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In this pivotal episode of "Expedient: The Podcast," we delve into the monumental changes rippling through the tech landscape following Broadcom's acquisition of VMware. Bringing together industry leaders and experts at the heart of this transformation, we offer a comprehensive analysis of how this shift will redefine cloud computing, data center dynamics, and cybersecurity. This episode serves as an essential guide for IT professionals and tech enthusiasts aiming to navigate the evolving digital ecosystem, providing deep insights into the strategic implications of the acquisition and its impact on the future of digital infrastructure. Join us for an enlightening exploration of the latest advancements and challenges in the tech world, all presented with the insightful, forward-thinking perspective Expedient is celebrated for. This isn't just another podcast episode; it's an in-depth look into the technologies and strategic shifts propelling us into a new era of digital innovation.
Creators & Guests
Host
AJ Kuftic
AJ Kuftic is Principal Product Strategist for Expedient. AJ has over 15 years of experience as a customer and partner helping end users build solutions that are sustainable and easy to manage. Having knowledge across various silos of IT infrastructure gives AJ a unique perspective of the pain points and what customers are looking to improve. When AJ isn’t thinking about the next big thing, he spends his time with his wife and 2 children trying to bake the perfect loaf of bread.
What is Expedient: The Podcast?
"Expedient: The Podcast" is your gateway to the inner workings of technology and innovation, presented with unparalleled clarity and expertise. Each episode is an invitation to join the luminaries of Expedient along with special guests from the forefront of the tech industry. We delve into the latest advancements in cloud computing, the evolution of data centers, cybersecurity trends, and groundbreaking developments in AI and machine learning. This podcast strips away the complexity of the technology landscape, offering listeners an exclusive look at the real stories of challenge and triumph, innovation and leadership, that are driving our digital future.
But we don't just stop at presenting groundbreaking ideas; "Expedient: The Podcast" is about building a community. It's for the IT professionals charting their course through the ever-changing cloud environment, and for the tech aficionados keen on decoding the future of digital infrastructure. Our episodes provide the essential insights and perspectives to keep you at the forefront of a world in constant transformation.
Tune in to "Expedient: The Podcast" for a deep dive into the technologies and ideas propelling us towards tomorrow. Experience the journey through the eyes and voices of those shaping our technological landscape, all presented with the authenticity, insight, and forward-thinking Expedient is celebrated for. This is not just a podcast; it's your insider's look into the technologies transforming our lives.
00:00:05:01 - 00:00:24:24
AJ Kuftic
Hello everyone and welcome to today's conversation about Broadcom and VMware where we're going to try to answer all of your questions. Every one of them about Broadcom and VMware. And the changes that are happening and how it affects service providers in you as a client. With me today I have our CEO Bryan Smith. I have our COO John Rosenson.
00:00:24:27 - 00:00:45:05
AJ Kuftic
And we're going to kind of walk through, where we see the program going and what changes we've seen and how we see expedient being able to fit into the new space. So John, kind of walk me through the new expedient partnership that we have with Broadcom, because there was a bunch of changes that happened. And where do we fit into that program now?
00:00:45:07 - 00:01:17:12
Jon Rosenson
Yeah, it's a it's a it's a very new program. We just became a pinnacle partner in Broadcom's Advantage program. So as you know, VMware Moore's program was ended at the end of last year, and we became part of this new program that gives us new access that we didn't have under the prior program. two key important elements of the new program are that we get the opportunity to be one of only 12 partners in the United States that has access to the highest levels of discounts that Broadcom offers.
00:01:17:12 - 00:01:44:02
Jon Rosenson
That allows us to extend the best price possible to our clients within our solutions, and it gives us access to the accounts that the VMware, account managers are using and managing to provide our solutions to clients who weren't necessarily aware of service provider offerings in the past, which enabled us to offer that managed services on top of the vSphere, VMware Cloud Foundation software.
00:01:44:05 - 00:02:10:06
AJ Kuftic
And that sort of partnership is very limited to obviously, just the 12 you said. But I think overall that simplification of the number of partners, there was thousands before it. It's much, much smaller now. Do we see that being something that, clients start to turn to because their existing partnerships might be changing or we fit in, in the better spaces with the VMware sellers?
00:02:10:09 - 00:02:37:02
Jon Rosenson
Absolutely. It's a big differentiator for this short list of pinnacle partners like expedient. We are well positioned inside the program to provide support to existing VMware clients who are looking for solutions to solve their cost and their operating models. Simplification is a great word. That's the word that Broadcom uses. So they've simplified the product offerings. They have moved from hundreds of SKUs to single digit numbers of SKUs.
00:02:37:02 - 00:02:56:09
Jon Rosenson
Yeah. that makes it a lot easier to understand what you're getting. That means you're getting more than you probably were using before. So how do you get value out of that? Well, you use a service provider like expedient that can provide a solution that leverages all of that technology, and you can do it at a cost structure that's going to be the best available in the market.
00:02:56:12 - 00:03:05:11
AJ Kuftic
And Bryan mentioned the that he just mentioned the simplification. Well, excuse how do we see that affecting existing VMware customers?
00:03:05:13 - 00:03:22:28
Bryan Smith
Sure. One of the big differences there is going to be the consumption of the different services that people can use, because previously they had to make lots of different decisions. And there were, you know, like John said, hundreds of SKUs, but thousands of individual components in there. You had to make decisions on what you were going to do and what you're going to leverage.
00:03:23:01 - 00:03:43:11
Bryan Smith
And in this now, there's really the one skew that we have with the VMware Cloud Foundation. And then all of those components with a few different add ons are in there. So you get that true cloud like experience, and you're making one decision for what your hypervisor is. And then you have all those other components that are pre engineered to work as one system.
00:03:43:13 - 00:04:05:29
AJ Kuftic
And we've seen in the past VMware has done the growth that they've had through a number of different acquisitions. NSX was nicer when they brought in some of the carbon black with security, in the horizon space, they had desk tone that they brought on for desktop as a service. So does this sort of change the way we that Broadcom sees VMware growing?
00:04:06:01 - 00:04:26:19
Bryan Smith
It's really about their original goal was to have one unified experience in that cloud operating model for users. But each IT person really likes to build things. And so they would take their components, things that they knew, things that they were aware of and plug them in with other VMware technologies to have their own version of a cloud.
00:04:26:21 - 00:04:46:19
Bryan Smith
And, you know, by tying this all together, that's really what VMware vision was to start with. So by bundling everything together, it gives people one decision where they have access to everything. So now there's not a separate sale that you're doing inside your own business to say, well, I want to move from this networking technology to this other, and here's the implied cost.
00:04:46:27 - 00:04:51:28
Bryan Smith
It's actually all tied together, and it's about how you get the best utilization of all the capabilities.
00:04:52:04 - 00:05:11:13
AJ Kuftic
And John kind of alluded to that around getting the more getting the most value out of the platform. And I think that's really where we've seen and heard from clients and customers that there is a cost increase to this. does it seem like it's just the old number was this and now the new number is this, and it's a 1 to 1 thing.
00:05:11:13 - 00:05:14:15
AJ Kuftic
Or is there really a value shift that's happening there?
00:05:14:15 - 00:05:35:04
Bryan Smith
Sure. Well, there's a couple of different components that go with the cost change. You know, one of those is if you looked at all the previous services and bundled those together, the new cost is less than all those individually. But and not everybody was using all those services. Right. The other piece was you were buying a perpetual license previously and then paying a service fee for maintenance each year thereafter.
00:05:35:09 - 00:05:55:00
Bryan Smith
And this is changing to a subscription model, which really all software has been pivoting to. But then part of that is in the announcement from, Broadcom and VMware is that they're increasing their R&D spend by $1 billion. So they're taking that additional investment to make that one unified experience and tying it all together.
