"Putting information to work"
HP Americas StorageWorks Conference
September 14, 2004
© Copyright 2004 Hewlett-Packard Development Company, L.P
All rights reserved. Do not use without written permission from HP.
Good morning; thanks, Jack. I'd like to add my warm welcome to all of you this morning and in particular a personal thank you to all of our customers and partners for taking time out of their busy schedule to be with us here in Houston. And I also want to especially welcome those of you who are joining us via Webcast, particularly our partners in Europe.
I want to begin this morning, first and foremost, by saying thank you for your business. We value very much the partnerships that we have built with you, and we appreciate the opportunity that you give us to contribute to your success. We know that we have to earn your trust and confidence every day by delivering the products, services and solutions that meet your unique needs.
Now, I am here today in particular, because some of you may be wondering whether we're really committed to storage. Let's face it, our execution as well as our results in this business have not been all that we would have liked, recently. And so, I am here today first and foremost, to say our determination to lead in storage is unwavering. I am here to tell you about new products and capabilities in storage that demonstrate that leadership. And I am here to describe our road map and architecture for storage over the next three to five years, because HP is in this business for the long haul, and we believe we are delivering value and innovation now and over the next several years that literally no one else in this industry can deliver.
Now, we are today in a world awash with data - a world where all of us are challenged every day to turn data into information, information into knowledge and knowledge into competitive advantage. Each one of us leaves an ever-growing digital footprint every day of our lives each time we send an e-mail, or post digital photos and videos, or prepare presentations, or download a song, or save a project plan. And increasingly, we expect to be able to access that data wherever we are, whether it's a desktop in the office, a notebook on the road, a handheld while waiting for a latte at Starbuck's, or a smart phone between meetings.
Consider this: stored information is growing at a rate of 30 percent per year, and 90 percent of this new information is stored digitally. More than two million terabytes of storage capacity were sold in the last four years alone, and according to IDC, that will increase to 16.4 million terabytes during the next five years. Frankly, my guess is that that estimate is low, because of the rich exponential growth that's going on in rich digital media, music, photos, et cetera.
Now you know, all of us maybe think back fondly to the days when it was enough to back up your data and file it away, and forget about it forever. But today, those dusty data depositories represent insight and competitive advantage, and sometimes, they might even mean the difference between regulatory compliance and noncompliance. And perhaps most importantly of all, they represent new revenue streams, and the issue we all face is how to unlock the value of all that data. How do we put it to work in real time? How do we use that data to create new businesses and new customer experiences? How do we share more information with employees, with customers, with partners, and do it securely, and protect it from disaster? How do we make it easier to find the information necessary to comply with new state and government regulations? In other words, how do we find the needle in the haystack, the one e-mail out of one billion?
Imagine this scenario, and it is something that actually happened to one of our customers. This particular customer received a subpoena for information. The director of IT - whose real name is Todd -spent four weeks and 400 man hours searching through backup tape to find the information in old e-mails. They were successful, and the lawyers said they were done, so Todd erased the restored exchange infrastructure - only to have the lawyer come back to him a week later and ask him for more information. And so Todd learned the hard way that it is not about storing data. It's all about search and retrieval, and being able to do it quickly, and easily, and efficiently.
Just think of all the time and productivity costs of having Todd's team spending all that time searching for one piece of information, and then having to start the process literally all over again, and then multiply that by the hundreds of times something similar happens in any company, any day. That is the proverbial needle in a haystack.
There are 32 billion business e-mails sent daily, and many companies now face regulations requiring them to retain those e-mails for years. And we have all read about the consequences of noncompliance with these and other document retention regulations, and as a result, the ability to search and retrieve data in real time is becoming business critical. And of course, it's not just e-mail; physical information, such as documents or medical images, are rapidly moving into the digital domain, and they often need to be retrieved very quickly for legal or time-critical health reasons. And then of course, there is the growing importance of customer intelligence, inventory management and other digital data that's vital to business operations and business success.
So, increasingly, the issue is no longer where the information lives; it is about putting the information to work. It is about transforming data from passive to active, from static to dynamic, and that's really what you're going to hear about at this conference - how HP is delivering an innovative, grid-based storage architecture that will help you get significantly more value from your storage infrastructure, while supporting a more agile and Adaptive Enterprise.
