Sramana Mitra: As you said, VMware is a company that is growing through acquisitions, and this is a very fast clip of acquisitions. You are inheriting all sorts of diverse systems. Do you see any patterns among the companies that you bring in? And are there any standard processes or methodologies for integration?
Mark Egan: We have an approach where, with few exceptions, we will integrate the acquired company into our business and our business model. In a software company, the difficult thing is all around licensing. There are three broad approaches to licensing. The first I will call the historical perpetual license; you buy it and so forth. The second is usage; for a period of time, for a year a month or whatever. It is term based. The third is also usage, but you pay for what you use, and there are a bunch of variables.
What we have to do is make sure we can cover all three models. Then when we acquire a company, if they have revenue, we plug them into one of them. We rarely keep the [company’s] systems. They tend to be smaller companies, but my recommended approach is to not spend a great deal of time trying to figure out how to keep someone’s existing legacy systems. Rather, we say, ‘Welcome to VMware! This is how we do business. Let’s integrate you quickly’ because that is how we are going to get the value out of that acquired company and just plug it into our existing sales and support organizations and so forth. I think companies can spend a lot of time, but I don’t think there is a lot of value going into details of evaluating the systems. I want to know, How can I take what this company had, remembering why we acquired a particular company, and just add it to our portfolio of our offerings, products, and services and get it out to our customers as quickly as possible.
SM: Switching to the topic I wanted to cover in depth, what is your vision of where entrepreneurial opportunities lie? Where could we point entrepreneurs to look for open problems? Where would you start?
ME: I think the challenge we have in IT is to take that entire consumer experience and bring it into the enterprise. If I look at myself and my kids, my kids are probably the best barometer – they have their iPhones and Androids and so forth. They download apps. The ones they like they keep, the ones they don’t like they throw away. They pay for the apps based on usage. These apps have great user interfaces, there is no training required, and my kids are able to do everything from their phones; it’s kind of that portal notion, if you will. The challenge I would set for entrepreneurs is, if you sit yourself in the middle of an enterprise and you have old interfaces, you have all the stuff that doesn’t interoperate, the experience is not necessarily that pleasant. How do you take some of those aspects of the consumer experience and get them into the enterprise?
I think the back-office functions of a company, such as accounting, are fairly well understood. But the front office things are not, and those are changing. Just like your example of crowdsourcing for technical support, how do we use all these new social media capabilities and move them into the enterprise? Because I think it is very powerful, and I mean the notion of mobility as well. I don’t know I can give you concrete examples, but that is the thing I think IT is struggling with today. We have about 60% of our spent in many cases just keeping the lights on and then the amount of spend that is left they are trying to get some of the new stuff in place. So if it can be offered as a service for which you pay as you go, a lot of that risk is removed, if you will. I think that frankly the business partners are going to sign up for this. It is just about those choices, that flexibility. We talked about earlier how you spend an enormous amount of money on some of your productivity tools, your e-mail and so forth, functions don’t necessarily add enormous value to your company. But if you can help to create a more intimate relationship with your customers to sell them more products to cross-sell with them and so forth, those are the kinds of things that I think good white spaces for entrepreneurs to fill in.
SM: My observation also is that in the domain of analytics, there is a back end of analytics, you know, data storage, data warehousing, and everything. But when it comes to making key business matrices available at your fingertips in a personalized way, like this is my business function, these are the key matrices I need to track, that part of the IT value chain has not been delivered yet.
ME: I would agree. I think that analytics is often a comment that you hear – ‘I don’t have the information to manage my business, I feel like I am running blind’ and so forth. And getting to that and getting back to the user interface, we don’t have 500-page printouts anymore but it still isn’t anywhere near where it should be.
SM: This actually lends itself very well to these highly user-friendly interfaces. If you do the logic behind them – and this where your comment earlier about business analysts comes in – if a startup comes in with a specialized understanding of a particular business function and it is able to provide those kinds of hooks into the back-end systems that also have good usability in the front in, I think that kind of application would be very interesting.
ME: I agree.
SM: Any other thoughts?
ME: I just think it is an exciting time, and I think it is time to challenge some of the traditional IT models. My suggestion to entrepreneurs is this is to take a hard look at some of these things that we have accepted as norms, if you will, and challenge those. Why do you have to spend so much money on tools that don’t provide necessary as much value? Why should you be locked in to these environments? Just challenge all those things and come out with innovative solutions, and I think that there are great opportunities out there!
SM: Thank you, Mark. It’s been a pleasure talking with you.
ME: Thank you. I enjoyed it.