 Live from Las Vegas, Nevada, it's the CUBE at HP Discover 2014, brought to you by HP. Hello everyone, welcome to SiliconANGLE, Wikibon's the CUBE, our flagship program. We go out to the events, extract the signal from the noise. We're here live in Las Vegas, Nevada for HP Discover 2014, all the ground-making action in IT, cloud, mobile, social. I'm John Furrier, the founder of SiliconANGLE, joined by my co-host Dave Vellante, co-founder and chief analyst at Wikibon.org. Our next guest is Seamus Dunn, VP of Technology, serves as support at ULAPacker. Welcome back to the CUBE you've been on before. Yes, good to be back. So, tell us what's going on. I'll see HP is in the center of all the action, all across the board. Big player in the industry, the business is changing significantly. And one of the most shocking disruptions that's really rocking the world is around cloud and how cloud is shoehorning into the processes immediately within large enterprises and businesses. Not replacing anything, so to speak, it's a shift, coexistence, a lot of complicated kind of mechanics, but in the day that's the number one demand point for customers. So, give us your take on that. Where does that cloud fit in that disruption and execution? Well, it's good to be back first of all, thank you. Well, our point of view on HP is it's a hybrid world, it's hybrid IT. We've already got a strong position in a private cloud on-premise, and I can mention a few things we're doing there, but with the announcements of HP Helion and the various aspects of that, we've also kind of built some service arrangements that go beyond your on-premise IT. And with things like flexible capacity, data center care, we're also adding in things like hybrid cloud support. So, we can take IT deployments that are on your premise, build kind of flexible arrangements around them, like with flexible capacity, give you kind of the known enterprise grade support, help for deployment, and support you at the life cycle. And then as you move workloads out externally, put a support arrangement around that whole thing that's similar to on-premise with HP Helion, HP cloud system. And then with various platforms externally, whatever service providers you want to use externally, kind of make that a continuum of support arrangement. So, we're building kind of people, skills, tools, some instrumentation around it to monitor, and so on. So, I've got to ask you the open source question, one of the things we discussed heavily at the OpenStack Summit and recently at the CUBE was at the Duke Summit in Silicon Valley is the role of open source. How does that play into your team and then also your customers? And what does that change, if anything, the game? What's been different about how you guys use that to deliver the solutions? Well, I hope hopefully you'll get to speak to some of our HP Helion business unit guys this week. But our whole point of view is open industry standards and embracing open source. So, you know that we're one of the biggest contributors to the OpenStack community. And HP Helion is built around the whole OS model. And we've actually, as HP, are building a distribution for that. We're building a support model around that as well. And developing our skills with our business unit as they deploy Helion. So, open source is kind of supporting open source and building standards around open source. It's kind of in our DNA. It's kind of a value proposition. I don't think there's anything new or changing that over a long period of time. So, I wonder if we're going to ask you a question about the flexible capacity. So, how does that work? So, you install capacity. So, you over provision. Yeah. Essentially. Sure. And then the customer has a key and can turn it on as they like. Is that right? The software key? Yeah. It's a little more than that. I mean, so first of all, the thing about flexible capacity. So, if you think about what CIOs, CXOs have to face, you know, they have demands for like speed, flexibility, deploy true DevOps into production very quickly. And you know, the demand for their business is usually the public cloud does all that. Why aren't you using it? So, what really with flexible capacity, what we're doing is putting an arrangement around your on-premise infrastructure, probably built as a private cloud and giving you the public cloud dynamics and economics of flexibility, agility, elasticity of your pricing, making it less of a big capital investment for you. And then to your question, we're putting not just the economics around it, then we'll change your whole purchasing requirements. So we'll deploy capital that we'll retain title to, you use and pay for it as you use, and then as we monitor that, we'll place more capacity on your site for you, kind of managing your capacity so you don't have to make big jumps of capacity. So your customer books that as an operating expense, is that right? Yeah, typically. You own the asset. Yes. HP owns the asset. Yep. And you don't necessarily, you're saying, over provision. You might. We might. Yeah. It depends. You might monitor your usage and so on then. So you're essentially replicating the cloud model in a sort of a brute force way, but it's good, right? Because