 Live from San Francisco, California, it's theCUBE at VMworld 2014. Brought to you by VMware. Cisco, EMC, HP, and Nutanix. Welcome back to San Francisco, everybody. This is Dave Vellante, and this is theCUBE. SiliconANGLE's continuous coverage of VMworld 2014. theCUBE is our live mobile studio. We go out to the events, we extract the signal from the noise, and we love to have guests on. We've got an interesting segment here combining a technology company, EMC, with a practitioner at McKesson. Jay Schneider is here. He's the vice president of Americas at EMC, and Peter Hunt is the vice president of cloud integration at McKesson. Gentlemen, welcome. It's great to be here, Dave. So Jay, talk a little bit about what you guys are doing here. We've had a number of folks on talking about cloud this week. You guys are all in on cloud. A lot of the engagements that you're doing are cloud related, right? So, where are you at? Talk about what you're doing here, what the conversations are like. Let's set this up. The conversations for me, specifically relative to solutions and services, and I run global services. So as opposed to everything and all things in the Americas for EMC, my focus is really on the services portion, and I think it's really relevant right now, Dave, because what we're seeing in the marketplace is a product won't solve the problem. So when we talk about cloud technologies and the enablement of cloud, it's really a holistic solution that our customers are looking for, and when we break that down, there's a variety of elements that come into that. We, in fact, have defined six attributes, the defined well run cloud, and all of those attributes entail some type of solution, services orientation, whether it's user portal, whether it's a services catalog, and service definition, but most importantly, it's the operational enhancements that need to occur at the organization and process layer that we're seeing. So my conversations with folks here have been primarily, how do you get through that knot hole of changing the people process within the organizational structure that they're challenged with? It's not the technology or the challenges they face in deploying virtualization or the componentry that EMC sells within the hybrid cloud. It's all the ancillary pieces around it that make it well run that are really unique, and that's where my thrust has been. Well, it's like we were talking off camera, Peter. It is cliche, but people process technology, technology's the easy part. People process where all the mistakes are made and all the wounds exist, so let's start by talking about McKesson. For those who weren't familiar with McKesson, set that up and talk about your role. Sure, so as a technology provider to healthcare and also as a distributor of pharmaceuticals and durable medical, et cetera, two years ago we set on a path to change how we interacted with our customers, IT interacted with our customers, and the charter was to build something very, very different, and underlying that was to change the relationship to truly add value. Yes, that sounds like cliche, but at the end of the day, where we addressing one of three areas for our business, where we helping them make money, save money, or manage risk, and IT really contributes on the make money, which is time to market, so could we speed their ability to deliver products, or were we impedance to their roadmaps? So we started with a small team of five people and created a new capability to recreate IT, and the end result of that is two years later, we're a year into a production capability on a cloud, but what we've learned through the first year of working on the technology side is that we needed to now focus on the people and the process to make the change. Standing up the technology, improving that we could spin up workloads, became the lesser of the challenges, then re-architecting the organization. Could have created new challenges. It does, it does. If I could jump in, Peter, I think you did a great job of setting the stage for what we think is the primary use case for a lot of what we're talking about now, the new enterprise hybrid cloud. We absolutely encourage folks to do exactly like McKesson, find a green field environment, don't try to intermix with the legacy complexity of the original infrastructure, take a green field, deploy it, put workloads on that, start them up and running, and show success. It sounds like that's what you did is what you showed success back to the business, that you could be a provider of services at speed. You could allow them to go to a portal and provision them themselves. All these things are very complex, especially if you try to intermix those into an existing environment. But when you prove out that capability in a green field, and then slowly over time, start to migrate those applications to that green field, that becomes the next generation architecture. And we're seeing more and more customers embrace this. What Peter touched on secondly is the critical piece, which is if you do that in isolation only around the technology, you will hit a wall. Eventually, you need to bring the people in process along with it, because at scale, it will break down. Well, so Peter, I like, I mean, very simple model you use. I drew a little pyramid when you said it, value. I'm either saving you money, I'm making you money, or I'm managing your risk. So in thinking about that, and I mean, I don't know of a technology that I put in that makes me money. You know, maybe, I don't know, but maybe in a particular use case, or saves me money, you know, automatically, or manages my risk, no, it's