 Live from Las Vegas, it's theCUBE, covering Dell EMC World 2017, brought to you by Dell EMC. Okay, welcome back everyone. We're here live in Las Vegas. This is theCUBE SiliconANGLE's flagship program. We go out to the events, instruct the signal noise, three days of wall-to-wall coverage with theCUBE at Dell EMC World 2017, winding down day two, a lot of action here, two cubes, two sets, double the action, double barrel shotgun of content. I'm John Furrier with the mic. Coase Keith Townsend here on the floor. Our next guest is Michael Hoek, who's the vice president at VirtuaStream, part of Dell Technologies portfolio. Michael, welcome back to theCUBE. Good to see you. Thank you very much. Thanks for having me. Your role changed a little bit. We just talked about for camera. You were doing the SI work. Now you got a new role in healthcare. Take it a little bit through what the new role is. Sure, and it actually relates to the news that we have that we're announcing today. So I was running our global SI, global strategic partner business for the last two and a half years. About two weeks ago, I've taken on a new role. I'm now leading our healthcare and life sciences vertical. And this relates to the news that we dropped today where we now have a healthcare cloud at VirtuStream. So a separate cloud built on our enterprise cloud that we've been running for the last six years, built for ERP, built for mission critical applications, high security, high availability. We now have a healthcare dedicated cloud as well. So I got to ask you, the number one conversation that comes up is VirtuStream, what's going on with Dell, technology in the cloud. I'm sure you hear this all the time. Michael clarified on stage, also sat with us yesterday around, really talking about his philosophy in the cloud and says, look it, the cloud, hybrid cloud is definitely here to stay. But he talked about understanding the technology requirements that customers may have in the future. And that was Dell's core competency. So take a minute to describe the VirtuStream play within Dell. It's not like, where's the cloud play? And that's what a lot of people were saying. And Michael said, like the internet was back in 1998, what was your internet play? There was no internet play. It was called the internet. So you guys are taking a little bit different approach. Take a minute to first clarify that VirtuStream's role with respect within the Dell portfolios, what is the cloud quote play? And how does that relate to how the value proposition that Dell is putting forth? Sure, sure. So VirtuStream was initially bought by EMC in 2015 and then part of their role in. And at this point, VirtuStream is the enterprise cloud provider for Dell technologies. We're not trying to compete with public cloud providers. We were purpose-built for mission-critical applications. That was when we were a venture-backed company. That's where our mission was. ERP, like SAP is one of our cornerstone apps. Built for that, focused on that. We've been doing that for the last six years with the live cloud, hundreds of customers. That's what we're continuing to focus on. Within the Dell technologies family, we're focused on mission-critical apps, managed infrastructure as a service. So the story hangs together. If you look at it from that perspective, cloud is going to be everywhere. You're just extending the range, if you will, of the on-prem. So it's not the cloud play as a silver bullet. That's what people are looking for, but that doesn't exist anywhere. No, and VirtuStream's had a hybrid model from the beginning. We never said to any customer, you need to move everything in order to have take advantage of the cloud. Move the parts that are relevant to the cloud, where you can gain the most efficiencies, where you might be having stability issues, where you need high security. All of the things that we are really good at, bring them to VirtuStream. And we never also didn't ask customers to rewrite their applications. You can bring your applications as they are, run them in the cloud, and get all the cloud components. This ties very well with the Dell technologies stories. Michael, it's interesting, you know, we have so many conversations on the queues, our eighth year covering it. We've seen stories come and go, some stories have timeless kind of vibe to it. Certainly the cloud is here to stay, no doubt about it. But one thing that's consistent is, the cloud has been a model of disruption, specifically around two areas. Horizontally scalable, and vertically integrated. We've been talking about it on the queue all the time. You got to have some niche differentiation in these unique markets, where there's a domain expertise needed, say healthcare, aka health comes, kind of set you up for the healthcare question that's coming pretty quickly, which is EMC and Dell have all the data, and a lot of other people have the same strategy as well. Have a horizontally scalable cloud and data elastic, et cetera. But when you go and build apps, whether it's mission critical and or non-mission critical, you got to have some knowledge of the domain you're in, the data's context. So these are kind of, this is now a new model that not everyone is grokking this new way. And healthcare kind of teases that out, that this