Building and Managing a VMware Cloud business
- 1. LEADING YOUR DIGITAL TRANSFORMATION JOURNEY vCloud Air Network Partner Exchange 2017
- 2. Building and Operating a VMware Cloud Nicholas Power, COO Zettagrid
- 3. AGENDA • Choosing a path • Upfront Capital Investment • Expenses • Revenue • Go to Market • Competing against Hyperscalers CONFIDENTIAL Session Title
- 4. BACKGROUND Nicholas Power Chief Operating Officer Zettagrid Pty Ltd (Australia) BSc Computer Science (Software Eng.) 18 Years in I.T.
- 5. TIMELINE FY16Q3 FY17Q1 FY17Q3 2017201620152014201320122010 2011 Established Company EXPANSION Perth Zone EXPANSION Sydney Zone EXPANSION Melbourne Zone AWARD Australia’s Fastest Cloud AWARD Australian FAST 50 #21 AMEA FIRST Automated NSX Advanced NetworkingGLOBAL FIRST Automated Vmware Virtual Data Centre AWARD Vmware ANZ Service Provider 2012 EXPANSION 2nd Perth Zone ACQUISITON Conexim AWARD Australia’ss First vCloud Powered Partner
- 6. OUR SCALE 2010 commenced operations 4000 VM Workloads 2.5PB+ Storage 2600 Last Mile Services 3 Availability Zones 4 Peering Interconnect Partners 8 Telco Carrier Interconnects 39 Staff - 12 Developers 62 Net Promoter Score 100+ Channel Partners
- 7. MANAGEMENT Networking Storage Hypervisor Operating System* Middleware Runtime Data Applications Partner / Customer Managed Zettagrid Managed
- 8. CHOOSE A PATH • We’ve not seen both be successful at once. • Service approach is profitable very early on but not at scale. • Product approach is not profitable in the short term but profitable at scale. • Zettagrid chose a product approach. Standardised offerings which we could sell in an automated way. Cloud Provider (Product) or Managed Service Provider (Services)
- 9. SCALE DELIVERS PROFITS Zettagrid required investment for 4 years FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 (EST) Income Earnings
- 10. UPFRONT CAPITAL INVESTMENT • Creating a cloud zones can vary from $250k USD to $1M+ USD • Expect to continue investing for at least the first 3 years • After year 3, you can sweat some of the assets if you have reached scale • “Specialist Cloud” Enterprise Equipment Vendors charge a premium • That premium is all around the simplicity they offer • We haven’t found value in these providers, generic equipment is fine Don’t Overspend
- 11. WHAT DO WE USE? An example of a $250k start-up zone Category Description Qty Compute PowerEdge FC430 Server (256GB RAM 2 x 2.5Ghz 8 core) 8 Primary Storage DELL SC7020 3Ux30 Drive Storage Array (210-AHTX) 1 Primary Storage Disk Tray SC420 Enclosure (1st enclosure of new array) (210-AFTF) 1 Secondary (Low Speed) Storage 60TB Usable Capacity SCv2080 ISCSI 1 Cabling & SFPs General 1 Switching (Compute/Storage) DELL S4048-ON 2 Switching (Transit/Customer Aggregation) DELL S3124F 2 Routing (Enables Traffic Classification, Local/International) DELL R430 (32G)+Juniper VMX 2 1Gig SFP Cabing 10 2metre LC to LC OS1 fibre patch Cabing 10 1metre cat6 Cabing 4 AIRCONSOLE TS 8 PORT Remote Access 1 Packet sniffing server Intel Nuc Logging 1 USB to Ethernet Adapter Cabing 1 DELL 3124 Routing 1 Dell 3124F Switching 2 • For Zettagrid, hardware is NOT the secret to a successful cloud, IT’S SOFTWARE!
- 12. PLATFORM ECONOMICS • For a cloud, the costs of the platform need to be realised somewhere • You can choose to invest in Licences or Labour • No matter which you choose there is cost • Openstack has no licensing BUT labour to develop and maintain is high • VMware has licensing charges but so much is already built and supported For Zettagrid, adding people is not scalable, hence we chose VMware. We realise the benefit of: • Accelerated the time to market • Give customers a familiar look and feel to their own corporate virtual environment • A low number of staff required to support the platform Choose Licences or Labour
- 13. EXPENSES • Automate, Automate, Automate – even if labor is cheap. • Automation delivers consistence of delivery, customer self service. • We have 39 staff, 4 people manage the infrastructure for 4000VMs because almost everything is automated and customers / channel use our self service portal • Dedicated development team of 12 • 6 week release cycle for features Automation and Self Service
- 14. REVENUE • Get an anchor tenant, even if you have to offer special discounts for these first customers. • Come up with a consistent pricing model for all customers. Ghz (vCPU), RAM, Storage. • We chose no contracts, however customers who commit to 12, 24, 36 or 48 months can get significant discounts. • Don’t try and try and close big deals all the time, just get the customer billing, even if it is a tiny value to get the customer using the service. • If we get a customer spending $45/mth on backup and by month 12 they are typically spending $495/mth. Anchor revenue is key
- 15. GO TO MARKET • We identified that mid-tier and small business were our ideal market. • They were using VMware and were more likely to move to cloud more quickly. • Zettagrid positioned ourselves as an “infrastructure provider”, we provide the portal + products + automation. • We couldn’t afford to employ all the sales staff required to service such a large country as Australia, plus all the IT providers had the relationship with the end customers. So our sales model was to use a channel program. • Our customer and partners deliver the managed services on top. • This is a symbiotic relationship and we chose to never compete with the channel. • We provide the partners up to 25% discount as an incentive to use us. What part of the cloud journey are you helping with?
- 16. COMPETING AGAINST HYPERSCALERS Target the Hyperscaler weaknesses: • Language, currency, local understanding. Try and call AWS or Azure? What support can you get? • Don’t model your products on theirs, don’t use instances, bundle components into a solution. • AWS customers suffer from bill shock. Zettagrid fixes pricing like a capped phone plan . • AWS and Azure is complex, deliver a simple solution. Moving the cloud is about trust. Customers need to trust you and the cloud. People (and governments) are patriotic and would always prefer to leave there data with someone they know. Their weaknesses is your strength
- 17. OUR KEY LESSONS • Ongoing capital investment is required. • Bespoke / custom solutions don’t work in scale. • Automation & Self service = increased sales, lower expenses. • Don’t try and target the whole market. • Local support and self service sets you apart. • Anchor customers are important to ROI period. • Target your competitor weaknesses and turn them into your strengths. • Ultimately you need to choose a path. (Product or Services)
Editor's Notes
- #2: DO NOT REMOVE THIS SLIDE