 Okay, we're back. This is Dave Vellante at wikibond.org and I'm here with my colleague, John Furrier and this is SiliconANGLE's continuous coverage of VMworld 2011. John, it's been a phenomenal event, as usual, theCUBE, covering all the angles. I mean, we've got executives, we've got VCs, we've got customers, we've got cloud service. Spotlights, great spotlights. Yeah, so we're here to talk about a VMworld spotlight on cloud realities. As you know, John, these spotlights are in-depth segments to help users understand a particular topic. These are sponsored segments. This cloud realities segment is sponsored by NetApp. Innovative clouds are built on NetApp. Well, I mean, I think NetApp, we want to just say thank you to NetApp. Our sponsor is one hour spotlight where we can do our editorial coverage and then talk about that theme and we really appreciate NetApp. So let's just jump into the programming, Dave. I mean, my perspective is the more on the market angle is cloud realities are all about adoption right now and where they are in the adoption curve. And we actually even heard from Tom George, the CEO of NetApp, who basically said that they see cloud as a reality, they see some emerging technologies, but ultimately the numbers just aren't there. And we're seeing that across the board. I see that the numbers are there in terms of adoption, but not as big as people think. I think it's more of a future thing, but there's more of a roadmap information. What is your take on it? Here's what I think's happening. So we just shared some data with the audience from a Wikibon survey. It basically people, IT practitioners, saying, okay, as far as broad cloud strategies, we're just getting on the on ramp. You know, we really haven't figured out hybrid cloud yet. You know, we're thinking about it, but we need some proof that it's actually going to work. Having said that, I want to share some data that I put together here in this slide. It's a CIO magazine survey that was done recently. 73% of mid-sized and large firms have some kind of cloud project underway, right? Everybody's doing some form of cloud, whether it's software as a service or they may be doing some kind of pass or cloud deployment or doing something with Amazon. So there's pockets of cloud projects, you know, one, two, three, four projects going on. And they're saving money. On average, the survey found, and this was a survey of CIOs, of course, CIO magazine, that people were saving about $350,000 annually speeding application deployment, as you would expect. And why were they doing it? They want pay as you go. I mean, I know when I talk to CIOs in the Wikibon community, they say, call it hybrid cloud, public cloud, whatever you want to call it, I want pay by the drink, right? Yeah, I mean, there's no doubt, Dave, I would agree. And also the data from VMworld here this year is the reality is it is definitely on everyone's agenda. And you're starting to see rollouts of actual products. So last year we looked for proof points, a lot of PowerPoint slides. This year it's more case study of product development. I think next year you'll see deployments increase significantly, but this year I'm seeing a focus on product delivery. So last year was talk. This year they're delivering, and that's the big difference. And that means the product's refining. So we're seeing people talk about integration. We're seeing people talk about actually filling the product portfolio. So I see this rapidly adopting this year, and it's a reality. Well, I'm glad you said that, John, because the focus of this spotlight is on how to. And we had the CIO on from seven corners. We'll be hearing from him a little later in this spotlight. And he was phenomenal. It was a great story about what they're doing with a converged strategy and basically bringing infrastructure in for the cloud, refreshing. He talked about them saving basically $100,000 a month by avoiding downtime. Really great story there. I mean, customers, when they come on, Dave, that's to me the ultimate benchmark. When you get a customer testimonial, that's what you want to hear. But how many true case studies are out there? And I think my angle is that there's just not enough there to make it a fully blown out market where it's reached the top of its potential. So I'm bullish on cloud. I think it's totally a reality. And I'm looking at the products, how it's coming out. And so if you look at the cloud S-curve, just talking about adoption, it's down at the bottom. So it depends on how you look at this, where you are in the inflection point. Are you at the top bottom of that or in the trough about to go up? So it's definitely going to go up significantly this year. Yeah, so I think if you look at this adoption curve that we have here up on the screen, basically the way these S-curves work, you got return versus effort. So what you want to do is you want to be on that steep part of the S. And I think we're just getting into it. So you saw Amazon, actually Salesforce started it off, in late 1990s, 1999, Amazon Web Services came in, EC2. And then now you've seen this, we're talking about it today. We had folks from Cloud Foundry on, you got Azure, you got App Engine, Heroku Force, OpenShift, Beanstalk, on and on and on, they came out. Now people are starting to make choices. You had that great recession, which we think accelerated cloud adoption probably by as much as 12 to 18 months. Now still it's in pocket. So we're still not at the point, I think you're right, where we're