134-C99 8/28/01 EMC: Rewriting Customer Service Rules In 1999 EMC became the world's first company to earn the prestigious Support Center Practices (SCP) Certification in both North America and Europe. Further, EMC received the 1999 Services Marketing Excellence Award from the Information Technology Services Marketing Association, a leading professional association dedicated to advancing services marketing practices in the information technology industry.1 In 1995 and 1996, EMC was ranked No. 1 in customer satisfaction in 13 independent surveys among all information storage and retrieval companies.2 In the 1998 first and third quarter survey releases by SoundView, EMC was rated overall No. 1 in the storage industry.3 EMC had set a new standard for quality in the data storage industry by providing a remarkable level of customer service. EMC had used customer service as a strategic competitive weapon and backing this strategic weapon was a strong Customer Support and Service Organization (CSSO) whose operations were key to customer satisfaction. However, in 1999 EMC was embarking on a new journey with powerful competitors entering the storage arena. EMC had set itself an ambitious revenue goal of $10 billion in the year 2001 from a base of $4 billion in 1998. EMC’s software business was growing even faster and EMC was a novice to software business and software support. Further, 1998-1999’s explosive growth in Internet businesses and e-commerce was changing EMC’s customer base. Traditionally EMC courted the top global 2000 firms. This fueled EMC’s growth in the late 1990s and its investments into customer service. While EMC was now mining a market that had even more potential and storage needs no less than the global 2000 businesses, these internet firms were often very small and cash-strapped. 1 EMC Appoints Joseph F. Walton to Lead Award-Winning Customer Services Organization; Former Unisys Executive To Head 2,500-Person Global Customer Support Infrastructure, Business Wire, Oct. 21, 1999 2 Verespej, M. (1996), “Give ‘em what they want”, Industry Week, Nov. 4 3 Rocco, E. (1999), “EMC: Breaking Customer Service Industry Rules”, Dataquest, Jan. 18 Prof. Jay Rao of Babson College and Walter Reitz, VP EMC Customer Service Marketing, prepared this case as a basis for class discussion rather than to illustrate either effective or ineffective handling of a management situation. Copyright © by Jay Rao 1999, all rights reserved and licensed for publication at Babson College to the Babson College Case Development Center. To order copies or request permission to reproduce materials, call (781) 239-6181 or write Case Development Center, Olin Hall, Babson College, Wellesley, MA 02457. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means – electronic, mechanical, photocopying, recording, or otherwise – without the permission of copyright holders. EMC: Rewriting Customer Service Rules 134-C99 In late 1999, as EMC’s CSSO executives outlined the role of customer service on “the road to $10 billion,” they viewed change and challenge in three dimensions: Growth and global expansion of territories, customers and business segments Depth, breadth and complexity of EMC products and solutions and their operating environments Increased competition -- everyone wanted to defeat the defending champion. EMC and the Storage Industry In the late 1990s, data storage was exploding as businesses “warehoused” vast amounts of sales, financial, and operational data from every part of their business. Businesses like airlines, telephone companies, and credit card companies and banks record and accessed millions of transactions every week. EMC, head quartered in Hopkington, MA, designed, manufactured, marketed and supported high performance storage products and provided related services for mainframe and midrange computer systems. In 1999 EMC had the leading market share (35% by 1998, a 13point lead over the nearest competitor, according to Dataquest) of the worldwide external storage market.4 The $10 billion storage market in 1997 was expected to surge to $25 billion by 2002. In August 1998, EMC CEO Mike Ruettgers was more ebullient and put this number at $40 billion and predicted that EMC’s revenues would exceed $10 billion. Along with EMC, IBM, Hitachi, StorageTek, Compaq, Sun Microsystems, HP, and Dell were just a few firms trying to capitalize on this lucrative market. EMC provided storage solutions for applications such as online reservation systems, transaction processing, customer billing, year 2000 compliance, the Internet and corporate intranets, business continuance/disaster recovery, data mining, and data warehousing. EMC’s customers included banks, financial services