 Live from Las Vegas, Nevada, it's theCUBE at IBM Edge 2014. Brought to you by IBM. Now here are your hosts, John Furrier and Dave Vellante. Hey, welcome back everyone. We are live here in Las Vegas for the IBM Edge Conference. I'm John Furrier, the founder of SiliconANGLE. And this is theCUBE, our flagship program. We go out to the events and extract the signals from the noise, broadcasting live, shifting it over to YouTube and bringing out data, finding out what's going on, finding out where the stories are, where the action is. Our next guests are Steve DeLuca, SVP of Sales from MicroStrategy and Ray Scardelli, VP of Sales and Marketing from MicroStrategy. Guys, welcome to theCUBE. So the show here is pretty awesome. Tell the folks out there real quick, what's Edge all about this year? What's going on with the event and what's the vibe? What are you guys seeing? Well, I think for us it's learning about some of the new features and functions that IBM has put together in their products. The mix between business analytics, big data, power, and storage and how that all converges to, you know, for the betterment of our customers. So talk about the company, what do you guys do? Well, so MicroStrategy is a business partner, solution provider, integrator. We focus in two areas, business process solutions and infrastructure solutions. Around the infrastructure solution space, we're primarily IBM and we have analytics practice, security and mobility practice, infrastructure solutions practice, of course, and cloud solutions practice, as well as our business solutions, which is primarily enterprise content management. Ray, what are you seeing for your company's activity out there? Is there traction with IBM on the infrastructure side? They're saying infrastructure's back. Did it ever go away? I mean, it was never gone. But you know, it's funny because we've been on a number of sessions, we're talking about cloud, you know, in virtualization and we've seen that. We've been in the business for many years. We've seen cloud and infrastructure, you know, being around for many more years than what we're seeing now. But, you know, from an infrastructure standpoint, you know, we've done a lot of cloud enablement. We've done a lot of hybrid cloud and hybrid solutions around the cloud. And, you know, you need infrastructure for all of that. You need, you know, mainframes, you need a power, systemX and storage and wrap it around with solutions and virtualization. Yeah, so we see cloud as an extension of the core business that we've been doing for years, infrastructure, virtualization, provisioning, now cloud, hybrid, on-premises, off-premises. So you have to, you always see the sales force and the growth is big. You must do all kinds of market testing around figuring out where to skate, where the puck's going to be, if you will, or just kind of where the growth is. A lot of people are saying cloud's pretty much hyped up right now. We were just broadcasting at the OpenStack Summit last weekend, man, it was Kool-Aid Central for a cloud. I mean, we're not even close to the trough of disillusionment. It's really not prime time. From a deployment standpoint, there's some stuff going on. Do you see that growth coming sooner, faster, or is it still mobilized around the data center? Well, it's definitely coming sooner and it's right on top of us. But again, it's really, it's not a revolution, it's an evolution. So customers that are doing it and deploying it are really taking what they've done a step further now and we're well positioned to do that because that's what we've been doing. And now you mentioned anticipating where the growth is. We've had an analytics practice in place for over two years. So it's already well established and doing very well. That's probably in the cloud. You do a lot of cloud analytics. That seems to be a nice solution for the cloud. We're getting into that space. We've been doing it with customers in their data centers, in their marketing and financial departments. And so yeah, now we're embracing the cloud and deploying that aspect. Let's talk about the cloud. It's interesting you mentioned continuum evolution. We've called it also a continuum. There's no real radical shifts. But there are some radical disruptions in terms of process improvement. Can you share some insight with the folks out there? You mentioned business process is one of your practices. I mean, that's a business process. Looking at agile and the development side is certainly interesting. But when you come in and say, hey, CIO, here's your value chains and how you do things. What areas are being tweaked, if you will, in the process that you could share? Well, so that's a good question because it changes every day. But to give you an example, we were working with a customer, Music Mastermind, that was on Amazon. We ported them to Smart Cloud Enterprise and then to SoftLayer before the IBM acquisition. So as IBM acquired SoftLayer, we already had experience with that, had a customer, had a reference and now they're going into production. So we're, again, ahead of the time. That's good timing. Someone by chance, but timing is everything, right? What was good about SoftLayer? The bare metal is a service. You like the flexibility they had or is it? Yeah, I mean, I think that SoftLayer has a much more developed approach to being able to provision and move applications in and out, especially in a hybrid scenario where, you know, Steve had mentioned Music Mastermind. In that hybrid scenario, it's a lot easier to do, to spin servers and store jobs. So how did the customer get into the Amazon? Was it Shadow IT or they were born in the cloud? They were born in the cloud and they were developing on Amazon. You know, it was put the credit card in, but as the costs changed and SoftLayer came about, we were able to show them a better way to do that. And they did need that hybrid... It just sounds so funny, born in the cloud. Yeah, born in the cloud. It's almost ridiculously, the statement is here that, but that's the reality. These young kids coming in