 IT services is a $1 trillion global business, but that large base of spending is highly diverse. Not only are IT services geographically dispersed and often local in nature, but also different types of services customers purchase very different services. At a high level, these include things like support services, professional services, managing technology, consulting, training, education, even the outsourcing of entire IT operations. Software as a service is a new category. Peel the onion layers however of services and what you find is customers often require very specific activities that are unique to their organizational needs. Increasingly, the lines between business and IT services are being blurred as the notion of an IT project is morphing into more of a business driven initiative that is enabled by technology. Organizations are in fact demanding more business focus comes from their IT service suppliers. As for example, they will be launching revenue generating entities based on cloud technologies or they attempt to monetize big data or even transform their IT organizations from a pure cost center to more of a revenue enabler. How is the services business evolving? How are the mega technology trends impacting customer needs for services and what does the future of services look like? Hello everybody, this is Dave Vellante of wikibon.org and we'll address these and other questions with our guest today, Howard Elias, a CUBE alum and the president and chief operating officer of EMC's global services business. Howard, welcome. Well thanks, great to be with you. Good to see you again and now, let's start off with some news. We're going to talk about these big high level trends. Absolutely. But you have some news you've announced previously in this Utah facility, in the United States of America or Utah and you're officially opening it this week. Yeah, I'll be out there in the next couple of days. So why Utah? Why not Bangalore? Why Utah? Well actually, this is our newest global support center. We actually have support centers here in Hopkinson in Ireland, in Bangalore, as well as in different places in Asia including China. And this is just our newest global support center we're opening up really to cover off increasing customer needs. While we do follow this on support and we support and continue to grow in all of our geographies around the world, that includes here in the US. And so we're investing back here in the US really to make sure we have local time zone support. There's some linguistic capability in Utah which is great for our South American customers of both Spanish and Portuguese. And then increasingly we're seeing more and more US based customers wanting US soil, US citizen support. Not just the federal government interestingly but other US based companies as well. So you mentioned follow the sun. You hear that a lot. Yeah we do. So what does that mean? And it sounds pretty like a simple concept but talk about that a little bit. Yeah it does sound simple, very hard to execute though. And what this really is is what we really refer to as continuous support for the customer. And the ability to continue to work a case real time. So let's say a customer has an issue in one geography. We'll start in that geography during the local business day. But if for whatever reason the problem isn't resolved or in many cases the customer wants us to continue to monitor the resolution. It might be a performance issue. It might be a host integration issue. We'll go ahead and seamlessly hand off to the next support center during their day time zone. And that way it allows us to continuously utilize the business day of our support centers around the world but still take care of the customer and get that case resolved through complete closure. Now you mentioned Latin America customers. You're supporting them out of Utah. So you'll have local or Spanish speaking. Absolutely. Portuguese presumably for. Spanish and Portuguese both. Great linguistic capability. And also Utah is relatively roughly in the time zone within a couple of hours of all the South America markets. A very fast growing market for us. And this really supplements, we've added a lot of e-services capability as well over time. So all of our chat and customer forum and more and more documentation is localized. But we now want to back that up with local language support when they do have to talk to a live human being. So specifically what activities are going to take place in the Utah facility? It really is the full gamut of our support capability. So it's taking first call, triaging the issue, getting it to the right subject matter expert, integrating that then with all of our other customer support activities. So our e-services platform, connection into engineering, all of the log analysis, escalation management, all the way through to the closure of the case. Now how many people roughly? Well we've committed to hire up to 500 people over the next couple of years and we'll well on track to making that happen. Now I know some other technology vendors. Cisco for example has a presence there and there may be others. Do you feel like there's a good base of skill sets there already? Are you trying to train them up? Or what sort of? Absolutely we're very excited about the great skills, IT skills that we're seeing in the area. That was one of the selection criteria among others. We looked at a competitive business infrastructure, great IT skills, the local US citizen, US soil, linguistic support that we talked about and just great sort of cost of living and a great place to live and a great place to work. So all of those came together but first and foremost, it started with great IT skills, great colleges, great universities and people really wanting to live and work there with those IT skills. Good powder. Now you also, Howard, mentioned that not just federal customers are demanding some local presence, it's others. I mean people like financial services, are they pushing you for that? We're seeing it out of the telecommunications industry, the financial services industry. As regulations continue to develop and more and more companies want to think about where they're actually managing their data. Cloud is wonderful and as you know EMC is a huge proponent and thought leader in cloud