00:05:55:02 - 00:06:17:19
AJ Kuftic
And I think that kind of plays back into the individual businesses. For people who have not really seen the inside of VMware, they had individual business units. This was the networking and the networking and security business unit. This is the compute business unit. And they were all kind of not necessarily competing, but they were individual ized. And sometimes you could tell that they didn't talk to one another.
00:06:17:22 - 00:06:28:13
AJ Kuftic
But now unifying it under this is one overall VCs platform. Do we see that billion dollars effectively going to a simplified stack.
00:06:28:15 - 00:06:56:01
Bryan Smith
That's that's how they've described it, that they've taken away those different silos, that it's really about charging towards that one experience. And that's also why they really limited the pinnacle program to such a small set, you know, because they look for providers not just based on the sheer quantity of VMware licensing, but also the consumption of the different technologies, because their goal is for their clients is to have if they go to expedient or they go to another pinnacle partner, that they would have a similar experience.
00:06:56:01 - 00:07:17:15
Bryan Smith
As far as you know, what stack is being consumed, what technology is available so that their sales teams are comfortable referring clients into that cloud operating model in that manner. So, you know, our know how inside the business, you know, is going to be a significant differentiator versus if company had to build up knowledge on each of these individual components versus were deploying that at scale.
00:07:17:17 - 00:07:40:23
AJ Kuftic
And I think, John two, the sort of shift that we've seen, this isn't a new thing for us as experience. We've been building our enterprise cloud off of this software defined stack and helping clients optimize those costs. So how do we see clients coming on board to our platform, and how do we help them optimize in the new sort of model?
00:07:40:26 - 00:08:06:29
Jon Rosenson
Sure. We've we've been a VMware partner since 2006, and Bryan and I have been working together since before then. when we were managing, you know, bare metal, the opportunity for our clients is to take advantage of our scale. And as Bryan said, our know how. So we offer two forms of cloud. We offer a multi-tenant experience where clients share the expense and the cost of all of the components that make up that cloud platform, that BCF platform.
00:08:07:02 - 00:08:31:23
Jon Rosenson
We also offer private cloud. Now there are different needs and desires from clients to have a private experience versus a shared experience. And some of those include, needs for compliance and needs for performance. But we are able, because of our scale, to build the highest performance shared infrastructure possible. And as we say in our mission statement, we're a curator of enterprise technologies.
00:08:31:25 - 00:08:46:26
Jon Rosenson
So rather than an end user client having to have relationships with ten, 15, 20 vendors, they can have one relationship with expedient. And we put all of those technologies together in a solution that serves the needs that they have based upon their workloads.
00:08:47:02 - 00:09:09:29
AJ Kuftic
And I think that is something that a lot of organizations struggle with, of just vendor management. And how do I think this is also sort of the interesting part of in a lot of especially large organizations, there's individual teams that manage things is the networking team. This is the storage team. This is the compute team that simplifying this stack down.
00:09:10:01 - 00:09:20:00
AJ Kuftic
Do you see organizations potentially simplifying and going to more of a simplified organizational stack to be able to take advantage of all of these together?
00:09:20:03 - 00:09:21:18
Bryan Smith
I guess. How are you envisioning that?
00:09:21:20 - 00:09:27:29
AJ Kuftic
So instead of having a individual compute and storage and networking team having a like a cloud team.
00:09:28:02 - 00:09:45:03
Bryan Smith
That's really been in the goals people are trying to get to that cloud operating model so that they're not having all the silos of specialization, and they have people that are more focused honestly on their business and less on some of the technology. So it's and what are the things inside the technology stack that make an impact to your business and the service provider?
00:09:45:03 - 00:09:52:00
Bryan Smith
And it takes care of all the things that are keeping the lights on and making sure that you have 100% availability.
00:09:52:03 - 00:10:05:09
AJ Kuftic
And when they've shifted this bundle now for to be to be C.F., I'm sure that there are clients who are saying, I don't need all of that. Or is there another option? Is there other options other than just one big bundle?
00:10:05:11 - 00:10:25:00
Bryan Smith
So for, service providers, you know, DCF is really the only bundle, for, SMB business for small and medium business. You know, VMware does sell a VCF, license that's less expensive, but they are making some choices in there. So some of the big things that they are choosing not to leverage Automation's one of the biggest.
00:10:25:02 - 00:10:49:07
Bryan Smith
So if you did automation with VA and that's not available, or if you're doing software defined networking and micro segmentation inside NSX, that's not available. and also support hours are become limited. So, you know, you don't have the same 24 by seven support, that you would have, and that you've used previously. So it is really designed for the SMB business versus BCF is, you know, for that midsize business to enterprise.
00:10:49:09 - 00:11:14:02
AJ Kuftic
And I think that's, you know, those decision points are I think it kind of funnels it down to, okay, do I do I need these certain components or do I need this certain level of support when a client wants to come into expedient, you know, they're seeing this big shift from their perpetual licenses or subscription license. Does this open up any opportunities for them, John, to come over to us?
00:11:14:05 - 00:11:30:12
Jon Rosenson
Absolutely. So as a pinnacle partner, we have the ability to offer them flexible licensing to make that transition and that opportunity allows them to move to a managed services model and get a relationship with us as a service provider that can solve a lot of their business challenges and get them the outcome they're looking for.
00:11:30:15 - 00:11:33:14
AJ Kuftic
But does that allow them to bring their own license to.
00:11:33:14 - 00:11:51:20
Jon Rosenson
In fact, it does. If they have an LR, we will be able to work with them to use that until its end, and allow them to transition in a manner that's more predictable for them from not only a cost perspective, but their operating model, from a financial, recognition perspective.
00:11:51:27 - 00:12:20:16
Bryan Smith
Also, from a timing perspective, if they have an LR that's ending and they weren't able to do their full migration in that time, we could use our licensing back on their hardware as a pinnacle partner, to help with that transition, because one of the things in that pinnacle program is we have a committed license, just like an end user would, but we also have the ability to do a consumption based license so that we could, take additional licensing and put it on their hardware in a month, month fashion while they finish a transition.
00:12:20:19 - 00:12:36:06
Bryan Smith
But that same type of burstable license enables us to do services like disaster recovery as a service, where it becomes consumption based licensing, just like we've always done on Dr.. Right know versus if they're doing Docker internally, that's an expense that they would have 100% at all times.
00:12:36:09 - 00:13:03:19
AJ Kuftic
And I think that's a huge cost shift for a lot of organizations, because if you're running your own disaster recovery, you've got that full license stack running all the time, right? On a set of hardware that you hopefully never have to use. And now with a service provider like expedient, we're able to say, okay, well, we'll offer we have the ability for you to replicate over and failover when you need to, but you don't get hit with the huge charge every single month.
00:13:03:22 - 00:13:06:14
AJ Kuftic
So I think that could be a huge cost savings for them. Right?
00:13:06:17 - 00:13:24:02
Bryan Smith
Yeah. It can be a major cost mitigation factor right now, you know, because if they have their own licensing and they could continue licensing their production if they wanted to keep that in-house and do Docker build confidence, in a service provider. And then, you know, over time, they could, leverage and move production as well.
00:13:24:04 - 00:13:31:06
AJ Kuftic
So do we see that as being part a large part of our guidance for clients who want to transition into a service provider?
00:13:31:09 - 00:13:56:12
Jon Rosenson
Absolutely. For drives especially, I think given the cost changes that are happening with the, the bundles, we believe that the best option for clients for Dr.. Long term, from a cost perspective, first and foremost with this change, but also from an operating model long term, with the consistency that VMware is looking to Pinnacle Partners to provide the upgrades and patches and lifecycle management of the VCs stack.
00:13:56:15 - 00:14:29:27
AJ Kuftic
And I think that's I think that's where we really fit in, is beyond just that. You know, here's the licensing shifting, here's what's happened is, okay, now how do you go solve bigger problems. Exactly. Which is, I think been a lot of what we've focused on and tried to help clients with over the last 20 odd years. How do we see that going forward with, you know, this, this new model where clients want to, you know, engage a better level of support with experience and being able to come on to us as a service provider.