the customer doesn't really see the difference. Is that true? That's exactly what we're trying to do. We're trying to give you those public cloud economics and dynamics, but with all the benefits of on-premise, with your control, with your security, with your latency. So you're getting on-premise ID with some of the speed, elasticity, and pricing models of going to a public cloud. How popular is that sort of flexible capacity option? Incredibly. I mean, you'd be really surprised. We really built it out first with the service provider community. They were scaling out and building so much that it was very attractive to, especially in mid-tier. It's kind of, we started a lot there. We went to like larger service providers, but now we're expanding the capabilities of it, the metering, the tooling, billing like at a VM level, integrating software and the services into the model. So now enterprises are starting to love it. It's a snowball effect. I mean, as it's catching hold, it's a longer sales cycle than typically people are used to. So there's a little bit of explaining and selling and a lot of the backups and the infrastructure you've got to put in place is complex at the back end where we kind of manage that and keep it from the customers. But as people are starting to understand what it is, it's a snowball effect. And it's incredibly popular. And is that a bespoke service that you charge for, or do you get paid as the customer deploys the capacity? In other words, is there a setup fee? Is there, you know, how do I engage? No. What we will do typically, I mean, with some of the arrangements we customize for customers' needs. But, you know, typically, we'll use our balance sheet to put the infrastructure, the software, and the deployment services, the consulting, if it's required, the support. And we'll put that into a monthly bill. I mean, you pay each month. There's no big setup fee. That's all aggregated into, you know, an arrangement over a period of time. Now how do you deal with Amazon and Google? They cut their prices like every three minutes. Yeah. So how do you deal with that? Is that built in? Is there forward pricing built into the scenario? Well, we'll make an arrangement, you know, for a certain part of the infrastructure. And, you know, we'll price it and make a contract like we would normally do. The, you know, then, as you want to maybe scale out that arrangement or build it, you know, we'll come to another, you know, another pricing agreement. But, you know, we do monitor what, you know, some competitors are doing in their public cloud and what they bill and how they bill, how they meter it. You know, and there's a lot of apples and oranges comparisons in this situation. But, you know, what we would say is that there's only a small premium to pay for a flexible capacity arrangement for the benefit of being on-premise and having it private and with the security, the latency and all the other benefits you get from on-premise. Well, we will do a comparison, but it's a modest enough premium to pay for. But essentially, customers are renting and renting is more flexible, but it should be more expensive. It's more expensive to rent a car than it is to own a car, unless you just need it for one day. So, you need flexible capacity, it makes sense, right? You're absolutely right. I think where the analogy there breaks down a little bit is that we know that infrastructure, we know the software, we now have to manage it. So, in the end, you'd also get not just all the benefits of the flexible capacity arrangements, but we'll optimize it. We understand it, we know it, we look after it, we optimize it, we make sure it's up to date, it's provisioned, so in the end, the total cost structure is actually quite good. And that's bundled into the service cost. That's the deal. I'm paying one bill, one line item every month, and I can add to it, obviously, if I need more. Exactly. That's correct. I mean, it's a bill and it's based on your usage, it's metered. That's good. That's very helpful. Thanks for helping us unpack that. I have another question now. Sort of switch the subject to hybrid IT. If I'm a customer and I got my on-premise and I'm happy, I'm putting there's infrastructure, I'm trying to replicate the simplicity of the public cloud, and then over here I got some DevOps guys that are doing Amazon or Google or whatever, Azure. How is that different than what you're calling hybrid IT? Well, I don't know that it is different. I think we got to do a little more and we're planning in some of our arrangements as we build out our infrastructure and our tools and instrumentation. We're building an approach that's a little more friendly and suitable to DevOps, to DevOps people, to speed up that development cycle and move into production. But I don't think it's particularly different. I'm surprised that your answer, though, because I would have thought you had said, well, the security policy that you have for your on-premise and if you're going with something like Helion will be more aligned. Is that true or is that not true? Well, it will certainly be more aligned. But I think the answer to that question is it depends on the customer. I think what we're doing