Compliance will drive storage demand, says Veritas CEO

Veritas Software chief executive officer Gary Bloom talks about compliance, Linux and the challenges of ILM.

Veritas Software chief executive officer Gary Bloom talks about compliance, Linux and the challenges of ILM.

Despite an improving economy and increasing IT budget, Veritas, like many software companies, had a weak second quarter. Why?

There are several reasons, and one is the expectation being too high. As a company, we are on a revenue growth plan - as we stated earlier this year - of 14%. At this moment, we are well ahead of that. In fact, for this quarter, we were up 19% and we are actually up 23% from the first half of last year.

The business condition that created the difficulty was very much isolated in one segment the US enterprise software marketplace. IT spending has not increased as much as some people believe.

We expected IT to have a measured recovery, meaning it’s not skyrocketing like during the [dotcom] bubble and it’s not depressing as we saw in the downturn. It’s more an average speed of recovery, but the expectations have gone beyond that.

In our view, Sarbanes-Oxley compliance is diverting management’s attention and spending. A number of our major accounts must certify their process and IT systems by the end of this year, making it difficult for them to implement any new software.

But with the need for data retrieval in the Sarbanes-Oxley Act there should be higher demand for storage management software. Are you seeing a loss of momentum in this sector?

Sarbanes-Oxley represents an opportunity for our business and I continue to believe that. It’s going to drive demand for storage and storage software in the long term.

I think that the unexpected short term impact was that companies complying with Sarbanes-Oxley have stopped buying new software.

It’s like going back to the Y2K era - somewhere around six to nine months before Y2K, companies stopped changing their systems so they could ensure continuity when the clock ticked over. This is really no different.

This timeliness issue has two phases. Companies don’t want to make changes because, first, the system may not pass compliance and secondly, they will spend lots of money documenting new software implementation. That’s why we have not seen Sarbanes-Oxley lead new demand for software.

Meanwhile, EMC had done well in the second quarter and met market expectations. Do you think that’s a result of a successful transition to a software company?

We don’t believe there has been any material shift in our competitive landscape. Legato, which is an acquired product of EMC, has always been our competitive product. Interestingly, EMC has stated publicly that they don’t believe they [affected] Veritas either.

The area of overlap between EMC and Veritas is roughly $30m (£16.6m), or one-fifth to one-sixth of our typical quarterly revenue. Their hardware businesses are actually doing better than their software business. They are using acquisition successfully to improve the company to keep it more competitive.

Information lifecycle management (ILM) has been a major focus for EMC. Do you see Veritas providing the same offers?

ILM is the generic industry term to manage the processing of data, like how long you keep that information, where you keep it, when do you delete it. It’s really not a revolutionary change, but just a driving demand to manage storage and manage information better.

The requirements are changing and evolving so quickly and they are so industry-specific that [every] supplier's products will require a high degree of customisation.

One of the major challenges with ILM is interoperability and standards. We often hear users bemoan the slow progress of establishing standards. Do you think these are fair comments?

It’s a perfectly reasonable view. If I look at the storage industry, I’m seeing very few standards. We are big supporters of standards, given that we build applications for the heterogeneous environment.

But I can tell you that, when you get into places like EMC, HP, Network Applications, the more you ask them to build San boxes that work together, the more likely they are to fight against each other. So the speed of suppliers in establishing standards is going to be slow. It’s just human nature.

It’s also one of the reasons why Veritas have done so well - we provided the technology that allows storage systems to interoperate, regardless [of whether] there’s a standard or not. That said, we still prefer to have a standard to make our job easier.

Veritas is also a major sponsor of Linux, which is quite popular in China. How do you see the adoption of Veritas’ Linux offerings in China?

I think China is keener on Linux than other places. They do try to use Linux in wherever they can, which is not the case in the US or European markets - partly because China is a developing market, with lots of investments in technology. It’s a country without much computing power to begin with, thus they try to adopt the latest technology.

My view is that Linux is very popular in China on the desktop marketplace, relative to the enterprise server. In the enterprise computing space, we still see a [more] traditional enterprise environment. There are multiple versions of Linux as well - that’s why we need to establish a development centre in China to convert and localise the product.

Sheila Lam writes for Computerworld

This was last published in September 2004

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