00:14:29:29 - 00:15:11:08
Jon Rosenson
So I'll answer that as I'm understanding you effectively. When clients use expedient, they can focus on their applications and ensuring the best experience for their clients based on the features in their applications and the software that they're operating on the platform. Because we're freeing them up by doing all of the lifecycle management, like I mentioned before, but also providing them the latest technology in a manner or a cadence that's going to allow them to manage their applications and the workloads in a in a in the best possible manner so that they're efficiently using the resources they're getting the most value out of it.
00:15:11:11 - 00:15:14:15
Jon Rosenson
And frankly, the outcomes that their clients demand from them.
00:15:14:17 - 00:15:20:12
AJ Kuftic
And is that does that help them figure out their future investments from there?
00:15:20:14 - 00:15:50:21
Bryan Smith
Yeah, I think there's a front end. Also, in addition to what John said, that experience always had a firm belief that if we give people easy access to high quality data, it gives them a better overall decision, you know, so, you know, we have tooling that we can provide to clients on the front end to evaluate their current environment, identify risk points, identify areas where they may have more resource provision than they need, where pinch points are, from a performance perspective so that we can get them right size, which, you know, during an onboarding process can have a significant impact to the investment that we're making.
00:15:50:25 - 00:15:58:06
Bryan Smith
In addition to at the different components. And then we look at that same type of information from an ongoing, data management.
00:15:58:09 - 00:16:07:24
Jon Rosenson
That's a really, really great point that that they get with the knowhow that our teams have. They really get a optimized experience for their entire, stack.
00:16:08:00 - 00:16:29:29
AJ Kuftic
And I think that that plays into the amount of licensing that they're not paying for and eliminating that overhead. And I think that's something that a lot of clients who are running their own workloads on premises today have a an amount of service, amount of resources that they are paying for that are just there for potential growth or failover.
00:16:30:01 - 00:16:33:18
AJ Kuftic
How do we, as expedient, help eliminate that overhead?
00:16:33:21 - 00:16:57:06
Bryan Smith
Sure. There's a couple different pieces that and that's part of the reason Broadcom is making the switch to you know that subscription model. in a service matter that we can grow in scale. And as the need of our client changes so that we can add resources and grow into that. So in aggregate we have a lot less overhead or unused capacity than if you look at a thousand companies that are running, inside the platform.
00:16:57:11 - 00:17:24:04
Bryan Smith
If they were each running individually, they have all those redundant hosts that are sitting there. They have to make decisions of, you know, how much capacity am I going to need in 3 to 5 years? And they buy hardware all at once for that, and they're paying for that unused capacity along the way. Where, you know, a core part of our business is that capacity management and, you know, making sure that we're adding things in licensing things appropriately so that, you know, we don't have extra waste in the system that you would have if you're running all this individual environments.
00:17:24:04 - 00:17:47:27
AJ Kuftic
So we so we're effectively combining optimizing the overhead and eliminating that as much as possible on the front end for production and then helping clients on the back end with Dr.. When they need to fail over with not having to pay for that overall. So I think that could be massive on both sides to save. Even when we see clients coming in with exceedingly large workloads or even if they were pretty efficient to start with.
00:17:48:03 - 00:18:00:08
Bryan Smith
Yeah, you take that and then Marriott with the we not just from VMware, but from other, companies have the ability to buy licensing in a different manner than an enterprise can and in many cases in that consumption component.
00:18:00:11 - 00:18:17:18
AJ Kuftic
And I think, how do we see that future changing with cloud services as VMware makes this transition? Do we see, you know, VMware maintaining a central role in that? Do we see, some shifts happening as part of that because of all of the changes in client sentiment?
00:18:17:21 - 00:18:45:09
Jon Rosenson
Well, I mean, clients have choice. So VMware software adds and offers a lot of value. And if cloud service providers meet the moment that Broadcom has set up, we believe that the shift will be that many more VMware clients will purchase and use VMware technology through service providers, because it will give them the outcomes they're looking for, including operating model and including price.
00:18:45:09 - 00:18:45:29
Jon Rosenson
Yeah.
00:18:46:01 - 00:19:07:03
Bryan Smith
But we're fully aware that. And there's a lot of emotion that's involved, right now. And because anytime there's change, there's, you know, initial emotional reaction and then you have to step back and say, what's the right decision? And then also understanding what's the cascading impact of that decision. And one of the reasons that VMware is a leader is the ecosystem of the other technologies that connect into it.
00:19:07:06 - 00:19:31:25
Bryan Smith
And we also believe that you need to have choice. So, you know, we all offer alternate hypervisors as well and prioritize those based on also the total ecosystem that's available technologies that I've run. So we have both VMware and Nutanix base environments that we offer to clients. But when you think about how does it change the sentiment over time, I don't know if you're thinking that it's a new, you know, everything's going to be cloud first 2.0.
00:19:31:28 - 00:19:49:24
Bryan Smith
And I think that we've already seen what that looks like. You know, so for 15 years, you know there was the trend that everything's going to end up in a hyperscale. And roughly, you know, 15 to 25% depending on the company ended up in hyperscale. And if you put the right applications there, it can be the absolute best location.
00:19:49:27 - 00:20:16:02
Bryan Smith
Right. But what the landing point has been, and really everything from 2020 22 forward has been put. The right workload in the right place in hybrid is the permanent and VMware has over 90% market share for the hypervisor. That's non hyper hyperscale you know. So it's unlikely that if you that everyone's going to just instantly change that to a different technology because it has huge cascading impact.
00:20:16:05 - 00:20:38:21
AJ Kuftic
Do we see ourselves fitting into helping that leveraging potentially alternate hypervisors or bringing, you know, kind of both of them together as a solution overall for clients to help them optimize like these are the workloads that need that I really think need to stay on VMware. But this is my, you know, maybe test dev workloads or this is my, you know, tier two applications.
00:20:38:21 - 00:20:44:14
AJ Kuftic
And I don't feel like I need that VMware stack to support that. Do we see that as part of an optimization?
00:20:44:21 - 00:21:02:23
Bryan Smith
I don't know if I see it in kind of the way that you've described it. Yeah. I think that we absolutely have a role and a responsibility to help people make a decision on what workload should be in which place, and we already do that today in our assessment process that, you know, what things fit well and expedient, what things fit well in a hyperscale.
00:21:02:29 - 00:21:25:02
Bryan Smith
And now there's that additional piece of which hyper visor, you know, things should run on. And we've even written some calculators to help people understand that they could predict what their cost likely would be from the from the licensing. And to give some additional clarity on that and then show what that looks like in a service provider, on a VMware service provider, on Nutanix, you know, so there's a lot of different decision points that go into that.
00:21:25:09 - 00:21:59:09
AJ Kuftic
But I think that guidance is really where, John, you've mentioned this a number of times, the knowhow of okay, here's what we see. This is what we do. And I think this fits into our overall core competency. We're providing a service, whether that's a the actual managed service that we run month to month. But that assessment and optimization service up front, do we see the impact to clients being something that becomes that emotional decision, or that they decide to make a harder shift than they should, or that they really recognize?
00:21:59:11 - 00:22:09:06
AJ Kuftic
Do we see that kind of almost back to Bryan's point of like cloud first we're going all the way in on AWS. Whoops, that was a bad idea. We need to make changes there. Do we see that make do we see that shift happening?
00:22:09:13 - 00:22:31:01
Jon Rosenson
I'm sure there will be a continuum of decision making that we can model after we go through this process. And yes, there will probably be some organizations that make, or tried to make wholesale changes. But I think what we'll find, as we did with the cloud first strategy is that it's it's hard. It's it's costly, it's time consuming.