I'm here today because storage has never been more important to the solutions HP offers to its customers, both large and small. Storage represents an enormous opportunity for all of us to unlock the value that is sitting throughout our companies, and use that value to create new revenue streams. And it is also at the core of the solutions we offer to help companies of all size become Adaptive Enterprises.
Now, we are building on a very strong position, not only as a storage provider, but also as a storage visionary. We've been recognized by industry analysts as both a market maker and a market leader. We pioneered the big shift toward network storage, which transformed storage from a peripheral device to a shared IT resource, and brought new levels of efficiency, and scalability, and availability. And we did it with a focus on modular, standardized systems.
Of course, all that began with the Enterprise Network Storage Architecture in 1998, which was the first step towards a storage utility. It continued with the unification of network attached storage and storage area networks in 2001, and the introduction of our Enterprise Virtual Array a year later.
Our commitment to this business and to providing leadership storage solutions for businesses large and small has never wavered. HP sold one out of every two disk drives that was sold in the world during the second calendar quarter, and we continue to rank number one in total storage revenues worldwide, according to IDC.
Now, being in the technology industry, I get asked all the time, as perhaps you do, "What's the next big thing?" Everybody's always interested in what the next big thing is, and part of that comes from the 90's, when the next big thing was always a killer AP or a hot box. But the truth is, I don't see one big thing going on in technology; what I see actually are transformational trends, and they affect storage, just as they do all of IT and all of business.
The first of these transformational trends is that every process - every process and all content is being transformed from physical, static and analog, to digital, mobile, virtual and personal. By personal, I mean in control by the individual. Every process and all content will become digital, mobile, virtual, personal. It is a massive transformation; it will not all happen right away, but it is inevitable and inexorable. And the reality is that all content and every process will become digital, and therefore available and accessible to anyone, anywhere, in any form they want.
This is a transformative effect. It is also a very disruptive effect, and all you have to do, for example, is look at the music industry, or the Kodak company, to see how companies can be totally caught off-guard by the shift that goes on from physical to digital, mobile, virtual, personal, if they are not changing ahead of this trend.
Now, those same shifts are happening in healthcare, government, education, supply chains - you name it. Consider the impact, just as an example, that radio frequency identification is already starting to have as we effectively digitize supply chains and inventory management. RFID will transform - is transforming - business processes, and it's enabling companies to make faster, smarter business decisions based on real time information.
The second transforming trend is that simplicity, manageability and adaptability are the new technology imperatives. The truth is that while technology is core to everything, and every process is being digitized, technology is still too complex; it's still too hard to manage, and it is often a barrier to business agility and change. And this is why HP is investing so heavily in improving the simplicity, manageability and adaptability of our products and our systems, to make them easier to use, to make them work seamlessly together, and to make them simpler to manage, because now it is not just about stability, or reliability, or security, or total cost of ownership, or quality - although all those things remain very important. It is also now about adaptability, and manageability, and flexibility.
And the third trend is that value is delivered horizontally, not vertically. Technology has historically been deployed in vertical islands. Technology was organized around supporting vertically organized businesses or processes. Content has been connected to very specific devices, and infrastructures have been connected to very specific applications. But standalone islands of automation and technology no longer derive sufficient value. Now in every business - our business and your business - it is about making a heterogeneous world work together and speak a common language; it is about not just connecting devices; it is about networking and connecting businesses, companies, divisions, processes, employees, and suppliers, and customers. It is now about horizontal value creation, not vertical integration.
Now, each of these trends is powerful in their own right, but taken together, they are truly transforming the way all of us operate. It is no longer enough, as I said, to manage costs, or to improve quality, or to mitigate risk. Companies now also have to become more agile and more responsive to change, and this is the foundation for what we call the Adaptive Enterprise, which we define as the ability to synchronize business and IT to capitalize on change.
Or think of it this way: the Adaptive Enterprise is a service-oriented IT environment that is tightly and dynamically tied to business requirements, that is managed as a single, globally distributed resource, that is powered by modular, standards-based components, and that draws on virtualized systems that can be allocated and reallocated as needed. It is a service-oriented IT environment that is tightly and dynamically linked to business requirements, managed as a single, globally distributed resource, powered by modular, standards-based components, drawing on virtualized systems that can be allocated and reallocated.
