Storage Soup - A SearchStorage.com blog

Storage Soup:

 

A SearchStorage.com blog


A data storage blog offering commentary on the storage industry, as well as a behind-the-scenes look at developments in storage management, SAN, NAS, backup, disaster recovery and storage strategy.

Reyes verdict offers peace of mind

Greg Reyes, the former CEO of Brocade, was found guilty of securities fraud yesterday in the first criminal case involving the backdating of stock options.

For IT users, the result should offer some peace of mind that when you spend millions of dollars with a company, it is not going to get away with being so dysfunctional as to end up like Enron, leaving its customers and employees out on the street.

The conviction is also a signal to the rest of the industry that the buck stops with the CEO, no matter how busy you are. Reyes’ defense (if you believe it) was that he was too busy to know everything going on at the company and that others were responsible. Clearly the Judge didn’t buy it.

Reyes’ lawyer also argued that Reyes did not benefit personally from backdating options, which is absurd. A CEO’s compensation is inextricably linked to the financial success of the company on Wall Street. Hence the SEC’s unanimous vote last year in favor of tighter regulations around executive compensation.

Reyes is, of course, appealing the verdict, but it seems unlikely that the courts will take much notice. His sentencing is scheduled for Nov. 21 and he could get as much as 20 years in jail. It’s more likely he’ll serve a fraction of this time, but will face hefty fines.

If it was up to me, CEOs convicted of this type of offence would be restricted from ever running a public company again. I personally had several meeting with Reyes in the course of covering the storage industry, and he commonly gave the impression of being beyond reproach. He once abruptly ended a meeting as he was “too busy” and didn’t like my questions. I don’t get the impression from news of his trial that any of that has changed.

A word on options backdating

Former Brocade CEO, Greg Reyes, went to court Monday to face the music for options backdating. His trial is the first of over 100 cases against companies accused of options backdating and the results could signal a collapsing house of cards for the technology industry. The criminal indictment against Reyes charges him with conspiracy to commit securities fraud, mail fraud, making false statements in filings with the SEC and falsifying books and records. He faces decades in prison and millions of dollars in fines if convicted.

Options backdating refers to the practice of reaching back to a date when the company’s stock price was at a low, and selecting that date for the option grant’s exercise price, or the price an employee will pay for the stock. The goal is to boost the potential windfall for the recipient. It’s said to have been common practice during the hay days of the dotcom era to lure talented employees. The criminal part of this action is when a company hides this practice from its shareholders, therefore not having to pay the correct compensation on options at the time they were awarded.

But the trial is not about whether Greg Reyes did this or not. His signature is all over hundreds of documents signing off on the practice. The question is whether he knew it was wrong, but did it anyway. Reyes’ defense says that he didn’t know he was doing anything wrong.

So, for the sake of argument, let’s say he was totally clueless and scribbling over financial statements and falsifying board meeting documents seemed perfectly normal to him.

Now think about this. The IRS calls to audit your taxes and they discover you claimed more than you should have. Can you say sorry officer, the rules are so complex, I must have filled out the form wrong? From my limited knowledge of tax laws, even if you get the wrong information from an IRS agent, you are still liable!

The most complex part for the government in this case is proving intent. And Reyes claims he didn’t profit personally from any options backdating. That may be so, but what about his staff and close associates? Should they be called to account as well?

I was talking with a friend in the business world about this topic and he says that CEOs hire legal advisors and executive management to advise them on such matters, as they themselves cannot be expected to know, in detail, every aspect and legal loophole of the law.  So where are these guys then? Perhaps they should be in the dock?  My friend also felt that with hindsight it’s clear that backdating was a nefarious practice, but at the time, it really didn’t appear to be.

In high-profile trials such as Reyes’, the defense and prosecution legal eagles will spend weeks jousting over semantics. In the end the jury will get worn down by the attorneys, who will create enough confusion and doubt in their minds as to Reyes’ actions, and he will be let off, perhaps with a slapped wrist and a fine. That’s my bet.

In the meantime, is it possible for the legal system to monitor the business world a little more closely and for the business world to try to act ethically, to prevent years of wasted legal wrangling and millions of dollars in fees? Or am I just hopelessly optimistic that things can change for the better? Anyone have any thoughts?  

Shameful disclosure

Word of tapes “falling off the back of trucks” is almost a once-a-month event these days, but the way companies handle the disclosure of these albeit embarrassing incidents is shameful.