and you guys must hire young guns coming into your organization and never install the Linux patch before. Well, they're like, ah, what? I had to load software on a server? You seeing some of that in your organization? So we have an arm of the company that actually does recruiting and staffing. And so for projects like this, where we need some resource, and we're 125 people, right? We don't have everything for every project. So we'll go out and find people to staff projects and manage the projects ourselves. So yeah, so that's important part of our flexibility and our value to the customers when we get into things like this. Yeah, I mean, so we use the experience and some of the new folks that we have in to move some other applications into the cloud. Voice recording is another one of the practices that we have. We do a lot of 911 emergency call recording. We've moved a number of customers into that cloud using software as well. So the stuff we've learned from Music Massima, we're able to translate that into some real business acumen and be able to move some other customers over. Let me ask you the question of what's changed in the past couple of years. Obviously, IBM, big player, big channel presence, they're not the only ones who have had an indirect sales channel, have partners make their partners successful. How has the channel and the service models changed? I mean, obviously gross profit is great around services. You want to be able to wrap services around stuff, right? So how is IBM to work with and what do they need to do better to take you guys to the next level? Well, so IBM has the strategy, right? They have the, whether it's acquisitions or development and the ability to integrate all of that into a solution, not just a solution, but a comprehensive strategy. So we embrace that, right? And we depend on them to take the leadership role in those areas, but we're the integrator. When the customer goes to deploy the project, we're the architects, we design, help them develop, implement and support. And we lean on IBM, all aspects of IBM, whether it's software or services. But you're talking to the customer, you have to get their trust. Yep. They're working directly and supporting the deals. And so that's why it's important for IBM to not just go in and say we have a solution and it's just IBM, right? And here it is. So IBM takes a higher level approach and says, look, we support the environment. We acknowledge that there's other solutions out there that we have to help the customer manage and be that higher level interface and not just a niche player. So that's really behind our commitment to IBM. Are they flexible to work with from a tool chest standpoint? I look at IBM as like one big toolbox. You don't have to use IBM anymore. You can use a little bit of that open stack. You guys use software you mentioned. But you know, one of the things about IBM that we think is very important is there was a business partner charter that they came out within the mid 90s. And that strategy, they've only enhanced. A number of other vendors have changed, altered, gotten rid of a lot of their partner programs. What IBM has done over time has always kept the base and they've enhanced it. So, you know, you take that enhancement and you take the best of breed products that IBM has across the server and storage line and wrap it with some minimum margin and some real enhancements to allow us to make some money on not only on our services, but also on the hardware. It's a good combination for us. So as they say in Jersey, you guys are from Jersey. I grew up there too as well. A lot of dough in cloud, right? So how do you guys, a lot of bread to be made there. So what do you guys look at in terms of, hopefully, well there's tons of, I mean, there's tons of services. We're seeing the huge, I mean, it's not talking about the main press these days around the, just to go to market services are huge. You thought to anyone on the services side, they see a lot of dough on that area. But like in terms of like the forecast, how much of cloud do you see shaping your business in your customer base? How much percentage of the cloud business will be there? Well, that's a good question. I mean, it changes so quickly and it's right on top because it's important to be right in there and ahead of it. But, you know, we're not three steps ahead. I'm not even sure we're ahead. It's just really happening quickly. So to say that we've fully anticipated and planned, it's not quite that simple. How about the customers? What are they looking for? Is it more app development drivers or infrastructure kind of re-tweaking, re-engineering? You know, that's also interesting because we're seeing customers move the easier things. You know, email systems, some development. We're seeing them, you know, putting their toe in the water, if you will, a little bit. And just making sure that, you know, that some of that stuff sticks and it's available. And then, of course, the security thing is a big concern for a number of different industries. Securities huge. I mean, that's like the last thing to drop in terms of going to the cloud. Well, you got to have it built into the cloud, but like, the low-hanging fruit would be what? What would be a good example of low-hanging fruit? Analytics. I mean, people are putting analytics in the cloud. Or is that data? Analytics, email. Things like Salesforce.com and their website. They're important, they're not mission critical. Yeah, and it's stuff that IT can easily hand off. But we're used to dealing with enterprise-level clients. And they're not necessarily putting their mission critical stuff in this cloud. Not just, yeah. And there's a lot of workload considerations. You got to look at security, the data compliance issues. So there's a lot of private cloud deployment going on. It makes a lot of sense, right? Provisioning, utility-based pricing, charge bags, all that stuff makes a lot of sense, and incrementally going forward with the more important mission critical applications. But there's a lot of infrastructure still