 The Cube, at EMC World 2014, is brought to you by EMC. Redefine. VCE. Innovating the world's first converged infrastructure solution for private cloud computing. Brocade. Say goodbye to the status quo, and hello to Brocade. Welcome back to Las Vegas, everybody, this is Dave Vellante with Jeff Frick. Howard Elias, the president of EMC's global services. Howard, it's always great to see you. You have been an icon in this industry for a number of years. You and I have seen the first platform, the second platform, and the third platform, and it's really exciting to be here, isn't it? It is, and it's great to be back on the Cube, and we appreciate the opportunity to spend some time with all of our customers and partners here. Well, thanks for having us. Talk about the strategic direction that EMC is going. You are a member of the executive staff. You've been an exec in the industry for many, many years and a critical part of really growing EMC services and also contributing to its strategic direction. VCE, we'll talk about that, but talk about the strategic direction and how it's evolving. Well, as you know, there's a lot of talk about third platform, and we're really informed by what's happening in the marketplace and what customers are really looking for. And this is really this transition from second to third platform, cloud, big data, mobile, social, all informing everything we're doing. And actually, you know, the other thing that people don't really take into account as much as I think they should, it's not just data created by the speed of fingers and thumbs. It's all the machine created data, telemetry data, telematics data that's coming at us, right? So this really needs different architectures for third platform, but we have to also help our enterprise customers get there. So you've seen it all around the show. It's all about the hybrid cloud. And we've been talking about Journey to the Cloud for some time and helping customers build private clouds, but the real answer is that hybrid cloud, having one common model, whether it's the management model, the orchestration model, the security model, how you develop and deploy applications, you want to be able to do this independent of where the infrastructure sits. So that's what the hybrid cloud's all about, and that's really the overarching strategy of our EMC information infrastructure business. So you guys have had that sort of hybrid cloud. If you can originally, when I first read about it, your definition of the private cloud was really what evolved into a hybrid cloud. Correct. And private sort of became on-premise. But you guys have been really disciplined about that vision. And it's hard, right? Because you get a lot of cloud silos. You got classification, you got cloudification, you got the public cloud. Are you worried that you're going to have sort of cloud stovepipes? And how much of the market do you think that you can attack with that sort of homogeneous, consistent, standardized message? Yeah, it's a great point you make. We've, as an industry, and EMC's been on this, right, is trying to help our customers move away from these vertical silos. You'd have your exchange environment. You'd have your Oracle environment. You'd have your SAP environment. And we've said, no, you should have more horizontal. Build a storage network. Build a compute platform and virtualize it on top of that and have all these shared resources. And what we see now is the silos being recreated. Whether you want a public cloud that might be, you know, Amazon or Azure, those are, you know, one set, but they're silos. And then you can have, you'll have your on-premise infrastructure. You'll have a SaaS-based application. All we've done is traded this in for silos of the future. And the CIOs are saying, hey, that's not what I want. I want to be a portfolio manager of a set of services in a common way. And that's what the hybrid cloud is really designed to deliver. So if you have a common management model, now we have chosen VMware to do this, but you can do it in an open-stack ecosystem. You can do it in a Microsoft ecosystem. But look at the VMware ecosystem. Build a vCloud orchestrated hybrid cloud that sits in your data center, but also with VCHS in a public cloud. And now you have that common model to be able to go back and forth. Yeah, well, the whole virtualization concept you've now applied in so many different places. You see Viper coming out with sort of the abstraction layer. I want you to talk a little bit about because you've seen M&A in a lot of different companies over the years. And it seems to me that while you were talking about the different stovepipes from an application standpoint, EMC's never been shy to bring in technologies, whether it's Icelon or data domain that are adjacent to existing technologies that you have in your portfolio and figure it out either with services or with technology. I want you to talk about that philosophy a little bit. It's worked. A lot of people when they analyze acquisitions say, oh, there's overlap or there's gaps or the cultures, blah, blah, blah. How has it that EMC's been able to make that all work and what role has services played there? Well, it starts at the highest level. What we understand is it's all about the workload and not all workloads are created equal. And if they were, life would be easy. You'd have just one platform and you'd be done. But whether it's a high performance or a high service level or a low cost, workloads have different characteristics. So what we've recognized is you need, it's horses for courses. You need the right tool for the job. And so that's what's led us, whether it's VMAX or VNX or Icelon or Atmos, you want to be able to have the right tool for the job. Now what we've done for a long time is really with services and virtualization as a first cut to be able to help bring all that together into a common model. Viper really takes that to the next