00:22:31:01 - 00:23:05:21
Jon Rosenson
And sometimes when you make the move, you don't actually get a benefit from it. Right? You're just moving a problem for for example. So I think the the answer is probably it will differ. It will be different by organization. But with our guidance and our knowledge and know how, as you said, will help customers through that process to show them data, to give them themes that we're seeing across all of the organizations that we're working with and allow them to make the best decision for their workloads.
00:23:05:24 - 00:23:27:09
Bryan Smith
Yeah, I think, you know, what I expect is likely going to happen is people start to make the first decision, and the first decision is, okay, I'm thinking about using a different hypervisor. Then they realize the next decision. Does my backup platform work with that? Does my networking work with that? Do my people understand that technology? And back to a lot of what people are trying to drive towards is simplification.
00:23:27:09 - 00:23:43:06
Bryan Smith
So they can focus their people on the things that really affect their business. And that's where a service rider really comes into play, because they can make one decision of using a service provider, where we take over the decisions for security in the technology stacks and delivering the availability so they can really just focus on their application.
00:23:43:12 - 00:24:07:17
AJ Kuftic
And I think that's something that a lot of organizations don't realize about the service provider space is that when we talk about alternate hypervisors, it's not just here's where you run your workloads. It's we have our cloud data protection. We have our disaster recovery as a service. We have our monitoring tools, and they work across those hypervisors. So it's not necessarily something that you have to make decisions on.
00:24:07:17 - 00:24:28:02
AJ Kuftic
And two different sets of tooling we can bring all of it together to actually make that makes sense. Do we see clients making the bigger decisions to jump to something like a hyperscaler off of that, like they want to move to, okay, this is this is too much. I want to go to one single platform. Hey, here's Azure or here's AWS.
00:24:28:02 - 00:24:32:09
AJ Kuftic
They do all the stuff that we're kind of talking about. We see that shift happening.
00:24:32:11 - 00:24:57:18
Bryan Smith
That's a pretty radical jump, to be honest, because, you know, you think of the conversation of a journey that people talk about the cloud journey, right? And I think of that as you know, you're doing a physical travel journey and you use different modes of transportation, use a plane and a train and a boat to those different modes of transportation have a function and similar to different modes of cloud, of a hyperscale cloud versus an enterprise cloud, like an expedient or one of the other pinnacle partners.
00:24:57:21 - 00:25:19:29
Bryan Smith
those are have different purposes. And people have had 15 years really to decide which application fits best in which cloud. And so I don't know that I see that this doesn't really change where those land and what works better. If you're building something from scratch, that hyperscale and you're using their specific tooling and you're fine being locked into that specific technology, you can get a lot of benefit.
00:25:20:01 - 00:25:38:15
Bryan Smith
But if you're running those existing applications, those things that power your enterprise, you're not going to get a lot of value of just lifting and shifting that into hyperscale. And likely it's going to be more expensive than the cost delta that you were thinking from your own VMware licensing. And for sure, it's significantly more expensive than running on like an expedient platform.
00:25:38:17 - 00:25:59:12
AJ Kuftic
So we've heard a lot of emotion. Anytime we talk about Broadcom or VMware, you go to any webinar just like this one. You'll hear a lot of people in the comments, in the chat, in the Q&A asking about, you know, my costs are going up by three x or five x. How is this affecting expedient and what are what are our clients?
00:25:59:15 - 00:26:24:05
Bryan Smith
I think the emotion is reasonable. And anytime there's change, especially related to pricing, it drives a lot of emotion. We had the same response internally. Yeah, yeah, there were a lot of conversations. What's the impact going to be? How are we going to address this. Because we want to minimize the impact to clients. And as we went through and looked at what what are the adjustments we could make in design, what are the adjustments that, you know, we can make in our process to make sure that we optimize everything for the client?
00:26:24:07 - 00:26:46:00
Bryan Smith
And we ended up having a couple of different types of increases based on what type of service. So overall, the average client, had less than a 5% increase. Wow. So we're really happy with that. And for people that were on dedicated, platforms, there's additional overhead because there's more redundant servers dedicated to just them than what a somebody in our enterprise cloud platform has.
00:26:46:07 - 00:27:00:06
Bryan Smith
So those clients were still in the 17%, change still significantly better than the ranges that you were talking about and what we were really pleased with on our disaster recovery clients. No impact.
00:27:00:08 - 00:27:05:29
AJ Kuftic
I think the final kind of thing to go through is what what should our audience do.
00:27:06:02 - 00:27:06:18
Bryan Smith
Sir?
00:27:06:20 - 00:27:15:22
AJ Kuftic
You know, that's a I think I think that I think a lot of people came to this look, you know, trying to get answers to the questions, but it really comes back to what, what do I do?
00:27:15:25 - 00:27:20:21
Bryan Smith
I'd say the top three would be one. Know when your Ela is coming up with VMware.
00:27:20:21 - 00:27:23:00
AJ Kuftic
So if you even have any like correct.
00:27:23:02 - 00:27:48:01
Bryan Smith
If you have that two would be leverage some of the calculators and just the discovery tooling that a service writer has that can give you better visibility, that can help forecast potential costs and identify risk points for you. And three, if you're running disaster recovery internally, it should be an absolute first thing you look to move into a service provider, because you can really avoid the cost of licensing, from that platform.
00:27:48:03 - 00:27:59:09
AJ Kuftic
And John, do you see, you know, obviously we are seeing changes as well. You know, our clients, how do we see our clients moving forward and what should they do?
00:27:59:11 - 00:28:18:02
Jon Rosenson
Well, I'd add number four to that list that applies to everyone, which is start a conversation. And we're already having those conversations with our clients, relative to the changes that have, been announced and that are occurring. And we have clients that are coming to expedient in the process. Now we have clients who are evaluating all of their workloads.
00:28:18:05 - 00:28:29:10
Jon Rosenson
I think all four apply to our clients as well. And having that conversation early will prepare them for the milestones that are ahead for them in their journey.
00:28:29:12 - 00:28:41:17
AJ Kuftic
Got it. And with that, we're going to go now to your live questions that you've been putting in. Thank you so much. And we'll turn it over to the Q&A section.
00:28:41:20 - 00:29:09:23
AJ Kuftic
Hello everyone. I'm very excited to bring to you the live Q&A that we had promised last week. We had some technical difficulties. I deeply want to apologize for that, but we are here to answer your questions. during the registration process, we got a lot of questions. And to bring in our, my co-host here, I have Bryan Smith, our CEO of experience, and I have John Rosen, our CFO of experience, here with us to answer your questions.
00:29:09:28 - 00:29:29:21
AJ Kuftic
You had a lot of them. So, we we broke them all down into some common themes that we saw. But if you have live questions or you have things that you want to add in, please feel free to do so. You can use the chat below, to enter those questions and we will get them answered. So, Bryan, I want to start with you.
00:29:29:24 - 00:29:48:10
AJ Kuftic
we've seen a lot of, you know, different changes, different reports of, you know, amount of increases that we've seen. So how is expedient ensure that the reported 2 to 5 increase that we've seen in VMware licensing costs don't adversely affect the pricing for expedient customers.
00:29:48:12 - 00:30:06:21
Bryan Smith
Thanks, AJ. As you can imagine, this is probably the most common question that we've received for our own use. And also, you know, as we're talking to different clients out there and, you know, I think we have to zoom out a little bit and make sure that we define some of the different, changes that have happened and specifically in the cloud service provider world.
00:30:06:21 - 00:30:29:22
Bryan Smith
So, previously with VMware, they had about 4500 different cloud service providers in aggregate. And in the new world with Broadcom, you know, they've really reduced that dramatically to globally about 500. And specifically you know there's the highest tier that are pinnacle partners. And that's really what expedient is. And experience is one of 12 pinnacle partners in the US.
