EMC, the leader in corporate data storage systems, is trying to repeat the VMware acquisition success with the formation of a new company, Pivotal. Pivotal CEO Paul Maritz Says Companies Must Rediscover Software Development

March 6, 2014, 6:01 PM ET

Pivotal CEO Paul Maritz Says Companies Must Rediscover Software Development

By Steve Rosenbush

Deputy Editor

EMC Corp.EMC +0.04%’s acquisition of software company VMware Inc.VMW -0.85% is among the most successful tech deals of all time. Now EMC, the leader in corporate data storage systems, is trying to repeat that success with the formation of a new company, Pivotal.

Pivotal’s CEO, software pioneer Paul Maritz, says that Pivotal’s opportunity is just as great as the one that VMware took advantage of during the last 10 years. “We need to repeat the VMware playbook. We think this is a big enough shift and a profound enough opportunity,” he said in an interview.

To take advantage of Big Data, companies will need to analyze it themselves, instead of outsourcing that task as they have in the past, according to Mr. Maritz. Pivotal, formed by EMC, VMware and General Electric Co.GE +1.12%, has created a cloud-based platform that companies can use to build, test, deploy, run and scale applications on any cloud. (We’ve explored EMC’s corporate structure in a separate article.)

“You hear this phrase, ‘data lake,’ which refers to data sets that are orders of magnitude bigger than anything we have held before. If you are going to store hundreds of petabytes of data and reason over it, the cost of technology has got to come down radically,” Mr. Maritz says. “We can’t afford to manage that with a traditional structure. It won’t scale. It’s too expensive.”

The core of the new company is Pivotal Labs, a 25-year-old firm that has developed software for clients such as Groupon Inc.GRPN -0.58%Google Inc.GOOG +0.11%, and Twitter Inc.TWTR +0.83% and is known for its use of Agile development, a development process that breaks large projects into smaller pieces and moves through them very quickly. VMware and EMC added people and technology, and since its launch last April, Pivotal has made an acquisition of its own, mobile app developer Xtreme Labs of Toronto.

Pivotal Labs, acquired in March 2012, was the foundation for the larger company, now known as Pivotal, which launched in April 2013. VMware, spun off from EMC as a publicly traded company but still controlled by its former parent,  contributed technology to the new venture. GE invested $105 million.

EMC brought in Mr. Maritz, who had a successful four-year tenure as CEO of VMware, to run Pivotal, which now has about $300 million in revenue.

Mr. Maritz, a former Microsoft Corp.MSFT +0.10% leader who oversaw the development of Windows 95 and the SQL Server, says that for the last 15 years, businesses often were content to outsource software development to low-cost providers. Now, companies have the means to collect “lakes” of data about their customers, but must be able to make sense of their currents. That development is too important now to be outsourced, according to Mr. Maritz.

“We have to rediscover software development,” Mr. Maritz says.  “We have to rediscover product development.”

Pivotal is designed to give corporations access to the sorts of data storage and analysis tools that Internet giants such as Google developed to facilitate their own growth. “If you lift up the lid and look at how they do IT, it is very different than how enterprises do IT,” Mr. Maritz says.

Soon, the need for such tools among enterprises will be very broad, he says.

Traditional approaches to storing and processing data, which have their roots in the 70s and 80s, can’t cope with Big Data, he says. Older approaches are too expensive for the volumes of data that are being generated today by the use of mobile devices, Web sites that record everything visitors do, and, increasingly, objects that are connected to the Internet with sensors.

Pivotal makes use of open-source technology that can be run on scalable clusters of cheap hardware. For data storage and processing, it uses Hadoop, an open-source framework geared toward storing and processing large amounts of data. Much of the technology was derived from Google software. Hadoop can be distributed over large groups of machines, making it highly scalable.

But Hadoop can make data analysis difficult, according to Mr. Maritz. To address that problem, Pivotal has integrated the technology of Greenplum, a data warehouse and analytics company that EMC acquired, into Hadoop. That eliminates the need to shuttle data back and forth between Hadoop and a database, thereby speeding up the process of analysis, he said. And the Greenplum technology is supposed to be accessible to more people.


About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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