Transcript of a BriefingsDirect podcast from the VMworld 2011 Conference on the cloud era and what it means for IT.

1. VMware's Carl Eschenbach on the Scope and Depth of Cloud
Computing and How CIOs Will Have to Adapt
Transcript of a BriefingsDirect podcast from the VMworld 2011 Conference on the cloud era and
what it means for IT.
Listen to the podcast. Find it on iTunes/iPod and Podcast.com. Sponsor: VMware
Dana Gardner: Hello, and welcome to a special BriefingsDirect podcast series coming to you
from the VMworld 2011 Conference in Las Vegas. We're here in the week of
August 29 to explore the latest in cloud computing and virtualization
infrastructure developments.
I'm 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 ecosystem
developments, and on-stage customer testimonials, the scope and depth of the impact of cloud
computing has become crystal clear.
The move to cloud is far more than an IT delivery model adjustment. It really presents a unique
opportunity to get IT and the business of IT, right at the highest levels. Few people have as a
comprehensive a view of the impact of cloud computing than our guest today.
We're 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 we're sort of wrapping up the show here, and I have to congratulate you on a very
high energy and quite a large event, we're seeing that this really is a sea change in the IT
industry. I'm curious about the issue of relevancy. Some people seem to think that this move to
cloud and this major transition makes IT less relevant. Do you agree, and how are the CIOs you
are 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 only
proves that our industry is going through a major transformation towards cloud computing.
When people ask if it's real or if it's happening, I can tell you unequivocally that the answer is
yes. In fact, one of the things that VMware is so excited about is our position around cloud
computing.

2. 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. It's 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 it's true there are some CIOs who are resistant or hesitant to
move to the cloud, it's not whether they're going to in the future. It's 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 cloud
Once they find a way to do that in a very secure manner, people will start to build not public
cloud offerings and solutions, not private cloud offerings and solutions, but they will truly build
what we call a hybrid cloud.
Gardner: You seem to be saying that IT becomes more fundamental, that the role of IT, whether
it's public, private, or hybrid cloud, becomes a strategic partner at the highest level of the
companies?
Eschenbach: IT needs to become a strategic asset or weapon to help drive revenue generation
for the company. It no longer needs to be a cost center or just something that becomes a barrier to
success for the company.
Today, in a lot of cases, people look at IT as the barrier, meaning they're not agile enough to
service and support the line of business. In effect, what happens when you start to build either a
private or public cloud, is that they actually become opaque. They become transparent to the line
of business.
There's no longer an issue or challenge with how fast a company can roll out a new business
opportunity or solution. It's actually removed now, when it gets to IT or the existing CIO
organization, because they take that away. They're able to service them much faster, because
when you deploy cloud-based solutions, you have a much more agile infrastructure to support
the line of business.
Gardner: We've been hearing about cloud infrastructure management, cloud application
platforms, end user computing, and additional use of virtualization on the client tier. This is
coming together as a seamless strategy, and I'm curious about the paybacks.
Those companies that are biting this off fully, that are going full bore at cloud at these different
levels, seem to be getting a lot back in return. Do you see this as a whole greater than the sum of
the parts? Is there an advantage to being a full cloud-enabled organization?

3. Eschenbach: There clearly is, Dana. We have customers that are going through multiple phases
of a journey towards a cloud platform.
First, everyone has to start with just thinking about how they'll virtualize their existing assets and
their data center, which is exactly what VMware has done over the last many years. We've helped
our customers drive out a lot of CAPEX savings in IT by just moving to a highly virtualized
environment.
But what cloud brings is more than just CAPEX savings. It brings OPEX savings and operational
savings, 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, which
really then focuses on the OPEX savings you get.
Business benefit
So 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: I've been talking to a number of customers this week and I'm certainly hearing from
them that the more they adopt and adapt to cloud, the better the returns. They're seeing better
disaster recovery efficiencies. They're getting better data efficiencies. They're doing better with
their networks. It seems as if it becomes pervasive.
But I'm wondering too Carl, for those companies that resist this, are they facing a penalty? It
seems to me that they could be at a competitive disadvantage pretty quickly.
Eschenbach: Among our customers, the people who typically resist moving to cloud-based
architectures 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 they
can move to public cloud models and it's much cheaper, faster, and in some cases, they think
more reliable. In effect, they forget that the CIO has processes in place, has existing expenses on
building out its infrastructure, has security, compliance, and controls of the IT that’s already
running on that infrastructure.
If we can help the CIO build out a cloud infrastructure within their own four walls of their data
center, 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.