00:30:29:24 - 00:30:49:21
Bryan Smith
So with that you know we have the highest level of discounts that are available. And you know, that also, leads to know we have one of the biggest deployments that's out there. So we've had to make some significant pod changes in our design so that we could minimize the overall impact to clients. And specifically because of those changes, you know, we have three different types of cloud, really.
00:30:49:22 - 00:31:18:07
Bryan Smith
We really do for clients. We do our enterprise cloud, which is our shared platforms. We have our private cloud that are dedicated per client. And then we really have our disaster recovery as a service platforms. So, you know, with the changes that we did, the average increase for our enterprise cloud clients, the most prevalent is less than 5%, compared to what you've heard in that 200 to 500% type of change in the private cloud, the average is, you know, just about 70 between 14 to 17% in there.
00:31:18:09 - 00:31:38:20
Bryan Smith
And on our disaster recovery service, we're really happy that there's actually zero price change. So we're able to, keep all the services, not have that flow through, because of some of the architecture changes that we made. But it definitely did require, you know, tens of millions of dollars of investment in capital hardware and actually additional teams and people to make some of the changes.
00:31:38:20 - 00:31:55:24
Bryan Smith
So we're happy with, you know, the adjustments that we were able to make to minimize the overall impact. And then there's a lot of additional focus on the way that we think about capacity management, because before it was all done on the gigs of Ram that a client consumed, and now it's the number of cores that are available.
00:31:55:24 - 00:32:11:21
Bryan Smith
So, I think that, you know, we've made a lot of adjustments and, you know, we've really gotten very close with, you know, the new changes and adjustments in the program. And because that pinnacle status, you know, we're able to minimize the overall impact, for clients.
00:32:11:23 - 00:32:28:28
AJ Kuftic
And I think that's kind of the key thing here is that we've spent a lot of time overall that other clients have to go through as well. So this is also something that we've seen and we've had a ton of experience now in terms of saying this is what needs to happen. This is how we can move our workloads around.
00:32:29:00 - 00:32:43:27
AJ Kuftic
Being able to leverage a partnership, I think is is massive. So how does that play into our long term strategy to mitigate any disruptions to our services and business continuity, services and plans in light of these changes?
00:32:44:00 - 00:33:03:27
Bryan Smith
Sure. And in the service provider world, the DPS is one of the most impacted because previously, again, everything was based on consumed memory. So if the hardware wasn't in use by the client, there was no cost for licensing. And by the change of moving over to a per core that's available, you know, you're essentially licensing the entire stack of hardware.
00:33:03:29 - 00:33:24:28
Bryan Smith
So if you didn't make any changes to your hardware stack, then, you would actually essentially have the same cost for disaster recovery that you would have for production. and one of the things in the pinnacle program, we can have a combination of things that are committed long term licenses, like on a 3 to 5 year plan, but we can also have burstable licenses that are consumption along the way.
00:33:25:01 - 00:33:52:00
Bryan Smith
So with that, we're able to leverage those licenses into our disaster recovery, stack so that we, have a cost for licenses when, clients fail over. So the same way that we had previously, nothing's really changed from that design. But also, you know, some clients are aware that if your service provider wasn't already, using, VMware's, Dr. technology, the VDI, then they can't add that in now.
00:33:52:02 - 00:34:12:08
Bryan Smith
So because we were already using that technology along with Sato and other, platforms for replication and as a service, we're able to continue that for our existing clients, but also for new clients. So it gives us a lot of different, flexibility and, fortunately, really happy. That is one of the first places that clients often start with us.
00:34:12:10 - 00:34:27:18
Bryan Smith
And it's probably been the number one place that people want to start a conversation right now, because things that they were doing with other service providers that aren't in some of those tiers won't have the option for that burstable licensing, you know, so that's been a very active conversation with expedient.
00:34:27:21 - 00:34:45:07
AJ Kuftic
And I think that also plays back into that original point you made about licensing of that. There was really no change to RDR clients, and that's huge because I think one of the biggest challenges that we see is that core license comes up and becomes a, oh, hey, now I'm paying for licenses that I wasn't necessarily paying for before.
00:34:45:07 - 00:35:05:24
AJ Kuftic
So this is a way that we've helped optimize costs because of that partnership. So as we kind of extend beyond VMware, what sort of alternative hypervisor supports like HP or Citrix or Hyper-V are being evaluated by expedient to provide those options beyond just what VMware what VMware offers?
00:35:05:27 - 00:35:31:17
Bryan Smith
Yeah. In out of you know, over 100 questions that we got coming in. This was, you know, definitely in the top, 25% when we think of it, the consolidation or everything. And I did an event last night where I hosted a lot of, different senior it leaders. And this was also a heavy topic conversation. So experience in all of our different technology stacks always has multiple different options, because we never want to be in a situation where all of our eggs are in one basket.
00:35:31:17 - 00:35:53:25
Bryan Smith
So although we're one of VMware's largest service providers, we're also have one of the largest. We're one of the largest service providers on Nutanix as well. So when we think of, you know, the hypervisor technologies that are out there, the biggest thing that we really look at is that ecosystem, you know, because you have to have those supporting technologies that go around it and you also need to be able to operate at scale.
00:35:53:27 - 00:36:11:24
Bryan Smith
And those are the two things that so from our side, we end up being fairly hypervisor agnostic. And so based on your business need and where you're at, there's certain times that VMware is absolutely going to be the best fit. There's other times that Nutanix may be the best fit. So be able to work through and, talk with clients to help guide them through.
00:36:11:26 - 00:36:32:20
Bryan Smith
What are those criteria, what are the things that they should think about? What's the impact when they make that decision on a hypervisor? What are the next ten decisions you need to think about and make? You know, that's I think, the important way to think of it right now, because there's a quick knee jerk reaction that there's a change and it's just looking at the price change versus understanding.
00:36:32:23 - 00:36:52:28
Bryan Smith
Part of the reason behind it as well. And part of the reason that VMware is making this change is similar to the way that the hyperscalers, like an AWS and Azure, sell their platforms. It's an entire ecosystem. and it's a turnkey solution. And VMware is really trying to provide that turnkey cloud experience, across their different, platforms.
00:36:53:04 - 00:37:14:20
Bryan Smith
So you're not having to pick and choose the different features that you want. All are available in that bundle, that you have. So with that said, you know, directly with expedient, we're doing both and we're doing VMware. In the past we've done, Hyper-V. and we found that it didn't scale. when we look to do the large scale deployments, it didn't work at the level that we wanted.
00:37:14:20 - 00:37:25:19
Bryan Smith
And we've evaluated some of the other platforms. But it comes back to the ecosystem. And because we need to be able to integrate with our clients, other, platforms, and those have been the best two that we found.
00:37:25:21 - 00:37:51:13
AJ Kuftic
And I think it also comes in to where it fits into the other the services that we offer right now, a lot of our clients don't come to us. For one thing, they come to us for a number of different things. And so being able to say we support Citrix, HP or or that Citrix, HP, excuse me, Nutanix, HP and Microsoft Hyper-V, but not have anything around, it means that the client still has to go figure all those things out.
00:37:51:13 - 00:38:03:20
AJ Kuftic
And so we've allowed them to switch hypervisors, but not really given them anything else to really stand on. And it doesn't really work for us as a service provider. We want to be able to help through the entire journey, not just in little bits and pieces.
00:38:03:22 - 00:38:05:14
Jon Rosenson
And so how do we.
00:38:05:16 - 00:38:37:29
Bryan Smith
Before you jump, I think that's really one of the values of a service provider, is it reduces the total number of decisions that a client has to make, through their journey. And, and because if you build everything yourself, you're deciding on the hypervisor, then you have to decide which backup platform, which network platform? You know, which observability platform you're using versus when you're using a service provider, you're really making a decision on being focusing your employees time on what's most strategic and unique to your business and that you're looking to purchase uptime, essentially an SLA.
