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EMC Corp. and MTI Technology have pulled together an e-mail storage solution for a commercial real estate firm, a deal EMC cited as a model for its new and medium-sized enterprise and small business push.

MTI, a storage systems integrator, installed a series of EMC products for Hartz Mountain Industries Inc. The solution is designed to make data and e-mail storage more flexible, more easily searchable, and more affordable for smaller companies.

EMC is retooling its channel approach to accommodate partners. In one move, EMC consolidated five separate channel programs into one. Mike Wytenus, senior director of mid-sized enterprise marketing at EMC,
said the multiple-program approach became inefficient, forcing partners to work with a whole series of representatives from various parts of EMC.

EMC also has taken steps to boosts partners’ profitability. In the past, EMC delivered the lion’s share of services on projects calling for more than storage hardware and software. But in EMC’s downstream effort, “the route to market for services is the channel,” Wytenus said. Service traditionally has contributed to the profit margins of resellers and integrators.

Wytenus pointed to the heightened level of cooperation EMC was able to give the MTI/Hartz project as well and the comparatively low cost of the EMC products as an example of how EMC will work more effectively with the channel under EMC’s Making Storage Simple program. The initiative, unveiled on Wednesday at CeBIT, marks EMC’s bid to expand its presence in the medium enterprise and small and medium business (SMB) sectors.

“EMC has primarily succeeded in the large enterprise space over the course of our history,” Wytenus said. The company’s downstream push, however, will let it tackle a market that is equal in size to the enterprise storage market and growing two to three times as quickly, he said.

The solution MTI installed for Hartz was based on The EMC Express Solution for E-mail, which will help Hartz reduce costs, boost productivity and respond more quickly to legal discovery requests, Wytenus said.

Express Solution for E-mail, for Microsoft Exchange environments, includes EMC’s Clariion network storage systems, EMC Replication Manager/SE, and EMC Legato EmailXtender. Replication Manager/SE provides online backup and recovery, while EmailXtender captures, indexes, and stores e-mail messages.

The product focus of this marketing push consists of an expanded set of Express solutions. In addition to the e-mail turnkey system, EMC now offers Express Solutions for networked storage, backup and recovery, archiving, and business protection.

Peter Gerr, a senior analyst at Enterprise Strategy Group, said EMC “recognizes that the medium-to-small business segment represents an enormous opportunity for incremental growth and expansion.” He said EMC has the right systems to sell into this market, citing the company’s Clariion AX and CX lines and network-attached storage offerings. Software components such as backup/recover and storage resource management are also in place, he added.

“Just as it’s taken EMC years of acquisitions, investments, and planning to reach this point, I think it will take some time before we can judge whether its push [into medium enterprises and SMBs] has been a success,” Gerr said. “But it is making the right moves to help make storage – and IT users’ jobs – easier.”

In another channel-friendly step, EMC built a configuration wizard that Wytenus said speeds the process of pricing and building a solution.

With the configuration wizard, a partner asks eight to 10 questions about a customer’s application environment and plugs in the responses. The wizard then creates a bill of materials. Wytenus said the wizard will save partners about one month’s worth of work each year.

Compliance Alliance

EMC embarked on another channel push this week, as well. The storage vendor and Electronic Data Systems Corp. unveiled an e-mail archive service targeting the regulatory compliance concerns of large enterprises. The alliance was announced on Monday.

EDS plans to sell the service to customers facing such regulations as Sarbanes-Oxley and the Health Insurance Portability and Accountability Act. The service is built around EMC’s Centera platform, a storage product designed for housing fixed-content data such as archived e-mail, legal documents, and other files that don’t change after storage.

An EDS spokesman identified government, financial services, and healthcare as key targets” of the e-mail archive service. He added, however, that the service “is applicable to all companies in all industries.”

The market for compliance-related technology products and services is poised for rapid growth as companies stockpile the ever-greater number of documents required to prove their operations are on the up-and-up. The worldwide capacity of compliance records will increase at a compound annual growth rate of 64 percent, according to Enterprise Strategy Group. The market research firm identified healthcare as the industry with the largest volume of records, and life sciences as the industry with the fastest-growing base of records.

EDS, meanwhile, offers e-mail archiving as a service customers can pay for on a per-mailbox per-month basis. The service supports Microsoft Corp. Exchange and IBM Lotus Domino/Notes.

Storage Boosts Arrow Sales

The compliance market has contributed to revenue growth at
Arrow Electronics Inc.
as well.

William Mitchell, the distributor’s president and chief executive officer, said the need for record retention in light of Sarbanes-Oxley and the Healthcare Information Privacy Protection Act (HIPPA) has fueled demand for storage. That demand in turn has helped fuel the growth of Arrow’s computer product sales.

“That is a good trend for us,” said Mitchell, speaking of regulation-driven storage sales. “We continue to see good growth there.”

Mitchell, speaking earlier this week at the Morgan Stanley Semiconductor and Systems Conference, pointed to EMC Corp., Hitachi Data Systems, and Network Appliance Inc. as examples of storage vendor partners.

In February, Arrow announced computer products sales increased about 12 percent in the fourth quarter compared to the same period last year. Looking ahead, Mitchell said he expected computer products sales to “out grow” the overall market rate, which he placed at 5 percent to 7 percent.

Outsourcing Pursuit

Convergys Corp.
continues to build out its human resources outsourcing business, one of three business lines at the company.

That’s the word from Earl Shanks, Convergys’ chief financial officer, who presented the company’s strategy at the recent Deutsche Bank Securities Global Software Conference. Shanks said that the company’s initiative is at a “very early stage.”

Convergys’ strategy is to target companies with more than 20,000 employees and provide a range of services. Those services include payroll, learning, staffing, and benefits.

Shanks listed Accenture, Affiliated Computer Services Inc., Hewitt Associates Inc., and IBM as competitors. He added, however, that no single competitor has captured a significant portion of the HR outsourcing market.
HR outsourcing is part of the broader business process outsourcing market, which has begun to mature.

In addition to HR outsourcing, Convergys offers outsourced customer service solutions and billing software for wireless and cable companies.

CSC Extends Healthcare Pact

Business process outsourcing was also a theme at Computer Sciences Corp. this week. The company announced an extension to its claims processing contract with Gateway Health Plan.

CSC’s initial contract with Gateway, a Medicaid health maintenance organziation in Pennsylvania, dates back to 1996. The renewed pact runs through March 2010 and is valued at $74 million.

CSC’s extended contract also provides support for Gateway’s expansions in into Ohio’s Medicaid market, according to a CSC spokeswoman.