By Charles King, Pund-IT, Inc. October 8, 2014
Praveen Akkiraju is Chief Executive Officer (CEO) of VCE, a private company formed by Cisco and EMC (with investments from VMware and Intel) that has become one of the fastest growing converged system and cloud infrastructure companies in the industry. Akkiraju and his team are developing solutions that enable enterprises and service providers to accelerate deployment of next generation IT platforms and operating models. VCE is the #1 market share leader in converged infrastructure solutions with annual revenues topping $ 1 billion.
Akkiraju holds a master’s degree in electrical engineering from Louisiana State University and is an alumnus of the Harvard Business School. He also serves on the Senior Advisory Council at the non-profit Industry Initiatives for Science & Math Education (IISME).
During a recent meeting with Akkiraju, we conducted the following interview.
PUND-IT: It’s good to talk with you, Praveen. Could we begin by discussing your work history and education?
AKKIRAJU: Prior to VCE, I spent 19 years at Cisco. After completing my masters in Electrical Engineering in 1993, I joined Cisco. In the early days of my career, I was primarily involved in defining some of our early Internet[K1] standards and helping customers deploy large-scale IT infrastructure.
PUND-IT: Sounds like you were in the Internet from the beginning.
AKKIRAJU: Yes. After that, I ran Cisco businesses in enterprise, wireless, broadband and mobility, where my role was in product development. I built up large-scale products, including the flagship CRS-1 (Carrier Routing System-1), which is the largest routing platform Cisco has ever developed. So fundamentally, my career at Cisco was focused on deploying large-scale IT infrastructure and developing platforms that were critical to the build-out of the Internet.
PUND-IT: Why did you come to VCE?
AKKIRAJU: Around the end of 2011, I was looking to make a transition, and the opportunity at VCE came about. EMC’s CEO Joe Tucci and Cisco’s CEO John Chambers urged me to consider the opportunity. So after having conversations with the board (VCE is a joint venture between Cisco, EMC and VMware, with an investment from Intel) and some VCE customers, I decided to take on the challenge. I’ve been at VCE now for a little over two years and it’s been a phenomenal ride.
PUND-IT: How so?
AKKIRAJU: VCE is a pioneer in establishing the converged infrastructure market. It is a fundamentally new way of deploying data center infrastructure. Over the last two years, we’ve seen a dramatic acceleration in the adoption of converged infrastructure by enterprises and service providers. VCE finished 2013 at a $1.8B run rate and has grown more than 50% each of the last five quarters. In fact, you can truly say that converged infrastructure has become mainstream. Right now almost everybody is talking about it.
PUND-IT: It sounds as though your work and educational experiences prepared you ideally for this role.
AKKIRAJU: Being an engineer, I approach things from a really technical perspective. However, in times like these, I think you need to make sure that you really understand what’s driving changes from a technology perspective, a customer value perspective and an economics perspective.
PUND-IT: And that’s part of what VCE does?
AKKIRAJU: When I look at what we’ve achieved at VCE, it’s clear we’ve truly nailed the value propositions on what we can deliver for our customers. Specifically, we’ve dramatically simplified the adoption of next-generation infrastructure, accelerated the delivery of new services and applications and lowered overall operational costs. Bringing all that together is what makes us special. Plus, we truly enjoy the technical challenge of doing it all.
PUND-IT: Why do you think VCE’s message and the underlying capabilities of its solutions resonate so well with customers?
AKKIRAJU: The CIO today is faced with unprecedented challenges. The business expects IT to provide fast, convenient and cost-effective access to resources, similar to what they imagine the public cloud provides. They also want an agile, secure and resilient infrastructure. So if you are a CIO who’s competing with public cloud providers, you need to incorporate these new technologies and world-class infrastructures at a really rapid pace. That’s the fundamental problem with the transition to the cloud era, and it’s what most CIOs are really grappling with today.
PUND-IT: And the cost of failure is dire.
AKKIRAJU: Yes. The price of not keeping up is that you lose your end users to the public cloud, and your IT infrastructure and investments are basically in fragments. So one reason why VCE has been so successful is because we can directly help CIOs address that problem. We can enable them to incorporate the latest and greatest technologies, such as flash storage, software-defined networking, automation and orchestration. VCE integrates these and other cutting-edge technologies into Vblock Systems and optimizes them for the customer’s specific requirements. We deliver significant benefits to CIOs, while dramatically speeding time to deployment.