the process around that, it's the alignment with the business. So my question to you is, how do you manage those three sort of dimensions? Is it project-based? Is it so, I presume it starts with the conversation with the business and understanding those requirements. Can you take us through that? Sure, we've shifted our approach instead of dealing with the technical requirements. We're now working more with the Vice President of Engineering. So we have our customers are now customer-facing to the outside. And whereas I would provide infrastructure, I now have to have a conversation to understand what allows my end customer, the developers and Vice President of Engineering in this case, to be able to speed product to market. So that's the make money. If I can bring them in by months, then I'm addressing their ability to make money. If I'm able to reduce the cost through standardization, then I'm saving money. Yeah, so, and I understand sort of how you can apply technology to create that business capability. My, well, let me ask it differently. Can you be optimized on all three, for example? Or are you finding that the alignment occurs around one of these, sort of the business case, if you will? Are you saying there have to be trade-offs to achieve all three of those? Right, or are you finding that in your industry or in the examples of your customers, your consumers, that they're trying to optimize on all three, or is there sort of typically an overriding business case around one? I would say, perhaps strangely, that you're going to either achieve all three well or you're really going to be limited in your success. So through standardization, one of the things that we like about the cloud is we're looking to standardize across our infrastructure and be able to deliver faster because we're standardized. So because we can deliver faster, our customers can bring product to market faster. Because we've standardized on our product set and where our operational cost and the number of people that touch the product is limited, we've reduced our cost. And also because we've standardized, we don't have the complexity of an environment that's trying to be all things to all people. Many people have asked us, well, what is your cloud strategy going to be and what's it going to become? And it is simply an x86-based platform and we're not looking to make it more complex. We're looking to make it as simple as possible to address all three of those. I was just going to say, Dave, I agree with what Peter said. I'll just put the slightly different slant on that. We find talking to most CIOs that they do prioritize those three and say for us the most important thing is speed, time to market, that overrides anything else. And we see this time and again, if you ask me what most CIOs would say, at the top of that list is always speed to market and ability to expedite the business needs versus cost. Can they have both, would they like both every day of the week? But what typically happens, and this is where I agree with Peter, as they move through that paradigm shift to enable speed, they have to go through some type of ruthless standardization and automation to achieve that. And by definition, you're improving your cost model. The risk piece is the interesting one. That's usually the one that's left out. It used to be the highest priority. People are much more comfortable with cloud decisions today. I'm often finding that as they design for the cloud, they forget about the fact that things that may have been second nature to them, legacy disaster recovery policies, for example, are now completely broken down because you now have a variety of different means on how you're serving up services. You have external providers, maybe a series of internal providers and legacy providers, and the old guard of what managed risk around your data center is not the same. So I'm not seeing a lot of momentum there today in that market, but I think it's going to come. Well, I think, you know, the interesting point that this brings to my mind is that there are organizations who define value as cutting costs. I'm meeting my budget or lowering my budget or doing more with less, et cetera, et cetera, et cetera. And it really isn't a robust value discussion going on. Those really aren't interesting places to work, and oftentimes they're not growth companies, but this is a saying, grow or die. So I like the way Peter, you framed it and sort of phrased that value equation. Do you feel like that's unique in the industry? It's started to become more prevalent because cloud. Jay, for example, is an enabler to the new business models? So the way I like to articulate it is, to me, IT's pretty busy, right? You've talked to a lot of IT people. They don't have a lot of free time. This notion of transforming IT is not something because IT's bored, Dave. They have plenty to go do. They're transforming IT as a means to be an accelerant to the business enablement factors. So you can't write next generation third platform applications on legacy infrastructure. You need an enabling device like in the hybrid cloud to build and write those applications upon, to connect and provide the connective tissue to the business. So without questions, I do. I think that this is, what we're seeing now is IT realizing, not only do I need to be a service provider, if I don't have the underlying infrastructure to drive predictive analytics, big data applications, social mobile applications, I'm going to be out of business because my customer will go somewhere else and develop them with them. So Peter, when you sit down to write the cloud strategy or