being deployed. And it's going to run somewhere, right? Yeah, yeah. So it's not infrastructure matters, it does. And it's going to continue to be there. Talk about your customer base. You guys have a small, medium-sized business operation. You have large enterprises. Is the geography regional? Are you guys global? What do some of your customer bases look like? Well, as you mentioned, we have from industry, enterprise, mid-market, and SMB, and we're northeast-based. So we're in New Jersey, New York, I've been in Atlanta. Boston to DC, essentially. We're Boston to DC, we're trying to expand to. And so we're mostly regional. And the way we manage our customers. You guys have other business, not just IBM, right? You were other like HP, and other. Yeah, we're primarily IBM. We're a Microsoft partner on the business solution side for as well as Al fresco autonomy and those players in that space, ECM. But on the infrastructure side, it's primarily IBM. And some complimenting, non-IBM, but mostly complimenting it. And now, SoftLayer. Oh, you had SoftLayer before. You had SoftLayer before. Now, it's an IBM compliment. So tell me about the acquisition. Was it a surprise? Did you know it was coming? Did IBM give you the little signals on the table? Nah, no, no, no, no, no. We're not privy to those conversations. Come on, did you tell us, right? Come on. Were you surprised? No, I think it was more, we were working with SoftLayer because they were the best to breed at the time. And we needed that flexibility in the solution where we were going to potentially lose our customer back to the Amazon folks. So, as we were working with them. I was very skeptical on that deal at first. I was like, man, that's a terrible deal. I was really critical of it. Just like I missed the forecast Godzilla breaking box office records. I had that as the biggest flop of the year. I called it the John Carter. I love this year, I'm getting hate mail. All kinds of stuff. I can't even say on the queue. I'm going to have to do a retraction. It had a hot opening. We'll see. But, you know, it's clearly SoftLayer. There was some stuff in there. That was interesting to IBM, right? For their customers. Bearing metal as a service, having some flexibility on-premise, and hosting, so. And there again, IBM's ability to take an acquisition and wrap their investment and development around it and turn it to something a lot more. And do it quickly. Well, think about SoftLayer at IBM Pulse and Impact, we saw firsthand. The DevOps culture is driving everything right now. So what I'm seeing is, and what we're seeing from talking to folks is, and certainly Wikibon research seems all over, is that the young guns that are coming in the new programmers, they're the new rock stars. And that's not just software guys. It's infrastructure guys. It's a new build out kind of wave coming. And it's systems. It's like, you know, our age, right? You know, anyone over the age of 35 has an old systems guy. You know, we're like, what? He's 38? Yeah. I wish. You're living with that. Still got my hair. So good stuff. So what's changed in the channel in the past five to seven years? What's been the most from an indirect from a partner standpoint across the industry? What's your observation? You know, I think from, you know, I think, you know, from an IBM standpoint, we're seeing a lot more push from the IBM Direct teams out to the channel. Because I believe that they think that we have the skills. We have invested in, you know, the technology. We have all the certifications that are needed. So I think that they look at us almost like an old IBM branch office. And they use us like that. So together we go and we make a powerful team going to the customer, the power of IBM behind the power of a partner that's level five skill. Yeah. So guys, final question for you. Share with the folks out there in your own words, each of you, if you could, why in this time of history, you've seen the movie before, you've seen cycles of innovation come and go, why is this point in time so interesting and exciting for the folks who aren't inside the trenches, aren't in front of the customers, people looking at the tech industry saying, what's all the hubbub about all this cloud, mobile, social stuff? Why is this year so critical? Well, so it is rapidly changing, right? There's technology, there's cloud trying to figure out what direction is going, what the customers are looking for, right? And be the people in front of the customer saying, what's your cloud strategy? Not only that, but what are you trying to really accomplish, right? And how do we help you? And then leveraging all the resources we have. I mean, that's really what this year is all about because customers are trying to figure out and they're looking at us to help them figure out how to embrace the technology and how to deploy which technology and not just that but the software, the management of it. Do I send it off to the cloud, software, whoever? Do I manage it myself? So that's really, I think, what's... It's a sea change going on. It is. There certainly is. Right, what's your take on that? I think that now more than ever, there's more data and it's more unstructured data than there ever was ever. And getting a handle on that, being able to manage that, where to put it, what to actually look for to do business analytics with big data and how do you do that and how do you keep it secure? Hasn't been a time that I can remember that all those things combined are as important as they are today. It's like that perfect storm movie. You got the data management piece of the business, the convergence is happening, you got the cloud, analytics. I mean, the tsunami of data is certainly like. It certainly is. I mean, that could be a back breaker for some companies, not getting it right. Okay, we're getting the signal to break, guys. Ray, Steven, thank you for coming on theCUBE. Microstrategies, a big partner of IBM out there making it all happen. This is theCUBE. We'll be right back with our next guest after this short break. Thanks, John. Thanks.