By making converged infrastructure easier to consume, they've helped many IT organizations accelerate their transition to cloud and IT-as-a-service models.
But -- as is always true with any new concept that upsets traditional orthodoxy -- it hasn't come without a fair amount of controversy: some thoughtful and intellectual, and occasionally a bit of unprofessional mudslinging and innuendo.
I had a chance to catch up with one of my good friends and long-time EMC colleagues who is now at VCE: Todd Pavone, responsible for engineering and marketing at the company.
We had a great opportunity to share perspectives on what's really going on at VCE -- and what might lie ahead.
One is the familiar a-la-carte model: select individual components from different vendors, test, integrate, deploy and support. There's a great degree of freedom in your choices, but a heavy price to pay in level-of-effort and time required.
The second model is the familiar reference architecture: start with an established template that delivers known results. Somewhat less work testing, integrating, deploying, and supporting in exchange for a more restrictive set of choices.
The third model is what I call converged-infrastructure-as-a-product: you acquire an infrastructure product or appliance with pre-defined choices, and almost no effort involved in testing, integrating, deploying and ongoing support.
VCE -- the Virtual Computing Environment company -- was formed as a joint venture between VMware, Cisco, EMC and Intel. Cisco and EMC are the primary investors.
Because it's a rather unique joint venture, it doesn't report financial results as would a traditional company -- revenues flow back to the parent companies and aren't accounted for separately.
A number of my compatriots at EMC have joined VCE, so I'm always very curious as to how they're doing, what they're seeing, and so on.
Todd, it's been 18-24 months or so since VCE took its present shape. At a high level, where are you today?
It's come a long way in a very short time, thanks to the team. VCE ended 2011 at around an $800m run rate, so we must be doing something right.
We strongly believe that our basic value proposition has been validated across the board. Most of our growth now is around scale -- we want to make sure our customers get a perfect VCE experience wherever they're doing business in the world.
We've made converged infrastructure easier to consume, and helped our customers accelerate their IT transformation. And every week, we see more and more IT leaders acknowledging that we've created a better way to do things.
For example, we're now seeing great traction in F500 (Fortune 500) customers that depend heavily on IT to power their businesses.
What's turned out to be most difficult for VCE customers?
You're changing the way you're doing things when it comes to acquiring, deploying and supporting IT infrastructure. Many of the traditional organizational silos (server, storage, network) have to learn to do things a different way, and change isn't always easy. VCE has engineered a lot of complexity out of the system, and that means that many IT people will now want to play different roles.
That being said, we increasingly see IT organizations that are willing and ready to embrace change, and we believe this is a trend that will continue.
What usually happens after the first Vblock goes in?
More often than not, we're pointed at either a well-understood use case, or perhaps a greenfield application like VDI. The project goes extremely well: time to production, performance, availability, cost-efficiency, and so on. People are generally amazed with the results.
And then there's always a strong motivation to start moving other workloads and use cases to Vblock platforms.
I think this second phase of customer adoption tends to be limited by practical things like available budget, migration efforts and the like.
Despite those internal barriers, the business always wants to go faster, run more effeciently, etc. and as a result, the IT team is looking for ways to change their game. Once they do, they've now got more time to focus on the things that matter vs. simply re-inventing what we've been able to do.
As we finished 2011, 40% of our business was repeat business from existing customers, which is very encouraging for the future.
Let's talk about VCE partners for a moment -- what is the winning formula that you've seen?
Well, as you know, we've been very partner-centric since day 1, and that's proven to be the right approach.
In addition to the usual technical breadth, the most successful partners bring their unique value-add. Maybe it's application knowledge, maybe it's operational knowledge, maybe it's a strong portfolio of system integration skills, or a combination of the above.
For them, the Vblock means that they can spend an absolute minimum of time on infrastructure-related issues, and focus their value proposition more on what their clients and customers are trying to achieve. Needless to say, this makes our partners more valuable to their customers.
