 Okay, we are back live here in SiliconANGLE.tv's theCUBE special broadcast. We are live at Brocade's headquarters in Silicon Valley, California. San Jose, California for a special broadcast for Brocade's Technology and Analyst Day. I'm John Furrier, the founder of SiliconANGLE.com and I'm here with Stu Miniman, the analyst at wikibon.org, breaking down what's going on with Brocade and the tech trends and our next guest is Tony Underwood, paper, cloud, EVP, CMO, welcome to theCUBE. Thank you, good to be here. So we go out, we're talking to executives, entrepreneurs. You're a customer of Brocade. Yes, we are. And you have a really interesting solution that's really kind of hitting the sweet spot of the market. We've seen companies like SuccessFactors get bought by SAP, people are moving stuff to the cloud. Tell us first with your company what you guys do and how Brocade's helping you get there. Sure, as paper cloud, we provide infrastructure as a service and software as a service and then the managed services that wrap around that to help businesses in that SMB space go from an on-premise solution to a cloud solution. And they can take advantage of either individual SaaS offerings or fully dedicated private cloud environments. So give an example of a typical client engagement. Typical client, actually there's nothing typical about any client. Give us a, well not normal. A good size problem that you're solving. So we have customers that sit in the space that we really want to be in. Our target customer is that mid-sized customer that maybe has 250 to 1,000 employees that have solutions that are costing too much, that are too difficult and complex to manage on an ongoing basis. And they need their IT staff to be focused on solving business problems, not dealing with IT infrastructure issues. Like operations, managing the mail servers and applications. Exactly. There's no reason for a business of that size right now to have an exchange solution that's sitting on-premise. I hear that all the time. That is one workload of many workloads that makes sense to move out in the cloud. But what we're finding our greatest success right now being is finding the managed services that help that customer migrate. So that they can have, it's not an all or none answer. And some companies are looking at moving to the cloud as being an all or none. Yeah, yeah. There's some liberation involved because you're essentially taking away a huge pain point for them because stuff is breaking, they got to upgrade servers at such cost. So you've got this OPEX kind of threshold where it's costing them some money. And then they hit this point where they go, wow, we got to either buy more gear and keep it on-prem, or so they got to do the economic analysis. Is that fair, accurate assessment of what's happening? Absolutely. My background, I was a CIO for many years. And the decisions that really were important to me was, can I solve my business problems and not spend a bunch of money doing it, right? And so there's a couple of ways in which you can do that. And I kept having my IT staff come to me and say, I need another $100,000 or $200,000 in order to buy additional storage, your additional servers. When you can turn that into a monthly cost and you can control and manage that cost as a CIO, you can make better decisions. And back in the day, classifying that environment, you were the no person. Everything was no, right? Exactly. The no ops was a term that'd be kicked around for the ideal operation, but they called the CIO a no op because all he would say is no to operations. So again, this is the op-ex problem. You know, a lot of money goes into the operations. So talk about some of the challenges that you need to execute on to develop this because obviously infrastructure as a service, platform as a service and server as a service is cutting edge. That's really a big part of the infrastructure now. So as you do your job and want to scale out your client base, you want to keep your marginal costs down and increase your revenue, right? So okay, it's a nice economic situation. What are some of the technical challenges you have there? Well, one of the key ones, and part of the reason we're here is in our old infrastructure, we had a problem being able to scale and control the costs. Our customers need speed. They need the ability when they're putting up either a private cloud that has VMs inside it or virtual machines, they need the ability to be able to get speed and move those and provision VMs quickly, right? So Tony, can you talk to us a little bit about kind of your growth profile? What are you seeing in your environment and specifically on the network? What do you see both from a network standpoint and kind of a virtualization standpoint? Is virtualization part of your environment? Yes, absolutely. Well, so where I was going with that is we had an environment that had the ability to have eight servers in a rack. After we deployed our new infrastructure, we had the capacity of 12 servers in a rack. Okay, so I have a cost structure that can support now on the same footprint, 12 servers. The real magic though wasn't the number of servers, it was the number of VMs that I can support inside that. It grew from around 100 to 500. There was a significant improvement in the ability for me to sell virtual machines or resource out to my customer with a cost structure that stayed in the same footprint. So the economics for us as we look at our growth prospects, if we can continue to grow the business without the cost growing