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VMwares Carl Eschenbach on the Scope and Depth of CloudComputing and How CIOs Will Have to AdaptTranscript of a BrieﬁngsDirect podcast from the VMworld 2011 Conference on the cloud era andwhat it means for IT.Listen to the podcast. Find it on iTunes/iPod and Podcast.com. Sponsor: VMwareDana Gardner: Hello, and welcome to a special BrieﬁngsDirect podcast series coming to you from the VMworld 2011 Conference in Las Vegas. Were here in the week of August 29 to explore the latest in cloud computing and virtualization infrastructure developments. Im Dana Gardner, Principal Analyst at Interarbor Solutions, and I’ll be your host throughout this series of VMware-sponsored BrieﬁngsDirect discussions. [Disclosure: VMware is a sponsor of BrieﬁngsDirect podcasts.] Here at VMworld, amid a a ﬂurry of new product news, partner ecosystemdevelopments, and on-stage customer testimonials, the scope and depth of the impact of cloudcomputing has become crystal clear.The move to cloud is far more than an IT delivery model adjustment. It really presents a uniqueopportunity to get IT and the business of IT, right at the highest levels. Few people have as acomprehensive a view of the impact of cloud computing than our guest today.Were here with Carl Eschenbach, Co-President of VMware, responsible for customer operations.Welcome to the show, Carl.Carl Eschenbach: Thanks, Dana. I appreciate you having me.Gardner: As were sort of wrapping up the show here, and I have to congratulate you on a veryhigh energy and quite a large event, were seeing that this really is a sea change in the ITindustry. Im curious about the issue of relevancy. Some people seem to think that this move tocloud and this major transition makes IT less relevant. Do you agree, and how are the CIOs youare talking to viewing it?Eschenbach: Let me start off by saying that it has been a very exciting show here at VMworld.We had 20,000 plus people in attendance, and I can tell you that the energy at this show onlyproves that our industry is going through a major transformation towards cloud computing.When people ask if its real or if its happening, I can tell you unequivocally that the answer isyes. In fact, one of the things that VMware is so excited about is our position around cloudcomputing.
The reason I say that is that the cloud era is here, and VMware has the solutions to help our customers actually bridge the gap between their existing data centers and legacy applications to this new world of cloud computing. Its us and the strength of our ecosystem partners who are leading this technology innovation and services that enable people to accelerate their cloud adoption. So while its true there are some CIOs who are resistant or hesitant to move to the cloud, its not whether theyre going to in the future. Its really how fast. Clearly people are thinking about it. They need help along the way, because they need to bridge their existing investments, as I said earlier, to move to the cloud.Hybrid cloudOnce they ﬁnd a way to do that in a very secure manner, people will start to build not publiccloud offerings and solutions, not private cloud offerings and solutions, but they will truly buildwhat we call a hybrid cloud.Gardner: You seem to be saying that IT becomes more fundamental, that the role of IT, whetherits public, private, or hybrid cloud, becomes a strategic partner at the highest level of thecompanies?Eschenbach: IT needs to become a strategic asset or weapon to help drive revenue generationfor the company. It no longer needs to be a cost center or just something that becomes a barrier tosuccess for the company.Today, in a lot of cases, people look at IT as the barrier, meaning theyre not agile enough toservice and support the line of business. In effect, what happens when you start to build either aprivate or public cloud, is that they actually become opaque. They become transparent to the lineof business.Theres no longer an issue or challenge with how fast a company can roll out a new businessopportunity or solution. Its actually removed now, when it gets to IT or the existing CIOorganization, because they take that away. Theyre able to service them much faster, becausewhen you deploy cloud-based solutions, you have a much more agile infrastructure to supportthe line of business.Gardner: Weve been hearing about cloud infrastructure management, cloud applicationplatforms, end user computing, and additional use of virtualization on the client tier. This iscoming together as a seamless strategy, and Im curious about the paybacks.Those companies that are biting this off fully, that are going full bore at cloud at these differentlevels, seem to be getting a lot back in return. Do you see this as a whole greater than the sum ofthe parts? Is there an advantage to being a full cloud-enabled organization?
