Last week I met with members of the IT team at a regional law firm here in Florida. The local rep from one of my vendors accompanied me to discuss a Storage Area Network project we’ve been working on with this customer. At one point the manager on the project asked for my vendor rep’s predictions for the future of the company. To his credit the rep’s answer was frank: “At some point in the next two years we will probably be bought by one of the big guys.” The discussion then turned to speculation as to which of what I call “The Big 5″ IT companies (it’s not hard to figure out who they are) might be the likely acquirer. In the end it was decided that this was of little consequence in the context of this particular project. Why? Because we came to the conclusion that if the customer purchases a new SAN from this vendor now and the vendor is acquired by a Big Five company in two years, it will take at least another year for the acquirer to screw it up, which is within the customer’s time horizon for use of the SAN.
In the meeting we discussed numerous recent acquisitions by the Big 5 and not one was viewed as a positive long-term customer experience. It occurred to me that in the Small & Medium Enterprise (or SME) customer world, where I primarily work, this is a pervasive attitude. This got me to thinking: Why do SME customers consider the Big 5 to be at best a necessary evil, even though they often still do business with them? Herewith are three reasons why:
1. The Big 5 are not structured to serve the SME market. In recent years the Big Five have been on an acquisition binge. The main reason is that they are all positioning themselves to be one-throat-to-choke for the Global 2000, i.e. the 2000 largest companies on the planet. At least one of the Big Five admits that more than 80% of its business comes from the G2000. The results for SME customers, however, are less than attractive: each Big Five company now has a huge slapped-together non-integrated product line acquired from multiple sources, sold and supported by a giant bureaucracy that is trying to be a one-stop shop and not succeeding very well. Due to their chronically poor organization everyone is a specialist but no one is in charge. From an SME customer standpoint all of the Big Five are a mile wide and an inch deep. The same IT team referenced above related a story where one of the Big Five once brought 11 people to a sales call for a project that was worth roughly $100,000. Corporate bureaucracy at its finest.
2. Product innovation slows dramatically, or stops altogether. The data storage and backup sectors which are my specialty have traditionally been the sleepiest parts of the IT industry, but that is no longer the case. Both sectors are now rockin’ and rollin’ with constant new innovation and the Big Five are not leading the charge. It is mostly happening at the level of startups or fast-growth mid-tier companies. The big guys have all acquired multiple small technology leaders in this market in recent years and almost all of the acquired technologies have seen the pace of product innovation slow to a crawl or stop altogether. Every day I deal with SME customers who own Big Five data storage and/or backup solutions who feel they are being left behind by the innovations happening elsewhere in the marketplace. (For this I am mighty thankful.)
3. Support goes to hell. The Big Five tend to view customer support as a necessary evil and as a cost to be managed, usually downward. At the SME customer level where there is less specialization, customer support from the Big Five is almost universally viewed as being horrendously bad. By contrast startup and mid-tier IT vendors tend to be the exact opposite; they see good customer support as a marketing asset and a competitive advantage which can both gain new customers and increase “stickiness” with existing ones. Some of them take it a step further by engineering support into the product from the get-go so it becomes a seamless feature of the product.
So now that we’ve explored the reasons why the big guys are dropping the ball when they acquire smaller storage and backup vendors, what is an SME customer to do? As you might expect, I have a couple of recommendations:
- Don’t try to think too far ahead. As referenced in the first paragraph, even if the vendor of your brand-new storage or backup solution is acquired by one of the big guys, there is usually a significant window of time before they screw it up. Keep in mind that the big guys do things slowly most of the time and in this case it can work to your advantage. There is a tendency among some SME customers to buy new solutions and use them until they are end-of-life and no longer supported by the vendor, which is typically five years. Two trends are converging to argue against this: the rapid pace of innovation in data storage and/or backup solutions and their rapidly decreasing cost. In other words among the smaller more agile vendors the pace of better-faster-cheaper is accelerating; you may actually save quite a bit of money by reevaluating your existing environment every two or three years, by which time at the current pace of innovation your shiny new solution will look obsolete and high-maintenance when compared with the new technologies on the market.
- Buy from smaller storage and backup vendors, but be careful. My company, Southern Data Storage, evaluates prospective additions to the line card according to four specific criteria: financial strength, best-of-breed features, compelling price points and superior customer experience, including – especially – support. These four criteria can also be useful for SME customers as they navigate the sea of new solutions in the marketplace, and will help assure that the vendor will be around for the long haul, even if acquired by one of the big guys.
So there you have it – another rant that I’m sure will make me no friends among the Big Five but then again they already know how I feel about them. One of the foundational philosophies of Southern Data Storage is the idea that in the 21st century success does not necessarily come to the big, it comes to the quick. I try to live that philosophy every day. If you are reading this on the SDS website please take a look around and especially take a quick tour through the “Partner Portfolio” tab which has sub-pages for the eight vendors of the current SDS line card: Nimble Storage, Unitrends, ExaGrid, NexGen Storage, Veeam, Nasuni, Nexsan and Gridstore.