Now, storage is a critical part of this environment, because huge quantities of real time information are necessary to drive Adaptive Enterprises. An Adaptive Enterprise requires storage resources that can be dynamically deployed simply by pushing a button, where resources can be reallocated to deliver different services when needed, and to do it all reliably, with resources that grow to fit business needs.
Now, while you're imagining that storage nirvana, let me tell you about a couple of HP customers who see the opportunity to use storage and other technologies to transform business processes and create new revenue streams. Like other financial services operations, for example, NASDAQ faces a host of new compliance challenges, including a new SEC regulation that requires the retention of e-mails. The company's existing EMC-based process for searching the e-mail archive and retrieving information was time consuming and manually intensive. NASDAQ wanted a faster, more automated, more adaptive solution.
After looking at competing solutions, NASDAQ chose the new HP StorageWorks Reference Information Storage System, which provides the performance, the scalability, the search and retrieval capabilities necessary to meet its business requirements. And as a result, the customer is saving nearly $300,000 a year, including the cost of the database administrators who were necessary to manage the more complex EMC system. And because of the automated capabilities of the HP solution, NASDAQ believes it will break even with just one search in the first year, and will add to its return on investment with two or more searches.
Now, as another example, we're also helping Time Warner unlock the value created during decades as a leader in entertainment and publishing. Today, for example, at a film studio like Warner Brothers, some of the very best stories and entertainment experiences are still sitting in old vaults, wasting away, where none of us can enjoy them, and, importantly, where Time Warner can't make any money off of them.
And so to help Warner Brothers bring these historic treasures back out into the light of day, we're leveraging technologies developed in HP Labs around imaging restoration, archiving and metadata tagging. We're also working with Time Inc. to digitally restore every image ever published in the history of Time Magazine - 80 years worth of images, images like the Allied landings on D-Day, Mohammad Ali's "Thrilla in Manila," man's first walk on the moon, the collapse of the Berlin Wall. And the digital archive that HP is creating for Time involves scanning, tagging and storing information from every issue of Time using HP's StorageWorks system, HP's OpenView management software, software developed by HP Labs and HP's consulting and integration capability. And later this fall, you will be able to extract the information you want in a fully searchable format on Time.com.
What both of these examples illustrate is that the demands on information, and the opportunities to turn data into revenue are only going to grow. We are all looking for much more efficient ways to make more data accessible to more people, often in new ways, whether those people are employees, or customers, or partners, or regulators. We're exploring more options for how data is shared and delivered to meet the specific needs of users, such as location-aware information for mobile users. As I said earlier, it is not so much now about where information lives, and it is not just about information lifecycle management. ILM is an important foundation, but it is about more than that; it is about putting information to work. Think about it in some ways as unleashing the corporate memory. The Time Magazine archive that I just described is a good example. The accumulated content of more than 80 years is the corporate memory of Time, and HP technology is unleashing that memory to provide new services for Time and new experiences for Time's customers.
And sometimes it's about finding the right piece of information that's stored deep in the corporate memory. For that, I want to go back to our friend Todd, and show you how his company, which is NetBank, is dealing with this challenge. So if we could roll the videotape, please.
So as you just saw in that example, unleashing the corporate memory is going to require a different approach, because as it stands today, important segments of that memory are isolated, or compartmentalized, or difficult to find. Network storage, which HP helped pioneer, has made data and storage resources more widely available on the network, but customer needs have expanded, and the pace of change has increased. You need a storage architecture that can grow seamlessly as your data requirements grow, one that is simpler, more agile and provides greater value.
Now, three years ago, researchers in our HP Labs began looking for a different approach. One that would produce storage systems that are smarter, faster, more reliable and more cost efficient. I can actually remember the day I first walked into their lab three years ago, and started talking with them about what they were doing. And their work three years ago was based on the premise that expensive, customized storage components could be replaced by industry standard components and volume economics. But lower cost, they knew, was just the beginning. They also saw the need for an architecture that would scale infinitely in performance, in capacity and availability, that would be highly reliable, and that could be easily managed as a single - though highly distributed - system. Of course, the industry standard components were easy to come by, but where HP Labs provided breakthrough innovation was in the software and distributed algorithms which enabled researchers to develop a disk system that provides the reliability and performance of Enterprise class disk arrays, at a fraction of the cost. The result is the HP StorageWorks grid, a new storage architecture that pushes the boundaries of scalability and efficiency to new levels.