firms, telecommunications providers, airlines, governments, scientific institutions, universities and manufacturers and retailers. EMC buys disk drives and packages them into a “storage server.” Along with its software, this server enabled businesses to store and retrieve data to and off disk drives in an efficient manner. Richard Egan and Roger Marino (the E and M in EMC) set up EMC in 1979 to build addon memory for minicomputers made by companies such as Digital, IBM, Wang and Data General. When this market was dying in the late 1980s, EMC quickly moved to build disk storage systems for IBM’s big mainframe computers, where IBM commanded an 80% market share. However, EMC had adapted a new technology called RAID (redundant arrays of independent disks) that involved algorithms to handle data among a wide assortment of hard disks. Within 3 years EMC was outselling IBM in mainframe storage systems. In 5 years EMC had captured 41% of the mainframe storage market and IBM’s share had shrunk to 35%. In 1998, EMC’s flagship Symmetrix storage system, the size of a refrigerator, could store up to a terabyte (1012) of data, roughly the equivalent of a million novels.5 These storage boxes going for about $2-3 million, were more than just giant disk drives. Termed an “open computer 4 5 Judge, P. (1999), “High Tech Star”, Business Week, March 15, p72 McHugh, J. (1997), “When it will be smart to be dumb”, Forbes, Vol. 157 No.9, p118 2 EMC: Rewriting Customer Service Rules 134-C99 storage system,” EMC was the first to develop and market this new technology. It allowed a company to centralize storage for all its disparate computing systems -- mainframes, UNIX, and Windows NT computers. Most businesses had data on a variety of platforms and it had become increasingly difficult for them to manage and share data effectively. EMC’s products (approximately 60% faster than most competitors’ products) could store and fetch massive amounts of data, at speeds approaching 3,000 transactions per second.6 EMC devised a key feature called “caching” that allowed most-used data to be stored in a short-term staging area, so the computer did not have to make lengthy trips to retrieve information from remote disks.7 By 1999, EMC had 35,000+ storage units installed worldwide and its storage units were the most expensive in the market place. They were deployed at 90 of the Fortune 100 companies and at the 10 largest Internet Service Providers.8 In 1997, 1998 the EMC stock was up over 900% and a staggering 33,600% in the period between 1988 and 1998. Please see Exhibit 1 for an overview of its financial performance from 1994-1999. In 1998, EMC was named to Fortune magazine’s annual list of the World’s Most Admired Companies. Business Week listed it in the top 10 among its Info Tech 100 list of the best-performing technology companies. Industry Week recognized it as one of World’s 100 Best-Managed companies. EMC executives attributed its sustaining leadership in the enterprise storage market for excelling in three key areas: products, distribution, and customer service.9 10 Customer Service at EMC One of the key differences in EMC’s approach to customer service was its treatment of the EMC CSSO. Together, they were treated as an Investment Center -- not as a cost center, or a profit center or a revenue center. This was in stark contrast to what the industry did in general. Customer service departments at most hardware and software companies were profit/loss centers. In fact, the gross profit margins for services at most IT (information technology) product companies were very healthy: Silicon Graphics at 43.5%, HP at 34.1%. At 1.5% of total revenues (mainly from warranties), service revenues at EMC were far below industry standards.11 When you get here [EMC], what you are told is [by EMC], just worry about the customer, don’t worry about anything else. That is so radical and so appreciated by customers and by the managers because they only have one focus. Do what ever it takes to get the customer back up and straightened out. I have been here [EMC] for 9 years. The customer service mentality was already here. Mike Ruettgers, Dick Egan they were the ones who really promoted this mentality and 6 ibid. Muller, J. (1998), “EMC2: Hardware times software equals success”, Boston Globe, Tenth Annual Globe 100 Nobel, C. (1998), “EMC faces interoperability hurdles”, PC Week, Nov. 9 9 EMC Annual Report 1998 10 This case summarizes EMC’s customer service in the late 1990s. For an in depth look at EMC’s technology, products and distribution strategies please refer to the following Babson Cases: EMC Corporation (A): From Inception through 1998, The Rise to Market Dominance EMC Corporation (B): 1999 and Beyond, Charting the Future. 