but it's also thinking through where and how you manage customer data and more and more customers we're seeing this internationally as well. German customers want to manage their customer data in Germany. So that's fine. We can help them build those cloud services in Germany. Well, no different here in the US. Do you think that's psychological? Is it more compliance or regulation? I think it's a combination, right? It's philosophical, it's psychological but in some industries and then certainly when you talk about public sector and federal government, it's actual law. Will customers pay a premium for that or do you just have to figure out the cost on your end? I think it's just a necessary cost to doing business going forward. Yeah, okay. So the justification for you is obviously it makes you more competitive. You gain market share, happier customers. And we're doing all of those. Yeah, okay. Now we've had Tony Colish on the cube for how we're talking about support services in particular. Absolutely. He runs that business for you. How have support services changed in the last several years? Yeah, it's a great question. And we really have this notion of support anytime, anywhere and any way the customer wants to consume it, right? So this is really part of that growing capability that we're building worldwide. Whether the customer wants to come in by phone, which by the way is now less than 50% and getting much, much less over time. Folks want to come in off the web. They want to come in off their mobile devices. They want to utilize a chat. They want to actually collaborate with other customers to actually solve problems and innovate solutions. So it's really this notion of any way, any time that a customer wants to come and interact with us, we want to be able to supply that capability to them. And so this notion of anytime, anywhere, any access method is really increasingly take hold. And this is now the mantra of Tony and his team. It's interesting, I mean, I'm older. I like being on the phone, but I think young people, like you say, want to chat. They want to use email. I don't know, do your kids call you anymore? Mine just texts me. Right, they text me. That's the way, if you want to get a hold of your kids, you text them. That's exactly right. Now, another one of your managers that we've had on theCUBE is Tom Roloff. Absolutely. And people used to think of EMC as really supporting disk drives to 10, 20 years ago. Clearly in talking to folks like Tom, that's changing. I almost see it as the tip of the spear as consulting. You're having a lot more CIO interactions. Talk about how EMC global services has changed in the last five or seven years. Tremendously. You know, we talked about Tony and his team and really first and foremost is delivering the industry's best TCE. And you know, job one for us is always take care of our customers, deliver that best customer experience. And we continue to get accolades for that and our acknowledge as an industry leader there. But to your point, we really have evolved over the years to provide the full gamut of capability that our customers are looking for. So Tom, as you know, runs our consulting business. So we provide a set of advisory and consulting services to help the strategy piece up front, help customers assess their environment, understand their business requirements, their challenges, their objectives, their aspirations, and then translate that into a roadmap. What steps do we need to take on the journey to cloud? Steps along virtualization, big data, trust, security. So we've built a whole series of advisory services. Then of course we have ML, crack hour in her business, the implementation business, but it also includes a managed services business and a residency business. So the way to really think about this is EMC global services now really provides that full life cycle of services to a customer. From advisory services to implementation, operations, whether it's managed or through residency, and then the great service and support. Another thing you're going to be seeing increasingly is then the ability to not only for us to do this directly, but with and through partners. So we're really enabling our partner ecosystem to deliver this value to customers as well. All right, let's talk about that because Joe, I listened to the calls and followed EMC for a number of years and you and Joe have always said we're not going to compete with our partners. That's right. But that sounds good, but it's not an easy thing to do. Look, in reality it's always a fine line. Yeah, so talk about that fine line, Matt. No problem competing with IBM and HP, right? Of course not. Go hard after them. But you've got a number of other services partners. Where do they pick up and where do you leave off? You know, it's a great question and I always say water finds its own level. We are first and foremost a technology company. I say that as the head of services. Joe and the rest of the leadership say that as well. Services to us is an enabling capability helping our customers and our partners maximize the value out of the use that they get from our technology. That is what our services offerings are all about. Some customers want to have that capability directly. Others want to work with a set of key partners. And what we're seeing increasingly by the way is more and more partners want to rely on us for much of this infrastructure component and then they can add value above that. Applications, business process, workflow, delivering IT as a service. So water finds its own level. The best way that this works is where it meets with the customer. First of all, the customer chooses number one and then our account teams work directly with the customer and the partner ecosystem to do what's best. There is not enough total capacity to help customers deliver cloud, virtualization, big data, trust and security. And so working together and collaboratively is the best way. There's a situation where there's more demand and supply that's plenty to go around for you in the ecosystem. And okay, now take VCE for example. And when VCE was launched, you were heavily involved in that. And communicated it, I know, to the analyst community. And now VCE has really become a product. It brings a lot of services along with it. And