Mike Vizard:There’s been a tremendous amount of activity in the data center in the last year or two where just about everybody and his brother is in the process of moving to some level of blade center architecture or at least thinking about; what kind of opportunity does that create in the channel around data center infrastructure?
Robert McKernan:Well Mike, it’s been a tremendous opportunity. Just in the last five years there has been a whole host of products in the power and cooling arena that the IT channel has never been able to play in. Then APC announced ISX and introduced three-phase power, introduced in-rack and in-row cooling to IT professionals who were selling everything else in the IT, but were relying on facilities managers to take care of power and cooling need. So today the channel partners are now open to large hardware and, in some cases, service opportunities in that space.
Vizard:Now, are those two different channels, one selling into facilities, one selling into IT? And do you see those channels coming together, or is there a lot of merger and acquisition activity and in some cases a lot of times you’re dealing with different buyers?
McKernan:Absolutely. Sometimes it’s been a facilities decision and other times it’s been an IT decision. Recently, as you know, Schneider Electric purchased APC and the merger went through on February 14. Schneider is an $18 billion company with over 105,000 employees in 190 countries. Underneath them, they had such great brands of Square D, Merlin Gerin and MGE UPS. And now today, the newly formed power and cooling company of Schneider is APC-MGE. The merger is tremendous for both companies in many ways. MGE has really been the expert in selling into the facility side while APC has been the expert selling into the IT side. So, already in the 45 days since we’ve merged, we’ve seen some strong synergies where APC was strong, MGE can benefit; where MGE was strong, APC can benefit.
Vizard:And do you think that we’ll see corresponding mergers among the solution providers themselves where they have different specialties?
McKernan:Potentially so. What we’re seeing more of, though, is companies who have focused in IT and have done a great job of selling say Cisco solutions or IBM solutions or HP solutions. We’ve seen those IT-centered companies call APC and, over the last two or three years, through our training programs, through an investment by solution providers, we’re seen our greatest growth through those partners that are already doing a great job selling say IBM blade servers or what have you. Now they’re selling the power and cooling aspects as well and they’ve enrolled in our Certified Partner program and they’ve attained Gold status, which allows them to go into a customer’s site, understand their power needs, configure a solution and them implement the solution. It’s been a very strong win for a lot of those partners.
Vizard:Now, data center arts design was kind of a lost art there for a while because all you had to do was sell Intel-based servers into the environment. What are you guys doing to help people kind of wrap their minds around the design aspect of a data center and what kind of margins of profitability are there in this?
McKernan:I think that’s been the key. If you look over the last four to six years, the ability for an IT partner solutions writer to go in and utilize APC’s configurator, which is an online tool available to our partners to help in that design process, so with classroom training combined with the use of this configurator, it’s enabled them to not only do what they do well, but also bring in the wrap-around the racks — the power and the cooling needs for their customer. So it’s been a very strong training in terms of getting the solution both on the software side by our configurator and then also being able to go in and implement the hardware as well.
Power to the Data Center.
Vizard:If you partner with APC, how do you get around the fact that an HP or a Dell or an IBM for that matter is trying to sell this whole complete package and why would you bring APC into that play or how do you bring APC into that play when a lot of the servers are owned by those companies?
McKernan:Obviously, you leave the servers to those guys. But we’ve seen many partners, again, really strong IBM partners or really strong Cisco partners, etc. that are utilizing Dell, utilizing Cisco, utilizing IBM for their expertise, but when you cross over into the power and cooling, they realize that those guys don’t have the entire solution. APC has been a company, APC/MG that is, it’s the leader in terms of R&D. We’re constantly upgrading our technologies and through white papers, through very strong knowledge that we’ve acquired from dealing with hundreds and hundreds of end users and understanding their needs, most solution providers know that they can without with APC, they can expand their sales by getting more of the power and cooling. So we have had partners calling us — and I contend we are one of the few companies out there that our active partner bases increased dramatically over the last four or five years. New partners have come in, kind of called APC up and say, “You know what, I want to start selling more and more of your stuff.”
Vizard:Now, when I look at the array of offerings around the power management side it gets confusing quickly. I mean, there’s air-cooled solutions, there’s water-cooled solutions. There are people our there selling things that look like, you know, you put the refrigerator coils alongside the servers so it looks like a freezer. How do you distinguish between what to apply and where?
