 Live from San Francisco, California, it's The Cube at VMworld 2014, brought to you by VMware, Cisco, EMC, HP, and Nutanix. Okay, we're back everybody, this is Dave Vellante and this is The Cube, SiliconANGLE's continuous production of VMworld 2014. This is our fifth year here at VMworld. I love being in Moscone, you know, we do a lot of shows in Vegas, you know, Vegas is great, but it's nice to be here in California, you know, in the Bay Area, the heart of innovation, kind of right up the street from where VMware started, you know, new headquarters going up the cranes in Palo Alto, so, you know, we're seeing, we saw the transformation of an industry and now we're sort of, you heard, just heard from Carl Eschenbach talking about, let's do it again, we're sort of entering the second wave. We'd love to get the customer perspective here, we'd like to geek out and talk about technologies, but it's always good to talk to the practitioners who are in the front lines and trying to transform their businesses. John Walton this year, he's the CIO of the County of San Mateo and he's joined by Matt Day, who is with Lang's Building Supplies in Australia. Gentlemen, welcome to The Cube. I appreciate you coming on. So John, let's start with you. Talk a little bit about your organization. We'll start there and your role, you know, CIO, of course, but tell us a little bit about what you're doing at the county. Sure, happy to and thanks for having me here today. It's been a real pleasure to be here and be part of this. I joined the county about a year and a half ago. I used to be the CIO up here, as a matter of fact, in San Francisco for six years. So this is kind of coming home for me and coming back and seeing all my old friends. But down in San Mateo, it's a very large geographic county, home to a lot of the tech companies that I see up here. And as a county, we have to balance sort of our public-private partnership, how we're going to leverage the technologies that surround us, and people expect government to take advantage of, but also provide really low-cost, high-quality services to the public at a large. And we do that through our partner departments, like the police department and the hospitals and the parks department. So when I joined the county, we had a lot of very old, for lack of a better term, architecture, a lot of old disk arrays, a lot of old servers, very old network. And we were fortunate that we were really in a period of revitalization. We were really interested in reinvesting and rethinking the whole business model. We have our IT department in the county set up as what we call an internal service fund. So we actually act like a mini-corporation. So we work with all the vendors, like the vendors you see here. We buy products from them, package them, and then resell them to our customer departments. So we support about 6,000 county employees directly, providing virtual desktops, virtual servers, storage applications. And we act like a mini-non-profit center within government. We have to break even every year. So we're very interested in emerging technologies, where we're going. You know, it really is a CIO down there now what I find. It's not so much about being the Uber technologist anymore as much as I've missed my days and I knew a lot of the details about the technology, but really being able to see what the expectations of my user base is as consumers as they all get their new iPhone 5s and they're consuming things through Amazon Prime and Netflix. Their expectation of how I provide services as an internal service fund to them isn't aligned with that now. That I'll be quick, that I'll be cheap, that I'll be customer service friendly. And so we really leverage a lot of the technologies we buy now, VMware's technology, Nutanix technology, Office 365, to try to mimic as much as we can a very agile, cost-effective, consumer-type technology experience for our government workers down in the county. So you've achieved so-called IT as a service? We're working towards that and this will be the first year where we actually broke even. It's always been something that had to be supplemented to show that we could, but this is the first year where we actually achieved fiscal independence. So you're self-funding. Well, so you had some non-recurring engineering costs that you had to recoup and you've crossed that line now. We've actually, you know, the mythical payback line, we've actually achieved that as a department. But it's not mythical for you. It's actual cash flow. Absolutely, absolutely. So when we come up here, we're excited to use the same technology, but it's a little different to me. I have to remind all the vendors, I'm actually a reseller. Like, you know, just view me, I know I'm the government, but I'm also a reseller of your products. I need to be able to package your products and sell them on and be able to justify both the benefits of them and the cost to my users. And it's been great. It's been great being up here and working with the partner vendors up here. I think they really get it. Interesting. I want to come back and talk more about that model because it's something that a lot of organizations are trying to achieve or in the middle of achieving. So I want to get your advice on that. All