00:38:38:02 - 00:38:46:06
Bryan Smith
And then the service provider is responsible for all the underlying pieces, like the the changes we made in the platform to minimize the impact. As an example.
00:38:46:08 - 00:39:11:19
AJ Kuftic
And I think that helps us to be able to prepare clients and customers for what comes next. And so how do we, you know, help support customers who are evaluating or potentially transitioning to those alternative hypervisors and hyperconverged platforms? You know, there's a lot that goes out there. Obviously, we as we just mentioned, that, you know, we're we're dialing in on Nutanix and VMware and really focusing on those two.
00:39:11:19 - 00:39:18:05
AJ Kuftic
But kind of what comes in around those from a, you know, an assessment and an evaluation standpoint.
00:39:18:07 - 00:39:36:28
Bryan Smith
You know, one of the core tenets and beliefs instead of expedient is if we arm our clients with really high quality data and make it easy to get access to it, you know, without any expense, they can make the best decision for their business. So we've invested a lot in tools that help can do discovery inside your business.
00:39:37:00 - 00:40:12:02
Bryan Smith
Understand what you have. You know where opportunities are for right sizing. You know, is it something that should be in a shared infrastructure? Is it something that should be in a private infrastructure? How would it compare in our type of cloud versus a hyperscale in mapping all those dependencies so that you can make good decisions early? but then also recently, you know, we've written a calculator that you could put in your environment that, you know, our teams are able to put in what your environment looks like and give you a comparison of what you would expect your VMware licensing to be if you continue doing it all internal using VMware, what it would look
00:40:12:02 - 00:40:28:20
Bryan Smith
like on a private cloud environment with Nutanix, what it would look like on a private cloud with, with VMware, or what it would look like in an enterprise cloud, a shared infrastructure inside of experience so that you're really armed with good decision, good information, and it takes very little time to be able to go through.
00:40:28:23 - 00:40:29:16
Jon Rosenson
All of that.
00:40:29:19 - 00:40:49:07
Bryan Smith
So those are some of the big things that we're able to help arm people with information. But then it's also understanding what the cascading dependencies are. When you make a decision, what's the next thing you need to think about and the next thing and the next thing so that you know, your chances of success right out of the gate is going to be really is going to be much higher.
00:40:49:10 - 00:40:50:25
Jon Rosenson
And then as.
00:40:50:25 - 00:41:22:01
Bryan Smith
That pinnacle service provider and having that burst license thing that we talked about for clients that may be coming to the end of their Ela, but they know that they can't do a migration fast enough. They feel like they're really stuck and there's pressure being put on them. We're also able to take our licensing and put it on hardware they own inside their data center, on premises, and consume our licensing while they're doing a migration over to experience so that we can take the pressure off and they're not having to make a new 3 or 5 year commitment for licensing.
00:41:22:03 - 00:41:43:06
Bryan Smith
They may not use it long term. And Dr. is one of the best places for people to start in there because if they can really eliminate that, cost that they have on that licensing early, that gives them some breathing room and also dollars that they can apply back to, you know, areas that are going to be of greatest benefit to the business.
00:41:43:08 - 00:42:06:17
AJ Kuftic
And I think that's I think it's really key to kind of walk that all the way through as a service provider. We're not just here for, hey, here's a service. You click a button and now you get VMs. It's making sure that the entire solution, the entire outcome is being reached. And not just individual piecemeal services. And I think that's really a differentiator of ours against, a number of other services that exist.
00:42:06:17 - 00:42:27:25
AJ Kuftic
And we really want to actually sit down and help you optimize all these things, because in the end, it is the actual best outcome. John, I want to I want to turn it over to you, Bryan, to answer a ton of questions. Thank you. Bryan. but I want to turn it over to John. And really, we as we start to see this change come on with with Broadcom you know taking over VMware and all the licensing changes.
00:42:27:25 - 00:42:40:18
AJ Kuftic
It kind of leads to well what's the actual future direction and where do we see their product development going. So what direction do we see them taking product development. And what are those implications for the current VMware users and services.
00:42:40:21 - 00:43:26:03
Jon Rosenson
Yeah thanks Ajay. And in recent weeks Broadcom has been become more clear about what that future direction looks like. And I think the overarching theme is creating the most unified cloud experience possible, full stack and having consistent integration and a comprehensive program that their partners like us, can take advantage of to solve clients, problems with solutions. And I think previously, VMware, prior to the acquisition was organized a lot differently than it is now under Broadcom, where they've harmonized a number of different business units that were sort of technology driven to be more solution and business outcome driven.
00:43:26:05 - 00:43:59:20
Jon Rosenson
So I think we're going to see, more and better, experiences of integration between their different software solutions. They've they've tremendously simplified the business model. So as Bryan mentioned before, you know, they're switching to this per core, subscription model from the Ram based model, of the past. And I think by doing that across the board, across their entire business, they're making the subscription license the only way to consume VMware going forward.
00:43:59:22 - 00:44:30:00
Jon Rosenson
So there are some benefits that come from that, even though that will create some initial, confusion and potentially even, challenges, long term, license portability for providers and partners like us, become a significant driver of helping clients achieve the outcome. They need to get to cloud by moving between, between, constructs of how they might have their own hardware now and how they might want to consume it as a service and move their subscription from on premises to the cloud.
00:44:30:02 - 00:44:55:19
Jon Rosenson
And then finally, we, we heard from them directly that they are taking a lot of the savings that they're getting from the simplification of the business and plowing that into research and development. So we have a lot of, belief that by optimizing, the platform, like Bryan said, that we'll, we'll be able to do as sort of an expert in VMware as technology will help our clients get the most value out of the solutions.
00:44:55:21 - 00:45:20:29
AJ Kuftic
Yeah, I think that's that sort of shifting that from perpetual to subscription. A lot of that also comes with clients who were just buying. vSphere are now able to access vSAN and NSX in the red suite, and there's a lot more available to them. So this is also where we can figure out ways to, optimize their usage of their platform and optimize their usage of their licensing.
00:45:20:29 - 00:45:37:19
AJ Kuftic
So we think that's a a big shift for a lot, John. You know, how does this then restructuring of the VCP program of the VMware Cloud Provider program. How does that really affect our cloud services offerings. And kind of where do we see that going as well?
00:45:37:22 - 00:45:57:18
Jon Rosenson
So first and foremost, it puts us in an exclusive group. Like Bryan said before, with only 12 Pinnacle partners in the United States, there are no more than 100 worldwide. And I think, a key element there is that as a pinnacle partner, we are, among the few partners that get the highest level of discount from VMware.
00:45:57:18 - 00:46:24:17
Jon Rosenson
And along with that comes dedicated account management and a full complement of support so that we again, as the experts driving this VMware cloud stack to help our clients solve, their most challenging infrastructure problems. It also, changes the name of the program, actually, from VCP to VCP v CSP. Excuse me, a lot of acronyms, under the Broadcom advantage program.
00:46:24:20 - 00:46:51:03
Jon Rosenson
And so we will have access to do a couple of other things. like you just said, including access to that full stack where clients may have not necessarily taking full advantage of the NSX capabilities, that give them micro segmentation capability and, other network features or, the cloud availability solution that Bryan talked about before. It's sort of all in there now.
00:46:51:05 - 00:47:19:27
Jon Rosenson
although there are add ons for, the VMware cloud Foundation, there's a lot that's included and that's where the value comes from. And then finally, as a clinical partner, we are able to white label the VCA solution, which means we can provide, turnkey solutions for other, smaller cloud providers. but also, help them with, licensing solutions if they don't have another alternative.
00:47:19:27 - 00:47:27:17
Jon Rosenson
So it really gives us, cloud providers a lot more to offer in the market.