talk a little bit about that transformation. And same thing happens there. Now here's a case where we've said, look, customers, some customers want to continue to buy Alucard and they'll either integrate themselves, they'll have EMC integrate, they'll have a partner integrate. Others have said, you know, a converged infrastructure offering is the best. Let's buy it prefix. And so the recipe is already done. And in fact, it's already been baked. And so we deliver now this product called the VBlock, the converged infrastructure. It is taken off phenomenally. And to your point, the services, again, there are strategic upfront advisory services in many cases that are necessary with the customer. Certainly implementation services and support services. All VCE absolutely works with parents and partners. They've got enabling capability themselves, but then it's the customer choice. But a key thing we have done is enabled VCE to deliver that seamless support. They are that one throat to choke. Anytime there's an issue or a challenge with a VBlock installation, customer calls VCE, they handle that case, even as they come back to the parents and they'll work with many of the support centers that we've just talked about here today. We just did a study in Wikibon just looking at the converged opportunity and it's enormous. And it's like a $400 billion TAM, I mean it's huge. And the interesting thing to us was while VCE is doing well, there aren't a lot of pre-engineered solutions out there. There's you guys, there's Oracle Exadata and everybody else is really more reference architectures. But what we found is the reference architecture to your earlier point about some partners want to do it themselves, the reference architecture business is enormous. And so talk about that a little bit. How do you see that shaping out and what does it mean for services? Yeah, it's very interesting. We actually started life in VCE as a reference architecture and found that customers said, you know, that's odd and interesting but it's still a lot of work. So more and more customers did want that pre-engineered integrated product. But to your point, what we're now seeing, especially in the mid-market and lower end, both customers and partners want a bit more flexibility. The great thing about Vblock is you can have it in any color you want as long as it's black, right? And you get the benefits associated with that because it is engineered, it is integrated, it does work in the use cases we've tested and it's supportable as a product. But more and more customers and use cases demand a bit more flexibility. So we do see the need for reference architectures as well. You will see EMC play in that space even bigger than we already have. We have our EMC proven solutions that we work with today but we're going to work with our partner ecosystem on developing even more broad based reference architectures and then the services need to go along with that. And again, it's going to be about us enabling our partners with the reference architecture and those enabling services. The interesting thing to me about the whole VCE initiative is it really drives VMware and further into the ecosystem. And it's a play that EMC has on the server business because you don't directly compete. We don't participate in the value chain of the server but we do through VMware to your point. And there are more virtual servers now than physical servers and that drags along storage, it drags along partner revenue for guys like Cisco and it obviously drags along services. Okay, so let's talk about a little bit about, I want to come back to the Utah facility. So this week you're out there, you got the governor coming in. We do on Wednesday and we have a big, you must be excited about that. Brand opening celebration, state and local officials including the governor, absolutely. And the local employers will be there. Absolutely, we're going to do, we have a whole sequence of events. We have town hall meetings, we have customer events, partner activity and then the actual grand opening event with the governor and local officials will be Wednesday morning. Now, how will you measure the success of an initiative like this? What are the kinds of things you look at? Well, we really have a whole set of KPIs as you would expect, right? So in terms of the productivity, the service levels, both transactional and loyalty surveys that we do. At the end of the day, it's all about the voice of the customer, though. Did the customer get what they paid for? Did they get what they deserve? And did we meet and or exceed the expectations of the customer? And we've been in operation now for a couple of months and the talent that we've seen, the energy, the passion and all of the KPIs that we're already measuring are way ahead of schedule. So we're very, very excited about the start of Utah. So my last question, Howard, is let's look ahead to the future. Services has changed so much. Now you've got cloud, big data, transformation, big theme at EMC World Trust is another theme. How do you see services changing in the next five to 10 years? Well, we're going to continue to evolve in the set of offerings that we provide to the marketplace. Our portfolio will continue to grow. Our capability and capacity will continue to grow. One of the things that we are working on, in fact, this year is frankly simplifying that interface to the customer and even to the EMC field because go back to the conversation. You know, we were one thing five or seven years ago today, a very broad and rich portfolio of services throughout that life cycle. So for us, we want to simplify and in fact amplify the capability that we bring to the customer. And we want to do that not only directly but through the partner ecosystem. So look for, especially in 2012, simplifying and amplifying the capabilities we bring to the marketplace and doing more enablement with and through partners. So services is where the rubber meets the road. When you talk to customers, you ask them why they buy product, price, it all comes down to at least half of the value comes down to services. This guy's team makes it happen. Howard, thanks very much for spending some time with us and good luck with the launch and the rest of the year. Thanks, good catching up with you. Take care.