4. So the CIOs are really the ones who may resist cloud today, but in the end they're the ones who
have to move to a cloud faster, so the line of business does not go around them and fall into
alternatives to support the business.
Gardner: That gets back to that relevancy. It seems to me that they risk becoming irrelevant if
they resist, but they could actually increase their role and importance in the organization by
embracing cloud.
Eschenbach: No question. There was an example on stage here. I had an opportunity to
interview the CIO at Revlon. One of the things that he talked about was the fact that he increased
the IT project throughput through his organization by 300 percent, when he built out a highly
automated, private-cloud infrastructure.
What's happened, he said, is that the line of business and his business partners no longer think of
IT as the barrier or the roadblock to rolling out new revenue-generating services. Instead they
look to them, because they know they can service them in a much faster way.
Large ecosystem
Gardner: I look around me here at the show and I see some of the largest corporations in the
world. I also see some of the largest IT vendors in the world. There's a big ecosystem that’s
developed here.
But I'm 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 enterprise
size companies and the benefits. Or is there even greater opportunity for SMBs?
Eschenbach: Cloud provides business benefit for all types of customers, regardless of the
vertical market segment they're in or their size and scope.
If you think about cloud computing, the promise it brings customers is the ability to get access to
infrastructure and data in a very cost-efficient, rapid way and only pay for what you use. It's a
great 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 SMB
organizations and companies, because they don’t necessarily have the IT skill set that’s required
to 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 a
cloud model faster than the large enterprises will.
We're seeing many SMB and mid-sized companies move to cloud-based models and offerings
much faster than the large enterprise or the multinationals.

5. Gardner: Let's slice it another way. How about vertical industry-specific clouds? We've started
to see a little bit of this. NYSE is probably a great example. Do you expect to see more of that,
where we've got intermediaries between a general-purpose cloud approach and that more specific
to the business processes that are germane and relevant to specific industries?
Eschenbach: We're really excited about the partnership we've formed with the NYSE Euronext
and the Capital Markets Community cloud that we had announced back in May. The feedback
from 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 how
they're supporting their own infrastructure at NYSE Euronext based on vSphere, but now with
this Capital Markets cloud they are taking some of their same services and offering them to this
new community cloud market.
While that is the first cloud that was really stood up, we do expect and believe that there will be
other vertical clouds that are going to be stood up, whether it's in the federal government, where
there’s already been some announcements around that.
Trend will continue
I also think you can anticipate seeing some other financial services clouds, as well as healthcare
clouds, 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 bring
very specific business benefit that is very repeatable across the customers who are going to run
on that cloud because they are in the same vertical. If they have the same compliance issues, or
security, or other regulatory things that they have to adhere to, building a community cloud for
one specific vertical is a lot easier than trying to serve an entire market with multiple, vertical
clouds.
Gardner: I'm still impressed by the amount of energy I'm seeing here. You'd never know that we
have an economic stagnation problem around the world. People here are really jazzed, but I
suppose 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 they
are able to do more with less essentially?
Eschenbach: This week I've had a great opportunity to spend a lot of time with customers and
our ecosystem set of partners. I can tell you that everyone is excited for this major tectonic shift
we 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 are
trying to look at IT in a different way. They want IT to be their business partner so that they can
differentiate themselves in this global economic environment.

6. One thing that VMware and our ecosystem set of partners do is that we allow our customers to
do more with less, and that’s kind of a cliché statement. A lot of people say, we will bring IT
services and solutions to you and we will allow you to do more with less. Well, quite honestly, if
you look back over the history of VMware, that has been a very consistent value proposition that
we bring to our customers.
Even potentially in a down market or a market where we have a strong headwind, I believe
VMware and the rich set of ecosystem partners we have, we will always move to the top of the
pile, when people think about IT investments, because we will indeed reduce their overall
CAPEX and OPEX cost, at the same time providing better IT agility for the lines of business.
Gardner: I know it's hard to believe, but in wrapping up here in Las Vegas, we need to keep
looking forward. I guess the next VMworld is Copenhagen. So EMEA is next. Any thoughts
about what to expect there or any ideas about what the next year, 2012, is going to bring in terms
of this ongoing transformation to cloud?
Eschenbach: We're excited about Copenhagen. It's our second year in a row that we will be
there servicing our European community of customers and partners, and we expect another
record sellout crowd there. So we're excited about that.
Strategic weapon
As we move into 2012, our customers and business partners can continue to bet on VMware as
being a very strategic weapon for them to differentiate themselves in this very competitive
market.
The thing I will end on here is one thing that we are focused on is helping our customers go
through this transformation towards cloud computing in a very programmatic way that allows
them 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 the
opportunity we collectively have with our partners as we look into 2012.
Gardner: We've been talking about the impact of cloud computing and how it's having CIOs
adjust, but perhaps to make themselves even more relevant, and more of a strategic partner to the
business than ever.
We have been joined here by Carl Eschenbach, Co-President at VMware, responsible for
customer operations. Thanks so much for taking the time, Carl. I know you've 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 from
the 2011 VMworld Conference in Las Vegas.

7. I'm Dana Gardner, Principal Analyst at Interarbor Solutions, your host throughout this series of
podcast discussions. Thanks again for listening and come back next time.
Listen to the podcast. Find it on iTunes/iPod and Podcast.com. Sponsor: VMware
Transcript of a BriefingsDirect podcast from the VMworld 2011 Conference on the cloud era and
what it means for IT. Copyright Interarbor Solutions, LLC, 2005-2011. All rights reserved.
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