PUND-IT: How long does it typically take to deliver and deploy Vblock solutions?
AKKIRAJU: After a customer says go, we’re able to deliver a system that’s preconfigured and pre-engineered for their requirements in 30 to 45 days. Once the system hits the data center, we’re able to get it up and running for production in about 48 hours. So it dramatically reduces the amount of time an IT department spends on bringing up brand new data center infrastructure. Plus, once the Vblocks are in, we assume the responsibility for keeping the infrastructure updated regularly, including the integrated applications. As a result, the customer doesn’t have to worry about any of the operational requirements of testing all its software together, making sure every new release works with previous releases and so on.
PUND-IT: In other words, VCE’s value proposition doesn’t apply just to the front end of the engagement.
AKKIRAJU: Exactly. We tune infrastructure for the customer’s specific workloads and application environment, we’ve dramatically improved availability as well as the performance of the application themselves. As a result, we’ve extended benefits across the entire stack. We service and support everything that we sell.
PUND-IT: I’ve heard that described as the “VCE Experience.”
AKKIRAJU: Absolutely
PUND-IT: Let’s talk a bit about the components VCE uses. How do they make Vblocks different from what other vendors are delivering?
AKKIRAJU: The building blocks we have are world class. We have Cisco’s Unified Computing System (UCS) and networking switches, VMware’s software stack and EMC’s storage solutions, all of which are leaders in their respective categories. Consequently, customers don’t compromise on any aspect of the infrastructure, which helps accelerate deployment and results in a highly available, high-performance environment with lower operational costs. When you wrap all this together, you can say we dramatically simplify the adoption, deployment and operations of next-generation data center and cloud infrastructures. That value proposition has delivered tremendous results for our customers and is the defining reason why we are so successful.
PUND-IT: Some vendors would suggest that their own converged infrastructures, typically vertically integrated, technologically homogeneous solutions, offer a similar or even better value proposition than VCE. How would you respond?
AKKIRAJU: When you think of it, you could put the elements of our approach into three buckets. The first is the sheer innovation of the Vblock building blocks: network, storage, server and software components. It’s best in class in each category – there is no better option. Those high-quality building blocks mean we have the most technically advanced system available.
PUND-IT: What’s the second bucket?
AKKIRAJU: Our people. When we created VCE, even when we bring in new employees, we don’t train them to specialize in only one particular area. We don’t have network engineers or storage engineers or server guys. We have data center engineers and every single one is trained in all three disciplines, as well as in the VMware environment. So our skill set, what is in our DNA, is the data center.
PUND-IT: Does that impact other areas of the company?
AKKIRAJU: Yes. Our salespeople have different, transformational conversations with customers. We don’t go in and say, “Would you like to upgrade your storage, or would you like to increase your server capacity?” Or, “How would you like to replace your server X with our Vblocks?” The questions we ask are, “How would you like to fundamentally lower your operational cost and gain a more agile infrastructure?” Our approach builds a lot of credibility for us with customers because we are truly not focusing on a point problem or a point technology product; we are helping them transform the ways they use and approach IT.
PUND-IT: Can you provide an example of how this works?
AKKIRAJU: There was a large pharmaceutical company that hired a new CIO. When he joined the company, he found they were using a fragmented, sort of loosely federated model that led to lots of inefficiencies and not a lot of control. They realized that with the looming Affordable Care Act, along with new regulations and compliance requirements, they needed something that would dramatically accelerate the deployment of a private cloud. VCE Vblocks offered a great way for them to achieve those goals efficiently, quickly and reliably – all the things that we talked about earlier.
PUND-IT: That’s a far different approach than many other vendors offer.
AKKIRAJU: It’s hard for our larger competitors to replicate because we have data center DNA throughout our teams. Our competitors, however, are faced with co-opting talent from different disciplines trying to work together to put the converged infrastructure together. I think that at scale, we are the only company that has that inherent DNA advantage. So that’s why I say our people are our biggest asset.
PUND-IT: What is the third bucket?
AKKIRAJU: We have experience with more than 800 customers and more than 2,000 deployments. We successfully helped companies transform their IT. We’re confident that we can provide new and existing customers with a great solution and contribute to a virtuous cycle where the more of these things you do, the better you get at it. I think our challenge now is to continue to scale that success at the same remarkable rate at which we’re growing.
