Sunday, September 8, 2013

Thoughts from VMworld 2013

Before flying off to San Francisco last week, I made some notes about what I was looking forward to hearing at VMworld 2013. It has been a year since Pat Gelsinger took over as CEO, and having worked (indirectly) under him during my days at EMC, I knew that he had outstanding experience at driving change from within and building strong engineering foundations.

The big announcements coming out of VMworld 2013 were vCloud Hybrid Services (vCHS), NXS Network Virtualization Platform, and enhancements to vSphere 5.5 including the GA of VSAN (storage) functionality.

Many people saw these announcements and focused their initial analysis on how VMware was creating new competition with the likes of Amazon AWS (cloud), Cisco (networking) or the entire external storage industry (EMC/NetApp/HP/Dell/Nutanix/Simplivity/Tintri/etc.).

I saw things somewhat differently, thanks to a great conversation that I had with Rodrigo Flores (@RFFlores) during a dinner on Monday night. Rodrigo is one of the smartest and most pragmatic people in our industry, especially when it comes to the topic of how companies change with respect to the use of technology. During that conversation, we focused on how the major shifts (especially within an Enterprise) are often driven less by technology and much more so by removing user/usage friction and shifts in IT buying centers.

In everything I heard at VMworld, it dawned on me that VMware is poised to significantly change several buying centers within Enterprise/Government IT. They already own the most expensive portion of the Data Center (server virtualization and network-switching edge) and now they are attempting to leverage this to expand into application, network and storage buying centers.


In the early server virtualization days (2006-2009), VMware was able to offer direct value to IT organizations by reducing the cost associated with servers (more efficient, less power/cooling, less rackspace, less network ports, etc.). While it incrementally adding some complexity to infrastructure teams, that complexity came with lower costs and improved speed of deployment for new applications and projects.

Putting that in the context of the VMworld 2013 announcements, they have the chance to again influence the direction of buying centers. With vCloud Hybrid Service (vCHS), they can actually shift the buying center from IT budgets, which are often under-funded for new projects, back to the Line of Business (LoB). But instead of letting that shift be about "Shadow IT", it becomes a more controlled shift in that the LoB owns the budget but the IT organization retains control and visibility - which ultimately they are accountable for. So while some might argue that vCHS isn't AWS, it has the possibility to successful reduce user/usage friction (IT is less likely to block it from internal users) and shift buying centers.

The NSX announcement is somewhat less straight-forward in terms of that shift, but the building blocks are in place. While it doesn't eliminate the need for physical (or "underlay"") networks, since bits need to physically move somehow, it does change the game in terms of speed of deployment for application owners. How much might an application team, or LoB, incrementally pay to have their application environment deployed "faster", where "faster" could be measured in hours, days or weeks? How much might the CFO be willing to pay to have new flexibility in terms of CAPEX purchases for physical networking?

The VSAN announcement doesn't feel as disruptive yet, since it's primarily targeted at SMB/SME sized companies, but it'll be interesting to see how it scales in 2014. SMB/SME buyers tend to not be nearly as silo'd as Enterprise/Government companies, so the server+network+storage buyer tends to be the same person. Could it simplify life for SMB/SME buyers? Maybe. There are a bunch of interesting converged infrastructure plays in the SMB/SME space already (Nutanix/Simplivity/Tintri/FlexPod/VSPEX/Vblock100/etc.), all of which are growing and competing fiercely, not to mention the expand of Microsoft SMB/SME offerings tied to Windows Servers 2012 + Hyper-V.

As I said in my pre-show notes, VMware has definitely moved from "Switzerland" to "Switzerland with lots of weapons". This is now much clearer. And while much will be written about pending coopetition and "wars" with existing or former partners, I think the more interesting developments to watch will be about how IT buying centers shift in 2014. VMware's announcements have done some very interesting things to reduce usage friction for LoB and Application groups, which has the possibility of significantly shifting the IT buying centers over the next 3-5 years. When either the CIO or VP/GM of a LoB can say "yes" to more things, especially things that happen faster, this can often be a huge driver of offerings/solutions that may only be "good enough" at the moment, but drive significant additional consumption in a short period of time.

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