FOR consumers, the digital age is often exhilarating. For companies, it is often frightening. The days when it sufficed for corporate information-technology departments to automate back-office functions and plonk a PC on every desk (or even a BlackBerry in every hand) are over. Both customers and colleagues are demanding a lot more, and fast. As we note in last week’s print edition, in theory this is a fine opportunity for the IT department to place itself at the heart of corporate strategy. In practice, many departments fear being overwhelmed.
That in turn means both risks and opportunities for those who sell enterprise IT (whether hardware, software or services). A Gartner, a research firm, says that in a recent survey of chief information officers two-thirds said they expected to change their primary IT suppliers by 2017. Asked to name the most influential vendor of the next ten years, they placed Apple third, Google second—and an unnamed “different vendor” at the top.
Established vendors are trying to adapt; younger ones have sprung up to challenge them. One of the hopefuls is a mixture of the two: Pivotal, which was set up in April with assets from EMC, a data-storage company, and its listed subsidiary, VMWare. General Electric has a 10% stake, for which it paid $105m. “Enterprises are really going to have to renew their IT infrastructure in a major way,” says Paul Maritz, Pivotal’s chief executive (pictured). He speaks of a “holy cycle” of applications, data and analytics: build the first, extract the second, apply the third, improve the first, and so on.
Consumer-internet giants such as Google and Facebook, Mr Maritz says, have found ways of going through this cycle at greater scale and speed and at lower cost than most enterprises can, using enormous numbers of computers working in parallel. Pivotal wants to help other companies get up to speed too. “Enterprises are going to have to shift from where IT was really just about automating undifferentiated back-office functions to using IT as the fundamental product of what they do,” Mr Maritz says.
Pivotal, which already has offices in San Francisco, New York and Toronto, opened a European headquarters in London on December 6th. In London, says Mr Maritz, Pivotal will be able to draw on the “ideas and intellectual ferment” of the local startup scene, and it will be close to the companies it hopes to serve (for example, in finance).
Pivotal’s progress will be worth watching for several reasons. One is Mr Maritz himself, a star of the IT industry. Once one of the top people at Microsoft, some thought he might return to take over from Steve Ballmer, the departing chief executive. (Mr Maritz, however, has told PCPro, a magazine, that this won’t happen.) Another is the involvement of GE. Gartner, for one, points to the industrial giant as an example of a company than is striving to put IT at the centre of its products as well as its processes.
A third is Pivotal’s governance, a repeat of EMC’s successful experiment with VMWare. VMWare had autonomy, freeing it to compete with EMC if it chose. Employees were not given shares in the parent, but in VMWare. Since the subsidiary was floated in 2007, its shares have risen by 56%, against EMC’s 30% (though they have had a bumpier ride), and it accounts for most of EMC’s market capitalisation. If Pivotal does as well, it would be a remarkable double.
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