 Okay, we're back in San Francisco at the big EMC v-spec event, and this is a special services angle interview with Barbara Speedtech, who is with Brocade, vice president of channels for Brocade, no stranger to the channel business. This is an event that's all about the channels, about the services, about the services angle, and you can go to servicesangle.com as our reference point for all the innovations in the services business. Service providers, web services, application services, customer service, and channel services, channel support, very disruptive. Barbara, welcome back. Thank you. To theCUBE. So we just had Arrow on, you and I were talking to those guys, and they're distributed, they've seen it all. They're huge. They've been a monster, and they have a huge size, they have a lot of customers. And we didn't get a chance to talk about some of the things that you and I were talking about prior to going on, so I want to have a special spotlight on the economics of the channel. Channels changed. And in uplift markets, IPO markets growing, opening up, companies are growing, opportunities are there. So you had some ideas that you wanted to share about the profitability and the economics on the channel. What's your thoughts on this? Well, I wanted to go a little bit deeper, and we talked a little bit about the whole channel transformation, what the clouds and the IT deconstruction actually mean to the channel are. They're all changing models. And I think there's a couple of things that are happening. One is clearly the buying behavior we talked about, CAPEX versus OPEX. So when we talk services, I also talk about financial offerings. And I think most vendors are nowadays trying to also add financial offering as a part of what I call channel partner business model awareness. What do you mean by financial offering? Well, there's anything from the, there used to be the classical lease options, but for example, Procade Institute last year, what is called Procade Network Subscription Offer, which is actually port and subscription basis. But it's subscription. It's actually, it's completely not owned anymore. It's complete transformation from CAPEX to OPEX. On the lease, you still own the asset. On the subscription service, you don't own the asset anymore. So that really takes the entire financial burden off the customer as well as the channel partner. So it's really, really disruptive models. And the benefit to go that way is what, for the customer to go? For the customers, obviously, as I said, immediate transfer to OPEX versus CAPEX cost. And that is part of the change in model they're looking for. The buying behavior is one. The other one we've seen is, and this is really all about services, right? It's the, it's the need for expertise and skill sets as these infrastructures are grown so complex, as it's all changing, as it's been re-architected. We heard in several interviews before, the customer as well as the channel partners under huge pressure to, to have the right level of skill sets. There is a shortage of savvy as ease, right? The certifications you need to hold when you do end to end. They can't hire fast enough. No, they can't. In areas that are most critical, data, cloud, architects. Exactly. And when you look at this, this is again where, as vendors, and I think Brocade and EMC teaming up, what do you have to be? You have to be very much investment aware, because it's costing the channel partner a lot of money, you know, to set up these army of, of as ease. Explain what you mean by investment aware, because that's, it's drilled down. Yeah, and that's placed right into the, into the profitable model, because as they are changing the model, as they need more skill set investments, they look in at vendors to either have very compelling certification programs, which are actually self-funded, which is what I think both ourselves and EMC invest a lot on. So it saves them cost. They're looking at as much web-based, you know, and more online and e-based training models, rather than as e-timeout, it's critical. And then they're looking at these things like what we offer with EMC, support service packages, you know, that they can just take to the customer, architectures they can take, they are pre-tested, pre-validated. So it doesn't require their skills. That's what I meant by push button. I mean, essentially turn key. It is, it is turn key. And then on top of that, things like the, the joint lab we're actually talking about, where they don't have to do and do proof of concept and demo investment. This is what I call investment aware. All of these, you know, are driven to improve the bottom line at the, at the reseller base. What he's, with all these new dynamics changing, obviously that changes some of the tactical things involved in the channel business. Like the old days, like Jeremy Burton. So I would just throw money at it and the old model co-op and then see you later. Yeah. Yeah. The channel has always been kind of a fickle beast in the sense that you got to kind of give them some love, but not too much love. Let them do their thing, no conflict, throw some dollars to support them. And then listen, if you don't listen, you're dead. Yes. And that's why you, that's such a good point because that's why you got to be, I think channel programs are like you say is really fickle. It's always like you have your usual set of tools, right? You have the deal registrations, the back end rebates, the co-ops. As I said, training funding, you have your usual, you know, set of tools. The table stakes, you know. But the, I think the big question is really, you know, how much of those you use and how you use them. And I think one of the key things that as a, as a smart vendor and a vendor that wants to invest in channel partners that provide value is really, you know, to tie those things into skill sets and specializations. And I always call out in our program and so does EMC. It's a pay-for performance, right? Rather than pay to participate. And I think that's very important as you try to drive profitability. You have to make sure if they invest, if they, if they get better, right? They should be paid on. And one of the things I wanted to highlight as well, within V-specs, that is a, such a fantastic example of a meet in the channel. We really did like a 360 package around it. Not only do we have the compelling technology offer. 