11 Rocco, E. (1999), “EMC: Breaking Customer Service Industry Rules”, Dataquest, Jan. 18 7 8 3 EMC: Rewriting Customer Service Rules 134-C99 when I got here there were just 600 people through out the company and every one knew everybody and it kind of just permeated through the whole organization. It [investment center] made sense to me. Once I got here, I got my head turned around [I always worked in a P&L environment]. When I came to this company, I once said P&L and service in the same breath and he [Mike Ruettgers] threw me out of his office. That is how serious it is. -- Richard Petzold, VP Field Operations, EMC The bonuses (at least 20% of their salary) of the service managers at EMC were based on one measure -- customer satisfaction. The goal was to hit 95%, i.e., 95% of the customers should be very satisfied or satisfied on a five-point scale. EMC had determined that the key drivers of customer satisfaction were availability of the customer’s system and availability of EMC’s support personnel. Hence, EMC CSSO was designed and operated to manage these two variables. The EMC CSSO was a complex division consisting of 2500 people spread in 63 countries and in over 164 offices. EMC technology enabled it to deliver remote, pro-active and pre-emptive services. All EMC storage products were equipped with on-board processors that monitored the status of the EMC equipment around-the-clock. These processors were isolated from the equipment to ensure its operation in the event of a complete system failure. The processor could detect anomalies and “phone-home” automatically to the EMC Customer Support Center and communicated with the support center’s main computer. Since the tolerances were set to be extremely sensitive, the majority of the dial-homes did not require on-site service. For example, EMC was able to advise a customer that its air-conditioning unit was failing because a storage system had sent a message home that it was unusually warm.12 In addition to the dial-home capability, the onboard diagnostics were self-monitoring, self-detecting and even self-healing. EMC got up to 90,000 dial-homes a month. If necessary, a Product Support Engineer in the Customer Support Center could dial back into the system and perform diagnostics and often remotely resolve an issue before it became a problem. In fact, 80% of all dial-homes were resolved remotely on the first call. If a pattern of errors was noticed, preemptive adjustments and corrections were made to the system and a Customer Engineer (CE) could be dispatched to preemptively replace a part before it failed. EMC had also invested millions in state-of-the-art technology labs -- Product Verification Lab ($7 million), Enterprise Technology Center ($2 million) and Knowledge Management lab ($2 million). These labs helped in customized demo capabilities and solve and prevent customer problems. Any product issue -- hardware, software, microcode related -- could be replicated, analyzed, and resolved there under simulated customer environment conditions. The problem cause was then entered into a knowledge database and the solution was integrated into the product or process to eliminate future recurrences. The dial-home initiated a support call (incident) at the two Customer Support Centers -one at corporate headquarters in Hopkinton, MA and another in Cork, Ireland -- operating 24 12 Verespej, M. (1996), “Give ‘em what they want”, Industry Week, Nov. 4 4 EMC: Rewriting Customer Service Rules 134-C99 hours, 365 days a year. The systems support centers were exact mirror images and both centers shared a common call tracking and problem/solution database. About 125 Product Support Engineers handled the dial-homes at the Customer Support Centers. In addition, there were 320 hardware and software support people in Hopkinton. Level 1 support took telephone calls directly from the customers. If Level 1 support could not solve the customer problem, it was escalated to the more experienced Level 2 personnel who each had a specialty in a particular systems environment. Level 2 personnel were more specialized as opposed to the Level 1 generalists. The highest level (Level 3) of support came from engineering -- the people who designed, built and tested EMC products -- and they were available 24 hours a day 7 days a week (on call). This resulted in one of the key differentiating factors for EMC. More than 1,500 customer engineers (CE), hardware and software support specialists were scattered in more than 164 offices in 63 countries throughout the world. The primary charter of the CE was to be an account manager. The job in the field was to be there for the customer, to make