Transcript of a BriefingsDirect podcast on how one municipality has broadened its own IT infrastructure to become a managed-service providers for other cities and towns.

1. VMware vCloud Hybrid Service Powers Journey to Zero-
Cost Applications Support for City of Melrose
Transcript of a BriefingsDirect podcast on how one municipality has broadened its own IT
infrastructure to become a managed-service providers for other cities and towns.
Listen to the podcast. Find it on iTunes. Sponsor: VMware
Dana Gardner: Hi, this is Dana Gardner, Principal Analyst at Interarbor Solutions, and you're
listening to BriefingsDirect.
Today, we present a sponsored podcast discussion on how a small city outside of Boston has
embraced hybrid cloud computing to host not only its own applications, but also
those of nearby communities. In doing so the City of Melrose, Massachusetts,
plans to reduce the cost of supporting its applications to perhaps zero and maybe
even generate revenue as a specialized managed-services provider.
To learn more about this early adopter municipality approach to cloud
computing and how they transitioned from nearly 100 percent server
virtualization to a novel cloud capability built on VMware vCloud Hybrid Service (vCHS),
please join me now in welcoming our guests. We're here with Jorge Pazos, the Chief Information
Officer in the City of Melrose. Welcome, Jorge. [Disclosure: WMware is a sponsor of
BriefingsDirect podcasts.]
Jorge Pazos: Thank you.
Gardner: We're also here with Colby Cousens, IT System Administrator in the City of Melrose.
Welcome, Colby.
Colby Cousens: Thank you.
Gardner: Jorge, let me start with you. As you looked to extend the benefits of server
virtualization, what were some of the top requirements as a CIO for moving to cloud and hybrid-
cloud infrastructure?
Pazos: A lot of this is driven by both challenges that we face and opportunities that we see. Like
you said, we're an IT department for a mid-size town in Massachusetts. We
offer services to all of our internal departments and we're beginning to grow out
into a managed-service provider. Part of what we're looking to do internally is
grow that managed-service provider part of the business, but then also take care
of a lot of the day-to-day stuff.
If you think about building a data center, which is what we did about three or
four years ago, it was a top-to-bottom upgrade of our data center. One of the
things that you immediately start to think about is your disaster recovery (DR). When you're a

2. small municipality with five square miles, where do you put a DR site that gives you diverse
power providers, and geographical diversity?
It doesn't make sense to invest heavily in a DR site that’s somewhere within the town. So we
were really looking to cloud-service providers to provide that for us. That was one of the big
drivers for us, and we really didn't feel comfortable growing the business too much without
having at least that capability somewhere, as part of our service offering.
Gardner: When you were looking forward to DR capability that opened up your eyes to what
hybrid cloud was capable of. Was that the beginning of seeing more than the virtualization
benefits of being able to replicate workloads and have elasticity and look to optimization benefits
beyond your on-premises server?
DR site
Pazos: We really wanted to have a fully functional DR site and we looked at a lot of the cloud
service providers. This isn’t a point-in-time perspective. This is
something that we've been doing over the last three or four years.
Three or four years ago, there weren’t a whole lot of cloud-service
providers that we felt could do what we were looking to do. So when
we had this opportunity to participate in the beta for the vCHS, we were really excited. There
was quite a bit of promise in it for us in terms of things that we felt were important, like
interoperability, security, performance, and things like that.
And after the launch actually one of the things that we are pretty excited about that we didn't see
in the past was cost predictability, which we don't really see a whole lot from a lot of the other
service providers.
Gardner: I'm sure if you are going to embrace a hybrid-cloud model and test and evaluate a
product like be vCHS, you might recognize that if you do this first, you've learned the lessons
and acquired the skill. How did that idea come about to take this into this extension of what other
municipalities would be seeking?
Pazos: It’s not that big of a stretch when you think about it. What we're doing is providing
services to other cities and towns. That is what we do on a day-to-day basis in one municipality.
The way that municipalities are run, especially from an IT perspective, there isn’t a great deal of
diversity. We could pretty much run IT for almost any city or town, because the apps are very
similar and the business processes are all very similar.
It’s not that big of a stretch to get to that point where you say, "I can do this for another city or
town." That was actually the thought process several years ago, as we started to do our own
internal consolidation. The idea was that if we do it for ourselves, why can’t we do it for others.
It’s not that much of a leap to get there.

