VMware continues to extend its virtualization business from servers to storage, networking and software-defined data centers. At the same time, many partners are seeking to introduce various managed and cloud services — especially for the potential recurring revenues, which tend to lift company valuations.
With those realities in mind, VMware is helping hosting providers, telcos, IT outsourcing firms, traditional VARs and other types of partners to build and monetize managed services. For the specific details, ChannelE2E interviewed Ajay Patel, SVP and general manager, Cloud Provider Software Business Unit, VMware. Part one of the conversation unfolded at the IBM Think 2018 conference this past March in Las Vegas. Part two continued over email. Here’s a look at the discussion.
ChannelE2E: You’ve focused considerable time on VMware’s MSP partner strategy. Which VMware Solutions represent the biggest opportunity for both VMware and the MSPs? Are there any particular market segments that stand out as being a strong opportunity?
VMware’s Ajay Patel
Ajay: We’re seeing two major trends – the first is around traditional hosting providers transforming into full-fledged cloud providers driving automation of infrastructure and application services along with managed services on top. These providers are leveraging VMware’s significant install base to deliver a common hybrid operating environment with VMware powered specialized Infrastructure-as-a-Service and differentiated managed services on top.
Second, a lot of providers recognize the value of managed services and have begun to move into a mix of asset-heavy and asset-light where they are starting to provide services on top of third party clouds, particularly the big providers like Amazon, Microsoft, Google and IBM. Providers are responding to their customers’ use of multi-cloud to offer management, security, compliance and other services across multiple cloud platforms. As part of this trend, traditional managed hosting, system integrators, outsourcing and traditional VMware solution providers are increasingly moving to become cloud providers or managed-service providers (MSP).
ChannelE2E: You mention hosting providers. What role will VMware play in their transformation into MSPs?
Ajay: MSPs are differentiating themselves thru specialization and intimate knowledge of local rules and regulations. We are particularly seeing higher growth in the emerging areas as they tend to be highly fragmented in smaller regions and providers tend to have an advantage with data center location and ability to offer superior customer service. Industry trends around data sovereignty and regulation is also driving the need for local service providers. As a result, we’re seeing a lot of specialization from MSPs whether it’s a region or vertical. Providers are increasingly looking to VMware to be their strategic technology partner.
Our role at VMware has become twofold. Offer an open, integrated and ready to monetize VMware cloud platform that delivers a highly automated, competitive IaaS cloud with ability for them to differentiate with unique value added services. Second, help them capture the opportunity around managed services as their customers struggle with connecting, managing and securing multiple clouds.
ChannelE2E: How far along do you think hosting providers are in their transformation or evolution toward managed services?
Ajay: The cloud provider business is very broad, and you can find a provider that does one thing very well and is very specialized. On the other hand, you can have full-fledged providers like that of an IBM, who has a comprehensive portfolio of services, or Rackspace, who has aggressively moved to become a partner in the multi-cloud world. Both, along with thousands of regional, specialized partners are part of our VMware Cloud Provider Program.
This isn’t a uniform or one-size fits all business – customer cloud computing requirements can vary greatly and must be individually addressed. Traditional hosting providers are getting more sophisticated, and we are seeing traditional system integrators like DXC offer managed services atop leading clouds like VMware Cloud on AWS. I see growth coming from a whole new type of asset-light MSPs joining the VMware MSP model, in addition to the traditional hosting companies. Concurrently, we’re seeing consolidation and existing partners acquiring new managed service capabilities. It’s a dynamic market with customer demand being fulfilled with wide array of services and capabilities from the thousands of VMware cloud provider partners.
ChannelE2E: VMware’s software portfolio is quite large. Is there a particular VMware management platform or toolset that you expect MSPs to embrace, and why?
Ajay: At VMware, we’ve moved from selling individual products that traditional providers have had to take and assemble into a platform themselves to building our Cloud Provider Platform with the solutions and services’ our partners can leverage to evolve and grow their businesses.