sure that the rest of the corporation [EMC] obeyed the rules of the customer, because every customer had different rules -- change control rules, rules of engagement, data access authorizations and security procedures. They were ultimately responsible for protecting the integrity of the customer’s data. EMC had set up specific processes to deal with customer problems and regular periodic services -- Management Escalation, Problem Resolution, Change Management etc. Some of these processes went by “catchy” phrases. “It’s not the big that eat the little, it’s the fast that eat the slow.” When problems went beyond Level 1, there was an automatic notification to appropriate individuals at the customer site, the local and regional field service offices and the corporate headquarters to ensure the rapid and efficient escalation of problem resolution. Support personnel at EMC were acutely aware that “minutes [of system down time] could cost millions” to the customer. Hence, EMC boasted of a 2-hour response time for on-site technical support and the quickest management escalation in the industry. If we have a problem at 2 o’ clock Sunday morning and it turns out to be a code bug or design bug, engineering is fixing it at 2 o’ clock Sunday morning. We don’t wait till Monday morning. This is a part of the organization [engineering] that is not even contained in service, but it is service. -- Richard Petzold, VP Field Operations, EMC Vice Presidents of Customer Service, Field Services, Tech Support and Engineering were all notified when there is a problem escalation and one of them would stay on top of the escalation to see through to its successful resolution. The VPs beepers were on all the time. If a problem was not resolved within 24 hours, CEO Mike Ruettgers was notified. The escalation process also resulted in the interaction between customer support personnel and engineering (design). If not on a hourly basis, these two groups were involved in discussion a couple of times a day. 5 EMC: Rewriting Customer Service Rules 134-C99 It goes back to the culture of EMC actually. In other companies if you are VP, you are doing a lot of strategizing during the day. Here at EMC we are very reactive. It does not matter if it is a small account in Tuscaloosa or Morgan Stanley in NYC, they are all treated the same. So, if I need to get a phone call, I do. There are several levels that are informed about the escalation. However, I do get informed, the data is made available and I want to know about it. The worst thing that can happen to me is to get blind-sided. I don’t want a sales rep to call me and say, hey what is going on with XYZ account. I don’t want to sit here and say, I don’t know. I want to be able to understand what we are doing. -- Leo Colborne, VP, Worldwide Tech Support, EMC The same sense of urgency throughout the company was high. If there was an event at a customer site that caused an impact, then the event was reviewed in the everyday 10 o’clock customer action committee meeting where there were representatives from every group -- tech support, field support, problem management, and product and information management. There was incredible peer pressure in these meetings to keep-up. You discuss an action item one-day and if you need a status update the next day; these guys do not want to come in to that meeting and say, “haven’t had a chance to make a phone call, really not sure what is going on.” The other thing with EMC, service or otherwise, once you get into that dog-house, it is awful hard to get out, probably to an extent that is unfair sometimes. People try awfully hard to stay out of it. -- Leo Coleborne, VP Worldwide Tech Support, EMC “Guilty till proven innocent.” It’s our problem till the customer tells us that it is not our problem. Early on in an engagement we might find that it is not our problem and that in fact it is an operating system issues. However, we do not leave them at that stage. We engage the other vendor, through the customer or directly till the issue is resolved. But the problem is still ours till the final post-mortem when the customer will tell EMC, “EMC the problem wasn’t yours and thank you very much.” We have case study after case study where the other vendor walked away from the problem and we just stuck it out. -- Dale Hoopingarner, Director, Product and Information Management, EMC EMC went one step further. EMC was always in a multi-vendor environment, because it did not make servers and processing units. So, when a customer experienced a problem, it was not always clear where the problem was and whose responsibility (vendor) it was. So, the other vendor was called in to help diagnose the situation. Hence, EMC