Now, imagine having an intelligent storage infrastructure that allows real time provisioning, deployment and redeployment of new and existing information services that can scale massively and dynamically; that can be managed as a single, highly available system; that can automate many of the tasks that require human management or intervention today, and that enables users to search three billion records in three seconds.
The StorageWorks grid is a collaborative infrastructure of standard modular building blocks called smart cells. The power of the grid is that each cell is aware of the others, creating a federated array of systems that can communicate and collaborate to balance loads and coordinate other functions and services. So as customers need more capacity, they add more smart cells without the scaling and performance limitations of many existing systems.
Now, these smart cells also provide significantly more flexibility. Today, storage systems are defined by the service they are built to provide, block serving, file serving, archiving and retrieval, among others. But with the storage grid, you'll be able to take undefined smart cells and dynamically load the capabilities and the services that you need. And you can repurpose the smart cells to meet changing needs and changing service requirements.
Linked together, the smart cells form the storage grid. And by adding cells as the front end for existing SANs and other storage systems, customers can make their current storage solutions part of the grid. And since the grid is standards-based, it is designed to incorporate existing HP StorageWorks storage systems and to accommodate multi-vendor storage offerings.
Now, one of the biggest advantages of this architecture is that it will enable the integration and delivery of real time information services over the grid - from formatting and virus checking, to archiving and retrieval, to backup and recovery, to information lifecycle management, and more. And these services can then be integrated into your business processes to put information to work for your company.
Overall, this storage grid delivers three very fundament benefits to your business: first, the grid enables growth without limits. It is designed to scale as your data requirements grow, without having to buy more capacity or performance than you need at any given time. New technologies can be easily incorporated as they become available, and it also protects the investments you've already made by incorporating existing storage systems into the grid. Second, it enables change without chaos - and this is truly the heart of the Adaptive Enterprise, and it is the heart of the storage grid, as well. You will be able to rapidly deploy, and allocate, and repurpose IT resources to meet changing business needs. Availability of data will be assured because the smart cells are designed to handle failures in a way that is transparent to the user. And since storage resources and information services can be allocated and reallocated on the fly, your business becomes more agile and more adaptable.
And finally, the grid delivers simplicity without compromise. The whole premise of the research in HP Labs was on developing storage systems that are simpler to build, simpler to operate and simpler to manage. It starts with systems that are based on industry standards, so they work together right out of the box. Management is simplified because each grid is a single entity that is highly automated and self-managed, and therefore, it can be managed as a single system image, and content management features provide easy, reliable, and rapid access to information.
Now, this isn't just me saying all these things. Let me quote you from two leading industry analyst firms and what they have said about the StorageWorks grid. In a report published in August, DH Brown said, and I quote: "HP's StorageWorks grid is a visionary architecture for an intelligent, scalable, reliable, and agile storage platform. It leverages HP's storage and server technology expertise, as well as research done at HP Labs, to create a new storage environment that delivers long-promised capabilities in novel and very useful ways." And just last week, the Enterprise Strategy Group said, and I quote, "HP has been working to develop one of the most innovative approaches to meeting storage management challenges on the market. HP's StorageWorks grid architecture is a revolutionary new approach to creating a dynamic, flexible, scalable storage environment."
Now, I don't want to stand here and suggest that every one of the capabilities I've just discussed are available today. The StorageWorks grid is a road map for the next several years, and like the Adaptive Enterprise, we see this as a journey, with customers following the path that is most appropriate for their business. But we are already delivering the first grid-based and grid-ready products. And you will see a continuous flow of innovation during the next several years, as we deliver fully on this vision. Innovation that builds not only on our expertise in storage, but our leadership in servers, networks, software, management, and services.
Just last week, we introduced the HP StorageWorks XP 12000 - the industry's most powerful, high-end disk storage system. It scales to more than twice the capacity of offerings from EMC and other vendors, and it delivers performance that is two to six times faster than known EMC numbers. The system is based on the newest array technology from our partner Hitachi. But it also, importantly, incorporates HP software and solutions innovations for single-system management, remote copying, and cross-continent disaster recovery. With the HP StorageWorks XP 12000, customers have the flexibility to start small and massively scale capacity without the expense, complexity, risk or downtime required with forklift system upgrades and data migration.
