single picture like Avatar, I’m told that was a pedabyte [a thousand terabytes] of data – just to shoot it.”
“For the last few years, you had to be connected – either via a hotspot or tethered to a wire,” Tucci continues. “Now, no matter where you go, no matter what time of day, no matter where you are, you’re connected – and you’re communicating all the time.”
“Videos are going to be on demand, more and more movies are being shot in 3D, and movies will be rendered digitally. Look at the demise of BlockBuster in the US – it’s a huge company and it’s just gone. It’s just amazing how these shifts happen.”
Needless to say, all this means huge challenges – as well as opportunities – for companies like EMC. The IDC study says that while data will increase by 50 times over the decade, the number of IT employees managing the information explosion will only grow by 50 percent. For Tucci, this is his biggest worry.
“We need a wave of people, and this is where jobs are going to be, that can take advantage of this technology revolution and really create this knowledge economy,” he says. “There’s not a culture that’s been built in the history of man that didn’t become great because they tapped into the masses. Now, the way to tap into the masses is you educate them, and then when you educate people, they want jobs.”
This ties neatly into why Tucci is visiting Dubai in the first place. Prior to our interview, the CEO has just finished off a press conference in conjunction with Dubai-based knowledge industry cluster creator TECOM Investments. The MoU signed at that meeting will see the US giant provide local universities with curricula on advanced technologies.
Of course, EMC isn’t the first firm to make the trek to the Gulf and pledge to help build the knowledge economy. And it won’t be the last – ‘offset’ deals such as this are a canny way to build bridges with local governments. But for Tucci, this seems to extend beyond mere lip-service.
“I think we’ve been very successful, and if you’ve been successful and have a soul you should give back,” he says. “And I know this is an area where jobs are going to be, so it helps us and our industry. These people that are being educated are going to come to us. We couldn’t hire them all, so we’re also benefiting competitors in the industry, and that’s fine by me.”
More generally, Tucci says that EMC will continue down the path that brought it such strong results in 2011. He remains silent on the acquisitions he will target for next year, indicating that this will be depend on “the timing of what’s available and what we really want”.
The CEO also points out that the tech company will also continue to build on the obvious pillars of its recent strategy. One of those, claims Tucci, will be “a brand new level of efficiency”.
“We believe that cloud computing can save customers 40 percent, and that’s a lot of money,” he argues. “Capex is buying a server, and opex is supporting a server. Everyone talks about capex and getting a PC or server for less money, but on the other side all IT organisations have a bigger budget on the opex side than the capex side.”
A second pillar is greater control of the applications that are being run; in terms of the private or public cloud, Tucci says the aim is to allow customers to set their own privacy levels and service level agreements.
A third area – on which Tucci is perhaps most fervent – is that of choice. In particular, he rails against those vendors who pursue ‘stack’ practices; in other words, those who lock clients into their products for all the components that go into a particular software application.
“Some of our own people are even asking why we are doing that,” the CEO says. “We own 81 percent of it [the application] and we basically control the endware? But it’s not choice. And that’s something I insist on.”
A great deal of EMC’s current focus is on the cloud – both public and private. As space on conventional storage systems struggle to cope with the zettabyte era, more and more information is being shifted to the cloud, which is causing a degree of concern among some clients.
But Tucci, unsurprisingly, is a strenuous defender of the cloud.
“The biggest thing I fight is that a lot of people, when they think of the cloud, they think that something is public,” he says. “But what we’re saying that you can transition existing data centres into cloud data centres – what’s called the private cloud – which is the bigger piece of cloud computing.
“I think the resistance is more towards the public cloud, because they all work differently, and people still wonder how secure they really are. But right now, most companies that we work with of size – either companies or governments – are working to install a private cloud. So that’s gaining really good traction.”
Those worries about security are not unfounded. Hacking attempts – whether amateur, state-backed, or due to organised crime – have recently been made against entities as diverse as Google, Sony and the CIA. The issue has gained even greater prominence in the Middle East recently, as Saudi and Israeli hackers carry out tit-for-tat attacks against banking and stock exchange websites.
“Every year they get smarter,” Tucci says. “And every year, we’ve got to get smarter to stay ahead of them. I wish I could tell you I saw an end to this, but I do not. It’s going to be an area that we invest more and more in, and I think it’s going to be an area that organised crime invests more and more in.
“By the way, I can assure you that we’re seeing a partial list [of companies that get hacked]. Obviously, if you’re in banking and a credit card gets stolen, you are virtually obligated to disclose. But there’s a lot of companies that get some patent information stolen that are not obligated to disclose and they don’t.”
Overall, Tucci seems happy to be part of an industry that is still seeing excellent returns despite the financial crisis. Last year’s good results may go some way to explaining why the 40-year industry veteran has decided to extend his tenure at EMC until the end of 2013. But it’s not just EMC that has been performing well. Recent results have shown SAP has seen total revenue rise by 14 percent in 2011, helped by impressive software sales growth of 22 percent. Google saw fourth-quarter revenues rise by 25 percent.
So why, and how, are the tech firms bucking the trend? Tucci trots out the usual line about information technology being one of the few ways to achieve improved productivity in a recession.
But he also voices his concerns about how the development of the knowledge economy in his own country is leaving the uneducated behind.
“In the US, if you get underneath the figures, unemployment for college grads is 4.4 percent. Unemployment for college drop-outs is around 15 percent, which is a huge difference. If you drop out of high school and you’re living in a developed economy, what are your chances of getting a job? Those opportunities are going to diminish more and more, every year.
“If I were a government leader, and I never will be, I would make sure, fundamentally, more than anything else I do, that I was educating youth. Because if you don’t, you don’t have a prayer for tomorrow – you are facing huge unemployment.”
In a period where voters are expressing an unprecedented lack of faith in the ability of political leaders to do what’s right for their countries, it seems that it’s up to companies like EMC to prepare the groundwork for the future.