We say that Vblocks accelerate value for our customers. It's also true for the VCE partners as well -- it accelerates their unique value proposition as well.
So, we've talked about customers and partners -- how about service providers?
About a year ago, we saw our business splitting roughly 50/50 -- 50% to service providers, outsourcers and SIs, and the other half being progressive enterprise IT shops. Since then, the enterprise IT business has accelerated dramatically as large organizations go "all in" with VCE, so it's now more like a 40/60 split. There is still plenty of SP business, but we've experienced a strong surge from enterprise organizations who want their own private cloud.
I think that -- over time — many customers want to move to a service-oriented model based on converged infrastructure. Service providers will want to market their IT services, and enterprise IT organizations will learn to compete for internal business by marketing to their internal stakeholders.
Either way, Vblock platforms have become the platform of choice for both models.
So, let's talk about VCE competition -- where is it coming from?
Well, as we sit today, we don't have a lot of head-to-head competition with other converged integrated products, but we don't expect that to last forever. I think incumbent server vendors have different priorities based upon their current business challenges and business models that rely pretty heavily on expensive services engagements. Our customers don't need or want those kinds of heavy implementation services.
One thing we don't ever see is people moving mission critical applications to public clouds. So, VCE focuses on being the best and fastest way for customers to transform IT to look more like a service provider model, and less like a traditional siloed IT shop.
So, let's talk about management and operations, shall we?
Good question. The key here is being able to manage Vblock platforms as a converged entity while accomplishing multiple objectives.
First and foremost, we're integrating tightly around VMware's management stack. We want to make sure our converged infrastructure is a seamless extension to the management paradigm VMware is working towards.
But, at the same time, many organizations have made huge commitments to established vendors like CA and BMC who are working hard to provide new levels of cloud orchestration capabilities to their management frameworks. So we're also investing heavily with them to make sure our technology interoperates seamlessly with their management stacks through our open APIs.
The third axis is openness and exposing APIs in a manner such that infrastructure organizations can mash up their own management applications and service portals, and we want to enable that as much as possible.
I suppose that some people are looking for "the simple product answer" and it's not that easy. As VCE customers get more into automated infrastructure, their requirements quickly evolve from packaged products to more open, composed approaches -- and that's a good thing from our perspective.
How have customer attitudes changed towards VCE?
You know, it's funny.
At the outset, there was a lot of concern that they could still call on the parent companies for various forms of support. That's always been true, and always will be true.
But once they get familiar with our seamless support, they quickly realize that dealing with a single, integrated support organization who's supporting a single, integrated product is the way they want to go.
If anything, they'd like us to roll more and more of the respective parent company's offerings into our acquisition and support model.
Last year, you did something interesting with VDI and offered a Vblock-based use case with specific enhancements. What's been the reaction, and will we see more of this sort of thing?
Well, we've definitely seen success with this focused use-case approach. The serious VDI projects want to move as fast as possible with a minimum of friction, and that's where Vblock platforms are so appealing.
Our Fastpath Desktop Virtualization Platform enables customers to confidently propose, plan and implement successful VDI projects quickly and with minimal risk. It gives tremendous credibility to customer IT shops when they can pull off an entire VDI project in weeks.
We think this use-case based model has merit.
I think it is safe to say that we'll be exploring similar types of offerings, including looking at how we help customers be successful with projects associated with next-gen application stacks like vFabric and the like.
Any final thoughts?
I think I speak for everyone at VCE when I say we are all extremely passionate about helping our customers change the way they do things -- helping them transform IT infrastructure for the better.
We now see what can be done, and we want to help our customers get there as quickly as possible.
I think the most insightful perspective comes from EMC's Joe Tucci and Cisco's John Chambers. At VCE board of directors meetings, they are always most interested in customer satisfaction -- are we predictably and reliably delighting our customers?
I think the view is that -- if we focus on that, the rest should take care of itself.