3. Cousens: We can kind of get some practice consolidating city and school networks and data
centers and realize it's the same thing. We could do it with other the
municipalities as well.
Gardner: Colby, that was going to be my question. What requirements did you
have in terms of what was needed in order to make this possible if you were
going to integrate and consolidate with the cloud infrastructure approach for
different divisions within your town? Sure, you can extend that to other
municipalities, but what was important for you to be able to do that in terms of
the solutions available?
Cousens: Compatibility was the biggest issue for me. I didn’t want to run into any roadblocks
with software or hardware that wouldn't work with each other, so we would have had to drop the
project just because two things wouldn't connect.
Gardner: Let’s get a sense of what we're dealing with here in terms of your scale and your size.
Tell me about Melrose, the applications, the number of users, and your infrastructure. What are
we talking about in terms of IT organization?
Modest deployment
Pazos: It is a fairly modest deployment by service provider standards, but I think by municipal
standards, we're decent size. Currently, we're at about 70 virtual machines (VMs) with 30
terabytes of storage. We connect our regional partners the way that we connect these
communities, Essex is about 30 miles away, and Saugus is a direct neighbor. To connect these
guys back to our data centers, we use an ENS circuit, which is basically a Layer 2 connection
between the two sites that can be ramped up.
They come up in base of 10 Mbps and then they can go straight up to a 10 Gbps . We run several
SQL databases, which includes our financial system. We run Microsoft Exchange, Public Safety
Dispatch. There is a CAD, Computer Aided Dispatch/Records Management application, and
database. We also have virtual desktops. Our entire emergency dispatch operations are all
running on virtual desktops, as well as point of sale for virtual desktops.
So we run quite a few different apps, many of which are obviously pretty mission critical, and
the demand is growing. We are going to be on-boarding Saugus through the summer and into the
fall. So we'll be experiencing some growth through that process as well.
Gardner: Just for our audience, Essex and Saugus are also municipalities in Massachusetts, and
you have been experimenting and bringing them on, so that they become paying customers to
you. Do you think it is possible at some point that you're going to cover your IT cost by doing
this managed-service provider business?

4. Pazos: Early on, it got to a point where we couldn't do it, but it looks to me like now we're
potentially going to be in a position where maybe five or six additional clients get us to the point
where we are revenue neutral to the city. That's looking a little bit more realistic for us in terms
of both getting people to warm to the idea and also being able to support it.
Revenue neutral would be absolutely fantastic. If you're taxpayer in the City of Melrose and you
can have a department that offers all of its services internally and be completely revenue neutral,
I would be ecstatic about that.
Cousens: I also think that the services we offer to the city are better because of our equipment.
Our refresh schedule is better. The stuff that we're using is more enterprise grade, because we're
using it in the hosting environment and providing to a number of partners.
Gardner: Let's look at the equation of how the economics of this work from the perspective of
your client municipalities, for lack of a better word. When Essex and Saugus evaluate this, are
they going to be able to get their IT services from you cheaper and with a higher performance
than they would have been able to do it themselves?
Pazos: There are two ways to look at that. Town of Essex has reduced their IT expenditures by
33 percent year over year. So they're immediately seeing savings every year. The story in the
town of Saugus was a little bit different. They had an IT department that had inherited
infrastructure that was getting old and needed to be refreshed. They were able to buy into the
service and not have to incur a large upfront cost of doing a forklift upgrade of their entire IT
infrastructure.
Year-to-year savings
They're saving, year one, somewhere in the vicinity of about $80,000 or just north of $75,000.
Then, there's the year-over-year savings that they're seeing. So for this three-year agreement,
they feel like they're saving quite a bit of money.
Gardner: Colby, given that you had a very strong set of requirements around compatibility of
being able to move from your on-premises infrastructure into a hybrid cloud model, what about
Essex and Saugus? Were they also highly virtualized in their servers and workloads, and how did
the compatibility from them work, moving towards your vCloud Hybrid Service set up?
Cousens: That wasn’t as much of an issue for us, because they weren't really virtualized yet at
all. So part of the on-boarding process for them is virtualizing all of their servers and doing some
virtual-desktop offerings too. We got to start fresh with virtualization onsite for their services.
Gardner: I suppose you could look at that as another added value. You're actually modernizing
them or guiding them into a more optimized IT infrastructure with a higher utilization. You're
also helping them decide which of their services to get from the source, in this case the one that

5. you are managing, versus perhaps a cloud provider that would not have the expertise in the
customization that they're looking for.
Pazos: Absolutely. Not only are we saving them money, but we're able to provide them services
that they weren’t providing for themselves. A lot of these guys didn’t have offsite data
replication.
They didn't have DR site capability. It was a pretty traditional small data center, a server room
type set up in a building. Everything was a single point of failure. We're not only saving them
money, but we're providing a higher level of service than they would have ordinarily been able to
achieve.
Cousens: Again, in the case of Essex, the town manager is doing the IT work too. So besides the
financial piece, he was having a hard time focusing on his IT stuff as well.
Pazos: I think it's important for anyone listening to the podcast that to understand that, a lot of
these are small governments scattered around the state. The $75,000 that Saugus is saving this
year is very big money in small town government.
In the case of Essex, quite often, people are doing double duty. They're the town accountant and
the IT person, or the town administrator and the IT person. So they are also gaining from freeing
themselves up to focus on their primary roles. In the town of Essex case, he's able to focus on
being the town administrator. That’s life in small town government in Massachusetts.
Gardner: As time goes on, it sounds like you want on-board other municipalities making them a
good deal, where everybody feels like they're improving the situation at a good cost, compared to
what they would have been paying otherwise. Over the next two or three years, what are you
going to be looking for in terms of cloud capabilities?
There is of course the infrastructure, and you want the compatibility that we heard about. What
about public-cloud services? Are there costs, compatibility issues, location or compliance issues?
What do you think about when you look down the road towards the public-cloud components
within a hybrid cloud deployment?
Competition important
Pazos: One of the important things is competition and, hopefully, as everything matures, that
cost will come down. Again, for small town government, that’s extremely important. I think a lot
these towns wouldn’t have this as an option, because the costs simply are just too much for them.
So we would like to see to the cost come down.
Gardner: That would be a function of choice, of having a marketplace, right?

