 And now, SiliconANGLE TV and wikibond.org present a focus spotlight. Live from Las Vegas and VMworld 2011, host John Furrier and Dave Vellante, a human being. Cloud Conversions will support from HP Cloud System, the most complete integrated platform for building and managing clouds. Okay, we're back at VMworld 2011. I'm John Furrier, the founder of SiliconANGLE.com, and I'm here with my co-host. I'm Dave Vellante of wikibond.org, and this is our continuous coverage of VMware Live 2011. We're here with Richard Taggart of SHI, and we're going to talk cloud. And Richard, you were telling me off camera that you guys build clouds. Yes. I love to hear that, because a lot of people at Marketing Cloud, your eyes are actually building them. So first of all, tell us what you do at SHI, tell us a little bit about SHI, and then let's get into it. At SHI, we have a relentless focus on our IT customers. We've been in business for 22 years and grew from a small sort of mom and pop billion dollar reseller to over a three billion dollar global company selling products and services. So about 18 months ago, we decided we wanted to get into the cloud business, but we really wanted to take an approach that was different and unique to a lot of our competition in the area. So we spent a lot of time talking to our customers. Specifically our IT customers, CIOs, IT executives about what they were looking for in cloud. And we came up with a number of, I believe, highly differentiated services and products in the market that specifically aim at production workloads for IT. So in your role there? My role is I'm one of the lead partners in the firm, the head of the strategic consulting organization. So we have a combination of professional services to work in cloud as well as cloud products and services that we've announced this week. So I would think a lot of that cloud action starts with you. You got to figure out what it is. What can go there. Exactly. So you're providing presumably upfront assessment services and consulting. We have spent a lot of time talking to IT executives about what they were looking for in a cloud. And what we found really was besides the obvious things security that you all hear about is we found that IT executives really looking for a highly flexible model for how they would do computing in the future. One where they could place capacity anywhere on the planet that they wanted capacity. And that's what we've done. So we've built out a cloud system that we can put either on-prem within a customer's data center managed remotely from our knock or placed anywhere on the planet that that capacity makes sense for that customer. One of the things Dave and I are talking about constantly, this year is this whole services angle. And the services business is being transformed by cloud and virtualization mobility and big data. All these things are the confluence of massive change. So the channel partners and partners of the big companies like HP, IBM and EMCs of the world are in a good position to go out and transform these companies. So what is the biggest challenge that you've heard from customers that you guys are pivoting on to deliver solutions on? Is it, hey, help me figure it out? Is it, hey, I want to just do test dev? I want some real solutions. I want to do some big data. What's the current state of where the market is? We went out and interviewed hundreds, literally hundreds of our customers over the last few years and there were two issues that always came to the top. Every conversation. One was how to leverage the cloud ecosystem and cloud technologies for business advantage. Every CEO wanted to do that. And the other issue was always mobility. Sometimes they were, the consumerization of IT, it's often called, but how do they deal with the proliferation of different device types that are out there and be able to deliver applications securely to those environments? We have been running professional services on that for quite some time, helping customers build out BDI infrastructures, cloud infrastructures and so on. What we did that was unique this week is we've come out with cloud products and services, both a cloud data center, which we've opened up, our first data center, as well as having managed private clouds that we can put on prem within a customer's data center. I know when I think back to the recession of 2008, 2009, a lot of people jumped on cloud. Yes. We think it accelerated some cloud adoption by probably 12 to 18 months, but a lot of people made some mistakes along the way. What are the biggest mistakes you see people making that are thinking about going to cloud or actually trying to do cloud? Jumping without a plan. Because of the difficult economic times, a lot of customers really started to move before they really had thought through what it is they needed to do, and in some cases really lost control of the initiative. Sometimes the various people within the organization, a number of CIOs would tell me that they were afraid they were having developers go off and develop on clouds using their credit card as opposed to going through the normal IT channels. And they were very concerned with being able to provide the kinds of business services they wanted to provide, do it economically, but also with a level of control. And we at SHI really understand the issues surrounding the need for IT to have a well controlled, secure, high performance environment. What's the number one out of control variable that you've seen, to be specific on that? What have you seen as, okay, when it gets out of control, is it losing people? Or is it the security? Is it just... Sometimes it's actually losing control of the development process. You can have easily rogue developers within an organization go off and develop something, but what happens very often is you use control of the data that's associated with, and the data goes out of the control of IT, which sometimes can have horrendous consequences for those organizations. When we have IT practitioners on in CIOs, in fact we had Mark Egan on this morning, CIO of VMware, and he said what a lot of CIOs tell us is that it's people process and technology, and technology is not the hardest. Having said that, Cloud