EMC and Voyence: Swallowing a Spider to Catch A Fly

10/31/07Follow @wroush

EMC (NYSE: EMC), the Hopkinton, MA-based provider of networked storage hardware and software, needs to focus on internal innovation rather than acquiring outside companies to grow its product lines, insider Mark Lewis argued in a keynote speech at EMC’s inaugural innovation conference earlier this month. But as Lewis also informed his audience, EMC’s acquisition quest isn’t over.

The company announced yesterday that it’s buying Voyence, a privately held Richardson, TX, firm whose software helps businesses monitor, reconfigure, and audit the hundreds of information devices from different vendors typically hooked up to their data centers. In a way, it’s a case of swallowing the cat to catch the bird to catch the spider to catch the fly: Today’s corporate backend systems are so complicated and heterogeneous that it’s easy for IT managers to screw them up by misconfiguring new components, and it’s increasingly difficult to root out small problems such as viruses or to prove that there aren’t security holes that hackers could exploit. Voyence’s software could help EMC customers get around such problems.

“With over 70 percent of service impacting problems caused by misconfigured devices, customers are automating manual change processes and realizing significant improvements in availability, security and compliance,” said Voyence president and CEO Susan Nash in a statement about the merger. “Together with EMC, Voyence now has the resources to realize the full potential of our technology, and bring a broader set of products to a larger customer base much faster.”

Voyence was founded in 2000 and has collected some $53 million in venture funding from the likes of BancBoston Ventures, Canaan Partners, HP, HO2 Partners, InterWest Partners Sevin Rosen Funds, and StarTech Early Ventures, according to peHUB. The acquisition—the amount EMC is paying wasn’t disclosed—comes close on the heels of another EMC purchase, that of Salt Lake City, UT-based Berkeley Data Systems, which runs the consumer online backup service Mozy. Outsiders might justifiably wonder why, if EMC is investing so much in efforts such as its Technology Venture Group and its Innovation Network, it still needs to buy small companies to add capabilities as basic as online backup, and why its existing systems are so difficult to deal with that customers need “change management solutions” like those offered by Voyence.

But in the end, EMC’s acquisitions are all just part of a major consolidation underway among the companies that supply hardware and software for corporate data centers. EMC, Hewlett Packard, IBM, and Computer Associates have been relentlessly snapping up smaller, more specialized firms in an attempt to assemble complete data-center packages that will keep customers from drifting off to their competitors. Witness HP’s acquisition this summer of data center automation company Opsware, as well as EMC’s own 2005 acquisition of network management provider Smarts and its 2006 purchase of application discovery and management company nLayers. (Voyence’s software is already integrated with the Smarts system, which should make it easier for EMC to “cross-sell” and eventually fold Voyence’s offerings into its own, analysts say.)

Add all the recent acquisitions to the astonishing success of EMC’s virtualization subsidiary VMware (NYSE: VMW), which itself was an acquisition, and it may be time for EMC’s competitors to worry even more than they have worried in the past. As blogger Ashlee Vance says of EMC over at UK computing site The Register, “The pure play storage vendor of old has totally been replaced by one with tentacles stretching throughout the data center.”

Wade Roush is a contributing editor at Xconomy. Follow @wroush

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  • Richard

    I think EMC missed the mark on this last purchase – SMARTS, NLAYERS and MOZY all made perfect sense. Data Center Automation is white hot right now, and I can’t fault them for wanting to get into that game, but starting so far out on the edge surprised me. Why not make a purchase closer to their home market (storage) to ease the distribution internally? It’d be easier for an EMC sales guy to sell storage automation than anything else. I would have figured that Stratavia or Enigmatic would have been a better fit.