 back to JSA TV where we're covering the latest stories, trends and innovations from leaders in global connectivity, real estate, the channel and the networks within. Buffy Harakitas of JSA and joining me today, we have two very special guests from Rackspace. We have Todd Colette. He is the Global Alliance Manager of Rackspace Technology and we also have Jeff Diverter. He is the CTE, the Chief Tech Evangelist. Sounds pretty fancy, doesn't it? It does. I like fancy, so that's great. We're going to get along really well then. Perfect. Absolutely. And these gentlemen are from Rackspace. So amazing to see you again. Yes, wonderful to see you, Buffy. It's been a year since we last talked. A lot of incredible things have happened with us and the organization, where our focus is and the things we're doing here is we're having success. So very excited to be here with you today. Absolutely. It's exciting. I mean, the conference floor just opened a little bit ago. It's electrifying already. It really is. It's the biggest and best channel partners to date here in Las Vegas. And Jeff, you just got off a panel. I did. Fresh off the AI panel. That's right. One of the hottest topics here. Everything's got AI attached to it. It's amazing. Absolutely. I mean, not only here is it a hot topic, but globally. I mean, it's definitely more than a trend at this point. It is definitely a critical topic of the channel, of our industry. So why don't you dive right in, give us some insights into what you just spoke about on the panel and how RAC space is leveraging AI. Absolutely. So we think about AI. Everything is we joke and we quip that everything has AI attached to it these days. But the reality is AI as a technology is not new. AI was first really pulled together as a thought construct back in 1946. But because of, well, the lack of compute power, of access to data, and then the ability to interconnect that, that's really what kept it from exploding. That and some really interesting evolution in the way, literally, the rocket scientists thought about this process. And so when you get to the early 2010s, I can say, was really when things started to accelerate, there were some amazing advancements that really started to happen in the space. But of course, November of 2022 is when it all exploded when OpenAI came out with ChatGPT. And nothing was the same again. We spent last year planning vacations, menus, making tell us jokes, all kinds of fun stuff. But now this 2024 really is the year where people are adopting AI as active projects inside of their organizations. Rockspace, we actually created an entire division inside of our organization full of data scientists, full of cloud architects, full of all the technologies and capabilities that are required. Because there's a lot to make AI work. And we're actively delivering solutions, custom solutions for customers today that's having significant impacts on stuff like employee productivity. For knowledge worker, cutting down on errors, for creating automated bots to help do the job of what used to take 10 people, now one person can oversee the work of the computers doing the things. And the quality is higher and the quality of life is better. And I can tell you this, this is the generational opportunity for all of these trusted advisors out here. The reality is this will open any door for people they wanna talk to because every company wants to explore how are we going to take advantage of this technology? How can we be better at what we do? And they don't know, they don't have any idea. And so anyone out here who just reaches out to a prospect and says, hey, what's your AI strategy? They're going to allow them time, right? They're gonna come meet with them to see how they can help. And so it's probably the greatest opportunity for everyone to make money because the reality is there's all this work that has to do behind the scenes, right? It all has to do with your data structure, infrastructure modernization. And so it drives a lot of revenue. It's absolutely incredible, the things that are to pull through with it. And so I couldn't be more excited about the opportunity. Yeah, I mean, it is a big opportunity especially for the partners across the ecosystem here. And it sounds like RackSpace is absolutely harnessing the power of AI within your organization. So let's switch to another important topic. And I'm gonna switch that to you, Todd. That's healthcare. Obviously healthcare is mission critical globally, especially here in the United States, of course across the channel ecosystem. So why don't you talk a little bit more about what RackSpace is doing? So a year ago, we created a healthcare vertical and it's the main driver in our business right now. It's unbelievable what has happened because hospitals traditionally, number one, they're very poor run businesses, right? On average, they make 1%, right? So they're just not very efficient. They can't keep technology resources. They have a hard time. So now we acquired a virtue stream from Dell who was a large epic provider. And Epic is the EMREHR that is responsible for about 45% of the hospitals in America. And so now we have become the largest provider of Epic software, even larger than Epic themselves in concurrent users, which is incredible. So last quarter, at the end of the year we had amazing successes into some of the largest hospital organizations. You know, one contract we did was $125 million. These are long contracts, seven to 10 years. These are not things that rip and replace, right? These people are committed to this. And so now that we are the