Enterprise Strategy Group research estimates that 46% of organizations went through an electronic discovery event in the past 12 months. 77% of those discoveries required organizations to produce e-mail. Amongst all the ImClone, Enron, and [enter your high profile corporate scandal here], we must realize that 1 out of every 2 corporations have to sift through IT systems, messaging applications and back up tapes in response to a regulatory or legal discovery request.

Is it not enough that IT has to manage all the applications and supporting systems that create the data? Now IT must lend in-house attorneys a helping hand when dealing with the latest lawsuit.

In 2002, ESG unveiled our research on "Regulatory Compliance and It's Impact on IT." This study culminated 18 months of meetings with regulatory agencies, IT professionals, and corporate attorneys. At the center of the study were record retention regulations and the transition of storing traditional corporate records on paper to electronic media. There were several catalysts for this transition: corporate scandals (Enron, Arthur Andersen, MCI Worldcom, Global Crossing, Qwest), more business was being conducted electronically (e-mailing your stock broker), and general business efficiency (Electronic Medical Record Program).

Caution this blog contains forward looking statements that may cause you to believe that LSI Logic is actually a storage company.  No need to call your attorney's on this one.  If I told you that LSI had approximately $1.3B in storage-related revenues in 2005, would you care? I bet you would care if I told you that if you use certain Seagate disk drives, Brocade switches, EMC arrays and IBM FASt or DS 4800 systems, you are an LSI customer.

Last week, LSI held a financial analyst day to update investors on progress that the company has made since it brought in new management and vertically integrated all of its storage business units.  Unfortunately, LSI's storage businesses are most known for the Engenio systems that are sold to IBM, Sun, and a host of other OEMs.  More recently, Engenio was in the spotlight as an impending spin-off and IPO were halted.  It is a shame, because LSI's Custom Silicon and Storage Components Group, coupled with Engenio, compose a growing business unit that continues to expand LSI's top line as SAS interface technology and next generation Fibre Channel systems come to market.

Last week, I attended Symantec's Vision conference in San Francisco where the company outlined its strategy for the next 12 months.  John Thompson unveiled his new corporate organization with three business unit leaders (Enrique Salem, Jeremy Burton and Kris Hagerman).  This reorganization should scale research and development resources and customers should see benefits starting with integrated products.  Customers will start to see the Symantec brand the wonderful yellow colors when buying the traditional storage management and data protection products.

Thompson is a software market visionary, most notably for combining a consumer (Symantec) and an enterprise (Veritas) organization to take on Microsoft.  After painting all the products the same color, it is now time for Thompson to hand over the reigns to his new business leaders and focus his attention on the balance sheet.  He has a new CFO, a billion dollar tax bill over his head, and a stock price that has struggled since the Veritas deal was announced.  Investors need to see John in person, hear the story from him, and most importantly, see a progress report on what has been done since the acquisition.  These proof points are necessary to reinvigorate investor confidence and bring Symantec's market capitalization back to where a leader like Thompson can leverage it effectively.

My in-laws visited my wife and me for the first time since we moved to the 'Valley'.   They are from a Boston suburb and had never been to Silicon Valley or to Stanford or to Palo Alto, where we now live.  My wife and I started to put together an itinerary of the places we should visit and I pondered some local places that could highlight Silicon Valley and Palo Alto, outside of Stanford's beautiful campus.

HP is still headquartered in Palo Alto, only a few miles from where the company was founded in a garage nestled in a lovely residential area.  Outside of HP, Palo Alto is now the breeding grounds for, in my opinion, a lively technology battle; server virtualization.  Palo Alto is the home of VMWare (an EMC subsidiary) and XenSource.  These two companies have different approaches to carving up physical servers and their business models could not be further apart.  VMWare has lived in a competitive-free environment for the past two years generating a premium for their software.  The server and operating system vendors continue to sell VMWare feeding the EMC storage machine with server related revenue.  XenSource, a Kleiner Perkins funded company, continues to march down the same path as Linux, developing free software seeking subscription and services revenue.  The server and operating system vendors have eagerly built XenSource technology into their next generation code as a hedge against VMWare.

There are several reasons why people look forward to spring; better weather, baseball, the end of the school year.  For me, one of the rights of spring are Girl Scout cookies.  If there was ever a product that could sell itself, it's those little green boxes filled with Thin Mints, Shortbread, Samoas, and other treats.   Think about how easy these things are to sell; cute little girls fundraising with products that are not available elsewhere during the most optimistic time of the year.

