Cloud Operating Models – Critical to the Private Cloud Approach

Coming out of Explore Las Vegas 2024, it’s clear that our top CIOs and CTOs want the economics of running their cloud environments to improve. Finance is the language of business today and with that comes the sharpening of pencils to understand the cost, complexity and controls associated with operating in a variety of cloud environments.

At Explore Las Vegas, IT practitioners were excited and engaged as we unveiled VMware Cloud Foundation (VFC) 9 and Tanzu Platform 10. They now see a clear path forward to better cloud management. 

Below is a brief discussion with Mike Gannon, President of Americas Strategic Sales, and Stephen Elliot, Group Vice President, I&O, Cloud Operations, and DevOps at IDC, during a break in the action at Explore. They share their perspective on customer cloud economics and how the numbers pencil out for CIOs and CTOs who are sitting at the negotiating table with Broadcom.  It has been edited for brevity. 

Broadcom: What’s the big view on customer cloud economics and how it is changing private cloud consumption today?

Mike: Customers made a huge bet on fulfilling their digital transformation initiatives in the cloud over the past 10-plus years. This resulted in broad commitments to hyperscalers with the general belief that cloud was a destination versus an operating model.

Looking back, we have countless examples where these initiatives fell short of expectations, and this is due largely to three common misunderstandings: Cost, Complexity, and Control.  

Cost. Stephen said it best: “Finance is the language of the business.”  It was initially believed that running a business in the cloud was cheaper than running on premises. We have various data points that suggest this myth simply is not true.  

So to change this thinking, each time a strategic customer is approaching a VMware Cloud Foundation (VCF) renewal, we demonstrate cost savings using a structured, repeatable approach. 

It starts with an aligned vision that helps customers realize that cloud is an operating model, not a destination.

Next, we pivot to showcasing how VCF provides the developer community a self-service cloud operating model at a fraction of the cost.  

Then using the VMware Value Modeler (VVM), we complete a detailed financial exercise by pulling information from across the virtual machine including storage, RAM, CPU, network interfaces, application dependency maps, and other key resource data.  

We go further to assess utilization and where automation is being leveraged across the IT supply chain. We use these reports to collaborate with customers and clean up assumptions and supply chain details in the developer's experience.

Next is how we get our customer from “current state to future state.”  This is a critical step that often was not well-executed across the market for legacy applications. This is where we address Complexity, Compliance and Controls. When we walk customers through the VCF future state, we map out how developer cycles can shift from rebuilding common IT governance/controls to focusing more time on business modernization. 

We all know customers are dealing with skill gaps and lack of developer cycles. So, our goal is to help them leverage existing IT resources by expanding well proven virtualization concepts deeper into storage, network, security, and automation while breaking down silos and delivering transformation at an accelerated pace. With VCF, we have countless examples of how to drive automation across discrete IT silos while driving up utilization and eliminating redundant costs. With every customer, we walk through what this journey would look like on a three or five year basis, and where Broadcom can incrementally start to deliver value through comprehensive consumption and adoption planning.

Stephen: Organizations that instilled a cloud-first stance have firsthand experience with public cloud deployments and challenges. Cost is immediately the major surprise.  Pushed further they begin to orient to data governance and compliance.  Private cloud is getting to a level of maturity—moving from a set of products to a unified platform—where automation becomes front and center. Process efficiencies offer tremendous value over the long term. 

Broadcom: What do the hard savings for customers look like?

Mike: Considering what we bring to market with VCF, we actually took the first major step by reducing the VCF list price, essentially cutting it in half—we made the entry cost 50% lower. If you look at what it costs now to run a private cloud on VCF and you compare that to a public cloud experience, we’re a quarter of the cost. If you look at how we’ve positioned and priced VCF, it’s incredibly well priced compared with public cloud consumption. There are also real hard savings on OpEx and CapEx that come out of the VMware Value Modeler reports. We have creative ways in which we can help customers ease into the cost of the VCF, so that it’s not all upfront. We recognize that past investments take time to depreciate. We are seeking to meet customers where they are today and step into the VCF cloud journey.

Stephen: IDC took a close look at what VCF offers by talking to executives at organizations that are using the platform to establish and operate private and hybrid clouds. Based on these interviews, IDC estimates that organizations will see benefits worth an annual average of $111,100 per 100 VMs, which amounts to $16.8 million per organization.  Customers are highly aligned with the benefits of having a more flexible and high-performing IT infrastructure with VCF, which allows them to optimize their infrastructure and human capital costs.

Broadcom: What do you tell  customers who are evaluating cloud operating models?

Mike: At Broadcom, we are extremely focused on building a great cloud offering as compared to the past, when we delivered a disparate collection of great products. As our customers are making changes, we are as well. We had to fix our own siloed operating model. Broadcom’s President and CEO Hock Tan basically said, “I’ve got one owner of VCF, and their responsibility is to deliver a cloud operating model from an infrastructure perspective.” The broad set of customers who deployed VCF  in the past experienced more system integration work than required. That will not be the case moving forward. Together, we can truly help our customers improve their cloud operating model and realize reduced cost, increased simplicity with required compliance and control.”

To learn more about the enhanced Private Cloud Maturity Model Assessment, and to help you self-assess and identify your cloud maturity, click here.  To read more about the news from Explore Las Vegas 2024, learn more here.