Hitachi Data Systems: Measuring Up to Transformational Trends

Posted on August 06, 2014 By David Hill


All IT vendors feel the challenge of the powerful forces changing the IT industry. Multi-product vendors are acutely impacted by these changes as they have to decide how to reshape their product and service portfolios. Just as important, IT customers need to understand where these vendors are going.

Today I’ll consider Hitachi Data Systems (HDS) as a vendor that is known for its solid technology, but whose focus in specific areas, such as data-driven storage, impels its broader strategy. HDS held a meeting in Colorado Springs, Colorado for a selected group of industry analysts. This discussion takes advantage of the deep insight that HDS kindly presented on its vision, strategy, and future direction although the selection of topics to discus, their order and emphasis, and my take on what this all means are my responsibility.

More Than Just Storage, HDS Is Data-Driven

As human beings we tend to pigeonhole companies into categories and for HDS that category is storage but the company is far more than that. Perhaps as an information infrastructure company, HDS can best be described as a data-driven company and has been for some time.

Now, that does not mean that HDS is not tending to its storage knitting. For example, its new Hitachi Virtual Storage Platform (VSP) G1000 allows HDS to meet the ever-demanding needs of traditional enterprise-class storage platform users. And HDS continues to play a leadership role in software-defined storage (as well as storage virtualization) with its recently updated storage virtualization operating system (SVOS).

HDS also plays in the unified storage space with its Hitachi Unified Storage (HUS) that manages block, file, and object data, in the converged infrastructure space with its Unified Compute Platform (UCP), and in the NAS space with the Hitachi NAS (HNAS) platform. And HDS also develops flash-based storage solutions. So for those who like a media-centric view of storage Hitachi Data Systems fulfills that need.

But HDS has a broader view of its role in IT and so should you. That view is what the company calls a “data-driven view.” Storage media is important, but it is and will always be the servant of data, not its master. Moreover, historically we have taken an application-centric approach to the management of data and that was appropriate when block-driven online transaction processing systems (OLTP) were the primary users of storage.

These applications will continue to serve as mission-critical backbone systems, but they make up a small share (at most only 20%) of storage requirements and that percentage will continue to rapidly erode. Why will semi-structured (i.e., natively content searchable) data and unstructured (i.e., natively bitmapped) data dominate even more?

In HDS’s view, data-driven represents the need to manage and control data through its lifecycle where the originating application plays a small relative role after initial creation of the data. Although that trend has been with us for some time through semi-structured content such as e-mail, word processing documents, and other content collaboration processes and true unstructured content, such as videos and medical images, it is also accelerating.

IDC talks about the third platform (after mainframes and client/server) in IT that is about cloud, big data, mobile, and social media. We can throw the Internet of Things into that as well and, guess what, everything is data-driven rather than application-driven. Note for example that although there are millions of smartphone “apps,” they tend to apply to data that has already been created, such as GPS data.

Now, data-driven intelligence can be incredibly important, such as the burgeoning analytics market would attest, but, remember, the focus is on the data itself. And that leads to a key illustration of what HDS is doing in this space, namely the Hitachi Content Platform (HCP). HCP is a distributed object storage system where IT organizations and cloud service providers can store, protect, preserve for a long time, and retrieve unstructured (which also encompasses my use of semi-structured) data as part of a single storage platform. HCP is the foundational component for the HDS cloud architecture and be deployed in private, public, or hybrid models.

But isn’t that what everybody is doing? Well, obviously the cloud parts of the data-driven approach have evolved more recently, but HDS has had HCP for a number of years now with its focus on a content platform that uses object storage. What that means in plain terms is that by dint of its previous work, HDS has been ahead of the curve towards data-driven storage. That indicates that HDS gets what data-driven is all about and does not have to play a catch-up game. But it also means that HDS can apply a data-driven lens with a tight focus on what it delivers for products and services.

HDS to Help Pave Its Parent’s Way to Greater Globalization

Alone, this more or less horizontal (from an industry perspective) approach would seem to position HDS for the future. But HDS is also going to do two other things. The first is to help its parent company — Hitachi Ltd. — improve its position as a global integrated solutions partner. The second is to take advantage of its parent’s considerable expertise in selected vertical industries and apply that with its own IT skills to deliver integrated solutions (such as in the Internet of Things solutions) that matter.