was in environments where a customer was not paying for an EMC representative to be there but the customer was paying their other vendor for being there. However, if the other vendor came in and found that it was an EMC problem, the other vendor would hand the customer a bill. On numerous occasions EMC 6 EMC: Rewriting Customer Service Rules 134-C99 paid the customer for that bill. EMC was taking ownership of problem resolution for its customers. What we try and do is tell our customers, if you have a problem, you should call us and we will take ownership position from the get go. If we then find out that it is a Sun, Veritas or an IBM issue then we engage them. -- Frank Hauck, Senior Vice-President, Customer Service, EMC Change Management Due to the dynamic nature of IT, customer sites required frequent changes -- code upgrades, data migration, data center relocation, etc. These changes at times had to be done quickly and without excessive interruption to system availability. Changes had to be successful the first time they were made. EMC treated every change as unique. Every change was well researched, precise and choreographed. The field experts and the corporate team create detailed and exacting change procedures that were double-checked and re-verified. The VP for Worldwide Customer Service wouldn’t go home on Fridays till he got an email from all of his 70 service managers worldwide, summarizing the status of scheduled changes in their territories. With these procedures, EMC claimed to have one of the highest change success rates in the industry. The difficulty we have is with training people, coming from other companies, is how cautious you have to be here. You are not out there as a Mr. Hero any more. You are out there to protect the customer. We keep driving that and driving that into them. If you look at the latest employee satisfaction survey, the lowest score we have from my organization is “are you encouraged to take risks?” It is a low score and I am happy it is a low score. I don’t want anybody taking risks with the customer’s data. We are very very very unforgiving if somebody has been callous about customer’s data. -- Richard Petzold, VP Field Operations, EMC EMC maintenance agreement EMC also had one of the simplest warranty and maintenance agreements in the industry - only one level. All EMC hardware carried a standard 2-year warranty and the post-warranty service agreement was an extension of the initial one. There are no varying levels of service -- no red carpets, no first class, no coach class. Every customer got the same level of service. “Everyone Meets Customers” EMC CEO Michael C. Ruettgers said, “Some have joked that EMC really stands for 'Everyone Meets Customers,' but that concept is a major reason for our success. By listening to customers and developing long-term relationships, we have been able to develop technology that helps our customers save money, make money and gain competitive advantage.”13 13 Hill, S. and Rifkin, G. (1999), Radical Marketing: From Harvard To Harley, Lessons From Ten That Broke The Rules And Made It Big, Harper Business 7 EMC: Rewriting Customer Service Rules 134-C99 In-direct Customer Support personnel were encouraged to interact with the customer. Level 2 and Level 3 (engineering) customer support groups got to interact directly with customers when there were escalations. However, there were other groups within the CSSO that did not have direct interactions with the customers. For instance, in Level 2 support there were co-product support engineers. When a problem occurred they were not involved in fixing the problem in real time. However, once the fix had been identified, they would take that and ascertain to eliminate it -- whether it be a design change or a documentation change. These folks were actually a step removed from the customer. So, in order to facilitate more direct interactions with the customers, they were made to rotate, sent out to sites, called in on escalations, made to get on the phone with customers, have scheduled site visits with the local Customer Engineer etc. Technical writers, also a part of this group, were made to do similar things. CEO Michael Ruettgers had led the company by setting an example. In 1998, he met with over 500 customers. Frequent migration of employees from technical support to engineering Customer technical support was very stressful. In product support, it was even higher. The larger the Symmetrix got, the more data one put in there and more mission critical it became and more damaging a mistake became. A Company could be put out of business for a couple of days. It took a special kind of person to stay and have a career in customer