00:47:27:19 - 00:47:50:01
AJ Kuftic
And I think that's something that the Broadcom platform really dials in on where where they want clients to be, I think for the last probably 3 or 4 years with the hardware, there's been kind of, where can we go next. And I think Broadcom really layers it into this is the way that it should be. This is the way that it should go.
00:47:50:04 - 00:48:12:16
AJ Kuftic
And I think for a lot of clients there's a ton of value to get out of that that there wasn't necessarily there before. And I want to finish before I go back to Bryan with, you know, where we see this change happening, where, you know, there's more there now with this, the change to the bundles, what do we implement to then maintain that flexibility and the cost effectiveness in our offerings?
00:48:12:18 - 00:48:36:01
Jon Rosenson
Yeah. And I'll remind our, our viewers that we've been providing a subscription to VMware cloud, platform in one way, shape or form since 2006. So we have a lot of experience doing this. And I think the a significant value of using expedient or a service provider is the opportunity to take advantage of the efficiencies that we have built into our infrastructure.
00:48:36:03 - 00:49:05:10
Jon Rosenson
We offer private cloud for clients that need that level of dedicated infrastructure. We also offer shared or multi-tenant infrastructure. And this gives, our clients a cost advantage in order to share some of those critical components of the overall infrastructure. I'm not just talking about, the VMware licensing. And then we can add on to that our managed services on top of some of these VMware products, that clients may not be able to take advantage of themselves because they don't have the expertise in-house.
00:49:05:10 - 00:49:23:20
Jon Rosenson
And we can either get them jumpstarted on that technology or they can, use our managed services, to do that for them. And because of our pinnacle, discounting, we can really closely manage our capacity and ensure that we have the resources that the clients need, and they can take advantage of that full stack all the time.
00:49:23:22 - 00:49:44:10
Jon Rosenson
So the last thing I'll say is, we have look, as Bryan mentioned earlier at the designs of our points of delivery, our pods, as we call them, where we, serve the clients from and as a result of some, straightforward design changes, frankly, over time, we'll be able to further optimize and pass those, benefits on to our clients.
00:49:44:12 - 00:50:10:14
AJ Kuftic
And I think that's that's really the key here is that this is what we do as a service provider. Our job is curating and delivering technology. And for a lot of organizations, technology is what enables their business, but it's not what their business does. So leveraging our experience as a service or as a service provider to actually get to the goal that you're looking for, the outcome you're looking for, and not just, hey, we got to figure this out and I got to deal with these hos.
00:50:10:14 - 00:50:31:00
AJ Kuftic
But I also have 50 other things I need to do. This just went to the top of the stack because of financial reasons. But this is a lot of churn and effort to just keep things going versus what we do as a service provider, which is to do this all day long, every single day. And Bryan, I want to turn this kind of back to you and ask about our partners.
00:50:31:03 - 00:50:47:17
AJ Kuftic
we've, you know, we've talked a lot about clients and customers and what they're seeing, but we have a lot of other managed service provider partners that leverage us for their infrastructure. So how are they affected by this acquisition and what changes do they need to anticipate in terms of service offerings? Mr..
00:50:47:19 - 00:51:26:03
Bryan Smith
Sure. The good news is there's very little change. for them because, the same set of services, the VMware cloud, the Nutanix based cloud, the public or the shared or, private cloud, all of those are still the same. And the Docker service offering is the same as well. The I guess the changes would be probably encouraging them to increase their utilization of some of the tooling that we make available so that know the same way that we work with clients directly and help, understand what they have, what are areas for them to do optimization internally into our platforms and so on, you know, making sure that they're getting a good use
00:51:26:03 - 00:51:33:07
Bryan Smith
of those different components, you know, so that they can help guide their clients and provide the most value.
00:51:33:09 - 00:51:48:29
AJ Kuftic
And I think that's that's something key to really think about is that there's there's a number of different layers to this. There's smaller providers who use other providers. And so this entire ecosystem has kind of been I don't know, I don't want to say thrown into turmoil, but there's a lot of decisions being made at a lot of different levels.
00:51:48:29 - 00:52:06:25
AJ Kuftic
And this is where, you know, kind of being where we are in the service, in the service provider space. I'll say it right one time on this call, I promise. But as we as we are sitting in our position, it's really beneficial to us and also to our clients to be able to leverage that position. You can use that.
00:52:07:00 - 00:52:37:07
AJ Kuftic
It doesn't have to be we're here and others that are over there. It's you can leverage this as well for yourselves. And John, in the kind of as we're wrapping up here, how do we navigate this potential transition from these perpetual licenses to a subscription model? This is coming from the outside. This is not necessarily expedient, but how do we help enable, you know, government educational clients who, you know, really have tight budgets and they can't really move things around when they want to, the kind of have to wait for the bigger sort of capital years to happen.
00:52:37:10 - 00:53:01:00
Jon Rosenson
Yeah. So there's there's a couple of things here and it's going to be different for every client. But essentially there's no difference between the types of clients. if a client currently has an LR, to be clear, VMware is not going to be renewing, LA is going for it, not going to offer new layers. So everyone is being moved to subscription again regardless of what industry or sector you're a part of.
00:53:01:03 - 00:53:30:19
Jon Rosenson
So with the benefit of a service provider like experience, having provided a subscription service for so long, we have tooling, as Bryan put it before, to assess what people have and really understand what their needs are, because our experience as a service provider is that sometimes clients could be over or under provisioned, depending upon, their scenario, and there's actually opportunity to optimize their environment by making that move.
00:53:30:19 - 00:53:54:03
Jon Rosenson
So from navigating that transition, we have a couple of tools as a pinnacle partner that we can use to allow them, for example, to continue running on their own hardware if their ELR expires, but also to provide a bridge to move them over, with that subscription portability over to our cloud, in a reasonably, identified time frame.
00:53:54:07 - 00:54:23:23
Jon Rosenson
It's not a it's not a forever thing. there has to be a finite period. But we have that flexibility in that partnership with Broadcom and VMware to enable that level of flexibility. So our clients or our mutual clients don't experience any service interruption. But but really as it goes with the with the price increase, the efficiency that we have built into our business generally is offsetting a significant portion of the cost increase for for our average client.
00:54:23:23 - 00:54:38:15
Jon Rosenson
So again, regardless of what sector or industry they're in, the experience is going to be, relatively speaking, the same. And I think that's the benefit of the simplification is that everybody knows what to expect going forward.
00:54:38:17 - 00:55:01:17
AJ Kuftic
And I think that's that's really the the key thing to think about. There is really that simplification. And I want to wrap this up because we have been out having these conversations with our clients. And I don't know if you guys want to say, bring up any of the specific ones. I know, John, you've had some conversations with our clients where, you know, what are they seeing and how what how are they reacting to this?
00:55:01:17 - 00:55:12:00
AJ Kuftic
I'm sure there's, you know, a very visceral emotion that comes through of, hey, what do we do here? How do we do this? What do we do now? But how do how are we hearing from them?
00:55:12:03 - 00:55:47:04
Jon Rosenson
Yeah. You know, Bryan mentioned this, on our our last discussion on this topic about the emotion and, you know, going into some of these client conversations, we didn't know exactly what to expect. But we are all in this together. We're navigating this, at the same time, one of the unique aspects of our business is that we have our own data centers across the country, and some of our clients who are not currently our cloud clients are actually talking to us about becoming a cloud client, because, in essence, a lot of what they have in co-location with us is, is VMware.
00:55:47:06 - 00:56:11:20
Jon Rosenson
And because their Elas are going to be expiring soon, they're trying to investigate their options. So we didn't necessarily know or think about how quickly that would happen. But we've already had many of those conversations, and that has led to some other interesting opportunities with those existing clients who will still need co-location with us, but who also want to explore a cloud transition.
00:56:11:23 - 00:56:30:16
Jon Rosenson
This is, again, to take a phrase from Bryan, among the biggest change events that that has occurred in our last decade. And it that is creating urgency for people to to make a change. And Bryan, I know you've had some of these these conversations as well. What would you add to that? If anything.