PUND-IT: That’s a good kind of challenge to have.
AKKIRAJU: We feel like the core value proposition of IT simplification is something that we can deliver reliably to our customers. As long as we continue to innovate in the converged infrastructure space and take our core value proposition of simplicity further up the stack, we are going to continue to lead.
PUND-IT: Let’s touch on a different point. VCE’s history is a bit different. Do you believe that VCE has developed a unique culture as a result of its ownership model?
AKKIRAJU: Absolutely. In the early days, most of our seed talent came from our investor companies: Cisco, EMC, VMware, and Intel. Today nearly 80 percent of employees come from other companies. Related to this, one thing that I quickly realized after I joined VCE is that we definitely need to have a different outlook and perspective to be competitive in the marketplace. I mean, the titans in the industry are our competitors, and we’re the small, scrappy joint venture private company that’s out there beating them and leading the marketplace. The reason for that is we don’t really think of ourselves as ex-Cisco or ex-EMC or ex-VMware employees; we think of ourselves as VCE employees. That’s something that’s drilled in as soon as an employee joins the company.
PUND-IT: And the customers understand and appreciate this?
AKKIRAJU: Yes. We have customers in both business and IT who want to have a relationship with VCE because they value what our pre-sales engineers, whom we call VCE vArchitects, provide and what our service engineers offer in terms of their well-rounded knowledge of the data center and what it takes to help customers transform their IT operations.
PUND-IT: So the customer must be willing to begin the transformation process?
AKKIRAJU: One of the things we also need to remember is that most enterprises are still in the process of transforming their IT departments. Clearly, certain customers are already far advanced in terms of creating dev-ops teams and restructuring their IT infrastructures, but many of our large industrial customers – oil and gas and the like – are still in the process of reformatting their IT departments for the cloud era. So in those cases, we also act as advisers and are there to help them in that journey of transformation. We consider ourselves a solutions company – not a product company or a systems integrator. We provide solutions for customers to help them achieve specific objectives.
PUND-IT: What sorts of objectives?
AKKIRAJU: Data center consolidation. Acceleration of specific workloads. Re-platforming onto x86. Rolling out a private cloud and rolling out managed private cloud services. So those are the kinds of solutions that we are most involved in.
PUND-IT: How do you measure VCE’s progress?
AKKIRAJU: We measure ourselves by asking the following: Are we delivering great value for our customers? Are we delivering on good objectives for our investors? Are we delivering a world-class workplace for our employees? I believe we are and you need only look to Gartner’s recent Magic Quadrant for converged infrastructure as validation that VCE is recognized as an industry and innovation leader. Additionally, if you look at market share, we’re the No. 1 converged infrastructure player. EMC’s Joe Tucci recently mentioned that we have achieved five consecutive quarters of 50 percent or greater growth. So I think those are the ways we measure our performance and execution.
PUND-IT: Let’s change tracks a bit. Could you talk about where you see the broader IT market going? I’m curious about VCE’s position within that context and how you see the company either challenging or staying ahead of competition.
AKKIRAJU: In 2012, when I first joined the company, we were still educating the market about converged infrastructure. Today, you see announcements and solutions around converged infrastructure everywhere. There’s also been a huge market impact where if you look at the broader growth in the IT space, traditional system sales are flat or increasing in low single digits, if that, while we are growing at a significantly faster pace. Effectively, what that tells you is that IT spend is shifting, customers are changing the way they’re buying their infrastructures and they’re moving their investments toward converged infrastructure. I believe we’re going to see that accelerate going forward.
PUND-IT: Do you anticipate much evolution in product development?
AKKIRAJU: I believe we’re still in the early stages of the adoption cycle for converged infrastructure, and along with the mainstreaming and acceptance of converged infrastructure as a foundation for the next-generation data center, you’re going to see different flavors of solutions. You’re going to start to see the category expand out. Hyper-converged appliances will appear at the low end, and we’re going to see application-specific converged solutions. There will also be evolution in what we build, which are pre-engineered, high-performance, highly available systems that form the foundation for a lot of global Fortune 500 data centers.
PUND-IT: Sounds like the sky is the limit.