Eschenbach: There clearly is, Dana. We have customers that are going through multiple phasesof a journey towards a cloud platform.First, everyone has to start with just thinking about how theyll virtualize their existing assets andtheir data center, which is exactly what VMware has done over the last many years. Weve helpedour customers drive out a lot of CAPEX savings in IT by just moving to a highly virtualizedenvironment.But what cloud brings is more than just CAPEX savings. It brings OPEX savings and operationalsavings, because when you move from a highly virtualized infrastructure to a true private, public,or hybrid cloud, you are now focused on leveraging management and automation tools, whichreally then focuses on the OPEX savings you get.Business beneﬁtSo again, moving from a highly virtualized environment moves you from a technical discussion and a CAPEX savings discussion to one that’s more of a business beneﬁt by leveraging cloud, because of the management and automation you put around that highly virtualized environment, therefore leading to much more agile infrastructure to service the business.Gardner: Ive been talking to a number of customers this week and Im certainly hearing fromthem that the more they adopt and adapt to cloud, the better the returns. Theyre seeing betterdisaster recovery efﬁciencies. Theyre getting better data efﬁciencies. Theyre doing better withtheir networks. It seems as if it becomes pervasive.But Im wondering too Carl, for those companies that resist this, are they facing a penalty? Itseems to me that they could be at a competitive disadvantage pretty quickly.Eschenbach: Among our customers, the people who typically resist moving to cloud-basedarchitectures or solutions are actually the CIOs and their infrastructure team itself.The reason for that is that the line of business has this notion,or has this understanding, that theycan move to public cloud models and its much cheaper, faster, and in some cases, they thinkmore reliable. In effect, they forget that the CIO has processes in place, has existing expenses onbuilding out its infrastructure, has security, compliance, and controls of the IT that’s alreadyrunning on that infrastructure.If we can help the CIO build out a cloud infrastructure within their own four walls of their datacenter, the line of business would much rather leverage them, if they can get all the security,compliance, and controls that they are accustomed to getting, but get it at a faster, cheaper rate,which is the promise of the public cloud.
So the CIOs are really the ones who may resist cloud today, but in the end theyre the ones whohave to move to a cloud faster, so the line of business does not go around them and fall intoalternatives to support the business.Gardner: That gets back to that relevancy. It seems to me that they risk becoming irrelevant ifthey resist, but they could actually increase their role and importance in the organization byembracing cloud.Eschenbach: No question. There was an example on stage here. I had an opportunity tointerview the CIO at Revlon. One of the things that he talked about was the fact that he increasedthe IT project throughput through his organization by 300 percent, when he built out a highlyautomated, private-cloud infrastructure.Whats happened, he said, is that the line of business and his business partners no longer think ofIT as the barrier or the roadblock to rolling out new revenue-generating services. Instead theylook to them, because they know they can service them in a much faster way.Large ecosystemGardner: I look around me here at the show and I see some of the largest corporations in theworld. I also see some of the largest IT vendors in the world. Theres a big ecosystem that’sdeveloped here.But Im also seeing smaller companies. So cloud’s message, cloud’s value to small to medium-sized business (SMBs), is it just as good as what we are telling them in terms of their enterprisesize companies and the beneﬁts. Or is there even greater opportunity for SMBs?Eschenbach: Cloud provides business beneﬁt for all types of customers, regardless of thevertical market segment theyre in or their size and scope.If you think about cloud computing, the promise it brings customers is the ability to get access toinfrastructure and data in a very cost-efﬁcient, rapid way and only pay for what you use. Its agreat value proposition, regardless of size and scope of your organization and company.With that being said, some of the people moving to cloud services ﬁrst are actually SMBorganizations and companies, because they don’t necessarily have the IT skill set that’s requiredto keep up with the business demands. Therefore, if they can get this service from someone else,and get a service level agreement (SLA) that’s relevant to their business, then they will move to acloud model faster than the large enterprises will.Were seeing many SMB and mid-sized companies move to cloud-based models and offeringsmuch faster than the large enterprise or the multinationals.