with HP Helion is building up a set of partners, too. So it's not just an on-premise proposition with an open-stack distribution on top of cloud system. We're also looking at a set of who are cloud agile partners today. If they deploy the Helion platform, we'll then have an ecosystem that HP can broker around that will move workloads across that ecosystem, but on and off your premises, but on a consistent platform. The security benefits improve, but at the end of the day, it's still workloads that are moving in and out of your network. Well, let me ask you a question differently. So when you go into an account on-premise and you negotiate a security approach, policy, standard, SLA, let's call it, security SLA. You obviously have to commit to that. You're doing a lot of work to live up to that. You're HP, you make a promise, you're going to stick to it. What happens oftentimes when we talk to customers is they say, we're happy with that. And then our provider might do a partnership with a public cloud provider, and then we have to negotiate with a public cloud provider to get the security SLA. And it's different than what we just spent six months agreeing on. Can you solve that problem? Well, I mean, we can certainly indemnify a bit what we do. The proposition that we're putting out as a technology services business is that we will take responsibility for that SLA on-premise, off-premise, with whatever service provider you're using in our service support arrangement. So we can solve a third party's decision, but we can indemnify it on our behalf, and we might take that on with some customers. Well, what if I use the HP cloud? Can that solve the problem? Well, definitely. Right. That's a difference. So that's what I was asking. If I come to you as a customer and say, OK, I got on-premise, I love it, and I want to use Helion. Helion. Helion. I say Helion. Everybody else says Helion. Will my security SLA be comparable, substantially identical? Identical? Put on and off-premise? Yes. I think it'd be substantially identical. Let me clarify one thing about Helion. So I think when you're saying Helion, Helion is a brand for all of our cloud products. So I think when you say Helion, you're thinking about our public cloud approach. Helion is also what we will call our open-stack distributions, which also helps you with your on-premise cloud solution. So what we are really saying the benefit of an approach with Helion, which we're building on with services, is that you have a common platform on-premise with cloud system using HP Helion's open-stack distribution. And then when you go to our public cloud, you've got the very same platform. So your question on that was in security, but for lots of reasons, using that common platform gives you a lot of benefits about your workload development, what DevOps have to do, what you deploy in production. And further, we're building an ecosystem that's other cloud providers that will also use the same platform as this. So Helion is a brand that describes our platform for cloud on and off-premise and with partners. But essentially that is the value proposition, that the on-prem and the off-prem is substantially identical in terms of its SLA security, compliance, audit, et cetera. That's exactly right. And I think there's more we can do and build on that now that we've got that platform and it's being invested in so much. And as that's adopted, which we expected to be substantially over the coming year, there's a lot in services that we're going to build on top of that. And that's where my comment earlier on DevOps is, as a DevOps platform is built there, that's going to be very attractive to people to speed up their flexibility of development into production. And yeah, so we're going to build the service arrangements around that. Thanks for coming on theCUBE. Really appreciate it. I want to ask you the final question. Share the folks out there, in your own words, the future of services. I mean, because this is what you're really talking about is this new transition is a shift. It's happening rapidly. Just quickly share what is the next generation future of technology and technology services? Well, I think we know that the future in IT is a hybrid world, speed, flexibility. It's just going to be taken for granted. Our services historically have been really about looking after your infrastructure, your products, keeping them up and running. So it'll still be about that, but now it's going to be about a partner who not just deploys your infrastructure, it helps you manage it. But here it's going to be about helping you solve your business problems. There'll be a disaggregation of just the hardware support and the infrastructure and software support to more solving business problems with you. That's the essential change for us. So the support arrangements are going to be at a data center level, body on your premises and broadly off premises as well. James Dunn, thanks for coming on theCUBE. Really appreciate seeing you again, sharing with you your expertise and insights into what's happening in the trenches. A lot of change, good change. This is theCUBE. We're extracting that data, sharing that with you. Right back after this short break.