Before we discuss these vertical focus areas, we need to understand Hitachi Ltd. a little more. Headquartered in Japan, Hitachi, Ltd. delivers products and services on a worldwide basis. HDS does not provide its financial results, but Hitachi Ltd. provides consolidated results as well as for selected groups. For fiscal year 2013 ended March 31, 2014, Hitachi reported revenues of $93.361 billion U.S. dollars. Hitachi states that the results are for 947 consolidated subsidiaries and 231 equity-method affiliates. We do not need to know details (such as what an equity-method affiliate is!)  to understand that Hitachi is made up of many parts.

Now, these parts are grouped into large entities: Information and Telecommunications Systems (of which HDS is a part, had revenues of $18.98 billion), Power (generation) Systems, Social Infrastructure & Industrial Systems, Electronic Systems & Equipment, Construction Machinery, High Functional Materials & Components, Automotive Systems, Digital Media & Consumer Products, Others (Logistical and Other Services), and Financial Services.

Hitachi is indeed a global company. While $51.49 billion of revenues came from Japan, the remaining $41.871 billion came from elsewhere. On the surface that seems like a very good market mix balance for a Japanese-based company. However, examining global economic growth potential would seem to indicate that Hitachi Ltd. has further potential outside Japan as growth in the Japanese market is likely to continue to be moderate.

That underlines the importance of HDS’s efforts to help the overall company expand its global presence. Jack Donne, CEO of HDS, reports directly to the CEO of Hitachi Ltd., who emphatically supports this effort. HDS brings a lot to the table. Jack and his executive team as well as many of the employees of HDS have a long (many years) history of working collaboratively with the parent company while at the same time building a culture that differs from the Japanese culture.

That its parent’s dominant culture antibodies have not rejected the HDS changes speaks volumes to the ability of HDS to find protectable common ground. Therefore HDS, in working to help Hitachi Ltd. align itself better, would seem to understand that the overall culture will not change (except perhaps incrementally), but that changes in how business is done can be made that will enable the component parts of Hitachi Ltd. to expand globally. Of course, that is a challenge, but even a 5% shift in outside Japan revenues would be very positive.

Making a Difference

HDS is not only giving; it will be gaining from at least selected parts of Hitachi Ltd. The Internet of Things has a relationship to many big data use cases but it is not only about the use of IT technologies; it is also about bringing data, such as the use of sensors, from the physical world into the world where IT can play a valuable role,. This world is about control technologies and their ability to interface with IT technologies.

Look back at the list of large groups within Hitachi Ltd. and you get some sense of the breadth and depth of the technologies that the company brings to the table, including deep domain experience in verticals. Large IT vendors can partner with other firms (such as General Electric, Analog Devices, and General Motors) but such one-to-one situations and relationships take time to develop. HDS has a unique cornucopia of choices that structurally other IT vendors simply cannot match.

From its recent financial report, Hitachi Ltd. states that it is “globally expanding the Social Innovation Business that will … work on solutions together with customers as ‘One Hitachi,’” and “Realize innovations by providing solutions that combine products, services, and highly sophisticated IT (Cloud).” In order to understand this better, Hitachi’s use of “social innovation” is roughly equivalent to what IBM means by its use of “Smarter Planet” and “Smarter Cities,” but may go beyond that.

Examples of “social innovation” that HDS talks include a clinical repository foundation for connected health, a data visualization suite for intelligent surveillance, the connected car, and real-time gathering of maintenance data from moving trains. HDS believes that the combination of its analytic capabilities (which are another part of its portfolio) and other IT technologies in combination with the deep expertise of its widespread business family and their control technologies will result in more social innovation outcomes. So HDS both gives to and receives from the relationship with its parents.

Mesabi Musings

Trying to understand any large multi-product IT vendor and how it will do in riding the transformational winds of IT change effectively is a difficult task, especially if we try to focus in on one thing alone. From a storage media perspective, HDS has a strong and broad portfolio. However, the company also understands that the focus has to be on data and thus has to be data-driven as the winds of change (cloud, big data, social media, and mobility) are really about what happens to the data. HDS has a good story here, especially around its HCP(?) solution.

But HDS has another story to tell about expanding its relationship with its parent Hitachi Ltd. HDS will give to the parent the knowledge and wisdom that it has acquired in becoming a global IT company in order that the parent can expand its global reach. On the other hand, HDS can gain from the Hitachi Ltd. initiative on social innovation and bring together the deep domain expertise in control technologies of selected parts of Hitachi Ltd. with HDS information technologies to develop synergistic solutions that offer customers the best of both companies.

Photo courtesy of Shutterstock.

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