360 package mean 360 view of all the stakeholders. All around, all around for the channel. I'm specifically saying, channel stakeholders. Because not only do we have a compelling offer that empowers them, right? To be that point of integration for the customer. Both EMC and brocade teed up and tied a whole bunch of components around it. We, we teamed up in deal registration. We joined up in obviously the lab. We're gonna do actually some direct even, even rewards at the sales basis of the resellers. So we really tied a package together that we send. Not only do we have the most compelling offer, but we also have a whole bunch of benefits. And then I think is, is, as we, as we call our earlier smart, smart use of your channel components. Well, we'll, we'll wait and see on how that results is. I mean, obviously from a packaging standpoint, as Dave Vellante pointed out, you know, this is really nice packaging. And, you know, we noticed that with the VNX launch in January was, packaging's fine, you know, as long as it works, right? And customers will vote with their wallets and we'll see what happens. And obviously the market dynamics. But I got to say, I'm impressed with the approach. I think it's totally channel friendly. Again, you know, we talked before we came on, the channel, you know, needs certain things, but there's a new model going on. So with that in mind, what new things are you seeing in the channel marketing business? So channel marketing today and then going forward. What do you see as new things that will emerge? Maybe something out of the V-spec's launch or something else. What's your vision around channel marketing? So like you're saying, the channel is really a heavy set of tools, right? The new things are really always, always difficult. I think one of the new things for me, and I keep on mentioning it, is really that you have to be aware that these guys are changing business model. And that goes to distribution where there's still vendors, I think, that's just pick, pack, and chip, right? And they do logistics and financing. But I think as we heard of some of the other interviews before, these guys are all changing their model. They're adding a lot of value. They're putting integration centers in place and so on. At the same time, the resellers are all looking for, why do I play my role in the cloud, right? Do I just resell, do I do services? I think as a vendor, one of the big things I see is you have to be aware of those changes and you have to make your program more modular, more flexible. So that's, for me, that's one of the key drivers because we will, the channel model and the way that they go to market today will not be the way that they go tomorrow. Yeah, and I think Pete Culliopoulos from Arrow really underscores that point where he said, just kind of off the cuff, and I'm really glad we kind of stumbled in that area. Is that relative to your point about changing business models is Arrow essentially said, hey, we've always had data that we've collected through our distribution business, but now they're taking the big data approach to build new products to change their business model. And it's not just a me too, it's actually they're using big data and using existing legacy data. So to me, that is an example of what I see as good channel market. And at the end of the day, he just underscores it and somewhere says, hey, it's about sales. I can go and get better sales leads in my salespeople. Well, and this is the classical thing like what does a channel partner look for, which is PPP, product profit and push, which means leads. It's still the same thing all over, right? But the push, and I think that's also what Pete mentioned, every winner talks about lead generation, right? But ultimately, that's always one of the most difficult things. Do you give unqualified leads and the way that Pete described it, using solid end user data, I think is also something that you can really bring to the channel partners? You know, this is a complex business that we're in. It's getting easier thanks to these kinds of respect solutions. And, you know, it's always going to be challenging to abstract away the complexities and make things simple and efficient, which I like that messaging from EMC. But it's still going to be challenging. It's still complicated. So you have a global view. You handle global channels. So, you know, multi-tenancy in the cloud in the US might mean something completely different in the European community. So, what's the global flair for you? What's the perspective there? And that's actually a great point. That's also a great point as it comes to services, because, I mean, we're in the United States here. So we're talking about services where most vendors have like a