A coworker at TechTarget told me this morning that he had just recevied a letter from IBM informing him that the company had lost tapes containing sensitive current and former employee data, including and potentially his social security number.  This is old news [May 15], but a few things stuck me as interesting about it.

1) He has not worked for IBM in over 20 years, yet the company is still storing information on him. Ever heard of ILM over there guys? I think Tivoli has something…

2) IBM announced this publicly on May 15 but my friend did not receive the letter until June 7.

3) IBM lost the tapes on Feb. 23, 2007.

“Time was needed to investigate the incident, determine the nature of the information on the lost tapes, and conclude that recovery of the tapes was unlikely,” IBM said in an FAQ sheet sent to its employees.  “In order not to impede any continuing investigative efforts, we are not disclosing the numbers of individuals affected,” it added.

Come on! We weren’t born yesterday. IBM’s excuse for the delay in informing its employees, as well as the number that were affected seems disingenuous, probably to avoid further embarrassment.  It’s a poor response not to mention bitterly ironic given IBM’s focus on security.

My friend was given a year’s worth of free credit reporting to help him track whether anyone is using his stolen information.  If IBM thinks this is enough to rescue its relationship with its employees it might want to take a look at this survey of people who were notified that their personal information had been lost. It found that 20% of the people had already stopped doing business with that company and another 40% were considering it.

Overland cuts jobs

As expected, Overland Storage has been forced to make some drastic cuts in the wake of losing two major OEM customers: HP and Dell. The company announced it has laid off 54 employees, or 14% of its workforce, in the second round of job cuts. Here’s a story that includes a response from the CEO on how the company hopes to pick up the pieces.

SNW chatter…


It’s a dirty job working in this kind of environment,
but somebody’s gotta do it…

Propellerheads and communication
Among the sessions at a new professional development track being tried out at SNW this year was a talk entitled “Interpersonal Communication Skills for Propellerheads” led by Deborah Johnson, CEO of Infinity I/O. As far as we could tell said propellerheads, some 30 in all, didn’t object to the moniker.

Johnson addressed attendees about other humans using their native language, i.e. technical jargon, telling her audience that interpersonal communication requires the befuddled propellerhead to “assess the ‘map’ of the person you’re talking to—” similarly to how they’d map a drive, we surmise. “Understand your goal and the audience context to select the right channel for your communication,” Johnson told the group, approximately one-third of whom were thumbing away busily on Blackberries or typing on laptops.

“Sometimes it takes more than one communication event to get your message across,” Johnson continued, further encouraging attendees to “ask questions to ensure you are decoding messages correctly [from others].”

So was it useful? “I do need to work on my communications skills,” said one self-professed propellerhead, adding that he has recently begun to cut his emails down from several pages to a strict one-page limit. Oy vey!

Deep dive on dedupe 

An early session on deduplication turned into a standing room only event, with Curtis Preston, VP of data protection services at GlassHouse, a.k.a Mr. Backup, holding court on the topic. He went through the different products, in-line versus post-process and the different schemes for identifying redundant data. But two points really stood out. First, data deduplication products are currently only appropriate for small to medium-sized environments, he said. “Do not take a 100 TB Oracle database and throw it at a data dedupe.” Second, ignore all the claims about deduplication ratios. “Your data will dedupe very differently to the guy next to you,”
Preston warned. 

Talking to a couple of users after the session, one thought dedupe could go the way of CDP. “It’s the big topic this year but we’ll see if it’s still around next year,” he said.  Another user, with 800 TBs to deal with, said the economics were too good for this technology to be a flash in the pan, if, and that was a big if in his mind, the products are robust and scalable enough. He noted that’s FalconStor’s SIR (single instance repository) doesn’t ship in volume for another couple of months, so it’s still very early days for this technology.

Users feeling out file virtualization

Comcast Media Center manager of server and storage operations Paul Yarborough gave a talk Monday afternoon on his company’s decision to virtualize NetApp 3020 filers with Acopia Networks’ ARX switch. Another presenter on file virtualization, Stephen Warner of Quest Diagnostics, has also deployed Acopia, to virtualize EMC Celerra boxes. Some tidbits that arose out of the presentations:

Yarborough’s company was so strapped for space on the NetApp filers due to the 16 TB filesystem restriction that they were spending dozens of man-hours on a regular basis reingesting digital content that had been deleted from overutilized disk.