service. However, employees often migrate from the reactive support side of the business to proactive support -design, engineering. So, the engineering department was full of very experienced ex-customer support personnel. Testing, Parts Inventory When Mike Ruettgers arrived, EMC was beset with quality problems and was a $190 million manufacturer of add-on computer memory cards that was on the verge of bankruptcy. Four months into Ruettgers new job as head of operations and customer service, EMC’s product quality problem reached crisis levels. Every piece of EMC’s equipment was crashing because of faulty disk drives supplied by NEC Corp.14 What he learnt on his customer visits was instrumental in making sweeping changes at EMC. When he became CEO is 1989 he insisted on 100% testing of all components and finished products, in an industry where testing of 10% of final products was the norm. In fact, it took 2 days for EMC to assemble its products and 28 days to test them, as it subjected each finished product to heat, cold, vibration and voltage fluctuations. Components from suppliers were tested for more than 30 hours in 55 test chambers located at its two assembly plants.15 Consequently, EMC’s products had the industry’s highest system availability. Winner’s Profile EMC CSSO executives were also very obsessed with recruiting the very best. They had very high expectations of its customer support personnel and had created a checklist describing the “ideal” service support person (Exhibit 2). 14 15 Judge, P. (1999), “High Tech Star”, Business Week, March 15, p72 Verespej, M. (1996), “Give ‘em what they want”, Industry Week, Nov. 4 8 EMC: Rewriting Customer Service Rules 134-C99 The challenge the whole industry faces is finding good people. There are many people out there who have the motivation, smart and may be have the right attitude but do not have the right skills – service people, people people. Then we have to make sure that they have a technical aptitude and hopefully skills in the right areas – UNIX, MVS, NT. To me customer service skills, technical skills and administrative skills in that order are the three most important things. -- Al Colarusso, Director, Customer Service Center, EMC We do get candidates easily. We are EMC. It is a good place to work. Conversely we have a reputation for being a sweatshop. Good salaries, high stock prices and good r-and-r can get around that. -- Leo Colborne, VP Worldwide Tech Support, EMC Developments in the late 1990s EMC still had the upper hand in terms of its product technology. A 1998 study conducted among 400 CIOs by Salomon Smith Barney indicated that customers overwhelmingly chose EMC products for their features (Exhibit 3). This debunked the notion that EMC’s strength in the storage industry was attributable primarily to its relationships with its customers (only 6.3% of them chose EMC based on their relationship with EMC).16 However, in terms of using technology for customer service and support, EMC did not really have any technological proprietary advantage. Stratus Corp. first developed the remote diagnostic technology in the early 80s. However, no competitor had yet to duplicate EMC’s remote diagnostic capability. Storage prices were dropping at 60% annually. To protect itself from this decline and the easy cloning of hardware, EMC stayed ahead of its competition by adding sophisticated software to its hardware. The software side of EMC’s business grew 152% in 1998 reaching $445 million for the year, making EMC one of the fastest growing software companies. Also, the company expected to invest $1 billion in R&D over the years 1999-2001, of which about 80% was to go toward software development. In mid 1999, 800 of EMC's 1200 engineers were focused on software. EMC software was gradually sucking into its storage servers other functions, such as network security, disaster recovery, workload compression and non-disruptive backups. If we were only providing hardware, you’d run the risk of price wars, but there’s so much value in the software we provide, the customer can’t do many of these things without our software. If we hadn’t transformed ourselves into a software company, we would be more vulnerable on price.17 -- Mike Ruettgers, CEO, EMC The explosive growth in software posed some concerns for the tech support executives. While EMC was a veteran at fixing hardware problems and set the industry standards for quick problem resolutions it was a rookie in the software arena. 