in direct proportion to that, we have a business model that becomes very interesting. Can you walk us through the decision process on how you ended up partnering with ProCade? Absolutely. And what's the technologies you're using? So we looked at a number of different solutions. There's a lot of good companies out there. Not going to knock into the others that we looked at, but they didn't have- Come on, you can tell us. Hahaha. It's on theCUBE, we keep it quiet. Do we really? Absolutely, just to share. As we're broadcasting out to the worldwide web, right. It's okay, Cisco. Yeah, okay. Microsoft. We are a strong believer in the solution that we put in with ProCade because it wasn't just a matter of whether or not they had a technical solution. It was, did they have a technical solution that made sense from a cost perspective and did they have a service and support capability that was going to work with our business? And so they helped us deploy this new solution. We had Esquia, who was one of the engineers who helped us actually roll it out. We had a live customer base. It wasn't like we could just pull everything out and switch over. We had to migrate while we were live. So my question for you is one for the audience that might not be in the inside, the ropes around the ProCade stuff that Stu goes into great detail on, but more of around Ethernet fabrics. And so everyone knows about Ethernet, that's in IT. Ethernet's great and fast and we all know going back to the legacy of the internet. But explain what Ethernet fabric is. I mean, because the word fabric is tossed around a lot. It's been obviously in the networking landscape. I got a fabric, I got V fabric on VMware. So what is fabric, what does Ethernet fabric mean? Doesn't fabric sound cool? It's a great marketing term. Is it polyester? Is it cotton? It sounds good. It's all kind of different fabrics. We said, I know people that have their cloud security blanket to kind of fabric, but yeah, this is something different. The fabric is the ability, and this is from my interpretation. I'm not the IT guy. I'm not the CIO. I'm a marketing guy. You were a CIO. But I was. You were a CIO. What if fabric is Ethernet fabric? The core message. The fabric is the ability to have a layer across your networking infrastructure where it looks as one solution to you. You don't have a bunch of pieces. You have the ability to look at a fabric or a holistic view of your networking, switching, routing infrastructure. It looks like a standard. It looks like a standard, in a way, because it's not a lot of complexity, right? Sure. Is that what you mean? Yeah. Okay. When I put, I'm sorry, but when I put resource into that fabric, or when I add components to it, it just expands the fabric. Got it. So automation. It's a pulled resource. Exactly. Yeah. Okay, great. So what about Brocade's fabric? Because we had Mike on earlier, and all their topics, there's been some geeks here. Deploying fabrics, and what do you say in seconds? Minutes? You know, we have high school kids up here deploying fabrics. Well. Using their fabrics. So it's that simple. Sounds almost too good to be true. What does that mean? Well, I must confess, we didn't deploy fabrics in a matter of seconds. Now, maybe the fabric could have been deployed in a matter of a few minutes. We were really more interested in a holistic solution because at the end of the day, our customers don't care about a fabric. What they care about is, are you solving my business problem? Yeah, yeah. So we had a whole bunch of other decision points that needed to be brought into this whole analysis beyond the fabric component. The fabric enables our ability to do something. So how about the impact to, let's get back to the meat and potatoes of your gross margin, which is basically your managed services. A lot of gross profit involved in services. So does that fabric help you deploy services faster? Absolutely, yeah. And then the latency that we experienced dramatically improved from milliseconds to nanoseconds. So the speed and the performance of the back end allows us not only from the scalability standpoint to put more load on it, to add more VMs, but to be able to manage that infrastructure more cost effectively. Takes fewer people to manage the infrastructure. Tony, I was wondering if you could kind of share with us what you're seeing from your customers. How is the adoption of all the infrastructure as a service, software as a service? Are CIOs readily adopting it? Is it still something that they're fighting and the CEO's telling them, I read about this, you need to go do it? Where are we in this process? And as a former CIO, what advice do you give to the CIOs out there? Yeah, there's a lot of shift going on right now. It's all over the map, quite frankly. And so I personally don't know of the specific trend. You have a lot of people that are viewing the cloud as a very big security hole. Until they understand that the cloud is a buzz term talking about something that's already existed for a long time, it's just evolved. And the way it's being consumed is now different. If you look at making a decision to put your enterprise-class ERP system in the cloud, you shouldn't be putting it in a public cloud. You can put it in a very highly scalable, secure, private cloud environment. But it all depends upon the workload that is being put out into the cloud, which is where we as PaperCloud come into the mix and where we excel is finding the right solution for the customer. It's not an all-or-nothing type of