In any event, I loaded up on a few (dozen) boxes of girl scout cookies a few weeks back and I started to think what technology products would 'sell themselves' over the next 12 months.  Here is my short list.

In early 2006, I wrote about my first 90 days in Silicon Valley, after moving to Palo Alto from Boston. I wanted to continue my thoughts after living in the 408 area code for 6+ months.

First, Boston had a mild winter and it rarely snowed. It has been raining in the Valley since January. I officially traded my snow shovel for a canoe. The good news is that my pasty white complexion has yet to be ruined by the sun. The bad news is that no one out here knows how to drive in the rain.

Mountain View Meets Wall Street, Kinda

In my first Valley article, I claimed "Google has resuscitated many dot-comers' hopes of going public and retiring to Tahoe. While Google's stock climbs above $400 a share, many Googly-eyed tech start-ups think they are next. Sorry to burst your bubble (again), Google is closer to being the next Viacom than XYZ.com is to becoming the next Google… Emerging technology vendors should learn from Google rather than try to hide and ride its tailwind."

Last week, several hundred IT folks headed to San Diego to see the latest and greatest in storage at SNW (Storage Networking World).  While many show-goers listened to pitches about next generation storage systems and a variety of new methods to protect data, this SNW was the first event where information classification technology made its way from 'whisper suites' to the trade show floor.  Information Classification, the process of preparing data for action, is a critical market segment within Intelligent Information Management helping organizations contextually understand their information assets.

This year, Gillette announced the Fusion razor, which has 5 blades.  One can pick up the handle for the razor and a few blades and not spend more than ten bucks.  Then, when you need to buy replacement blades, it costs you about $15-20 clams, getting you 10-15 blades.  It's captive customer selling; once you have the handle, you need to buy the blades and those blades will cost you a chunk of change.

The same thing goes for disk systems.  There is nothing more appealing to storage system sales rep then selling a frame that is less than 100% full of disk drives, because, more than likely, the customer (that's you) will buy the additional capacity at a later date.  And, you may pay dearly for the additional capacity.  So much so, that you may even be compelled to buy another frame, again less than 100% full. Disk drives sold into existing systems are like razor blades, it's a captive customer sale.  Often customers never even ask for two quotes from their preferred system vendor; one quote, with the capacity that they need (system is than 100% full), and one with a full system configuration.  The differences in these quotes may shock you, in fact, I know they will shock you.  My quick estimate based on a variety of quotes I have seen during the past three months is that on a relative basis, customers can save upwards of $2,000 per terabyte if they bought a full system as opposed to one that is configured at 60% of capacity.  This number per TB can increase if you tack on the premium that the vendor gets when selling you the additional 40%.  These numbers can add up fast.

This past Friday I made a visit to compound de Gates (that's French for Microsoft) and I spent the weekend in Seattle with my wife.  The highlight of the trip, other than some fun with my spouse, was a tour of Boeing.  During the tour, I got to see how a plane is designed, assembled, tested and delivered to customers (airlines, cargo carriers, etc).  It was fascinating to learn a few things that I had not been aware of.  First, Boeing fully implemented a Computer Aided Design software package that automates the 'drawing' and design of all aircraft components.  This application eliminates the need for engineers to build model aircraft for testing of new designs.  Also, I was taken aback by the testing process, where one of thirty-plus test pilots grab the wheels of a newly finished aircraft and take it for a spin.  This is the first time any of the component or the finished product makes it into the air.  And, during the test flight, the pilots test everything from 'dropping engine' (shutting one engine do off) to flying the bird manually (no electronic equipment).

If you are a basketball fan, March is the best time of year as your days and nights are filled with buzzer beaters, nail biters and tremendous competition. If you are in high-tech (IT professional or vendor), March starts a different kind of madness; trade show season. For the next 8 weeks, seemingly every industry has a trade show in cities like Las Vegas, Palm Springs, San Deigo, and Chicago Your days and nights are filled with planes, booths, sales gimmicks, executive posturing and many new product announcements. Hoops and high-tech, could it get any more fun?

