When Syncsort was founded in 1968, it quickly became one of the leading players in the mainframe world, providing software that streamlined sorting, conserved resources, and scaled to meet demand. Syncsort’s industrial-grade software powered applications that fundamentally transformed the established ways of doing business.
I was brought in as CEO in 2013 to accelerate the growth of the company, both organically and through acquisition. The goal was to leverage our existing resources to create sustainably high-value offerings for the current technology environment. We needed once again to become one of the disrupters, not the disrupted.
I was fortunate that Syncsort already had a global presence, with customers in eighty-five countries and profits that could be used to both develop new products and acquire high-value technology companies. However, our go-to-market model had to be upgraded so that our products could be downloaded over the Internet and consumed via the cloud. This transition also required divesting approximately one-third of the company that was no longer part of the core of our “Big Iron to Big Data” strategy.
We then reorganized the company into three business units, each of which was designed to be as nimble and flexible as any startup: Big Data, which focuses on our Hadoop solutions; Mainframe, which includes data-transformation software and our Ironstream product; and Sort, which carries on our legacy as the global market leader for sorting software.
In turn, each group follows an investment strategy centered on three clearly defined horizons to help guide business development. The first targets our existing businesses and ensures we maintain our leadership positions. The second horizon focuses on near adjacencies, segments we aren’t participating in today but where we have brand permission to play. These investments need to be in growing, attractive markets in which our go-to-market and talent create a natural fit. The final area is inventions. We have a long track record of insightful creativity at Syncsort, and we think about these third-horizon investments as forming a kind of innovation colony, similar to an internal incubator or venture-capital firm.
One challenge many legacy technology vendors face is figuring out the best way to participate in a new marketplace in which innovations are compressing prices and making existing products obsolete. It’s an especially difficult problem when startups are using open source technology to do a better job at what their product does for one-hundredth of the price.
For example, if you sell expensive storage, how can you compete with vendors selling $600 hard drives that have the capacity to hold all the music that’s ever been created in the world? It’s not surprising that these vendors want to participate in new exciting growth areas, but it’s hard for them to invest with conviction if a new business segment accelerates revenue and profit declines in their much larger existing businesses.
Syncsort, however, has been able to capitalize on the indecision that this classic innovator’s dilemma creates. We recognized that while much of Silicon Valley pays little attention to mainframes, 80 percent of corporate data originates from or resides on them. They are the system of record for huge numbers of high-volume transactional businesses like ATM networks, credit card processing infrastructure, and airline reservation systems around the world. These systems are critically important and need to be tightly integrated with the fastest growing big data environments, like Apache Hadoop, for advanced analytics. And this presented a tremendous market opportunity for us to develop products that bridge the old and the new.
The massive data processing capabilities of platforms like Hadoop, the increasing prevalence of big data technology, and the flexibility of open-source applications combined to create a perfect storm that has given birth to some of today’s most innovative companies. Fast growing vendors like Cloudera, Hortonworks, and MapR have been upending existing markets by providing commercial support for Hadoop and related open-source data platforms. Partnering with these vendors, we created DMX-h, our native Hadoop-based solution that allows customers to vacuum up data and workloads from legacy systems and run them directly on Hadoop.
Similarly, creative, disruptive companies like Splunk are using their powerful big-data technology to secure, monitor, and manage their enterprise environments. However, one of Splunk’s challenges was that they were unable to access much of the mainframe data needed for advanced cybersecurity or application performance monitoring. To address this gap, we created Ironstream, which brings critical security and application log data from the mainframe into Splunk Enterprise and Splunk Cloud.
In addition to partnerships, we have also looked for acquisitions to add high-quality talent and highly differentiated intellectual property to advance our ambitious technology strategy. After investigating opportunities for long-term growth potential, Syncsort acquired two European software companies: Circle Computer Group, which brought us talent that helped build Ironstream, and William Data Systems, which added additional networking and security capabilities to the Ironstream platform.
Our products, partnerships and acquisitions are making customers’ technology platforms more secure, allowing them to do more advanced analytics and saving them millions of dollars in the process. In 2014, Syncsort was named to the Database Trends and Applications’ “100 Companies that matter most in big data” list, and Forbes referenced the company as one of the “Top 10 Big Data Pure-Plays.”
What may be most gratifying to me personally, however, is that we’ve closed several very important deals with large health-care companies where our products will be used to enable advanced medical analytics to improve clinical outcomes. One of my former roles at IBM was leading health-care software, so it was particularly exciting for me to see our positive impact move well beyond numbers in a database. We’re part of a transformation that’s using big data to facilitate meaningful improvements in people’s lives on a fundamental level. That gives us a new kind of legacy.