largest, you know, and we have this entire team of people that are focused on that vertical, they all came from the healthcare world. And so we have a couple hundred people on that part of the team with great depth and knowledge, right? And so we can help all of the partners, you know, with respect to healthcare organizations. And one of the really beautiful things about what we're doing is Epic will only host their software. That's it. We can actually host the Epic software and all of the other applications that the hospital uses, which consolidation of that number one saves money, better for resources, right? Much more efficient as an organization. And so on average, I want to say they have around 180 other applications they utilize. And so it's a very powerful thing to be able to go to a hospital and say, hey, we can take this off your plate, we can control your costs, and we can manage all these other applications for you. So it's just really taken off for us. So if we're partners with healthcare clients, they should definitely be reaching out to us. Even if they don't, they should go find some. Yeah, absolutely. I mean, when you talk about the opportunity that exists there, I mean, you mentioned the size of the contracts, the lengths of the contracts. And best yet is the fact that because Rackspace gets in and can deploy and run these environments better, we're making the hospitals better, which is improving patient care. Exactly, improving patient care, which at the end is really important to do, right? And I gotta tell you, the smallest epic deal is around 200,000 months of recurring. That's for a small hospital. So you can see the size and the scope and the amount of money that can be made. And so people that have healthcare clients, they should be knocking on all their doors. And the ones that don't, they should be finding them. Absolutely, especially with that MMR. Yes, yeah. So definitely. So let's talk a little bit about VMware. I mean, we're hearing all about it across this show today. Acquisition, Broadcom. Why don't you tell us about how that has impact at Rackspace? Well, let me, I want to start real quick. We were the largest VMware partner in the world. No, we are. But before you terminated everyone, okay? So I think in December, every, you know, a thousand partners across the globe got termination letters, right? Well, you know, clearly we knew we'd get invited back to the dance because we were the largest. And so they invited 10 companies back, but we are one of three that are VCF ready, which is their virtual cloud foundation. It's their entire stack. And so we're in a really incredible position to again, help all these partners because on April 1st this year, they go from perpetual licensing to subscription and they're going to raise pricing like 200%. And so this is going to be painful for a lot of people, but now we can sell the licenses, we can support it and host the application. You know, so it's again, for us, it's a really good situation. I think for some other people, it's probably was a little more challenging, but you know. Yeah, absolutely. When you think about these solutions, I mean, VMware is that industry standard for virtualization as such, almost everything in the industry. If it's not running in AWS, Azure, Google, it's running on VMware. So this is a significant opportunity, challenge, issue that everyone has got to deal with. Well, it's not by the end of the year, by the end of the month almost effectively, right? No, exactly. And so this year alone, 3382 of their customers. So there's a three year plan for them to transition off. And they kept their top 1,700 customers and then the rest are basically given to be up to go out there. But it puts us in a great position because of our skill set with respect to them and how we can operate. And then on top of that, we created OpenStack 2010 with NASA. That's right. Which was an open source technology, which is an alternative solution for people. You know, and if you're gonna, let's just say your cost is gonna go from 100,000 to 200,000, maybe you can't afford that, right? We can migrate those people to OpenStack using OpenSource and save them approximately 40% from what they're billing with VMware. So we have multiple solutions to help the companies. Yeah, and the expertise behind it to be able to manage it all. I mean, we have over 100,000 VMware VMs under management, which again, the largest in the world. Yeah, and we have all the tools to transition the people to OpenStack if they chose to go that way. But we can sell the licensing, support the customers that way. And the partners can get paid now where they weren't in the past. So it's a, again, it opens up a tremendous opportunity and it starts on April 1, the first 3,382 customers have to move from perpetual to subscription. And a lot of good things are gonna happen for us, I think. Yeah, I would say so. So top three takeaways here are for VMware, you know, for the transition there, make sure you're reaching out to Rackspace for significant monthly recurring revenue when it comes to healthcare, reach out to Rackspace. And if you wanna learn more about how to harness the power of AI, reach out to Rackspace. In fact, it's as easy as going to FAIR, which is the name of our division, Foundry for AI at Rackspace. So go to FAIR.Rackspace.com to learn more. Definitely. We appreciate the time and happy that we got to share all this with you. And I couldn't be more thrilled to see you again, to meet you today and to tuning in viewers, thank you so much. Stay connected, stay curious and happy networking.