I am going to stick with parallelisms in this blog, and if you do not follow March Madness, I apologize in advance. When it comes to storage tradeshows, there are always some cool things that vendors announce. Here are my picks for the Vendor Final Four and reasons why. If you get a chance to check them out a show, I believe these will be worth your time.

Information Classification Bracket: FAST Search and Transfer

FAST has been helping enterprises index and classify information and is starting to develop a strong following when it comes to adding value in the "traditional" storage market. With organizations archiving Petabtyes of data every year, there needs to be a way to find it easily. If you have deployed an e-mail archiving solution, there is a 90% chance that the search function of the product is enabled by FAST, as many of the e-mail archiving software vendors partner with FAST.

Storage Systems Bracket: LSI Logic

Its official, the Engenio IPO is off, and it was a great move. Also, the new leadership team at LSI Logic (primarily composed of former Intel executives and Engenio all-stars) is reorganizing the company to leverage its expertise in the consumer and storage markets. If you are using an IBM FASTt or DS4000, a personal video recorder, or an Emulex HBA, you are an LSI Logic customer. LSI is the BASF of storage. They do not make the IBM mid range products; they make the IBM mid range products better. (You can insert many products into that statement, "IBM midrange" is just an example).

Data Management Bracket: Softek

As customers look to leverage tiers of storage, they are going to need sophisticated data mobility and migration stools to manage their information. Softek is quickly becoming an expert in this market, as other software vendors are focusing on more sexy data protection features.

Storage Pure-Play Bracket: NetworkAppliance

NetApp is about to conclude another phenomenal year where it grew revenues 25+ percent. The company has invested many of those hard-earned dollars in integrating acquisitions and developing new products. The fruits of Spinnaker, Alacritus and Decru are being harvested and new offerings should be a-plenty. Its time for NetApp's customers to look under the NetApp software tree, especially with data security and protection still causing heartburn.

If you are looking for Cinderella stories, there a couple. Brocade (Tapestry products), Attenex (e-discovery software), Zantaz (e-discovery, e-mail archiving and litigation support software).

I am looking forward to both March Madness events; the hoops games and the trade shows. Hopefully, your bracket picks are as good as mine (only if we are in different office pools) and I will see you at the trade shows.

Thanks to the SEC and Eliot Spitzer, the e-mail archiving market took off.  Kind-of.   The likes of KVS (now Symantec), Legato (now EMC), iLumin (now Computer Associates) and Zantaz took advantage of broker / dealers who had to archive e-mail to comply with SEC record retention regulations.  However, recent ESG research suggests that 78% of organizations have not purchased an e-mail archiving application.  

While it is very easy for compliance officers and corporate attorneys to free up budgets to buy technology, IT departments of unregulated organizations need more compelling reasons to buy e-mail archiving.  These reasons are starting to manifest as organizations constantly face discovery inquiries involving e-mails.  Also, as Exchange servers become mission critical to the business, IT must keep these things running like a NASCAR vehicle.  Archiving e-mails can improve e-mail application server performance by reducing strain in processor and storage resources.   ESG research also suggests that approximately 40% of organizations that have not bought an e-mail archiving application will pull the trigger within 24 months.  

My EMC investigation really disheartened me as many other vendors are rarely consistent when reporting their financials. Even worse, this zig-zag financial reporting theme is starting to permeate into vendor sales organizations. I have recently done some work with end-users where technology sales teams have blatantly misled their customers with promises that go unfulfilled. There is a delicate balance between getting "the deal" and helping customers. When sales teams lie about configuration and support options, customers are handcuffed. Wall Street can take action (see the stock) when vendors shift their reporting trends. However, customers are stuck with technology and must try any way to make it work. Sales teams count their commissions; customers count their blessings that they still have a job after buying something that does not work as advertised.

Last week, I wrote about my trip to Arizona, which was capped by a flight delay at Phoenix's airport. During that delay, CNN broke the news that Vice President Cheney shot one of his friends while quail hunting. As I was looking forward to all the jokes and banter on late night television, I started to think about how many start-ups are hunting for customers to build their respective companies while large system vendors farm their existing install base to increase revenue and market share.

Last week, I made the drive between Phoenix and Tucson in a spiffy Camry to visit a reputable systems vendor. During the drive to Tucson, I recalled my last trip there. It was April of 2000, and I was working for a vendor at the time and partaking in customer appreciation event turned boondoggle. Hey, this was pre-September 11 and pre-bust.