solution. So, Tony, we're wrapping up our day here. We got a couple more minutes left, but I want to just ask you some more, you know, some more personal business-oriented questions around your business and to share experiences with the audience out there. A whole new breed of entrepreneurs are entering the marketplace, leveraging, especially the rapid agile capabilities of the cloud with this massive surge of SaaS, et cetera. So, you know, it's fairly easy to program to get off the ground, but also the scale of business requires some discipline. You guys are doing that. What advice would you share the folks out there that are deploying on the cloud to doing these kinds of roles? A lot more boutiques and or new service providers are coming into the market. It's a huge opportunity. They're faster, they're nimbler, they've got lower costs and can generate, you know, still some good-sizable revenue. So, you know, honestly, you're doing a lot of great things. What advice would you share with folks out there in that regard? It's a very interesting question. As a technologist, you would think that my first response might be something about some cool technology. The advice is as simple as this. Technology is an enabler. And if you're not solving a business problem and if the customer is not your ultimate focus, you don't have a business, no matter how cool your technology is. And, you know, Brocade comes in, there's a great new set of tools that you can put inside your infrastructure to make things faster, better, smarter, cheaper. If you lose sight of the end goal and that is solving a customer's problem, you have no business. So, the advice is stay focused on solving business problems for customers. And how do some of the cloud things that you've learned lower your cost to do that? I mean, is there some tips you have? I'm not saying technology, but you know, business practices could be hiring, outsourcing, using other applications. I mean, what core competency should someone develop if you had to make a call? Like, okay, like not so much a tech feature or this virtualization, but like, also you got to get that customer. We got to get it in a way that lower costs, you make more money. It's simple, black line, red line. Keep the cost lower than the revenue, right? And still serve the customer. Is there a core competency relative to cloud and or these new technologies? A core competency. You know, I wouldn't say, I specifically had an answer around core competency other than to go back to what I just said and all business success is based on making a customer happy and solving a problem. And if you don't do that, again, it doesn't matter what you've done. And it doesn't matter if you've got the greatest business model for staffing and or the greatest, hey, I can control my cost here or there. If you're not solving a problem, none of the rest of that stuff matters. All right, so my final question for you is this. So as an ex-CIO and someone who's out there deploying some cutting edge stuff, solving business problems, try to imagine if you were a CIO today. What's going on in your mind today? If you're a CIO today, what's going on in your mind? Obviously there's a lot of pressure on the top line and bottom line, but what's the psychology right now of a CIO in 2012 going into 2013? Always up, always available. Low cost, gotta have more. Always up, always available. And now you've got environments that must be up 24-7, 365. There's no downtime. So in order to be successful and sleep at night as a CIO, you have to have solutions that you don't have to worry about. They have to always be up and always available. How are those CIOs, just to follow up on, how are those CIOs motivating their staff if they have staffs? And what's the challenging around the management of the people? I'm not sure if this is where you're going, but let me just say this. A challenge sometimes with the cloud is there's a perception by IT managers that the cloud somehow eliminates the need for them. It doesn't. It actually, if employed correctly, will enable them to focus on more business-oriented or business-needed problems rather than things that don't really add economic value to the business, either revenue or cost savings. Great. Okay, well we have one minute left, so I'm going to let's answer one last question. Fairly, it's truly the final question. That is, what's going on for your businesses next year? What are your goals and what do you hope to do in the next year? Well, we're really excited about the next year. We're going to be adding a lot more products and services and expanding our partner network. The partner network we see as something that is going to allow us to be a strong back-end infrastructure and software as a service provider and managed service provider, delivering solutions to MSPs and consulting firms where they can now have high availability solutions that they can provide out to their customer without all the cost and infrastructure needed to build their own. And partnering that way becomes a win-win-win because it becomes a multi-tiered touch to the customer and that customer gets a closer connection to the person solving their problem. Okay, Tony Underwood with Paper Cloud. Great success story. Entrepreneurs out there making new things happen. Fabric is an expanded resource. It helps drive revenue and profit. Great stuff in the networking space. Thanks for joining theCUBE. We'll be right back here with SiliconANGLE TV, special broadcast here at Brocade's headquarters right after this short break.