 From Las Vegas, it's theCUBE. Covering VMworld 2018. Brought to you by VMware and its ecosystem partners. Hello everyone, welcome back to theCUBE's live coverage, day three of three days of coverage. VMworld 2018 here in Las Vegas. CUBE, Wall-to-wall covers 94 interviews, two sets, our ninth year covering VMworld. I'm John Furrier, my co-host Stu Miniman. On this segment, our next guest is Milan Desai, who's the Vice President and General Manager of Cloud Services at VMware. Formally driving the NSX business, been there for multiple years, eight years. Great to see you, thanks for coming on theCUBE. Pleasure to be here. So you've seen the evolution, you've been there, you've been in the boat. NSX on a good path, doing really well. Cloud services, very clear visibility on what strategy is, private and public, hybrid, multi-cloud, validated by the leader, AWS and Andy Jassy, again for the second year. So pretty clear visibility at least on what the landscape looks like. Multiple clouds, software driving all the value. What's the cloud services piece that you're running now? Take a minute to explain what the landscape looks like, what's your charter, what are you trying to do and what's happening with news and announcements? Sure, so about two years back, we started on this journey around cloud services. And the premise was that, increasingly, there are two trends that are taking place, which is SaaS delivered experiences for on-prem. So how can we deliver SaaS experiences on-prem as well as the partnership with AWS for VMware Cloud on AWS? So the two things started coming together, both in terms of a product opportunity, which is VMware Cloud on AWS, but overall, delivering our capabilities as SaaS, both hybrid, as well as in the public cloud. So cloud services is a portfolio that delivers VMware services from management to security to operations as SaaS services to the private cloud as well as to the public cloud. Tom Korn, the Senior Vice President General of Security Props, was just on theCUBE today as well before you came on. He said, I asked him for a prediction and I'll ask you at the end too for a 2019 prediction. But he said, I'd see the conversation starting to be security as a service someday. And it was kind of like connecting the dots but that proves the point. It's a SaaS business model. The services need to be consumable and scalable. This is a key design criteria and a product guiding principle, right, for you guys? Yeah, so increasingly, SaaS makes it easy. The value benefits on that is I don't need to operate. It just works and I can get the value out of what we are delivering. And that's really what's driving the adoption of SaaS. It's easy to use. It gets you to outcomes quicker and I don't need to worry about the management elements of that. And so whether it's, you take our updates to cloud management, we announced cloud assembly, service broker and code stream, all delivered as SaaS to our hybrid infrastructure as well as if you want to deploy workloads in AWS or Azure, same thing. App defense, Tom's product is delivered as a SaaS service. VMC on AWS is a managed SaaS service. So you're seeing that come together as VM where the idea is, can we bring that experience on-prem as well as in the hybrid cloud? Yeah, Milan, it's a really interesting topic because often what gets lost when we're talking about multi-cloud is what really matters is applications and the data that sits on top of it. Maybe walk through a little bit. You know, my on-premises versus my SaaS-ified stuff versus the cloud native in PKS. How much of the business is driven from all of these pieces? So the majority of our business right now is on-premise software, where customers are building and operating the infrastructure with our software. Now the first evolution into SaaS was actually with our service providers who were using the subscription model to deliver VMware as a service to their end customers. And then the second iteration of that is VMware cloud on AWS, which is growing really well, both in terms of adoption as well as number of customers. And now you're seeing the next evolution. So I would say from a number standpoint, you know, it's low, but in terms of number of customers adopting it, that number is high. So whether it's cloud operations with Wavefront or the whole automation suite that was launched, app defense, you're starting to see the shift to SaaS, but I would say the majority of our customers are on on-prem software with VMware Cloud Foundation, which includes NSX, and our V-realized management portfolio, which has been driving the majority of revenue. I got to ask you about NSX relative to the cloud services because one of the things we've been pontificating and analyzing is how multi-cloud is really going to work. And we always try to compare and contrast to networking because Stu and I love networking and storage and some of the infrastructure stuff. But you know, if you go back into the evolution of TCP IP and what that did for the industry, and Gelsinger loves to talk about this too, is NSX the kind of enabler that TCP IP was, TCP and then you had IP create a lot of value in internet working? What does the customer challenge look like when you're doing