With the VMware Cloud Provider Platform, we’re providing an integrated platform that includes vCloud Director at its core but also includes management capabilities like vRealize Operations and a fully integrated SDDC of vSphere, NSX and vSAN, engineered to work together, stand up a cloud very quickly, operate efficiently and offer a complete solution to our partners.
According to a recent IDC report on Worldwide Managed Cloud Services, seventy-two percent of customers want multi-cloud and there is a $63 billion opportunity in managed cloud services. In addition to the VMware Cloud Provider Platform, our growing portfolio of VMware Cloud Services and eco-system partner is giving providers the rich portfolio of tools and capabilities to offer solutions and managed services that create value for their end customer.
ChannelE2E: There’s also chatter about VMware working on an MSP-oriented portal or dashboard. Can you share any details about that effort, status of the portal, and when MSPs might be able to see and test it?
Ajay: We recently announced vCloud Director 9, a strategic Cloud Management Platform for Service Providers that excels in IaaS and managed hosting use cases, enabling easy and intuitive cloud consumption for VMware customers. We are now extending this platform with SaaS delivered Managed Services Portal that gives partners access to VMware’s growing portfolio of services like VMware Cloud on AWS, Cost Insight etc. Our goal is to provide a single management platform that allows services providers to manage their own cloud, VMware running on third party clouds, and native public mega clouds. Have a partner branded catalog of services that can created from rich portfolio of VMware Cloud Services or eco-system services with flexibility of delivering self-service or managed services to their end customer.
ChannelE2E: As part of your MSP strategy, will you extend beyond hosting providers – down smaller MSPs that remotely support SMB customer infrastructure, and up to larger telcos that are doubling down on network services, NFV and more?
Ajay: Yes. The economics are changing in favor of partners that have specialized skills. Our VMware Cloud Provider Program has always been expansive and aggressive in the needs of smaller providers and we’re also providing great growth opportunities for other partner types. The cost of entry for MSPs is becoming more about human capital and the capabilities they can offer, and less about the infrastructure investment that they need to make to get started.
We are building platforms which enable the ecosystem of MSPs and ISVs, and work across all cloud as opposed to being siloed to a particular cloud or partner type and enable partners offer services that support customer requirements. We are partner led and driven leveraging infrastructure of public cloud, service delivery capabilities of our partners reaching VMware’s 500,000+ customers and more supported by the VMware MSP platform.
In telco, we’re seeing a tremendous opportunity in supporting the ‘edge’ and providing network and security managed services through capabilities like SD-WAN. Remote offices are moving away from using dedicated MPLS lines to using modern technologies and leveraging it with other physical networks that are in place, finding a cost-effective way to extend not just to the cloud but the data center to the edge. With our recent acquisition of VeloCloud we’ve see a lot of excitement and interest to offer SD-WAN services through technologies like this, particularly around branch and remote office integration.
We’re also seeing opportunity around our end-user computing platform, Workspace ONE. The business is evolving to be unified, and many our partners see an opportunity to leverage our digital workspace platform to help manage these endpoints from Windows 10 to mobile devices. At the end of the day, we are looking to bring a broad portfolio to these partners and there is room for every partner type to figure out where they want to play.
ChannelE2E: VMworld 2018 is approaching in August. Are there any particular steps hosting providers and established MSPs should take ahead of the conference to more clearly understand VMware’s focus on the ecosystem?
Ajay: Yes, as a VMware service provider and/or MSP partner, ensure you have a strategy to focus on how you be an effective partner helping customers extend their existing data centers to leverage the cloud. As part of the shift from just being a traditional hosting provider, providers should also start to think about their unique differentiation and specialization – a particular region, vertical solution, managed service capability or just your customer service. How can you provide unique value to your customers?
Lastly, get prepared for moving beyond infrastructure to start leveraging the rich portfolio services that VMware and our partner ecosystem provide. Partners can better serve our 500,000+ customers by aligning with our roadmap and double down by investing in our VMware Cloud Provider Platform. It is a provider’s cloud in the box which will help you stand up a cloud or build out an MSP service without extensive additional CAPEX investments. Ultimately, we’re focused on helping our partners make money and be successful in transforming themselves, their customers and leveraging the digital technologies that are shaping each industry;