As one example, Priority Health - a major health insurer in Michigan - needed highly available storage to support claims processing systems and data warehousing. Their XP 12000 system has made administrators more productive and effective by enabling them to manage more devices from a single view, while also reducing errors and downtime. In June, we announced the grid-based StorageWorks Scalable File Share, or SFS. This is a breakthrough file sharing product that uses new Linux clustering technology to deliver up to 100 times more bandwidth than typical clusters.
Built using industry standard HP ProLiant servers and StorageWorks disk arrays, this allows applications to see a single file system image, regardless of the numbers of servers or storage devices connected to it. SFS smart cells work in parallel with other smart cells on a shared storage grid to deliver extensive scalability and provide unprecedented levels of computing bandwidth. The Department of Energy, Pacific Northwest National Laboratory, which operates one of the 10 largest Linux clusters anywhere in the world, is using SFS to achieve faster and more accurate analysis of complex problems in energy, national security, the environment and the sciences.
And finally, we're delivering a high-performance, all-in-one solution for storing, indexing and rapidly retrieving reference information - the HP StorageWorks Reference Information Storage System, or RISS. And you just heard about that in the videotape. This was our first system based on the storage grid architecture. It is the first turnkey system built from the ground up for active archive search and retrieval. Existing archiving solutions search contents indirectly via an external database tied to an external archiving application. Smart cells in the RISS system use onboard disks to store reference documented data, indexes and metadata, and this allows data to be searched and retrieved within seconds.
Now, all three of these systems that I just described are being delivered now, giving customers the opportunity to begin building both a storage grid and a more Adaptive Enterprise, and today, we are making several announcements that further strengthen our grid strategy and plan.
First, we are unveiling the storage grid road map which describes the products and capabilities specifically that we'll be rolling out during the next three to five years, so that you can plan accordingly. You will see us moving on two tracks through the end of 2007, delivering a growing family of grid-based products and technologies, while making all of our other products and technologies grid-ready. And by 2008 and beyond, we expect to deliver a fully functional unified storage grid. We're also expanding the opportunity and market for partners to sell HP storage solutions.
In support of our Simply StorageWorks campaign, HP will increase the number of storage specialists who will drive business with our partners to small and medium business. We will ensure that SMB leads for Enterprise-class storage solutions will be passed on to our ESS Elite partners. We are also working on making more of our internal sales and marketing tools available to our Elite partners, and we're going to continue to invest in our partnerships, providing our partners with opportunities to increase their StorageWorks business and grow their margins.
In addition, I want to encourage you to see the demo of HP's document management solution on the show floor. HP AutoStore software, which combined with our multi-function printers, digital senders and storage solutions, creates new ways for customers to capture paper documents and transform them into digital information. And that information can then be indexed and stored on one of HP's RISS systems, where it can be searched, and retrieved, and printed as necessary. It's a good example of how we're leveraging HP's entire portfolio of products, services and solutions to create even more value for our customers.
And finally, we're also simplifying our storage offerings for small and medium business. That program kicks off here at this conference with the "Simply StorageWorks Road Show," which will tour the country to help small and medium businesses meet their data storage and retrieval needs. And we have a similar tour going on right now throughout Europe.
All of that is just the beginning, because you're going to hear a lot more about our plans during this conference and in the months to come. Simplicity, standardization, modularity, integration - these are the design principles behind the Adaptive Enterprise, and these are the same design principles that drive the innovation in storage that we've talked about today, from our modular storage arrays to our Enterprise virtual arrays and our XP family, as well as our advanced storage management software through HP OpenView, and now with our new grid-based products that we're beginning to deliver.
Information is the currency of the digital age, and we are putting the strengths of HP - from storage, and servers, and software, to services, and leading R&D, and rich digital media and print expertise - we are putting all of the strengths of the portfolio of HP behind a very simple, but we believe, very powerful idea: to make information work for you and for your customers. That is our commitment to you. And that is what we are here to share with you this week. So thank you very much for your attention. And I hope you enjoy the conference throughout the week.