obviously touches all three, probably in a way that's more disruptive than anything we've seen in a while. Yes. Maybe ever. How are IT organizations changing, and how do you predict they'll change as a result of Cloud? Most IT organizations are rapidly moving towards working the layer between IT and their business counterparts, so you see a lot more focus on business, analytics, business analysis, things like business relationship managers that a lot of these IT organizations work in order to really understand business better, and they want to work more on the application layer. They want to basically save dollars, they want to modernize the infrastructure using Cloud technologies, save those dollars that would normally have been spent on infrastructure, redeploy it on applications, and redeploy a lot of their staff around really crucial business issues. We had a conversation earlier about security and just overall moving to the Cloud and all the opportunities, but one of the things that's come out of our conversations here in theCUBE is the balance between compliance requirements and actually doing the right thing. It's there. You have to check the boxes and compliance. A lot of these large enterprises, you mentioned stick with policies, there's the rogue developer that's dysfunctional, but might be the model. There's been a comment going on. What's the balance between compliance and the right thing? Sometimes they're not always in check. That's a great question. I joined SHI actually from being a CIO in a large Fortune 50, and compliance was the largely growing expense that we had actually in the budget was regulatory compliance issues. For us, what that meant was we wanted to give IT organizations complete flexibility in how it managed Cloud. We want to be able to provide capacity when they needed it, where they needed it, the benefits of Cloud, but none of the disadvantages of Cloud technologies, which very often are in worrying about compliance issues. Worrying about data issues, data loss, compliance, and so on. The question, are you seeing people designing more for compliance, less for compliance? It's a design question, right? You have to get the compliance checked off, but how do you advise those customers and those environments? What we try and do is go in our services side, we try and help customers with an analysis of their application portfolio, and we do a lot of looking at the data as well, doing data loss protection, engagements with our customers, so they understand really where their data and applications need to be. Some applications are under very rigid requirements and guidelines, but large numbers of applications aren't, and a CIO really needs to know how his portfolio, his or her portfolio is built up to understand where they can best deploy dollars around compliance, around regulatory issues, and where they need to be able to deploy dollars into new innovation. And so do candidates for cloud fall out of that, or is it, or you're seeing the customers say, look, I want to put the whole thing in the cloud. Some customers will put the whole thing in the cloud, as long as you can do something like provide on-premise cloud, which is one of the reasons we went to this sort of hybrid architecture. Every organization has stringent, as some applications with highly stringent data requirements. It could be they don't want data outside of a country, they don't want data outside of the four walls of their data center. So it's important for them to be able to put the applications where that makes the most sense for regulatory compliance reasons. So John, of course, is from Silicon Valley, and one of the sayings out there of many is fail fast. IT gets a... You can't go with the data though, Dave. See, when you got the data, you can't just fail it. Oh, I screwed that out. The data is now out there, so I think the data, having the data is the center point of the design is critical. So what I'm going with this is, you know, the whole concept of fail fast is fail fast, you can move on and get to the successes. In IT, as we know, some projects fail. In fact, some people would say many, you know, third of projects fail. Whether that's a true number or not, I don't know, but enough to give CEOs heartburn. Does cloud change that dynamic? Not necessarily making the project succeed, but allowing organizations to fail faster and not have as much pain with sunk costs. Do you see that change in the dynamic of IT and business alignment? It absolutely changes the dynamic of time to market. It really isn't an abler. These technologies, an abler of speed, be able to rapidly provision within five to 20 minutes the capacity you need, just pay for what you need. You can focus your time, effort, dollars on the application, which is really where the value is, and less of those dollars on setting up and maintaining your own infrastructure. So HP is a big services organization. You're an HP partner. You guys do a lot of services, consulting services, and so how's that all work? Where do you pick up and where do they leave off? HP is one of our big partners, as is VMware, and we have a number of other strategic partners, but the approach that we took to the marketplace when we put together our cloud products and services was we went out and looked at the entire ecosystem, put out an RFI to all the major providers and decided what were all the best of breed technologies that we could integrate together to essentially create the equivalent of a cloud in the box for our customers. Having done that, we then added additional capacity around operations, developed some of our own codes, made some of our own patents, in order to fill what we saw with some gaps in the marketplace. But we became an HP partner in cloud because fundamentally many of their components were the best of breed components that we could use for the kind of high performance, high availability redundant sort of infrastructure we wanted to put together. All right, Richard Taggart of SHI, thank you for sharing your story actually deploying clouds, bringing your CIO experience to us. Thank you very much for sharing that. Good luck with the continued success. Thank you very much. Appreciate it. Good deal.