Gardner: Lets slice it another way. How about vertical industry-speciﬁc clouds? Weve startedto see a little bit of this. NYSE is probably a great example. Do you expect to see more of that,where weve got intermediaries between a general-purpose cloud approach and that more speciﬁcto the business processes that are germane and relevant to speciﬁc industries?Eschenbach: Were really excited about the partnership weve formed with the NYSE Euronextand the Capital Markets Community cloud that we had announced back in May. The feedbackfrom that announcement has been pretty positive.In fact, their CIO was on stage with me just the other day, and he not only spoke about howtheyre supporting their own infrastructure at NYSE Euronext based on vSphere, but now withthis Capital Markets cloud they are taking some of their same services and offering them to thisnew community cloud market.While that is the ﬁrst cloud that was really stood up, we do expect and believe that there will beother vertical clouds that are going to be stood up, whether its in the federal government, wherethere’s already been some announcements around that.Trend will continueI also think you can anticipate seeing some other ﬁnancial services clouds, as well as healthcareclouds, being stood up as well. This is a trend that will continue.One of the reasons we believe it will continue is because people can stand up clouds and bringvery speciﬁc business beneﬁt that is very repeatable across the customers who are going to runon that cloud because they are in the same vertical. If they have the same compliance issues, orsecurity, or other regulatory things that they have to adhere to, building a community cloud forone speciﬁc vertical is a lot easier than trying to serve an entire market with multiple, verticalclouds.Gardner: Im still impressed by the amount of energy Im seeing here. Youd never know that wehave an economic stagnation problem around the world. People here are really jazzed, but Isuppose we need to look at this as a trying time as well.What are you encouraged by in your meetings with folks and discussions in terms of how theyare able to do more with less essentially?Eschenbach: This week Ive had a great opportunity to spend a lot of time with customers andour ecosystem set of partners. I can tell you that everyone is excited for this major tectonic shiftwe are seeing in the industry, and these shifts only happen every 10 or 20 years.People are starting to say that this whole cloud computing era is coming to life, and people aretrying to look at IT in a different way. They want IT to be their business partner so that they candifferentiate themselves in this global economic environment.
One thing that VMware and our ecosystem set of partners do is that we allow our customers todo more with less, and that’s kind of a cliché statement. A lot of people say, we will bring ITservices and solutions to you and we will allow you to do more with less. Well, quite honestly, ifyou look back over the history of VMware, that has been a very consistent value proposition thatwe bring to our customers.Even potentially in a down market or a market where we have a strong headwind, I believeVMware and the rich set of ecosystem partners we have, we will always move to the top of thepile, when people think about IT investments, because we will indeed reduce their overallCAPEX and OPEX cost, at the same time providing better IT agility for the lines of business.Gardner: I know its hard to believe, but in wrapping up here in Las Vegas, we need to keeplooking forward. I guess the next VMworld is Copenhagen. So EMEA is next. Any thoughtsabout what to expect there or any ideas about what the next year, 2012, is going to bring in termsof this ongoing transformation to cloud?Eschenbach: Were excited about Copenhagen. Its our second year in a row that we will bethere servicing our European community of customers and partners, and we expect anotherrecord sellout crowd there. So were excited about that.Strategic weaponAs we move into 2012, our customers and business partners can continue to bet on VMware asbeing a very strategic weapon for them to differentiate themselves in this very competitivemarket.The thing I will end on here is one thing that we are focused on is helping our customers gothrough this transformation towards cloud computing in a very programmatic way that allowsthem to protect their existing assets in the data center, and also protect their legacy applications,but move to a new world of cloud computing all at the same time. That is what excites me in theopportunity we collectively have with our partners as we look into 2012.Gardner: Weve been talking about the impact of cloud computing and how its having CIOsadjust, but perhaps to make themselves even more relevant, and more of a strategic partner to thebusiness than ever.We have been joined here by Carl Eschenbach, Co-President at VMware, responsible forcustomer operations. Thanks so much for taking the time, Carl. I know youve been really busy.Eschenbach: Thanks, Dana, I appreciate it, and thanks for attending VMworld 2011.Gardner: And also thanks to our audience for joining this special podcast coming to you fromthe 2011 VMworld Conference in Las Vegas.
Im Dana Gardner, Principal Analyst at Interarbor Solutions, your host throughout this series ofpodcast discussions. Thanks again for listening and come back next time.Listen to the podcast. Find it on iTunes/iPod and Podcast.com. Sponsor: VMwareTranscript of a BrieﬁngsDirect podcast from the VMworld 2011 Conference on the cloud era andwhat it means for IT. Copyright Interarbor Solutions, LLC, 2005-2011. All rights reserved.You may also be interested in: • From VMworld, Cosmetics Giant Revlon Harnesses the Power of Private Cloud to Produce Impressive Savings and Cost Avoidance • From VMworld, NYSE Euronext on Hybrid Cloud Vision and Strategy Behind the Capital Markets Community Platform Vertical Cloud • VMwares vSphere 5 Hits the Streets • VMware Launches a Developer Edition for Cloud Service • Priming the Private Cloud Pump, HP Releases VirtualSystem for VMware at VMworld