AKKIRAJU: I think the market is expanding and, as in similar industry transitions, you’re not going to have one defined way that the infrastructure is going to be built. Some customers may choose to build with 2U servers and scale systems with 400 to 500 VMs or 100 VDI endpoints at a time. On the other end of the spectrum with our systems, we’re talking about deployments of 1,000, 5,000, even 50,000 VMs simultaneously, so that’s how variable the scale we’re looking at is. I also think you’re going to have a diversity of architectural plays.
PUND-IT: Where will VCE’s growth come from?
AKKIRAJU: I believe we have a huge amount of opportunity in front of us in terms of just the global Fortune 500 companies, the large systems integrators and the service providers who are large customers of ours but still in the early stages of adoption of this infrastructure. I believe the market is going to continue to grow at the 30 to 40 percent CAGR as projected over the next couple of years.
PUND-IT: How will VCE’s owners contribute to this growth?
AKKIRAJU: As I said earlier, we are able to draw on the more than $20 billion of combined R&D investment that Cisco, EMC, and VMware put into their organizations. What is exciting for me as an engineer is hearing about the cool things the partners are developing because I get to deliver those same things on our Vblocks.
PUND-IT: Such as VCE’s July announcements supporting EMC’s XtremIO and Isilon solutions, and the planned support for VMware’s vCloud Automation Center, vCenter Operations Management Suite and vCloud Air that you announced at VMworld 2014.
AKKIRAJU: Yes. Whenever Cisco, VMware and EMC announce new innovations and products, they create opportunities for VCE to incorporate those we select into our solutions. When I look at each tier, say, at the UCS servers, we’re probably going to get systems with Intel’s new Haswell chips, so that enhances our performance, but we’re probably also going to get more efficient at the lower end in terms of price. So we’ll cover the whole range of options. In the storage space, we’re aggressively deploying flash. We’ve announced Vblocks supporting EMC’s ViPR, and we deliver software-defined storage, and all the capabilities there. From a network perspective, we’re already shipping Cisco’s Application Centric Infrastructure (ACI)-enabled Vblocks, and recently VMware demoed its NSX network virtualization technology running on a Vblock. As you can see, we’ve got a lot of things that we can tap into. When you combine world-class innovation on the core components with VCE’s unique capabilities, such as our own software, services and processes, we will aggressively take our core value proposition of simplicity and move it further up the stack.
PUND-IT: Are there any issues or conditions related to the market that concern you?
AKKIRAJU: The tremendous pace of change is exciting, but it is also challenging. We’re extremely customer focused. Our customers guide a lot of the decisions we make in terms of what we are building and delivering. When I look at the market, there’s a lot of confusion as every vendor tries to put out their story. I certainly want to make sure that we help put things in context for our customers. We use what we’ve learned from customers; we use their use cases and workloads as a lens to look through. This helps us analyze all the new stuff that’s coming out and make the right choices.
PUND-IT: Do you believe that the market fully understands VCE?
AKKIRAJU: I sometimes jokingly say our customers are our best salespeople because they are extremely clear in talking about the value that we can provide because they’ve actually experienced it. We are also unique in being structured as a joint venture, which gives us a tremendous number of advantages. Admittedly, it also creates a certain level of confusion and provides our competitors with opportunities to create some mischief. But frankly, that’s never really inhibited us from being successful with customers.
PUND-IT: Nobody can fool satisfied customers.
AKKIRAJU: I use customers as a barometer. At the end of the day, our customers look at the value we deliver and continue to invest in us. Sixty-five percent of our customers are repeat buyers, so we have tremendous loyalty.
PUND-IT: What message about VCE would you like the market to understand?
AKKIRAJU: I would say three things. One: We are the most innovative converged infrastructure company in the world. That is because we have access to world-class technology, and we deliver unique solutions that we are able to help customers understand and deploy rapidly and successfully. Second, the value we deliver to our customers is tangible and measurable. Our customers’ testimonials are not marketing slogans – they are willing to stand up in front of large audiences and describe what they have actually experienced. That is why we have so many repeat buyers. Third, the biggest strength of VCE is our employees. We have a tremendous amount of experience that enables us to deliver continually better solutions and to take our core value proposition of simplicity progressively up the stack.
PUND-IT: It sounds as if there are as many opportunities ahead of VCE as there is success behind
AKKIRAJU: We’re going to continue to innovate and stay ahead of the curve. What we care about deeply are our customers and making sure we continue to provide them with all the value we can.
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