seeing these very clear widespread enterprise use cases. Well, for the folks out there, we've been at theCUBE for the past year now and we've been to every major tech event in this space. And the number one thing that we've heard, Dave, is transformation and growth. You're seeing that because of the great recession, people are coming out of the great recession with dollars to invest. And that really puts an end to a, what I call a dry spell of investment in IT. So I think that's going to actually catapult the adoption even further up the curve. And I think you're right. And then now what's going to happen, I would predict within the next 12 to 18 months we're going to be in the steep part of that S curve. And if you're not on that curve, you're going to be missing out, you're going to be less competitive. But the point of that curve is for less effort, you can get more return. And I think what we're going to see here is that over time, and I would say, let's say the next five years as a benchmark, 60 to 70% of IT services, of all IT services are going to be delivered in some kind of cloud-like framework. So talking about how to, how should you look at cloud and deploying cloud? So start with strategic objectives. That's what we're always telling ourselves. And then when we talk to people in the Wikibon community, they say you got to start with the organizational objectives. You know, it might be in the case of seven corners. It was an infrastructure refresh. They needed to cut costs. They needed to cut downtime. They wanted to improve agility. So whatever those are, you know, set them out. How are you going to measure those? You know, are you going to support it? Growth with no headcount. You're going to cut downtime costs. In his case, he was cutting downtime costs by $100,000. You know, very interesting case study. What are the risks? What are the things that you need to think about outside the scope of the project that might be prerequisites that you need to manage? Exception considerations that you better take into account before you do this. This is exactly what we were talking about with services. And we launched services angle.com, which is our new dedicated publication around tracking the services business. But what you're really laying out here is that in addition to the product advancements by the vendors, there's a whole value proposition around services and you're going to see massive change and around these kinds of things. You have to do the work. People are actually scoping these things out right now. And the way you deploy services, I'll give you a really, really simple example. When you deploy cloud, to deploy infrastructure, traditionally it would take, you know, months, weeks, months, whatever. In a cloud environment, you're talking about deploying virtually instantaneously. You got to make sure the capacity is there if it's a private cloud or a hybrid cloud that you're managing. And so you really need to think about that. You're going to have to change processes of procurement potentially and really rethink all those processes. So think about those out of scope expectations that you need to deal with. And then finally, you know, don't get all misty about cloud. And even if that cloud is another IT initiative, right? So treat it as a project, do an analysis, do a business case, do a design, identify acceptance, you know, a test criteria, deploy it, manage it, you know, skill up for it, set objectives and measure it. I mean, treat it as a project. I mean, it has to be did. We heard from Sikigunta from CSC and basically it's going to move from dev ops, test and dev to industrial grade cloud. So that's also going to happen. Some of the key customer issues that we're looking at, how do you get from point A to point B without having to rip and replace and losing your shirt? Everybody wants to know that. So look for vendors who are going to give you that roadmap and show you how to do that, how to deal with those legacy processes. And then I would say how do you address the pitfalls? So you got to pick the right use cases, you got to make sure that you're dealing with the organizational inertia. We can't because, you know, might be security, might be really good reasons, might not be good reasons. You need to, as an executive, think through that. What skill sets you're going to need? Legacy apps, ISV support. One of the most important things, John, that I think people overlook is understand the data, the interdependencies of the data, the location of the data, what compliance and other corporate edicts that you're going to have to comply with in a cloud environment. So for instance, let's say you're doing some kind of hybrid cloud, some portion is public cloud. What's a security incident? How is that going to be reported? You might be reporting differently today. Will they allow you to go onsite and audit? Look at these things and make sure that you understand how it fits in to your corporate direction. So those are some of the things that we're watching. Yeah, and honestly, we're seeing too the consumption patterns of how services deployed are going to change it. So it's going to be part of the transformation and cloud is a reality, people should plan for it, be ready for it, invest in it, and I think it's going to move up that adoption curve, Dave. Okay, so that's a wrap on the intro to this cloud reality spotlight. Stay tuned for more deep dives in this topic, and we are live here, VMworld 2011, John Furrier, Dave Vellante, and thanks for watching.