00:56:30:18 - 00:56:47:10
Bryan Smith
I think your your final point there in the urgency is really the biggest. That's that's what's creating the emotion for a lot of people is, you know, that they feel like they don't have enough time to make a good decision to make the right decision. And so that's part of what the licensing gives them is gives them that breathing room.
00:56:47:13 - 00:57:07:20
Bryan Smith
And, you know, also, they had been building hardware the same way or building their environment the same way, expecting the licensing was going to be the same over time as well. So it's, you know, taking advantage of the opportunity to step back a little bit and say, okay, now with these new things being fact, you know, would I do the same thing?
00:57:07:20 - 00:57:26:28
Bryan Smith
Would it look different? And so you can also use that as an opportunity to rethink it in to your point on the a lot of the colo clients, we've seen that exact thing that, you know, they had been in the data center for an extended period of time running their own environment. And a lot of, companies run, you know, 30 to 50% load on their environment.
00:57:26:28 - 00:57:48:01
Bryan Smith
So there's a lot of excess capacity, you know, and they buy hardware planning for the full lifespan. So, you know, three, five, six years of hardware life and, and that now when software is a bigger portion of the total cost than hardware, it makes you rethink some things. Having the ability to buy and a consumption model, also changes the dynamic.
00:57:48:01 - 00:57:51:29
Bryan Smith
So those have been a lot of the conversations we've been having.
00:57:52:01 - 00:58:19:25
AJ Kuftic
And that that overhead piece is really is really big. I've, I've run multiple environments where, yeah, you ran like 60% to 70% so that you could handle spikes and handle growth quickly when it happened. And then you would add resources later. Now that's a very expensive waiting period, right? So now getting a lot closer, getting a lot tighter on what the actual spend is, what the amount of resources you actually have is really key.
00:58:19:25 - 00:58:40:06
AJ Kuftic
That's again, where a service provider can come in and be able to have that very specific pay for what you're using model. Instead of paying for all of the headroom you're going to need over the next, however long for the next 3 to 5 years, as is your hardware, you know, life cycle runs out. We do have some questions here from the chat.
00:58:40:09 - 00:58:59:25
AJ Kuftic
there were a number of comments, on last week's webinar where we talked about this full stack. Right. We talked about these here at vSAN, etc.. for those shared pod customers, what do they have access to now that they didn't before? And I'll kind of take the first swing at this one. A lot of it is what you had access to already.
00:58:59:28 - 00:59:22:27
AJ Kuftic
And for the clients that were previously just vSphere clients on premises, they didn't have vSAN or NSX, our enterprise cloud clients have been able to take advantage of those for a long time, and we've seen a ton of benefits of them being able to create their own networks and firewalls and firewall ruling that is all baked into the platform itself instead of jumping around to a bunch of different platforms.
00:59:23:00 - 00:59:39:22
AJ Kuftic
So part of this is our ability to say, oh, that thing that you want to figure out how to get the most value of. We've been doing that for five years and our shared platform. We know all the ins and outs. We know exactly how to go do that. So I think the additional features that they will have access to is not a ton, to be honest.
00:59:39:27 - 00:59:58:00
AJ Kuftic
But from the clients who were coming from the private cloud space, from the color space from on prem, this is a way for us to help them optimizing, get that maximum value out because those features have been available. And John, Bryan, I don't know if you want to add on to that one.
00:59:58:03 - 01:00:19:03
Jon Rosenson
Good one. I would just add, you know, with the combination of these business units, consolidating things like Tanzu, things like, NSX, cloud availability. To your point, RJ, they probably weren't using them on premises. It will be included with the cloud service provider.
01:00:19:06 - 01:00:39:17
AJ Kuftic
And then there's another question here. we have clients. This is from a partner. We have clients that are telling us that they have a 300 to 600% increase in costs. Can you provide a broad percentage cost of what it would look like going to a shared environment? And we kind of touched on that earlier of, you know, our clients total cost increase was, what, 5% in our shared environment.
01:00:39:20 - 01:00:49:23
AJ Kuftic
Yeah. So for us they they don't have this huge jump that that 300 and 600% they were seeing before. Bryan or John, I don't know where you want to go from there.
01:00:49:25 - 01:01:11:13
Bryan Smith
I think you kind of hit it right on the head that, you know, both on the shared enterprise cloud. You know, it was a little less than 5%, increase. And then on the darker side, which is, you know, also, generally those shared enterprise cloud clients, you know, it was an 0%. So, you know, we we definitely had to make some significant investments to enable that.
01:01:11:15 - 01:01:26:05
Bryan Smith
and, adjusting the hardware, you know, put in a bunch of teams in place to, you know, re-architect it in the background, for folks, if we had done nothing, the increases would have been, you know, 4 or 5 x, you know, what they were.
01:01:26:07 - 01:01:49:23
Jon Rosenson
But but let's let's clarify. That's an average increase. You know, different clients are going to be experiencing different increases based upon the the quantity that they're using and how they're using it. As Bryan said, you know, I guess you did to AJ. There's the shared versus the private dedicated. And we are providing our clients a full solution. And that full solution includes a lot of other services.
01:01:49:25 - 01:01:58:01
Jon Rosenson
So that increases, you know, based upon the solution itself. And typically the VMware is only a small portion of that whole solution.
01:01:58:04 - 01:02:31:13
AJ Kuftic
And I think there's also the the part thereof as part of that solution. There's also we have people who are on staff 24 seven monitoring, watching the platform, handling growth, handling, patching, handling, maintenance. So I think that average cost profile is really income averages are fun. You can have big outliers, you know, really small outliers. But the fact that it really averaged out to only about 5% in our shared environments is a true testament to the amount of efficiency we've driven out of the platform and really shown that, you know, we can we can help you minimize those costs all the way through.
01:02:31:15 - 01:02:42:18
AJ Kuftic
if, John, Bryan, do you have any final comments? we're going to wrap up here, looking to see if we had any other questions that would jump in there, but, Bryan or John, do you have any other final comments?
01:02:42:20 - 01:03:11:11
Bryan Smith
I think final comments for me would be, probably a few. One, make sure you know, when your ELR is expiring, so that you can have the appropriate amount of time to make the right decision. definitely take advantage of the free tooling. We don't do any paid consulting, so we're happy to share information, give you access to to the information, so that you can do that and often will save you a lot of time versus if you're trying to put it all together yourself in the first place, that you should really be looking at.
01:03:11:11 - 01:03:27:16
Bryan Smith
If you're trying to do cost savings, you know, it would be have a conversation with a service provider related to your Dr. as a service, because you can have a massive, change and is something that you can implement incredibly quickly.
01:03:27:18 - 01:03:30:22
AJ Kuftic
John, any final thoughts before we wrap up here?
01:03:30:24 - 01:03:48:03
Jon Rosenson
I just I think everyone, would would do well to follow Bryan's advice from before about, you know, having those conversations sooner rather than later because I think there's a lot of opportunity, that urgency. what will help you plan for the future?
01:03:48:05 - 01:04:06:11
AJ Kuftic
And I want to thank everyone for attending again. this has been really great. We actually got to extend our question and answer time, from what we were going to do last week. So we actually got, more questions and more questions answered. I want to thank you all for joining and look forward. We are coming out with some more content around Broadcom.
01:04:06:13 - 01:04:23:22
AJ Kuftic
reach out to us. You can, hit this over that this way. There it is. It's mirrored for me. you can scan this QR code to schedule a strategy session and really walk through as Bryan mentioned, those assessments of what is your environment look like? What could it look like? Here are the options that you have available to you.
01:04:23:22 - 01:04:29:09
AJ Kuftic
And this is really something that you can take advantage of from us at expedient. I want to thank you all for joining us.