Partnering for Profit
There's been a turnaround brewing at high-flier and hard-faller EMC Corp. since Joseph Tucci took over in 2001. On October 16, the data-storage company announced its third straight quarter of increasing profitability. How so? A humbled EMC, once known for throttling competitors, has learned to work with them. It's making its storage hardware compatible with rivals' systems.
From Joseph's original entry:
Tell us what you do (or what your team or organization does) and the specific challenge you faced.
Joseph Tucci, CEO EMC Corporation Hopkinton, MA During the 1990's, few NYSE listed companies were hotter than EMC. EMC was one of the two best performing NYSE stocks in the U.S. (behind only Dell), yielding a striking 84,000 percent return. Annual sales grew 40 percent in the peak years, and in 2000 revenues reached $9 billion. But by late 2001, with the entire IT industry reeling, EMC stumbled and faced several serious new challenges. The company went from being the dominant high-end storage provider to facing heavy competition from Hitachi and IBM; it experienced a 90 percent drop in its stock price; and lost about $1 billion in revenue. The realization began to set in that concentrating on expensive, high-end data storage hardware and related software could no longer be the sole focus of a company struggling to survive the economic downturn. Enter Joseph Tucci.
What was your moment of truth?
In order to break EMC's "go-it-alone" mold created in the 1990's and reshape the Company into one of the most balanced hardware, software, and services companies in the IT industry, Tucci had to steer EMC into a three-point turn. He first turned his attention to EMC's product portfolio. Despite an anemic IT spending environment, Tucci continued to aggressively invest in new product development. He increased the percentage of revenue invested in R&D, while at the same time pursued several strategic acquisitions. In the past six months alone, Tucci has spent north of $3.5 billion on LEGATO, Documentum and VMware, which are all technology leaders in their respective software fields. The result is a dramatically different product line that now extends from entry level to high-end information storage systems, storage software and information management solutions. Recognizing that EMC would need help getting this broadened product portfolio to market, Tucci forged several channel partnerships with former competitors such as Dell, BMC and MTI, and technology alliances with tech heavyweights Microsoft, Oracle and Cisco. Finally, Tucci turned to EMC's corporate make-up. He put together a strengthened management team comprised of both EMC veterans and the industry's top senior leadership. He also aligned EMC's business model and cost structure to the emerging opportunity of information life cycle management.
What were the results?
As 2004 begins, EMC under Tucci has made that three-point turn. In 2003, EMC was profitable every quarter; had sequential revenue growth; and grew faster than the industry, taking away market share from its competitors. The company also had strong growth across each of its major product lines, an indication that customers and partners are enthused about EMC's broadened offering. In addition, as a result of the acquisitions of LEGATO, Documentum, and VMWare, Tucci's EMC finished the year as one of the world's ten largest software companies. And with a new management team in place, EMC's stock price rebounded 110 percent during the 2003 calendar year, a clear sign that investors and customers support Tucci's changes to EMC. The company is well on its way to fulfilling Tucci's goal of EMC extending its leadership in information storage and management, providing storage solutions to help organizations extract the maximum value from their information, at the lowest total cost, across every point in the information lifecycle.
What's your parting tip?
"Get your house in order and then go after new growth opportunities"