multi-cloud? It's not trivial, it's hard to do. Is there a interoperability framework and is it NSX? What could that be? Great question. I think, you know, as we go from private to public, to the edge, the virtual cloud network is what connects it all together. And so, definitely from a, within the data center, with now the fellow cloud acquisition, the WAN, and then layering it with analytics and observability with we realize network inside the portfolio of NSX allows you to connect these disparate data islands and operate very seamlessly in this hybrid cloud world. Now the same construct applies when you go native public cloud where you can connect into AWS or an Azure and that's where again the fellow cloud acquisition alongside how NSX is extending its security policy into AWS and Azure so that you can get the same security posture on-prem at the edge in VMC on AWS with our VCPP providers as well as in native AWS and native Azure. So definitely NSX is that connective tissue, which, you know, that's what we call it, the virtual cloud network, connects the hybrid cloud to the multi-cloud. Seamlessly. Seamlessly. Yeah, one of the feedbacks I get from users is, you know, multi-cloud is challenging. There's that big elephant, how do I get my arms around all the pieces, where my data live, maybe give us the update there. And I did have a chat with Joe Concello on theCUBE yesterday. So if cloud health technologies fits into that overall cloud management piece, I'm sure it does. And you can give a little bit of guidance. I'd like to understand how that fits. Yeah, so, you know, we talked a lot about SaaS and delivering VMware services as SaaS to vSphere customers. But there is this other world where people are going native AWS, native Azure, native GCP. And the interesting thing I tell folks is it's very easy to consume cloud, but as you start consuming it, you start dealing with tens of thousands of objects across multiple projects, hundreds of projects across thousands of users. And when you start looking at the problem statement, same things, visibility, lack of visibility, resource management, you tend to over provision to in the cloud, right? But now you're paying by the drip. So there's a definite impact to the bottom line. End-to-end observability. And then configuration compliance. Think about this. You're operating a 10X in terms of changes. The chances of making a configuration mistake, like leaving an S3 bucket open, are quite high. We've seen examples of that too. Exactly. Many as CIO have been fired because of that issue. So what we've been seeing with our customers is this has become a data problem, right? And so the acquisition of cloud health allows us to essentially provide a platform that has that data and then deliver to our customers in the native cloud. Visibility. I say cost management. So using reserved instances over on demand. Resource management. Hey, you're over provisioned on your elastic block storage. We can reduce the storage capacity and save money. I can optimize RDS better. SQL rightsizing in Azure. So resource management becomes very interesting. Returns on a typical customer with cloud health are upwards of 60%. When you take that into consideration with real-time security configuration, secure state was just announced in beta this week. So real-time security configuration, when that mistake happens with an S3 bucket being open, sub 10 seconds, we will notify the user that there's a misconfiguration in the cloud. Please go fix it. I'm curious, one of the other challenges is when I have, especially using lots of different SaaS providers, public cloud, private cloud, data protection is a big challenge there. I know VMware has a lot of ecosystem partners, one of the hottest things over the last couple of years. Is that primarily an ecosystem play? How does VMware position there? Yeah, so in the hybrid cloud world, like you said, we have a very strong ecosystem, multiple vendors here exhibiting. There will be some default elements that we bring into vSAN to help kind of the basics of data backup and management. But we will definitely continue to partner with the ecosystem when it comes to an aggregate stack of data management. But there will be pockets of just simple backup capabilities that you'll start seeing in vSAN. I think we announced the beta of that this week. Tell about your organization, you're the general manager, do you have a product loss, profit loss responsibility? So do you have revenue? Yes. So talk about the team, how you guys are set up, how big is the team? What's the focus? So we, our team, so there's two elements to my team. One is my team drives cloud services across VMware. So there are folks developing services themselves. The size of the team is now 70 strong across product, marketing, and engineering. And then I also work with my counterparts like Mark Lawmire, Ajay Singh, who are building services on our common platform. And so in aggregate to the customer, they come to cloud.vmware.com, they federate their enterprise identity, they log in, they see a catalog, it's like a Netflix-like catalog. You can subscribe to it, you get a common experience in terms of billing, and essentially start using the services. So