right, Matt, talk about LANG. So talk about the company, what you guys do and what your role is. All right, so I'm the IT manager there at LANGs. We're a building supplies company. So we started off as a fairly low-key venture back in the mid-70s. And obviously, we've grown out of that. We build roof trusses, wall frames, four systems, have an aluminum joinery, windows, all those sort of things. But we've had, I guess, an epiphany in how we want to deal with our customers and our staff and our workforce and how can we gain a competitive advantage and gain some extra business capabilities that allow us to move forward. And so that's where we have to start looking at, you know, new technology, whether it's from Nutanix or VMware or other people. So it's important to us that we can deliver to our users, because they're obviously my customers, my users, a better experience that lets them then, in turn, deliver a better experience to our customers. So that's the type of thing we like to do and where we want to go. We don't want to use technology that's maybe best practice today. We want to use technology that's going to be best practice in two years, three years' time. So you want to be ahead of the curve? Absolutely, absolutely. There's no way we would use best practice from five years ago today. So why would we want to settle for best practice today when we could have it best practice and down track? And are you guys in the same sort of maturity mode? Do you want to be a little bit ahead of the curve or are you more conservative? Well, I agree with Matt. We have to be a little ahead of the curve. When you make investments, the investments have to last you. That's part of becoming a self-sustaining financial model. You can't assume that every year you're going to have new money to invest in the newest, brightest thing. So you have to buy a little bit ahead so that you're planning forward and reaching that fiscal independence but also have some longevity to the investments you make. You can't just increase your rates or increase your charge-back model and cover the shiny new toy you want to chase every year. So you have to really find that right balance of cutting-edge technology but not bleeding-edge technology and be far enough ahead to anticipate your users' needs to do it cost-effectively but do it in a way that is not going to increase downtime or lag times in providing the services. Same or better level of service? Absolutely. Otherwise, the phone's going to be ringing. Okay, then Matt, your application portfolio is obviously a lot of logistics. You've got supply chain. You've got some finance in there. Okay, so pretty mixed. John, yours is really mixed. You've got a diverse set of customers that you're servicing. A lot of SaaS in there? We're seeing more and more of that. That's one of the interesting transitions. We've been having meetings this morning, for example, with our current technology providers and one of the main themes is partnerships. We're really now, when you talk about future-proofing your investments, having to say, here's where we see us going with SaaS applications, we need to ensure that there's strong integration, that the architecture we're building for the future isn't going to dead-end us at some point into a cul-de-sac, that we're like, oh, if we'd only known that was your roadmap for the future, we'd have reconsidered some of these investments. Well, I think that's the difference between a vendor and a partner. A vendor doesn't really understand your business, whereas a partner has a direct relationship with your business, so they understand what you're trying to achieve and so they don't want to hurt you, they don't want to novel you in any way and it's that give and take that creates a real solid partnership that you can move forward with. Can you tell the difference before you sign the contract? Sometimes you can and sometimes you can't. That's just the honest answer. I've had what I thought was really good partnerships and then something's gone wrong and then it's obviously not a partnership because there's got to be a two-way street, there's got to be that give and take. When it's up, it's up and when it's down, it's down and you never really know what type of relationship you have until something goes wrong. So five years ago we were here, it was our first year with theCUBE at VMworld and the conversations we would have with practitioners like yourselves were, where are you in the virtualization journey, how much of your infrastructure is virtualized, et cetera, et cetera. And back then it was relatively small, growing and people would talk about their objectives. We want to be 90% virtualized or we want to be almost all virtualized except for one app or whatever it is. Presumably you follow along a similar, your organizations follow along a similar journey. Is that fair to say? And now you're highly virtualized and we sort of put that behind us. So then the question is what's next? How do we maintain that cost competitiveness, which is fundamental and you have to keep giving back to your businesses or your organizations every year. You have to cut costs, do more with less. It's this recurring theme. It's not 1999 anymore and probably won't be ever again. I don't