In this part, Dan and Luis talk about the Partner perspective for creating and selling services to customers, opportunities for VARS and IT company patterns.

Transcript:

Dan Allaby: So let’s just shift gears. I want to jump into a partner’s perspective and I’m really interested Luis, in having some discussion around where you guys are seeing opportunity to help customers bring really the data center they’re used to today into a cloud model. What are some of the things that you do, and where you see your company being able to provide value to help customers accelerate and bridge that gap into the cloud?

Luis Benavides: Yeah, I think this goes back a little bit into the evolution of our company where we were a very services-focused shop, consulting services, moving customers from AWS, doing projects for applications that were running on RDS-type databases, things like that. But, as we really started finding in our engagements, it started becoming much more of a data center conversation. Even things when we were talking about eliminating tape and doing backup & recovery, things started moving into that “Well, I want to take advantage of more of these cloud resources from an Amazon. How do we redesign or how do we gain more efficiency in that space?” So, our conversation, our level of engagement, while we still do very services like WorkNet and I think it’s necessary, we’ve been getting into a lot more data center conversations around leveraging more AWS and I think that’s where one of our solutions like NetApp Private Storage for AWS really kind of drive us there too. But I think also another key component is that we try to make sure we help simplify for the customer is around Direct Connect. For enterprise shops, for folks, who want to be able to have private connectivity, for instance connectivity with Amazon Web Services and leveraging those capabilities in existing data centers, that’s what we really try to do around a service; we call it Day1 Connect, but it’s really focused around making that Direct Connect service as easy to deploy as possible.

Dan Allaby: You know, for the folks on the line, either as a partner or as a customer, feel free to weigh in. We want to hear from you as well in terms of where you think some of the gaps are and what you’re seeing out there and again, question wise, we’d love to hear from you. Just to jump in with a question, so Jeanie had asked a question to us. I’m curious and I think this is certainly more from a partner point of view, I’m curious what friends you’re seeing relating to VARS becoming cloud brokers for their customers, what’s the margin opportunity? How many cloud services do regional VARS have relationships with or are they just partnering with Avnet and not directly with a cloud provider? So, this kind of also, I think, Luis comes back to what are the opportunities for partners and where can they play? And I think the brokerage topic is absolutely an interesting one—I’ll kind of give a quick perspective from an Avnet point of view and definitely jump in, I really want to hear your perspective on this. We do feel there’s real value—first of all from an Avnet point of view—we’ve approached public cloud in really two ways: one is we think there are very specific solutions that we can package where we can bring our expertise in conjunction with our partners to bring together solutions that bridge technology & cloud services and also help bring the data center closer to the cloud. So that’s sort of one way that we feel there’s an opportunity to capitalize on cloud. And then specifically on the brokerage front, we definitely feel there are value-added services that wrap around kind of a brokerage model if you will, that you can deliver as a partner. You can provide value to your end customers by just providing Amazon; for example, Amazon Web Services as one element of what you do for the customer, but also bring into that, things like Managed Services and Design & Implementation and even just account optimization. Helping them continue to manage their spend in the cloud just to name a few, I know Luis, when we talked about it yesterday, you used the term “Services vs. Solutions.” Maybe comment on that and also on your thoughts on the brokerage platform opportunity. And we didn’t touch on margins yet but what are your thoughts there?

Luis Benavides: Sure, I’m going to speak from my experience back from working at NetApp, working at Amazon Web Services. You know, seeing this change of the VAR model, the SI model with the introduction of cloud and then cloud providers, your big Telco companies that do cloud and then your Amazons of the world kinda of roll in the picture as well, and it’s been a change, a big big change from “What’s a VAR?” “What’s an SI?” anymore, at least as it relates to providing cloud. So when you take a look at starting with the customer and what the customer needs to be successful, you’ll hear me say that a lot but that’s kind of really what we try to focus on and in doing that over these last couple of years, we’ve really seen ourselves incorporate the business model of the VAR, the business model of the SI and the business model of the Managed Service Provider. So if you look at us as—maybe classifying us as a transformative VAR like CRN did recently, or a Cloud Solutions Provider model, one of the things we would always tell these companies is that would have, say, these hosted systems that they’re built on some stack solution architecture and now they’re out there providing cloud is: we’re providing cloud too, our cloud just happens to be Amazon Web Services, inherently bringing all those capabilities back to the customer. So—and it goes beyond that—so in pure services point of view of the world, yes, there’s great opportunities out there to bring customers onto Amazon, to do projects, to help them with strategy and road map, and I kind of see all of that falling into that big SI bucket. And on the solutions side of it, it’s a little bit more complicated than just the traditional VAR model where you’re reselling applications. Now you’re reselling applications—or you’re reselling applications, look at Backup & Archive for example. You’re selling a third party app that can integrate within AWS, but it’s also going to integrate with the on-premise system or the existing, let’s say, tape library system in order to move that stuff over. But then there’s an ongoing component because in these conversations with the customers, it’s not a traditional VAR sale where you sell something and then you put the onus back to the customer, or even back to the SI working with the customer. The reason for that is a lot of these things are newer levels of skill sets and experience, and I think that’s one of the very important components of why we have that Managed Services practice, is to be able to continue working with the customer and then frankly, add these new agilities and new things evolve from Amazon and AWS where they can further take advantage of it or as we further want to balance workloads across data centers into the cloud. I think that speaks to the breadth of opportunity and we’re actually finding a little bit more than that where there’s this solutions focus and the subject matter expertise that is a gap, on the customer side and we’re getting requests to provide subject-matter experts into that world. All right, that’s a long answer, but I think again, it’s part of a change that I’ve seen personally being on the vender side of the fence working with partners and now being on this side of the fence where I’m very very focused on listening to the customer and seeing what they need to be successful and it’s a lot.

Dan Allaby: Yeah, it’s interesting, and I see this a lot in our partner base; there clearly is sort of a division there. There are partners who will help migrate services in and they’ll help design them, they’ll help deploy them, and then there’s a set of partners that obviously help their customers manage those environments. What I’ve seen from an IT point of view and what I’ve observed is IT organizations either want to own everything, they want to hug the servers and therefore they want to own everything related to that or if they’re leveraging the cloud, they want to push a lot of that out in terms of ongoing management and they want to rely on help to do that and that is a bit of a generalization I realize, but I feel that way.  Would you agree or disagree? Is that an accurate observation from your point of view?

Luis Benavides: Yeah, I think yes. Most customers want that kind of world where it could be more cost effective for them to outsource it than having FTEs, but I think where we see it fall back to is where is it? That’s for them to spend their time and energy and resources and it’s very common for us to get into environments where the customer has started off with Amazon and the goal of their company is, let’s say, private development because they’re an ISV, and they look then to guys like us to really focus on that type of—operational-type items and tasks and frankly a lot of cases we’re doing it better than they are because this is what we eat and breathe every day. So we find that allows them to focus back on the mission and I think that’s one of the characteristics of cloud adoption. Then there are things that they do want to own and again I know we’re going to talk about that later with NetApp AWS, but, just touching on that where they want to own things like primary data either for legal & compliance reasons or maybe even just for cost reasons, or maybe because they’ve already invested into this. So there’s a lot of cases there where we start seeing these mixed models, but I think to your point, we need to be able—“we” being industry or partners in the industry—need to be able to answer things as simply as possible for the customer and take a lot of that ownership and responsibility to provide it all but then be agile enough to kind of work backwards from there and let them do things that they want to move forward with and own.