is the trend that it's okay to have a specialized cloud to deliver great, specialized value, yet all the goodness of scale. All the goodness of scale. Did I get that right? All the goodness of scale, well, if you go to the NIST definition, we're actually in the community cloud component. So a community cloud for mission critical applications. We also rolled out a federal cloud that was specifically for the federal government, meeting FedRAMP and FISMA. The healthcare cloud, HIPAA, high tech compliance. You'll see life sciences add later this year while we'll have GXP capabilities for companies in the FDA component. We actually already run many GXP workloads today at Virtue Stream, but we support GXP. What you'll see later this year is actually having GXP from the ground up in our cloud. So it's a highly regulated environment, highly controlled environment, needs to support audit and compliance, and needs the availability, the five nines availability that Virtue Stream's been doing for a long, long time. So you beat me to the audit and compliance question. Health care is a, in life sciences, this is one near and dear to my heart. So expand upon it a little bit on healthcare. Go a little deeper than just audit. I think it's a unique value when you're focused on healthcare, life sciences. Those FDA audits can be really tough. What are some of the value adds as we talk about transformation, moving up the stack from a IT service provider perspective? What are some of the value add that Virtue Stream brings to the life sciences? So in the life sciences segment, or healthcare segment, there are new apps coming in that are more cloud aware, but most of the applications are long time. Been there a long time, they're not cloud aware. Virtue Stream, HPUX, IAX, but even more just the applications themselves, you have to manage them in order to size them, get them to run reliably, get the availability, redundancy, all of that takes a lot of manual effort. Virtue Stream was built with that in mind. You don't have to rewrite your apps. You can bring it into the cloud and get the cloud wrapper around it. So in healthcare, it's very good for them. They don't have to spend a lot of money to get the cloud benefits. Going to other providers, you might have to start over again. You might have to reimplement on a new application stack. We're letting them keep their application stack as they are, keep their compliance framework as it is. We can provide security tools or they can bring their own tools into the healthcare cloud. So that's a big benefit for them. They can then take it into a modern infrastructure, their aging infrastructure on premise, move into a modern infrastructure and start the transformation. Many of these systems of record like electronic medical records, EMRs, those are, they've got any number of hospitals within a hospital group. They might have five EMRs, 20 EMRs. They want to consolidate that. They want to rationalize that and they want to prepare it to intersect with new systems of engagement, patient engagement systems or systems of insight like precision medicine where you have analytics intersecting with your EMRs. So walk us through that life cycle. The from a practical perspective, virtual stream will take what I have on site, on premises, move that into, is that a private set of facilities, a public set of facilities, my existing equipment and then help me migrate that to a common community cloud, we call it. So the community cloud is the larger set of infrastructure. For our model is that a customer gets its own private tenant zone, so virtual private cloud. The underlying infrastructure is a multi-tenant cloud but you get a dedicated set of resources for you. The resource pool is within your control. You can bring your own network range. You can bring your own security tools or we have options if you want to buy them from us on a subscription basis. So it's completely within your control that resource pool. You can bring whatever you want into it. It also connects back into your data center, legacy environment through MPLS or VPN. We have very, very few customers that come over the open internet to us, almost all of it's through secure connection. So we look like an extension of their network except it's a utility cloud with high SLAs around it and with those security compliance components to it. So with those connectivities, there's this debate about multi-cloud and if multi-cloud exists, what you're describing to me because I'll have AWS in addition to a virtual stream in addition to my own premises, multi-cloud? All these multi-cloud, hybrid, hybrid cloud environment. So if they're connected AWS today, they can connect to AWS from us. We have many, many customers who do that. Salesforce, any SaaS environment, the way that they connect to them today, they can do the same techniques that at VirtuaStream. So talk about the, I'm trying to unpack, still hung up on this virtual stream and people not understand the role with Indel. So Amazon has FedRAMP and they have the Visma, give a build, FedRAMP certified, but they have a Gov cloud, they call it. That's a completely different cloud and other cloud. I know you don't want to be compared to other clouds, but I'm going to try to connect your story on that. How, why would I use