Meanwhile, Yarborough said he evaluated NetApp’s OnTap GX as a means to solve the filesystem limit, but he remained pointedly noncommittal on his findings, saying only that it was a very new product when he evaluated it.

Warner, who heads up an EMC shop, said he believes that truly vendor diagnostic virtualization will not come from a large vendor. In Acopia, he said, his company found a startup it could influence (of course, it helps to have just under a petabyte of data under management if you’re looking to influence other companies).

Other users’ questions during Yarborough’s session were as interesting as the presentation itself. During the Q&A users peppered Yarborough with questions about performance impact, how much training it had required to get his staff up to speed on the Acopia product, and whether or not Acopia was truly effective in virtualizing Windows and Linux systems equally. Yarborough answered that there had been no performance impact that he’d seen, that training on the Acopia switch had taken a little longer since it operates on a switch and his admins are not used to managing switches, and that yes, Acopia is effective in virtualizing heterogeneous OSes.

Another user questioned the fact that Comcast had installed an Acopia agent on its domain controller. “That would never fly in our environment,” the commenter said.

Are you a FAN fan?

FAN or File Area Network is the latest buzz word for file virtualization, coined by Brad O’Neill, senior analyst at The Taneja Group. (He has some big clients in this space.) In June 2006, O’Neill reported that a Taneja Group survey of global IT decision makers, found that 62% of respondents now identify “file management” as either “the top priority” or “one of their top priorities” requiring immediate attention in their data centers. Meanwhile, Tony Asaro, senior analyst at the Enterprise Strategy Group has just posted an interesting blog on the FAN market, or rather what he sees as the lack of one.  So which is it? Where have all the FANs gone?

Buying storage is like buying a car…


Here’s an interesting ancedote from a user requesting more storage at his company and likening the process to buying a car.

At least storage guys don’t wear those nasty shiny suits…

Microsoft, EMC get closer

EMC and Microsoft announced a partnership today under which Microsoft will integrate EMC’s Smarts network discovery and modeling software into future versions of Microsoft’s Systems Center Operations Manager. The companies also said they will be working on common models for networking and storage, going forward.

In October 2006, EMC said it would integrate its Documentum enterprise content management system with Microsoft’s Office and SharePoint 2007, SQL Server 2005, and enterprise search offerings.

And prior to that, in January 2006, EMC strengthened its Microsoft competencies by acquiring Internosis Inc, a specialist consulting and service provider for Microsoft shops.

Backups are great. Restores are better!

The Alaskan Department of Revenue has just learned the hard way that your backups are only as good as your restores.

A report by AP that was picked up Woonsocket Call, a local paper in Rhode Island, says the department wiped out a disk drive containing information on an account worth $38 billion. But worse still, when it turned to the backup tapes to recover the data, it was unreadable.

P.S: Not every backup issue can be avoided but there are resources to help. Here’s one if you have time: a free seminar that’s coming to a city near you this year.

Digital Universe

EMC has sponsored a report by IDC, out today, on the exploding growth of data. It attempts to perform a census of the amount of digital information created/copied in the world and project its growth rates. Here it is:

http://www.emc.com/about/destination/digital_universe/

Here’s a taste of some of the numbers:

  • In 2006, the amount of digital information created and copied worldwide was equal to 161 billion gigabytes, or 161 exabytes. In layman’s terms, that figure is roughly equivalent to three million times the information in all the books ever written - or the equivalent of 12 stacks of books, each extending more than 93 million miles from the earth to the sun.
  • In 2006, if divided evenly across the global population — currently 6.6 billion (6,579,247,264) people — approximately 24 gigabytes of digital information was created per person.
  • In 2010 alone, the amount of digital information created and copied worldwide will rise six fold to 988 exabytes . The unprecedented nature of this growth is symbolized by the fact that the word “exabyte” doesn’t exist in any word processing program’s spell checker.
  • The book and gigabyte analogies above will jump in 2010 to approximately 150 gigabytes per person and approximately 75 stacks of books to the sun.
  • By 2010, nearly 70% of digital information will be created by individuals; however, organizations will be responsible for the security, privacy, reliability, and compliance of at least 85% of the digital universe.

Gosh, could this mean we need to buy some more storage? Joking aside, the numbers are staggering. I’d like to know more about how IDC gathered this information.