McKernan:No two customers are alike and probably no two solutions are perfectly alike. What we have in place, whether it’s for a closet for Cisco gear or whether it’s for a data center with storage devices and servers, we have a multitude of solutions. We have the large three-phase boxes that MG brings us, which has its own application, but we also have the in-rack cooling in-rack power solutions that our ISX solution provides, and we have a whole host of many APC people that are out there working with partners every day and then working with the partners and their customers every day to design the best solution for those customers.
Vizard:You bring up an interesting point about the individuality of each installation. You can go visit every data center, it’s almost like they have their own technological system in there and no two implementations are the same because they throw off heat that will fly somewhere else in the room that throws off some other system. What kind of tools are available that help people like solution writers figure out what is the right balance of heat to the system and what is the flow of heat through the system?
McKernan:I think our ISX designer, which is a software tool that we use and our partners use, is the best tool out there to help both the end user as well as the partners design a solution that can grow as your business grows. One of the big keys to face is that energy consumption is just going to grow. You can’t plan for what you have today. You need to do your best job planning for what you will have tomorrow. Oftentimes you’ve seen where you go into a closet right now and you install new voice over IP Cisco gear. But your power and cooling that you had in that closet from years ago, it’s not sufficient anymore. So those are the types of aspects. I think partners who get certified with APC, they’re starting to do more and more on their own. But at the beginning certainly, they’re calling up APC/MGE and working with our inside sales or outside sales and our engineers to help them design those solutions because it’s not something you learn overnight.
Power to the Data Center.
Vizard:So one of the things you see about this whole issue about power supplies is the intimate connection back to disaster recovery. So I guess what I’m starting to wonder is, is that whole issue moving up the food chain to a senior level IT decision versus a staff decision?
McKernan:We think so and we’re seeing so. More and more, the cost of the data center in terms of energy and the cooling and the cost of downtime are tremendous costs on the IT professional’s budget. So when you link all three of those — the cooling piece, the cost to ensure uptime of all your equipment, the servers, the networking pieces as well as disaster recovery pieces — all of these issues are now front and center on the radar of the CIO professional. And most importantly, when they are deciding and putting together a plan, our APC/MGE is starting to move to the front of that plan in terms of talking to companies like us, in terms of their planning that piece before they do everything else. Five, six years ago that wasn’t the case. They would work all their plans out and then they’d start putting UPSs in place after the fact.
Vizard:So does that change the way the solution provider needs to think about going in to sell to the end customer?
McKernan:I believe so. I think we’ve seen examples where the successful solution provider is bringing in a company like us, APC/MGE, and bringing us in early and involving us in the design process of a data center. And we are getting involved in many end user customers’ planning well before other parts of their planning process is put in place because they do want to make sure that they are understanding the cooling, understanding the power needs and they want to make sure that they have a plan in place for a few years out, not just today.
Vizard:The other thing you went into is sometimes they’ll put in a system and then they’ll figure they’re going to use air conditioning. And they’ll find themselves spending more money supporting the air conditioning to cool the system than the system was actually consuming. But no one knows about it because facilities is over on one end of the building and IT is on the other.
McKernan:Yeah, and if you go to the S&D-type customer, something like that occurs a lot. So the education of our partners calling the S&D customers is even more important because we see issues like that happening.
Vizard:Do you see facilities coming under the auspices of the CIO or do they go to the CFO and try to hash this out?
McKernan:I think they’re still meeting at a higher level. They’re still meeting at a higher level because both these roles are still very vital in organizations. The key element is the manageability of the system, and as the facilities director becomes more and more comfortable with managing different systems throughout their facility, that’s where I think the IT manager will really help in that process.
Vizard:You kind of alluded to it before, but I’m just wondering if anything specific is being done in the area of demand generation from you guys that’s unique because, all too often, the solution provider is called in when, quite literally, the data center is on fire versus an ounce of prevention would be worth a pound of cure. So how are you raising the visibility of the issue?
McKernan:We’ve done it in a few ways. Over the last few years we’ve gone on extensive road shows with many partners both to educate partners as well as educate their end users and we’ve done well over a couple hundred of these over the last 18 months. It’s been highly successful, a classroom kind of, where we show the issues out there and have group discussions. And it leads to a lot of really strong follow-up meetings with partners, end users and ourselves. We are also still driving home the need for power protection, from the consumer right on up through the large data center. So the APC marketing engine has always been fairly strong in terms of the awareness factor and it continues to be.