Someone has got to put things back together again.
That might be a broad description of the quest in a cloud age of 25-year-old CommVault Systems, a company that had its heyday long before cloud computing arrived.
What, if anything, could be the relevance of CommVault, with its tools for backing up data in an era when modern cloud applications such as Snowflake are more than ever abstracted from the underlying data repositories? Can’t one forget about all that stuff?
“Never has data been more valuable nor more vulnerable,” is the response of CommVault’s CEO, Sanjay Mirchandani.
Since he came to the company two years ago, Mirchandani has been moving the operation head-first into cloud computing, taking tools meant for corporate data center servers and making them cloud-friendly, and adding new capabilities via acquisitions.
The disaster he says he wants to avoid, an existential threat to corporations, is that dark pools of data form all throughout the various cloud operations that companies consume, reservoirs of data that have become disconnected from how they were created, to a point where the legitimacy of that data may be threatened, what he has termed the “data integrity gap.”
“Never has data been so separated from where it was created,” said Mirchandani, in an interview with ZDNet this week following the company’s recent third-quarter report.
“The provenance of data was always tightly coupled to the application that created it, your databases, your transactional systems, your COBOL systems,” said Mirchandani.
That tight coupling, as it were, is broken with the cloud.
“In the old world, you engineered those services to perform to a spec,” he said of classic management information services. Cloud, by contrast, is “loosely coupled,” as one calls on a set of services wherever they may be.
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“A single application may run in Azure in Asia, and then may run in an Oracle cloud facility in Europe, and then in Google’s GCP cloud service in the US,” explained Mirchandani.
“Every one of those applications, wherever they live, spits out another set of data, it’s another potential point of failure, another set of dark data that needs to be managed.”
All that still needs to be backed up, and a company still needs to know “who’s touched it and who hasn’t,” across every app in which the data flows. Compliance needs the same controls they had before data was flung to the far parts of the cloud. “That data hygiene hasn’t gone away.”
Mirchandani speaks from an interesting background that lends his technical credentials a broader perspective. He has been a chief executive before, for privately held tools vendor Puppet. And he has sold major infrastructure capabilities, having run Asia-Pacific operations for VMware, run global enterprise services for EMC, and worked at Microsoft for 11 years in a variety of roles including running regional operations for enterprise services.
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He has not just a CEO’s perspective, but also a chief information officer’s perspective, which may be more important. CIOs want the cloud because they want the option for operations to be anywhere at any time. But then someone has got to take care of those points of failure, of the dark data that starts popping up all over.
As a CIO, “I want ubiquity of my applications and data, where I want it, it’s obvious, that’s what we’ve all been — I’ve been a CIO, that’s what I wanted,” Mirchandani reflected.
“But you can’t go from a super tightly integrated set of capabilities to anything anywhere; there is a happy medium, and that’s the role that we play,” the role of an “abstraction layer,” as Mirchandani calls it.
To create that abstraction layer, Mirchandani has used acquisitions in the past two years to bring new capabilities that are more focused on where workloads are heading: Virtual, containerized, and, above all, starting in the cloud.
Hedvig is a “software-defined storage” system that turns individual x86 servers into nodes that can collectively form a storage pool, as an alternative to the traditional approach of having one large system that is the controller for a rack of drives and tapes.
Also: Google acquires Actifio to bring backup and disaster recovery services to Google Cloud
Metallic is a service that lets one back-up and restore data without having to install and maintain traditional backup software. Commvault is letting customers use it with both storage based in the cloud that Commvault provides, and with local storage systems owned by the customer.
There are signs that all of this is helping to move software sales in the right direction. After a 6% decline in revenue last year, analysts are modeling CommVault to see a nearly 7% rise in the year ending in March.
The company’s results on Jan. 27, for the fiscal Q3, included revenue 7% above what analysts had been expecting, the third quarter in a row of positive revenue surprise, and “the best quarter in our life as a company,” said Mirchandani.
Without the sudden complexity of the pandemic throwing off last year’s March quarter — “the COVID quarter, it will forever be named,” as Mirchandani puts it — it would have been six quarters of positive surprises.
The business model shift is important, not just selling more stuff. It’s all about consumption, which means, selling products based on how people would like to do data backup for specific capabilities, rather than the old way of just buying a disk array or a tape backup system that sits there in the corporate offices and sucks in anything and everything.
“We realigned based on a workload,” said Mirchandani. “If I was a customer, if I’m used to buying virtual machines, why would I buy something else from us to protect those VMs?” he asked rhetorically. “If you’re protecting mailboxes from Microsoft Office 365, why would you protect based on storage? You protect based on user.”
“So we realigned with the consumption models, so it’s easy to engage with us.”
The pricing of that is still being tweaked, said chief financial officer Brian Carolan, who joined Mirchandani in the same interview with ZDNet.
“You’re always making tweaks on market trends, but we’re getting some great feedback; we have a pricing team that looks at this daily,” said Carolan.
That sale, more granular, is a different financial model for the Street, but one that can be appealing to the extent it adds up to recurring revenue.
During the financial analyst day last week, Carolan laid out the company’s multi-year targets, including an expectation that subscription revenue, which is now at 55% of software revenue in the just-ended quarter, will rise to 75% of software revenue come 2023. And recurring revenue, as a proportion of total revenue, which was 74% last quarter, is expected to rise to 80% to 85% by that time.
“Prior to fiscal 2018, less than 10% of our revenue was recurring,” noted Carolan.
Tools such as Hedvig and Metallic, along with capabilities CommVault is adding, called insights, and with the traditional storage sale, all add up to a $42 billion market in the coming five years or so, said Mirchandani, which “potentially gives us high growth” as a company, said Mirchandani.
As a result, the company expects to achieve annual software growth of 9% to 10% a year by then, and total revenue growth of 6% to 7%.
As more of the revenue becomes the recurring type, CommVault expects to pay out more to shareholders. Carolan told Wall Street CommVault is committed to returning 75% of annual cash flow to shareholders via buybacks, starting with the new fiscal year.
Asked what his priorities are for this year, Mirchandani rattled off a slew of considerations obviously honed from years of running large enterprise organizations. “Do we have a bleeding-edge portfolio, do we have the right technical engagements, do we have the right field coverage, do we have the right partner channels, is the go-to-market effort aligned with how customers want to engage.” Those are the things that keep him up at night, he said.
That includes “Do we have the right culture” as a company, “especially in these tough times when you can’t do the things you would ordinarily do,” he said, alluding to the pandemic’s impact on staff behavior.
Despite the progress going on, ZDNet asked Mirchandani if he would rather run VMware, his old shop, where CEO Pat Gelsinger just departed for Intel, leaving the top spot open.
“No,” he said with a laugh, “I have no desire to run VMware,” adding, “I am having the time of my life.”
“It’s not about how big a company is, it’s are you making a difference to your employees, your customers, are you having fun.”
“Every day is not the same, but it’s fun.”