think about the cloud strategy, you use these three dimensions of value. But then there are other parameters, presumably. Is it appearing self-service? Automation, you know, one of the, when we talk about the ability to manage risk, well, if we're going to automate, then we have to have standards put in place and we have to have our process put in place and decided to in advance. So the traditional way for security would be, let's say hardening, path to production. I would create a development environment and then I would take that environment and I would harden it at some point. It would go through a process, a manual process. But what if I actually build that into the template when I start? And the hardening process is just a matter of declaring that this is now production. Well, in each step along the way, if we can treat the more severe case and build that into the standard, since it's automated to begin with, it's not burdensome. In fact, it reduces the effort down the road. We haven't been able to do that in the past because for instance, if I had to have a hardened template, I have to bring in a security group to analyze that particular instance and they would then approve that instance. Now we went back to the security people and said, no, no, we don't want you to harden an instance. We want you to harden a template because people are going to be provisioning these by the tens, by the hundreds, by the thousands. You won't be able to scale that way. So now it's built in from day one and you can take that example of what we've had to do with security and you could expand that beyond requirements for PCI. These are emerging now in PHI. Build this in upfront. If I want to fully manage full production template, take everything I need and put that into the self-managed environment so that I can promote without all the manual process. So interesting, brings up another question. So everybody's freaked out about security in the cloud, I guess for good reason, but are you finding that the notion of cloud allows you to have better security than maybe previously? There is absolutely that aspect because I've reduced my world of a hundred, a thousand one-offs to six standard cases that match everything and a lot of effort goes into those six cases. So what we do is we put a tremendous amount of effort in automating and making it simple so that it's repeatable and you mentioned Dave's self-service. Would you agree though, Peter, that that's true if you are the broker of those services back to your business? In the instance where those cloud services are being provided around IT, the exposure is much greater. So Peter- So you're talking about SaaS, the public cloud. I'm talking about instances where IT, it doesn't have the control over both services. Oh, shadow IT. Shadow IT. So your question is an appropriate one. The answer highly depends on the controls that are in place. So in Peter's case, McKesson has a true service broker model where all those shadow IT services are funneled through central IT. So they understand where and why those are being delivered to the business. In those cases, you can lock down and derive true templates on which you will drive standards. In many instances, most customers we speak to, that's not the case. They'll have those templates established, Dave, but they can't control where the customers go to get the work from. And that's where we see security out of control. That's a put a genie in the bottle kind of problem. It is a put a genie in the bottle kind of problem. Two-paced in the tube, as John Furrier likes to say. It's even harder. Okay, what's the relationship between EMC and McKesson? I mean you guys, long time customer, but talk more specifically as it relates to the cloud integration work that you've been doing. Well, when we started, again, approximately two years ago, we'd certainly had a ramp up to that point where we decided we needed to stop. I think Jay mentioned this. We did the same thing. We set aside a firewall green field opportunity to recreate IT. We needed to move quickly and we needed to be able to bring the product to market and I kind of developed this thought. IT likes to be very analytical, likes to make the right decision, the perfect decision. And we really looked at this as a startup and being able to bring our own product to market quickly. So how do we bring a hybrid cloud to market quickly and what's the value in bringing that to market? And do we want to spend a lot of time analyzing these decisions or do we want to look at what's not the wrong decision? And that might be a strange way to look at it, but we said, you know what? The infrastructure that we're selecting here, it absolutely is not wrong. It allows us to move forward quickly and that's what we're trying to do. If we want to analyze the nuances and get caught up in technology A, B, and C, no, if I have something that I know will get me where I need to go, it's not about the technology at the end of the day. It's about that value pyramid and that's what I'm trying to achieve and be able to bring my customers in through that. Okay, so YEMC, I mean YEMC is a technology company and a nice services organization. I know Howard Elias, great guy, good capabilities, but YEMC, there's a zillion other companies out there that are technology agnostic. Given the technology is the least important, YEMC. True, for us it was the converged infrastructure. So we had seen and believed that we'd be able to implement very quickly, faster than an approach where we had to integrate the components. So traditionally IT is managing each of those components and is measured on