EMC: Before Acquiring, Check the Wiring
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he says, “and I believe it is missing in most companies, was an examination of the products and technologies [of] acquired companies or companies we invest in—how they architected their products, what is the design of their products, what are the technologies that they’ve built out or embedded into their products.”
It was to provide this deeper technical evaluation (the strategy decisions are left to the M&A experts) that Nick formed the Corporate Technology Review Board in 2005, not long after he joined EMC. This group is very small, consisting of a single senior technical leader from each of the business divisions or units that delivers any form of product to the marketplace: information storage, content management and archiving, RSA (the security division), software-as-a-service, and global services. Because it involves corporate strategy, explains Nick, who chairs the group, “We need to keep it small and secure.”
In the case of a potential strategic investment or acquisition, the business division that’s leading the effort comes to the CTRB “to discuss the products and technologies and design and architecture of these products that the target company brings to bear.” The board can give informed recommendations about how readily the target products and technologies can be leveraged to EMC’s existing platforms. As Nick puts it in some pretty impressive biz-speak, this is done “so we don’t just bring on stand-alone products or technologies, so that we are able to harvest the benefit of integration of those technologies into our portfolio and create synergy with other technologies and products we are currently delivering in the market or developing internally.”
In several cases, although Nick declines to name names, this deeper technical evaluation has led EMC to reject potential acquisition targets. It has also helped the company find hidden value in others. Here, he pointed to Tablus as one example of an acquisition that took on a new dimension after the board’s review. EMC acquired the California data loss prevention company for an undisclosed amount last August.
Naturally enough, it was RSA, EMC’s security division, that originally pursued the Tablus acquisition, Nick says. But when the review board did its homework on the company, it quickly realized the parallels—from an architectural standpoint, not just a product standpoint—with a just-released, internally developed product called Infoscape. Offered by the company’s information storage division, Infoscape uses an approach known as data tiering to identify and classify a firm’s data. The most important data is placed in the most reliable, highest-performance storage subsystem. Less important data can be held in a cheaper class of storage, and so on.
The review of Tablus’s technology architecture showed its products worked on a similar principle. “As a result of identifying the synergy between these products and their approach, and by identifying opportunities for compound values for their combination, we made a recommendation,” Nick says. The recommendation was that Infoscape and Tablus, assigned to different divisions, needed to be integrated.
“The decision was made to bring them together into a common division, and so that’s what happened,” Nick says. Last October, Infoscape was moved from the storage division over to the RSA side of the house. And the synergies don’t stop there: Nick says the company will use the underlying architecture to create products for other EMC business lines as well.
Lately, Nick says, the whole process has grown even stronger. Last September, EMC hired former Dell executive Louise O’Brien as executive vice president. She quickly formed a new organization called Corporate Strategy and Development that brings together all EMC’s corporate strategy and M&A activities, including the Corporate Technology Review Board and Nick’s roughly 60-person CTO office. “It’s kind of a marriage made in heaven,” says Nick. “It brings together technical strategy and business strategy, internal innovation, and directed acquisition and investment. And so it’s very, very powerful.”