If you look at today’s IT landscape, it’s almost unrecognisable compared to 10 or 20 years ago. It is not just businesses that have had to transform how they approach and use IT. IT providers themselves found that they had to follow suit in order to stay relevant.
This has been true for any long-time IT providers that have survived industry-wide transitions and are still in operation today. The list includes NetApp, a tech company founded way back in 1992 and best known for selling on-prem computer storage solutions. The challenge is that this need to be agile and adaptable is accelerating.
According to Fredy Cheung, NetApp Area Vice President of Greater China, ASEAN and Korea, who spoke to DSA in an interview, when he first joined the company a few years ago, people were still predicting that NetApp, just like many other hardware-centric companies, would go out of business. Fredy said NetApp had reached a fork where it could either continue being a large company in a decreasing market or transform in order to stay relevant.
It became quite apparent that a lot of organisations were changing their IT infrastructure consumption model, moving more towards purchasing cloud-like services or actually building their IT on cloud. Therefore, he said NetApp took the latter route and around five years ago, its CEO, George Kurian, had the vision to engineer NetApp to become a more cloud-oriented company – building it around the ONTAP operating system which has been around for over 25 years.
Fredy explained that George and his engineering team took great effort in porting this operating system on some of the largest hyperscale platforms in the world like AWS, Microsoft Azure and Google Cloud to, in Fredy’s own words, “literally put NetApp on the cloud”, packaging it all as part of its comprehensive Data Fabric strategy to customers.
Weathering Declining Revenues and Market Uncertainties
How has this transformation paid off for them? Critics have pointed out the fact that NetApp’s revenues have been on the decline for the past several quarters. In NetApp’s defence, Fredy retorted that this is an industry-wide phenomenon that is mostly driven by the fact that many companies are now shifting from a CAPEX to an OPEX consumption model and leveraging cloud – and NetApp is right in the midst of that transition too.
He said that if you listen to what IDC and other analyst firms are saying, “the hardware market for the next three to five years will be stagnant. But of course, certain pockets of that market, for example, the all-flash storage and hyperconverged infrastructure markets, are still growing.”
Since NetApp has strong offerings in both those markets, Fredy said that if you look further into the company’s earnings reports, there are clear grounds for optimism. He added that one of NetApp’s three business units, one that is entirely committed to building cloud services and products, has been growing very fast. So, in the next few quarters, NetApp will be accelerating that side of its business to compensate for the slowdown in traditional hardware sales.
Thus, based on the company’s market value and growth in these critical areas, Fredy believes that NetApp has turned a corner with its current set of product portfolio that can really drive their transformation even faster.
Most importantly, he said NetApp did very well in terms of profitability and making a healthy profit margin, while life is going to become quite difficult for many of its competitors who are operating their business at a loss.
Fredy further explained that NetApp achieved this turnaround by taking a different approach, which is to focus more on building partnerships and ecosystems instead of trying to do it all alone – and focusing on the cloud trend early has truly made a difference.
When talking about NetApp’s partnerships with the largest cloud providers, he said, “We have done all the heavy lifting already, so now it’s a matter of going to market and delivering the services. Our competitors haven’t even started. They’re on a proprietary, closed environment, so they have to do everything [and build a vertical stack] on their own. That’s the difference. That’s why if you talk to the analysts, they think we’re better positioned than any of our competitors in that space.”
Why Multi-Cloud is Becoming the Norm
During the interview, we were joined by Azrin Abd Shukor, NetApp’s Country Manager for Malaysia, Brunei and the Philippines, who concurred that cloud has definitely revolutionised IT consumption and provides a broader array of options for today’s businesses to accelerate their digital transformation.
However, based on his experience, Azrin warned companies against jumping on the cloud bandwagon just because everyone else is doing it as that is a recipe for trouble. Instead, businesses in the region should ask a few vital questions such as why they need to go to cloud and what needs (or makes good business sense) to be in the cloud.
This is because according to Azrin, not everything needs to be on cloud. So, once they have answers to these questions, businesses should stick to their mission and objective towards their digital transformation journey. With so many options available to today’s organisations, it becomes the role of vendors such as NetApp to advise them on what’s the best path they should take on that journey.
Now, it’s no longer about just choosing one cloud. Multi-cloud is fast becoming a reality for ASEAN businesses. Azrin said this is because companies don’t want to be locked to a single provider and there are now services that can help them switch between the different clouds relatively easily.
Moreover, since these organisations tend to have multiple workloads, going multi-cloud allows them to leverage the unique advantages offered by each cloud provider, or choose to keep data and workloads within the confines of their own on-prem or private cloud infrastructure.
Another trend that he pointed out was the fact that just like consumers, enterprise customers are also demanding seamlessness, simplicity and speed in the IT solutions that they now purchase – which vendors like NetApp have to provide. He mentioned the recently released NetApp Keystone program as prime example of how they have had to come up with new ways to provide the simplicity and flexibility that customers demand despite the rise in complexity overall.
How The Customer Conversation Has Evolved
Fredy attested to how much the customer conversation had changed when he shared an interesting anecdote about what went on when he and George Kurian met with bigwigs from one global shipping company to pitch their solutions (or so he thought).
The shipping company, one of the largest in the world, wanted to transform, but Fredy said none of the conversations in that meeting was centred around NetApp or its product offerings. Instead, George focused on elaborating on the most efficient ways the company could make use of its data, and setup project as well as DevOps teams.
The CIO and CDO of the shipping company intended to gain control over the management of the tremendous volumes of real-time data at their disposal. That was one of their top priorities and their end goal; to transform their business model to become a service provider to the shipping ecosystem.
Similarly, Fredy recalled how the CEO of Mercedes wanted to transform his company from an automobile company to a software company by analysing the data they generate to provide improved user experiences and make better cars.
Azrin also shared a story about his experience with a century-old conglomerate that was undergoing its own massive digital transformation journey. When Azrin asked the chairman why they were transforming, he said it wasn’t just about getting close to customers or enabling the growth of the business, but rather, to address their need to attract the younger generation to work for the company so that it could stay relevant for the next 100 years.
Both Azrin and Fredy agreed that most CEOs in the region are thinking about that journey; of taking where their business is today to where they need to be five years down the line to avoid becoming obsolete.