know, maybe in our lifetimes. So what's next? Let's start with you, John. So how do we get, you guys have mentioned Newtonics a couple of times. We're hearing a lot about hyper-convergence. Carl Eschenbach talked about not just CapEx but also OpEx savings and automation and orchestration. What's next in terms of your journey, in terms of taking cost out of your operations and further aligning with your business? I think for us one of the interesting things that I think an interesting parallel evolution for us internally is the conversation around disaster readiness and mobility. And we've always kind of viewed them as two separate initiatives. There's the mobile initiatives and there's the DR business continuity initiative. And what we've realized in the last year, you talk about controlling costs and giving back is our customers are actually willing to invest more in us if we show value for the service we provide. And so we've been very good at saying here's what we do, here's what we do well, and here's what we're going to do in the future. And what I see recently in the conversations we've been having with customers and with our partners, as you would as you well pointed out, there's a real difference there is not talking so much just about pure product but here's the challenge we're trying to achieve. We're trying to achieve, you can access that application through some type of virtual interface. Your data will be secure. That has a benefit both from the mobility standpoint when you're in the field or at home or traveling but also from a disaster readiness standpoint that should a big earthquake hit like happen in Japan or the small one we had up in Napa that the critical data and applications are still available irrespective of the platform you access them through. And so it's a real convergence not only from the back end technology standpoint of what we need to implement but a real convergence for us of how the users perceive it's not just having mobile access to something but that pre-prepares me for a disaster or for emergency situation when I really need access to my data at any time. To pay for value, okay, so that's a good thing. And it's not one that you... it's not a dominant theme in government, I have to say. I mean, but you've got a different approach and strategy than most government organizations that I talk to, I have to say. Now how about the situation with you guys, Matt? What's next? You're more into the infrastructure. What's next for you in terms of taking cost out? I think we're going a long way to achieve that now with Nutanix and VMware. One of the big things is always on business models. We want to take away the disruptive nature of IT. One of the things we've been able to achieve is upgrades and maintenance schedules without actually impeding the business and that's about business capability. We want to increase that business's continuity. So the business never ceases. It's become a 24-7 operation and that's allowed us through VDI and through GPU VDI to have more business people in different areas always working and it's not impacting the business which gives us a real competitive advantage. And that's where we'll go next. You can start talking about the hybrid cloud, you know, instead of doing the traditional backup regimes and those technological things, the apps and silos stuff that we got rid of, we're going to start looking at our backup and our DR and it's less about DR and more about continuity and pushing it to a hybrid cloud. You know, using the cloud as a DR strategy. Now what are you doing with Nutanix? So with Nutanix, we do a mixed node cluster setup. So we do some storage, we do compute and we do GPU. So we've got our design engineers, the guys that sit there and design your house. You know, they're in 3D models and that sort of stuff. So that was the clincher for us going from a solid workstation platform on a desk. We've removed all of that and it's in VDI and those guys can work 24-7 around the world. We've grown our user base with external people exponentially since we've done this this year and it's working fantastic. And VDI is the workload that you're pointing at. Yeah, VDI is definitely that workload. We've still got traditional stuff. We've got our SQL, we've got our other workloads, our ERP, you know, Dynamics AX. That all sits on the cluster as well. But the big growth area for us is how we do our graphical VDI. Okay, so you hear a lot about convergence and hyperconvergence and how that, you know, saves money and, you know, pretested. It reduces heavy lifting, et cetera, et cetera. Is that what your experience is doing? Oh, absolutely. Like going to the days where I sit in front of a whiteboard and design how my storage is going to look and then play with the lucky eight ball and the company decides we're going to purchase a new business unit and all of a sudden I have an explosion of databases. That all goes away because with mechanics and hyperconvergence, I don't really have to worry about it. I can just add new nodes to it and the cluster will expand. So how much of your labor resource have you been able to sort of repurpose? Oh, 100% of my field engineering team. We don't have one anymore. We used to, we don't. We now use that in programming