6. Pazos: Absolutely yes, and with competition, hopefully that will come to be. One of the reasons
that we invested the time into vCHS beta was that we really felt it was important to focus on that.
We went through Beta 1 and 2, we would have done the Early Adopter Program (EAP) as well,
except that we were in the midst of on-boarding Saugus.
We really committed some time to do Beta 1 and Beta 2, because I think the promise of the
service offering was fantastic. We really felt like there was an opportunity there to play with a
product that was extending our existing data center out into the cloud, and it blurred the lines
between what was on-prem, and what was out in the cloud.
Ideally, that's what we would like to see. When you're your managing a pool of resources, you're
not really managing on-prem stuff and cloud stuff. We would like it be one large pool of
resources that you are managing. I think that would be ideal.
Gardner: To circle back to some of your earlier reasons for going about this, you get that
business continuity benefit. You know that your resources are going to be available, and if
something goes wrong along the line within your organization, you've got someone covering
your back.
Pazos: One of the primary reasons that we're looking at this is DR and business continuity. I
need that diversity in being able to have different geographical zones, having somebody out in
Nevada, California or wherever. That’s a diversity that is, otherwise, really impossible for me to
get. So that's an important thing.
Gardner: How about some 20/20 hindsight, for those who are listening and reading about your
story and experience. What might have you had done differently? Do you have any advice for
those who might be also considering adopting a hybrid cloud or maybe even pursuing the notion
of being either a consumer or provider of these managed services?
Pazos: When we look back at this, it’s surprising to me how we were very fortunate with timing.
A lot of the things that we needed seem to have been rolling out at right around the time we
needed it, which was fantastic for us.
What I would say is, whatever you've been waiting for, don’t wait. It's to the point where you just
want to move ahead, and for some of this, you're going to have to adapt and sort of figure out as
you go and as things evolve.
There were times early on, where we were frankly a little hesitant to do some things, because, to
be honest with you, we spoke to a lot of folks in other cities and towns who just sort of cocked
their heads a little bit and looked at us and said, "Really? Why are you doing this? Why would
you want to do this? This seems sort of crazy." So there was a little bit of hesitation at times as
we moved forward.

7. Solid idea
But the idea seemed solid, and we went ahead with it. That's the advice for folks -- don't really
wait. Do your research, do your homework, understand what it is that you're getting yourself
into, but certainly move ahead, because I really feel like this is the way we're going to be doing
business. I know we are doing businesses right now, but I think a lot of folks are going to be
doing business this way at some point in the near future.
Gardner: Colby what about you?
Cousens: Experimentation is key. A lot of the technologies are complicated to just look at or
read about. Get in there and do an evaluation or download trial versions of different products,
like we did with the Beta, with vCHS. You just have to try it out and play with it. Then you start
to realize the true value as you apply it to actual use cases.
Gardner: Well, great. I am afraid we will have to leave it there. We've been talking about how a
small city outside of Boston has embraced the hybrid-cloud computing to host not only its own
applications, but those of nearby communities as well.
We learned how the City of Melrose, Massachusetts, plans to reduce the cost of supporting its
application down to zero by transitioning from high server virtualization to revenue making
managed services built on a cloud capability and they have been so far using VMware, vCloud
Hybrid Service as a Beta user to experiment and perfect this approach.
Thank you very much to our guests. We've been here with Jorge Pazos, the CIO, the Chief
Information Officer at the City of Melrose. Thank you, Jorge.
Pazos: Thank you.
Gardner: And also, we have been here with Colby Cousens, the IT Systems Administrator there
in Melrose. Thank you so much, Colby.
Cousens: Thank you also.
Gardner: This is Dana Gardner, Principal Analyst at Interarbor Solutions. Thanks, also to all
audience for joining and don’t forget to come back next time.
Listen to the podcast. Find it on iTunes. Sponsor: VMware
Transcript of a BriefingsDirect podcast on how one municipality has broadened its own IT
infrastructure to become a managed-service providers for other cities and towns. Copyright
Interarbor Solutions, LLC, 2005-2013. All rights reserved.
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