16 17 Dean, J. and Watts, W. (1998), “The future of storage systems”, Salomon Smith Barney Industry Report, Nov. 19, p16 Muller, J. (1998), “EMC2: Hardware times software equals success”, Boston Globe, Tenth Annual Globe 100 9 EMC: Rewriting Customer Service Rules 134-C99 With software, it is “where the heck is the problem?” The compounding factor is the inter-operability of software systems. This complexity is really straining my software tech support because the length of time it takes to identify and solve a problem is much longer than it is with hardware. Even with some of the microcode you can write a patch to fix a microcode problem and quickly apply it to the particular box and it will be solved. But what you don’t want to have is a patch patch patch software and soon you will have a bastardized version of the code all over the place and you have a control problem. Also for EMC, this problem has compounded itself because of its culture that has developed in the field with customers, hardware quick-fix, and software what do you mean it is taking two weeks to recreate this thing to figure out if it is working or not. The phone calls continue to increase as we sell more, but how do I keep the people off the phone lines so that they will be able to get into the labs and learn more and keep them intelligent. Customers are using this software everyday, and so they are getting to know more about the software than the people who are answering the phones. -- Leo Colborne, VP Worldwide Tech Support, EMC Unlike the hardware side, EMC charged customers for software implementation, maintenance and professional services. However EMC’s rate of investments into software support was much faster and much higher than its revenue stream. The Road to $10 Billion EMC had set its sights on reaching $10 billion in sales in the year 2001, up from $4 billion in 1998. In alignment with the company’s sales goals the number of employees in CSSO was to more than double, from 2500 to nearly 5500. This alone posed several challenges – maintaining the service culture, consistency, exceeding customers’ expectations and the great sense of urgency. What keeps me awake at night, is that a lot of the phone calls come in at night are being handled by what I think are very talented people. I want to be sure that they are treating these calls the way I am expect them to be treated. -- Frank Hauck, Senior Vice-President, Customer Service, EMC Global expansion was also a concern. In a study involving 2000 global customers that rated high tech support from vendors, all firms had fared very poorly in their oversees support operations, specially in S-E Asia.18 Above all, could EMC maintain its service leadership? Oldtimers at EMC recalled with paranoia how IBM was upset from service leadership in the early ‘90s. IBM and service were long synonymous. But when things began to go sour for the computer giant, IBM’s service faltered. IBM had tried to use its close customer relationships by strong-arming long-term clients into sticking with its outdated systems.19 18 19 Source: Eng, T, et. al. (1998), “Global Tech Support 2000”, Data Communications, October Peters, T. (1996), “The service edge”, Executive Excellence, March 10 EMC: Rewriting Customer Service Rules 134-C99 Exhibit 1 EMC Financial Performance Revenues ($ in millions) Software Revenues ($ in millions) Net Income ($ in millions) Market Capitalization ($ in billions) 1994 1,378 -251 4.4 1995 1,921 20 327 3.5 1996 2,274 76 386 7.9 1997 2,938 177 538 13.6 1998 3,974 445 793 43 Exhibit 2 Customer Service Winner’s Profile Must have excellent communication skills (oral & written) Must have good listening skills Must eat problems for breakfast Must possess the attitude “How can I help you” Must be able to deal with unreasonable people (when things break, the reasonable can become unreasonable) Must demonstrate technical product knowledge Must be able to discuss problems without being defensive or unpleasant Must have a commitment to excellence Must have a good attitude. Highly technical with a bad attitude doesn’t work. Must be able to learn from experiences (People make mistakes and products break) Must deliver on commitments – without exception Must be prepared. Must have back-up plans for the unforeseen Must like people and visibly demonstrate it Must have sincere customer empathy and quickly act to resolve their issue 11 1999 6,715 822 1,180 118 EMC: Rewriting Customer Service Rules 134-C99 Exhibit 3 Reasons for Choosing a Storage Vendor Based on interviews with 400 CIOs of large firms Vendor Price Features Relationship Price / Features Compaq EMC HP Hitachi IBM StorageTek Sun 14.3% 0.0% 14.3% 0.0% 8.3% 18.2% 16.7% 0.0% 68.8% 14.3% 0.0% 0.0% 27.3% 0.0% 57.1% 6.3% 71.4% 0.0% 50.0% 27.3% 66.7% 28.6% 25.0% 0.0% 100.0% 41.7% 27.3% 16.7% Source: Dean, J. and Watts, W., “The future of storage systems”, Salomon Smith Barney Industry Report, Nov. 19, 1998 12