resources. So that in itself paid for the infrastructure. How many FTEs was that? That was two. Okay. So two full-time employees. And John, how are you using Nutanix? Can you talk about that a little bit? Similarly, I mean, you asked the question earlier, how do you tell the difference between a vendor and a partner, right? And I think Nutanix is a good story there where we were really going through that process of evaluating products sort of in a traditional, you know, what has the best throughput, what's the price point of this. Nutanix came in, I think, showed good partnership. We believe definitely in that adage of fail fast and so we do a lot of proof of concepts with vendors. Nutanix showed their value right up front from both the performance and partnership standpoint. VDI was our entry point for Nutanix as well. Back to the business model, that immediately started showing benefits in terms of time to deploy, stability of deployments, security of the data on the back end. And now we're looking to grow that partnership into better things. I think the faster you can cycle through decision-making processes, testing processes, verifying architectures, and creating that future plan, it's cycle time that I think creates a differentiator sometimes between technology partners and the traditional approach to delivering service. So, and maybe that's the answer to this question, but when you look at the converged infrastructure play, I mean, everybody's doing it, it's sort of a natural evolution of the server suppliers. If they're not doing converged infrastructure, they're not going to be able to be competitive. Is Nutanix different from what you're getting from the sort of mainstream traditional vendors? I'll let my friend here answer as well, but I can say I implemented the traditional approach to server approach back in the days when we were all talking about we're all shooting for 90%. The story behind the scenes was there was four different things I had to procure. It took 18 months plus six months of configuration. I'd be two years behind on my project by the time it was done, just from a procurement configuration testing standpoint, Nutanix reduces that to days, which is a huge differentiator and return on investment, because now I'm not burning two years of staff time and lack of productivity because the solution works. For me, Nutanix is definitely doing it different because it's truly converged. I see a lot of vendors talk about convergence, but it's still the same three tiers, still a tier of storage, it's still a tier of network, and it's still a tier of compute. In the same box. They just put in a different package, it's still the same thing, right? Where with Nutanix it's not. It truly is converged, and the speed to deployment is literally 15 minutes to an hour. So we'd say truly is converged. What do you mean by that? I mean it was architected as such? It's architected as such in that it's all in one box, like in the same set of RU, right? It's not spread out. At the bottom of this, I've got 16 RU of storage, I've got a couple more RU of networking, it's all in the one box, and it clusters out. The other thing about Nutanix is you're not just buying a piece of tin, you're buying a solution. That solution includes the people. It includes the support, the pre-sales, the post-sales, the sales engineers, and they do a really good job. For people like me, where we're not always the biggest fish in the pond, that's important because they look after us no matter how small we are, and no matter how big you are. Have you had a chance to look at the Evo announcement rail? I have. What do you think about that? And how does it relate to what you're doing, for instance? Look, I think it's really good validation for Nutanix. I think there were some naysayers in the last 18 months that said it couldn't work, and I think the deal with Dell last week and now the announcement with Evo goes a long way to validate what Nutanix are doing and say that this is correct and this is where we're going to go. I think VMware will involve Evo to be better than this today. As from technical standpoint, I've got some questions about VSAN, but I'm sure they'll overcome those moving forward. You've got some questions about VSAN to VMware? Yeah, like data locality, VSAN doesn't do that at the moment, whereas Nutanix certainly does, and in my experiences, data locality is a very, very big plus. Data locality meaning you have an understanding of where your data is, or you have control over where the data is? Data locality and the data sits with the VM and if the VM gets motioned to another in the cluster, the data follows it. It stays there, where it's pinned. VSAN, the data doesn't move. Well, that's kind of what VVOLs is supposed to do, right? Yeah, right. So I think there's some questions there, but again, I think they'll conquer those given the time. John, I want to ask you a question about the CIO role. You mentioned before that you've got a technology background, but you're spending more of your time with, I'll call it the business, it's not the business, but you know what I mean, the euphemism for the business within government, your customers. CIOs are starting to tell us there's a role emerging. There's a bifurcated