it's not only what my team builds, but in aggregate what VMware is building and offering to our end users. And what go-to-market do you have, which products are you doing the go-to-market for? So it's all of our SaaS-based cloud services. We collectively drive the go-to-market for that as a team, working with our corporate marketing team. So that would be a combination of VMware Cloud on AWS, App Defense, now Secure State, Wavefront, and very soon Cloud Health. Yeah, a lot of pressure. The SaaS products there, do they live in the AWS marketplace, IBM, Docker, what kind of, where can they get all of them? So today you go to cloud.vmware.com and subscribe to them. Certain offers are starting to get into like AWS marketplace. So Cloud Health is actually in the AWS marketplace, and we're looking at Wavefront, which is a hidden jewel in our portfolio, is also, you're thinking about how we can get it into the respective marketplaces of Azure, GCP, and others. But today, if you want to access any of these services, you simply go and trial it by just going to our website and starting a trial. So they're giving you all the new stuff, make it happen, AWS VMware and AWS, vice versa, RDS on-premises, you're doing that as well? Yes, so RDS on vSphere, I mean, it's been, since the announced, we've had phenomenal conversations over here. Yeah. It's exciting, I think people don't understand how big this is. John, I had a phenomenal conversation with Yen Bing and Christos from the storage and availability business use, really broke down how all of that worked in detail. The customer interest is high. Someone asked me, why RDS? And they said, it's such a hard problem. And that was my point exactly. There is such a pain when it comes to managing databases. And just like everything else, we started off the conversation, customers want to manage service. They don't want to deal with the intricacies of managing databases. They just want the outcomes from how they access databases. And so Amazon has solved it very elegantly with RDS. It's one of their most popular services. Why not bring it on-prem? And so that's been a great engineering partnership and I'm really excited to bring it to market shortly. Well, we're looking forward to keeping in touch. We want to actually follow up with you on that. It's a story we're going to be following. It's certainly developing. It's big news, we love it. Thanks for coming on and spending the time. I got to get you to put a prediction out there for 2019. What do you see happening in 2019 that we're going to be talking about next year at VMworld? Personal prediction could be a VMware prediction. You've seen a lot of what's going on with NSX. You see what's going on in the big picture holistically. What is the prediction for 2019? It might be a boring prediction, but I fundamentally believe this notion of hybrid being bi-directional in nature. I think we'll see more of that. Even Google announced GKE on vSphere as an example. So I think you'll see more of that come through and it won't be a one-way destination conversation that we keep having. And you will see VMware truly be a multi-cloud company. It won't matter if you're deploying an application in the native cloud or on a vSphere-based cloud. We will help the customer where they land the application. My firm belief is next year when we are here, we'll be talking about stories about how we are helping scale customers in Azure and AWS and GCP on one end and about how we've brought cloud on-prem with services like RDS. Final question I want to put you in the spot. What do you think is the biggest disruptive enabler for the next 10 years in this bi-directional, multi-cloud world? Can you point to one thing that says that's going to be the disruptive enabler for the next 10 to 20 years? Is there something out that you can point to, trend, technology, standard? So the way I think about the world is a little bit differently in terms of, I truly believe that we are getting inundated by data. I'm not going to think about the data that you store in terms of running your business, but in terms of the metadata that you run your operations in your infrastructure with. And I believe that the layer that will control that portion, the metadata of infrastructure and applications, we have not even begun to understand where that goes. And then you apply AI and ML techniques to that. The idea of, you know, you will throw a term around here is self-driving data centers and self-optimizing applications. I get really excited, but it all begins with that data layer. And we are starting to put the beginning signs with cloud health, our private cloud assets to start that process. I'm really excited about how AI ML meets that data layer to achieve those outcomes. It automates IT operations, sounds like. Automation is coming. No, thanks for coming on. Long to size, the Vice President General Manager of VMware's cloud services, the hottest area. It's emerging, it's got a lot of attention. Will you be following it? Of course, on SiliconANGLE and Wikibon and theCUBE. We're day three coverage here in the broadcast booth in Las Vegas in the VM Village. I'm John Furrier with Stu Miniman. Stay with us for more after this short break.