complete broad layer of support infrastructure in country. Some of the regions I'm dealing with, you know, wouldn't even define an SME as an SME. That's like the large top enterprise customers in these countries. And the channel partners do everything from soup to nuts, right? You don't even have to tell them to do, to try to bring you revenues and services, because a lot of these guys act as support partners, professional service partners, and single stops, you know, in country, distribution, reseller. So I would say the interesting thing is from a global perspective, it's usually the more you go out of the, from the core markets, the model gets very, I would say, self-sufficient. And channel partners do almost everything, you know, from distribution through reseller, through support and service provider. Yeah, and having a global footprint means a lot now differently than it did a while ago. I mean, now, with the web and the internet being global, and with mobile being global, it means something differently. It actually means something now. And business can be global faster now than it used to be. In the old days, it used to be hard to be global pretty fast. My final question to you is kind of more of a philosophical question around kind of the state of the channel. If I would say the statement that Cloud Mobile and Social is the disruptive three major trends driving this change with data being the disruptive enabler underneath all those, if that's a true statement, what happens to the channel evolution from this perspective of where are we today? So, meaning this, because this VSpec launch underscores to me like, okay, a mindset shift in thinking around cataloging and how products are gonna be packaged with the notion of providing big scale support, almost like a massively scaled system. Where's the channel? Are they in kindergarten? Are they in elementary school? Are they in college? I mean, where's the channel business? Is it too early on a scale of one to 10, 10 being highly mature, one being born? I think in various stages. And again, first of all, from a global perspective, it's obviously dependent on the marketplace because the United States, Germany, UK, France will be in very different position than Eastern Europe is a part of Asia, right? This is, I mean, that level of maturity. It's sort of US. Geographic, yeah. Let's say US and the big international. Yeah, if we talk West, when I talked earlier, I think about the whole channel transformation where I see, as I said, I call it identity search. They're all trying to position where am I going. The reality is, though, I think the analyst and also myself and things like V-specs are designed for enabling channel partners to build out private clouds primarily, of course, hybrid and public. But the analysts still say that the next couple of years will be a lot of private cloud build-out. Private cloud build-out is a lot of classic data center build-out. So I think most channel partners. Yeah, with a cloud twist. It's not cloud washing. It's just cloud one data. Yeah, but the thing is, that means I think there still is a lot of hardware build-out, infrastructure build-out opportunity, which V-specs enables them to do even better. In terms of maturity, I tell my channel partners, though, adapt or vanish. You've got to think now about what happens in the next four or five years, because some of them might even further think about different business models. Like I said, some are doing their own application hosting or backup services or managed services. Some are really thinking, concentrating on cloud resale. But I would say maturity, probably 10%, 15% are adopting. I think the rest are still thinking about it. Yeah, and if you think about it too, what you just said is kind of interesting, because I look at SAP, for example, I just came back from their press conference, I've been covering them and EMC. I mean, this is cutting-edge stuff. I mean, what we're doing is really making infrastructure decoupled from essentially application-like environments with some middleware glue in between. And that's hard stuff, right? And to roll that out into a channel, an indirect channel offering is really, really compelling. So I think it's early, but it's really going to be a differentiator. I was just, even SAP, they're having a huge uptake, but that's just their cutting-edge. So the channel is quickly there with a product. So I'm excited by it. We'll see if the channel can suck it up and absorb it, if they can get trained on it and get all the tools integrated into this kind of formula, because it's essentially rolling out infrastructure at larger scale. There's, and I keep on telling them, it's if you don't see it as a threat, it's a huge opportunity, but they got to adapt. And as we said earlier, there's margin in the mystery, there's margin in the cloud. I think the cloud's the real deal. And Barbara, thank you very much. That's a services angle special, channel economics breakdown in the V-spec launch, very complex product package, simply and elegantly for the channel. If that's truly going to pan out, it should be a home run for EMC. Barbara, thanks for your commentary and analysis. We'll be right back with our next interview right after this. Thank you. Code ciphers and code breakers have been around since the beginning of time. Julius Caesar used ciphers to communicate with his armies. Secret coded messages were brought as evidence of treachery in the trial against Mary, Queen of Scots. She lost her case and her head. 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