role. Part of me is technical. Part of me is operational and business oriented. Do you see that CIO role sort of morphing where the growth path is ultimately a choice between technical and maybe becoming the COO or moving into line of business? What do you see as the future of the CIO? You know, I think it depends on the type of organization you're with, the size of the organization, and what you want to be as a CIO, right? I think I see a lot of CIOs that I still interact with that are much more technical than me. On the other hand, I'm the middle of the road CIO. I'm more technical than some of the CIOs know, but I think the successful CIOs that I meet realize what their strengths are, what strengths they bring to the organization, and they build a team that they can be part of. The whole pyramid view of a CIO role, the CIO has to know all the business, all the technology, everything. I think that model has become very rare. I rarely see that. I'm not saying it doesn't exist anymore, but I think more and more because of the complexity and the fast changing nature of the technology. Most people would fail on that job. Yeah, most people would fail. What I really see is the strong CIOs realize how to build a strong team. Whatever role they're going to play, they're very honest with themselves about where they add value to a team and where they need to step back and hire the experts, whether they're business experts, technical experts, customer service experts, but build that strong team to be successful. I think because it is the three-legged stool when you're providing a service. It's cost, it's quality, it's satisfaction. I think you have to figure out where you, if my staff would tell you I'm a better salesperson than I am a delivery person. So I have to be careful that I don't oversell and that they can't deliver on it because I know if I oversell and they can't deliver on it, customer satisfaction is going to drop. But I think we all play a role in our organization. In government, I think that change has been overdue. And I think the more traditional, sort of, you know, the Uber techie CIO has changed more slowly than it probably should have in government from my personal experience. I should have given up my technical role much sooner than I did in the organization. But I still enjoy it. I still love coming to these conferences. I geek out as much as anybody else on seeing new technology. It's just my staff have to reel me back in and say, you know, it doesn't fit into the architecture. We can't afford that toy. You need to move on to the next vendor. So it's good to have that balance. All right, we're out of time but I wanted to ask you each last question. So Matt, you're heading back to Australia next week and you got a bumper sticker at the conference. Your staff says, hey, how was the show? Maybe, you know, somebody on your team says, give me the quick overview. I'm really late for a meeting but give me the bumper sticker on VMworld 2014. What did you learn? What was it? What did it all mean to you? For me personally, it's the relationships you get to forge with the engineers, the other technical people. You get to see the insights of what your partner, partners that are going to do that you might not see at a local level because your local level guys don't know it yet. You know, so you get to sit down and have coffee off the table, off the books and just meet those people and have those conversations and I guess for management, that's a good thing and the tech head touched part of me. I get to play with an awful lot of cool toys. But I can't tell them how cool it is otherwise I'll hit me up to come himself. Yeah, right. It was just okay. It's a lot of work. Yeah, a lot of late nights. That is true, a lot of late nights. All right, John, you're of course hanging with the people that you hang with pretty much all the time in Silicon Valley in the Bay Area but still, sort of anything here that you would sort of summarize in terms of things either that you've learned or just the bumper sticker for you in 2014? You know, for me, coming to VMworld always reinforces about networking and partnerships, meeting new people. It's really inspirational. You know, we all get stuck in our offices and in meetings trying to sell something or come up with a creative cost model that's going to help you break even at the end of the day. But what's exciting to me about VMworld is there's that element of excitement of newness where you come to see new things but you meet new people and at the end of the day, you come away inspired. And so that's why, you know, this year we probably have more of our staff up here than ever before just for that inspirational aspect of it from being inspired by other people, by talks, by technology, to go back and be excited and to translate that excitement into positive outcomes for our people back at the office. A lot of positive momentum here at VMworld 2014 and the ecosystem is alive and well. Customers are innovating squinting through all the buzzwords and getting it done. So gentlemen, thanks very much for coming on theCUBE. Really appreciate your insights. Thank you. Keep it right there, buddy. We'll be right back. This is Dave Vellante and this is theCUBE 2014 VMworld. Right back.