VirtuaStream versus say Amazon Gov cloud or when does the specialty cloud work for the customer and when doesn't it work? You mentioned, I could, first of all, there's no debate. I think multi-cloud doesn't exist, but that's my opinion. But I think hybrid cloud exists. Certainly 100% with a little bit of multi-cloud-like features. But I buy this idea of specialty clouds. But how is that different from me just going to the cloud? So take me through that, just that's where I was hung up on the piece here. So, if I understand the question, you're asking that. It's a cloud from Amazon. How's that different from your FedClouds? So the FedCloud from Amazon has all the capabilities of Amazon. You buy on T-shirts, it might be in a FedRAMP or Fisma environment, but you're still limited by their architecture. We have, our architecture is different architecture. We do a tenant zone. We share resources within that tenant zone and we build on a utility basis across the entire zone. So when we manage the environment, we're looking at the CPU memory network and storage used every five minutes by the entire aggregate resource pool. At Amazon, you're going to buy a VM for each and every app that you have, database, web server, everything else. You pay for that VM when it's turned on, whether you're using it or not. And then in terms of the management of that environment, you need someone else to manage that environment for you. A lot of our customers ask us to do OS management, OS and D database management. So you provide a different mechanism. They're just Amazon for the government. You guys come in and look at the specialty needs and tweak it a bit and make it work. And the government workloads that we have are the same mission critical workloads that we have in the commercial. They're SAP, they're other ERP vendors, they're the communication systems, things that need that five nines availability, need that white glove service around it. That's really our bread and butter. If you've got somebody else who's managing before you, you can still use our cloud. We have a lot of customers who have SIs like we talked about last time, who have their own management teams. But we provide that support service. So there is a number to call. This is a big difference. There's a number to call when you have a problem, so we can help you get asbestos. Are the SIs competitors or partners for you? Because when we were at Sapphire last year, one of the clear things to me was, they all have their swim lanes and they're all differentiating with tech and building their own kind of cloud models. Because they can bring that expertise to the table. Is that similar to you? Are they competing? Are they partnering or do you care? Almost all of the SIs are partners to us. There are asset-like SIs where it's a natural fit for us. They don't own data centers, they don't manage infrastructure. There are other SIs who are more asset-heavy. And for those, we have different strategies. Some of them have purchased our software and built virtue stream-style clouds. We can actually collaborate with them in deployments. Others are using us in particular use cases that don't work with their internal clouds. So you're an arms dealer and a provider. That's Dell, right, with the technology. Yeah, it sounds like a good fit. I still want to tease out this difference between community cloud, public cloud, specialty cloud, healthcare specifically. These EMR type of apps, the apps that exist in healthcare basically don't lend themselves to public cloud to that AWS model at times. I have to refactor that application. So are you telling me that you'll take my application as is, but give me that cloud consumption model? And is that done? Basically, how do you make money off of that? Because can you run EMR cheaper than I can run EMR? Or are you transforming my operations and giving me more flexibility? What's the value in virtue stream? So the first value is what you said. Like if you go to an Amazon, you can't actually take some of these EMRs. Many of these EMRs can go to Amazon or any of the public clouds, because the architecture doesn't work. You need to have control of the storage at a level that's not available in the public cloud providers. There are certain throughputs around IOPS that the databases, their specialty databases, we can accommodate all of that within virtue stream. So bring your EMR, bring your Epic, your Serner, your Meditech, those types of things can run in virtue stream. We have architectures that support it and we charge you for a utility model within that. So you get the benefits of a utility model and the security compliance and all the other stuff with the application you have today. Then you can look at how do I transform that? But the other part of your question around where's the cost comparison? We have a utility model. If you're building an EMR today or if you're running an EMR today, you buy your equipment based on the peak load of a three year or a five year estimate. You buy that on day one. You're paying for it whether you use it or not. In our case, you pay for what you use. So on day one, you're going to have very little usage on month 24 when you're finally at steady state. Then you might have full usage and even then there's going to be fluctuations. You're not