managing that. There's a certain sense of pride in building that solution and managing that solution. Our goal was not to manage that solution. Our goal was to have someone else responsible. Our goal was to attract customers and so we felt we could go to market faster. I think it's fair to say though, Peter, our two companies have had a long standing track record for success dating back a dozen years through a variety of different engagements to help McKesson achieve business objectives. So I think that doesn't hurt when you have an established relationship where we've helped them, whether it's deploy business continuity strategy or a completely new strategy around how to consume storage and drive down costs. As a customer, how important is the VMware piece? It's very important. In fact, that is the ultimate access and portal to our services is through VMware. And I'll say one more thing about the convergent infrastructure and the relationship is VCE and EMC, they get the fact that the cloud is about a business model change and we're trying to accelerate that business model change by truly moving to a service relationship with all of our customers. So that was another good match. So that was my setup question. Now the real question I wanted to ask is there's a move of foot within Wall Street, Elliot Management wants to split off VMware, right? They think there would be more value for shareholders. As a customer, would you get in your view more value if EMC spun off VMware? Or would you think there's more value together? I prefer the integrated approach. So we want to select companies by choice. So we want an abstraction. We want an openness and VMware has demonstrated that. I think by further separating it, that might not add value to the overall equation. So we'll look at the overall equation and say by choice, we want to choose that path. If each of those components is separate, it might not be as smooth or as integrated for us. Interesting. All right, let's see, what else can we chat about? So we've touched on some of the challenges within IT outside of the technology realm. Let's talk about sort of the cloud strategies. Where does the public cloud fit in to McKesson's approach? Generally, and maybe Amazon specifically, is it another arrow in the quiver? Is it something that you guys don't do? And a sort of similar question to EMC. So we have this concept, we call our internal cloud one cloud. It is a hybrid cloud. We've demonstrated the ability to provision externally, but the people in the process need to be put in place for us to be able to open the doors and allow that external provisioning and have it be a true hybrid cloud. At the end of the day though, it is the cloud portal, the single pane of glass, single management portal or CMP as Gartner likes to call it that is most important to us. It gives us the visibility and ultimately the brokering to the various services. We do not see ourselves competing with the likes of Azure, AWS, et cetera. We want to be able to provide those capabilities to our customers as their requirements dictate. So most importantly, we want to make sure that we have a portal that people can access and from their select, we start though with our internal capacity because without our internal capacity, we don't have an ability to bring people into the portal itself. But it's fair to say Peter, in that portal, you are again providing the broker of services. So if the Azure or Amazon services are going to be delivered to McKesson, you have the control point in the decision criteria, which determines which applications and workloads are best suited for those external providers. Is that fair? Very important. So that's part of your portfolio then, the recent concept. And Dave, that's the exact approach we take. We acquired a company just over a year ago called Ad Activity. It's a rapid assessment tool to understand workloads and how to prioritize which workloads are best suited for cloud, and specifically which cloud providers. And we see a tremendous uptake in this service offering throughout the Americas because of exactly what Peter described, which is I want to understand all of the workloads in my environment. Those should dictate what the underlying reference architecture looks like, how many of my applications will sit in legacy, how many will sit in my hybrid cloud, and how many will sit in public cloud, and specifically which public cloud providers we should go to. All right, let's go. If I could make a comment on that. I don't think we in the market in general fully understands how complex that's going to become. We spent quite a bit of effort looking at brokering. And I have to say that as much as I thought I understood it having looked at this for well over a year, we're still learning how dynamic this is going to be. Not only are your requirements and your customers going to change, but the market is going to change. Its capabilities are going to change, and they're actually going to change on a dynamic basis. So this level of performance, this level of security, this level of relationship, this level of availability is going to be changing across all your providers. You're going to have to manage that. You're going to have to manage the cost structure of that. You're going to have to manage your workloads dynamically across all of that. The devil, as they say, is in the details. Jay Snyder, Peter Hott, thank you very much for coming to theCUBE, gentlemen. Thanks for having us. Okay, keep it right there, everybody. This is Dave Vellante, and I'll be back with John Furrier right after this. This is theCUBE, we're live from VMworld 2014.