extreme, right? Now you'll have that common control plane with a set of data services, whatever access method, whatever replication or data protection you need. And now you can still choose the right tool for the right workload but not have to have a different management paradigm for each and every one. The second thing is the model that we've thought about here is once you have workloads and once you're able to bring all of that together, we're not afraid to think about what we build, what we partner and what we acquire. And if we don't have the capability, we either go partner with it like we did with Cisco and VCE or we go acquire it like we've done with Icelon, Data Domain or Organic, which is Viper. And so if you think about our strategy is it's hybrid cloud. We want to make sure we help our customers build and operate a well-run hybrid cloud. Second is we want to help win those off-trend workloads so that for those portions of the hybrid cloud that are off-premise, we still want that same underlying EMC technology there. And then we really have five key technology areas that we know we want to win with. Flash, software-defined storage, big data storage, converged infrastructure and trusted infrastructure. And so that is the overarching strategy that informs everything that we do. So let's talk a little bit about VCE. You were the executive, basically, chartered with putting that together as Acadia. You hired your old boss, Mike Covellis. It was awesome, Mike was fantastic. We love Michael. And then we do. He was really the right guy for the job to get that off the ground. Now Provinz seems to be getting a groove swing. We're doing an awesome job. Yeah, we had Provinz on Monday. Oh, good. And, you know, he's really getting into the scene. He's now really driving that ship. So VCE, we've got some new metrics now. $1.8 billion run rate, 50% growth. You must be so pleased at the progress. I mean, a lot of naysayers early on said, it's not going to work. It's too hard. It's spending too much money. But what we saw was the market opportunity was so enormous. Now, there were still a lot of challenges. Absolutely. But talk about, you know, you got to be really proud of what you guys have built. And talk about that and where it's going from here. So it couldn't be more pleased. And, you know, actually, my partner in crime, Gary Moore from Cisco was here earlier in the week. We actually spent some time with Provinz and the VCE team. So Gary and I really were the ones, foundationally, that pulled this thing together. Of course, VMware and Intel were key contributors as well. But the idea of, you know, building a converged infrastructure, and you mentioned Acadia. You know, this is so true of a lot of startups. You have to have the courage of your conviction of what the ultimate idea is, even if you need to sort of tack or change course a little bit. You know, we started with a reference architecture with some services wrapped around it. And what we quickly found was customers loved the idea. They didn't love the execution. They really wanted to buy the product. And we said, okay, well, let's do that then. So we changed the VCE, started building product. Now we still have services to deploy and integrate and help put applications on. But the product of Vblock is now what gets delivered to the customer. And the value prop you mentioned, at 1.8 billion run rate, we have 1,700 Vblocks installed in over 800 customers, 50 plus countries around the world. The metrics are off the charts. You mentioned 50% growth rate for each of the last four quarters, minimum 50% growth rate. And, you know, the reason is, and I think a lot of folks misunderstand what the value prop is. It's not just that we're doing great engineering of, you know, best of breed components from EMC, Cisco, and VMware. It's not just that we're delivering a great experience to the customer and how we deliver it and deploy it. It's what happens after that. It's the operations. It's the management. It's managing all the patches and interaction between that. It's the ultimate customer experience and what they're able to get from that. I had lunch with a customer this week. Phenomenal story. Healthcare industry, $5 billion three years ago, made a decision to go Vblock. They are now $12 billion and flat labor cost in IT. And the CIO told me, he said, there is no way we could have ever have done this and ever have grown unless we had a Vblock. So, I want to talk a little bit about services. Services, I've always said, it's sort of where the rubber meets the road in terms of value. When I talked to customers and I asked them, you know what, if you had $100 to allocate, how much would you allocate on, you know, hardware, software, services, you know, product versus services. And it's always consistently at or above 50% of the value that they see is the services component. Whether it's services from guys like EMC, whether it's somebody from, you know, Accenture or Capgemini or whomever, you know, Ernie Young Deloitte, or their own internal services. That's where you make it happen. And it's interesting, I was having a discussion recently with one of your competitors, startup competitor growing like crazy, Flash Market Space, and I asked them, well, how are you going to deal with services? Because EMC's got this services engine that is perfected over decades. And the answer came back, the channel. Now, I thought that was kind of a trivial and maybe even naive answer. Am I being too critical? I mean, I wonder if you could talk about that a little bit. Well, so our view of services is really two fold. One is we want to try to design out as much of the non-value added services as we possibly can. Now, I don't want to devalue things like implementation services and integration services and interoperability type services. Those are important, especially in the early days of technology or of an architecture. But ultimately, we'd like