going to be paying 100%. So a lot of our TCO models around the infrastructure look at the ramp period, look at the management, look at the utilization over time and then you look at a transformation model where you're taking from just what you're running today to what you want to do. They want to have these new patient engagement systems. Put patient care in the hands of the patient. They want to have some precision medicine components where clinicians can have a lot more data around their patients, around what else is being done in the market, pharmaceuticals coming back to pharma. They're interested in medication adherence. Make sure people are taking the medicine they're supposed to take. Those types of systems of insight, systems of engagement are now possible to connect to the systems of record, the EMR, once you're in a cloud friendly, once you're in a modern IT environment. So what's the biggest challenge that you guys have right now? Is it just educating folks on virtual stream? You've had some great success. Certainly we know about the SAP. We've talked about this many times. I think you guys are onto something really big with this virtual, I mean, vertical specialization. In fact, we've been joking in the queue, specialty clouds will be clouds everywhere. Look at Oracle. They got clouds everywhere. They got data clouds. Everyone's got a cloud. So this is interesting, if you have a fabric of data, you can stand up clouds like data centers. Is that the vision? The idea is that as specialty requirements emerge, we can develop solutions for them. Financial services is one we've looked at. We have a lot of financial services customers. We haven't had a need yet. Because our regular cloud meets such high security standards and compliance standards, we haven't had to do it for financial services. Healthcare, though, does have a separate up. When you start talking about patient information, protected health information, all that type, we want to make sure that we understand it fully. We're going to build a separate cloud. In the end, though, a year from now, two years from now, we may find that our regular cloud is fully sufficient to handle healthcare. What's the big challenge, what's the plan? What's the business plan? The biggest challenge for us right now is one, getting over the hurdle. Healthcare is a slow-moving environment. There's a whole lot of healthcare providers now looking at cloud options. You got hit by like handcuffs. Yeah, I mean. And the culture is such that we don't let our data go outside. But if you could look back at Virtue Stream seven years ago, eight years ago, when we were selling our first SAP customers, they said, we're not going to let our critical systems go into the cloud. You're never going to be able to get the availability. You're not going to be able to manage it. We've proven that we can do that. That's the same hurdle. Education, experience, getting it in the hands of the customers. So, SLAs and availability, what's the hero numbers around? Specifically SLAs, MRs, these are mission, mission, mission critical apps. These are literally, lives are on the lines. What type of guarantees can Virtue Stream bring to the table versus your competitors? So we're bringing our standard offering. Goes up to five nines availability for the infrastructure. And then with managed services on top, managing the application, we can go to four nines for the application. That's our standard offering. We can do on steroids offering that bring that down to, bring it up to a higher availability. And in fact, part of our architecture work over the last year as we've been developing our healthcare offering is, how do you have always on continuous operations within a hospital? Given that the network is going to be your weakest link, literally. So we have a model that's a partial, that's a very small footprint on premise to allow for that continuous operations within the hospital. And then the majority of the workloads are done in the cloud. So that's neat. Well, we hope that you guys can help us out because the government's having a hard time with healthcare and systems. So can you guys solve our healthcare problem in the United States? I mean, I mean, all joking aside, tongue in cheek, it's a big data problem. I mean, if you think about how you can tackle the healthcare system. Well, the interesting thing, I've been talking a lot with our partners who are developing some healthcare related applications on our cloud. The big, healthcare is a small part of the healthcare cost problem. The medication appearance, actually billions of dollars a year that are wasted, trying to get patients to take their medicine on time. So looking at those next generation applications, this is really where we're going to see a transformation in the healthcare market, enabling those types of solutions. Michael, hope he from BP from Virginia, the healthcare cloud. Thanks for spending the time clarifying for me. Thank you because I've been following Virginia with all the market conversations. Thanks for the clarification, specialty clouds, mission critical applications. Michael Dell talked about it here. Thanks for spending the time on theCUBE. I'm John Furrier with Keith Townsend. More live coverage here at Dell EMCO 2017 after this short break.