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VCE is holding its second annual partner confab in Dallas this week -- an intimate gathering of top-ranked VCE solution providers from across North America who will discuss VCE's ongoing channel expansion and priorities for the new year. CRN is pleased to highlight this story that dives deep into VCE and its parent companies and which originally ran as an exclusive on the CRN Tech News App.
VCE employees were restless. It was the fall of 2011, and questions were being raised about the long-term viability of the much-hyped, much-criticized Cisco-EMC-VMware union. The company's human resources team had abruptly announced out-of-season employee evaluations, and there was rampant speculation that layoffs at the company were imminent.
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To quell employees' fears, VCE President Frank Hauck and Executive Vice President Todd Pavone -- neither much known for cheerleading in their management styles -- decided that an upbeat, rallying cry was exactly what was needed.
As VCE insiders describe it, there were Hauck and Pavone -- both well-regarded EMC veterans -- front and center, meeting with teams of VCE employees based in Silicon Valley, in Texas, and in Massachusetts, partly to reassure VCE-ers that the company was in good shape. It went as well as it could have, insiders said: Hauck talked largely about how VCE's numbers and growth were on track, and Pavone went on about how VCE was primed to go on a sales tear.
But those claims of a bright future for VCE were falling on deaf ears.
At around the same time, Cisco executives polled partners at its semi-regular Cisco Partner Executive Exchange (CPEE) meetings to gauge their levels of success and engagement with VCE. According to sources familiar with the feedback, some two-thirds of CPEE attendees -- an exclusive group that represents elite Cisco solution providers, telecoms and distributors from all over North America -- responded that if given the choice, they'd fold VCE and that they favor the model many partners refer to as simply "V plus C plus E." In other words, they'd rather design and custom-tailor the integration of products themselves.
"VCE doesn't matter, and I wouldn't expect it to be around in a few years," said the CEO of one of VCE's top channel partners, who was polled at the Cisco event. "The value to customers is in the VAR's ability to aggregate these products and services and make it work. The customers do want one throat to choke, but they want to be able to tell us, 'Here is what I want, and can you do everything?' They don't want to work with multiple companies or coalitions of companies or be locked into this or that product. It's that simple."
Based on dozens of interviews conducted by CRN over the past nine months with various stakeholders and observers of the company, it's clear that VCE faces huge challenges in its quest to remain a stand-alone venture. Not least among them: Many of the channel partners it counts on wouldn't bat an eye at its collapse; the number of potential customers best served by VCE seems decidedly finite; the sales reps from its respective parent companies find themselves at odds a lot more often than they're cooperating; and their own parent companies are caught up in selling competitive offerings, including EMC's VSPEX and Cisco's far more flexible and less arcane partnership with EMC rival NetApp known as FlexPod.
"I acknowledge that we will need to listen carefully to our partners, and I'm 100 percent committed -- the partner strategy, for me, is top priority," Praveen Akkiraju, CEO of VCE, told CRN. "We are aligning very closely at the senior management level and making decisions to ensure we get past these challenges."
Several former executives that have left VCE question whether the VCE experiment ultimately will be folded back into the respective companies. "That's the $64,000 question," said one former VCE executive, who did not want to be identified. The crux of the matter, he said: "What percentage of sales from VCE are incremental?"
In other words, exactly how many more customers, opportunities and returns are available to VCE and its partners that they wouldn't be able to find otherwise?
It's a question that Cisco and EMC top executives are focused on, according to current and former VCE employees. The problem is there is simply no way of knowing how much of the roughly $1 billion in run rate sales that VCE is getting would disappear or continue to go to a V plus C plus E reference architecture solution if VCE disappeared, said the former VCE executive.