to design that out and have it either pre-done in the factory or automated, right, in terms of deployment in the field. And that's another great thing that VCE, for example, has been able to do. And we're doing that with technology such as Viper and what we're doing across Flash and other CI work that we're doing. But the second part of it is, what customers really value and appreciate is the upfront, you know, let's think through the strategy, the economics, the service levels, the business outcomes we're driving. And then because it is workload-based, let's make sure we're picking the right tool, architect it, and then make sure we deliver that to deliver that business outcome. And my view is, at least for EMC, we are a technology company. Services, to us, is a key enabler. So what we typically do is we'll develop a set of services, create the IP, have some direct customer relationships to prove that IP, have that to be able to inform back to our technology groups within the company, but then enable the partner ecosystem for even bigger breadth and depth out in the marketplace. So we see it, we think it's important as a technology company to have direct services capability ourselves, but to us it is really to enable those first sets of customers, inform our BU's, and then enable the channels going forward. How about the Federation? How does the Federation affect your services strategy? Maybe talk about that a little bit. Yeah, it actually has a significant implication because so many customers are saying, hey, we love this Federation idea. Thanks for the ability to choose between the platform layer, the cloud layer, the underlying infrastructure layer. And then we get many customers saying, well, I choose all three. And so they really turned to EMC to say, all right, well, I would like to have Pivotal Cloud Foundry on a VMware cloud with EMC infrastructure underneath, can you help me? And so it informs us quite a bit. So we're working very closely with the Federation groups and architecting the right solutions. You've seen some of those EVP solutions here this week. We'll see more of that, and we're working on those services to get that solution to the customer. I have a perspective on the following. So you and I, as I say, both saw the, back to the first disruption when, you know, you saw companies like Compact really disrupt the industry and, you know, took out, it was a mainframe downsizing, mini-computer vaporized, and then they had a pretty good run Microsoft and Intel and the likes of Compact and others. It seems to me that the executives of today's company are very much more savvy. Of course it's more mature industry, but about that disruption, and you get guys like Jeffrey Moore talking about crossing the chasm, it seems that the Federation is a blueprint or a prescription for crossing that chasm. And I wonder if you could talk about that, sort of the genesis of the Federation, was it just sort of a natural, okay, we got to do this, this is a normal thing, or Maritza was hanging around doing strategy out, and is it a prescription for crossing the chasm? So, you know, a great lead-in. So it sounds like you already know that answer, but I'll tell you, it is exactly that. Look, we have seen this movie before, and a more traditional approach of having that vertical integration, whether it's the way the traditional systems companies would look at it, that is an approach. But what we find with customers, especially going through periods like this, they don't want to be locked in, they want to have flexibility, they want to have choice. The Federation gives them that choice at each layer of the stack. It is so critical during times of disruption. And then once they're saying, okay, I see how that works, now I do choose either one of those or two of those, or in many cases all three of those, we need to have the ability to deliver that. But it's exactly that reason. It's a strategically aligned set of businesses. We all see the market, Pivotal, VMware, EMC. We all see the marketplace evolving the same way, but we want to make sure that customers have that choice and flexibility. Yeah, we had David Goulden on it. I was asking about financing things like AirWatch and how the Governor of the Federation actually allows that and what kind of flexibility that brings. The other thing that you note about the Federation is it allows you to shift resources around in a very facile manner. I think I'm correct, and you picked up what we did. So that's an interesting component of the business model that gives you the flexibility to do that. Well, and I think it's a testament to the executive team and the way, not just the way we structured it, but the people we have running these businesses. And it gets back to that strategically aligned. We all have the ultimate same goal for our customers in the long term. And so if we need to tweak a little bit here, if we need to work together here or work separately over there, in the case where Pivotal, a young company really wanted to focus on the software development, software delivery, software engineering piece, they actually said, look, I'd rather leverage EMC and the partner ecosystem for those services and felt like we could drive that a lot better and faster for them and that's turning out to be the case. EMC is an amazing company, Howard. You must be thrilled to be part of it. You've been a key executive in the ascendancy of EMC over the years. Really appreciate it coming on theCUBE. What's the bumper sticker? We're leaving the show, leaving Las Vegas. EMC World 2014. What's the bumper sticker on the back of the car, say? Hybrid cloud is real. We can actually build it in hours and you can be deploying applications in days. Excellent. All right, Howard, thanks very much for coming on theCUBE. Always a pleasure to see you. My pleasure. Thanks. All right, keep it right there, everybody. We'll be back with our next guest right after this.