Who is to blame for the overhyped expectations?
The DCIM business is not living up to its promises. Some larger players draw their conclusions and ‘pulled the plug’ on their products. As a DCIM solution provider we too have been anxious for this ‘huge’ market that was promised to us by market analysts some 5 years ago. We always were a bit suspicious though about these numbers. Maybe because we own our company and have to weigh our risks very thoroughly. Apparently not all DCIM solution providers were this prudent and they are now reconsidering their DCIM adventure. Are those analyst’s reports the reason that the we now see a bubble that is about to explode ?
How did it start?
When you are a product manager at a large stock-listed organisation you use these optimistic analyst reports to justify the capex request you just presented to the board. After all, you’ve got this very expensive report to back you up.
When these very optimistic reports by strategic analysts entered our market we saw all of a sudden these juggernaut companies entering the DCIM arena one after the other. Some started to invest in their own R&D and others simply acquired an existing DCIM company. Each of these companies build ‘the single solution’ to increase availability and decrease the operational costs of data centres at the same time. Everybody needed that according to the analysts. It was a total ‘no-brainer’ for their potential customers, so success was inevitable.
It took a couple of years before they sorted out that these companies didn’t buy it. They didn’t buy their marketing and they didn’t buy their product. Not even when they were in the ‘magic quadrant’. Despite heavy advertisement and a really strong efforts by their marketeers to put their product in the spotlights, the business never came around (the ‘happy customers’ presented in the media usually didn’t pay for their solution). So after a period of enthusiasm and a lot of media attention it became painfully clear that the market hadn’t developed the way it should have. R&D spendings were cut and in some cases the complete product was dropped.
What went wrong?
It leaves us with the question what went wrong ? Was it really these overhyped promises to which their product development team could never live up to or was it more than that initiating the downfall ?
In our opinion they systematically forgot to take their customers perspective. Ask them what were their deepest fears? Where did they feel the most pain? What problems were they going to solve for their audience? These are some of the questions they should have asked.
Going to market in the traditional way, by getting in touch with the data centres was perhaps a bit too ‘old school’ for these product managers. Instead they considered themselves the new ‘Steve Jobs’ and just didn’t bother to listed to their audience. That wasn’t the way the iPhone was created, was it ? So they came with these humongous ‘all-in-one’ solutions that would cure all issues of modern data centres. The fact that these solutions would cost more than 1000 Euro (or dollar) per server rack should not hold their customers back because the benefits were even greater. The analysts had predicted these enormous investments in DCIM. You simply cannot ignore an expensive report from one of these established companies.
Data centres are very capital intensive companies and ‘Return on Investment’ is probably one of the main discriminators when it comes to capex requests. So when your ROI is beyond 12 months it will be very difficult to get an applause. Investing 1000 euro per rack or even half of that is a definite ‘no go’ when it comes to optimising operational costs. That money will not be earned back soon enough. Furthermore most of these products aim for a ‘lock-in’ of the customer. Once the customer takes the bait it will be very hard to switch to another system or even buying equipment that is not 100% compatible with the DCIM system. Most data centre managers are wise enough to avoid that trap.
So who is to blame here (we need to blame someone, don’t we? )
Was is because of these analysts firms who never take responsibility for their predictions? Or was the product manager who never looked beyond these reports to find evidence of what was predicted? Maybe we should blame the management of these juggernauts who are great a spending money from their investors because they are never held accountable for any mistakes, yet receive all the credits when something does work out.
In any case, it was NOT the data centre manager who decided to keep his money in his pocket or spend it in a more sensible way. Maybe he (or she) wanted to wait until a standard was set for data centre operations so it would be possible to compare products. Or maybe they just wanted to get a grip on the developments in de DCIM industry before deciding. What ever reason there were, the customers is always right… right ?
For us, the DCIM business hasn’t changed that much actually. We believe in the DCIM market and we believe in our product. More importantly we have customers that believe in us and our product too. That is what makes us get up in the morning and work hard to continue to build good, effective products that our customers can afford. We are happy though getting more attention nowadays because of this market turmoil. It is clear now that big isn’t always the same a reliable.
We are looking forward hearing your point of view.