E360 CEO Mike Strohl Talks FinOps Investment And Navigating The Supply Chain Crisis
Wade Tyler Millward
'All of those things for companies like ours – who have done things the way they've always done things – it is a big pivot and lift,’ Mike Strohl, CEO of E360, tells CRN in an interview. 'It’s learning to speak a new language.’
A growing practice around financial operations and navigating the supply chain crisis are some of what’s occupying Mike Strohl, CEO of E360.
E360 – formerly known as Entisys360 and No. 111 on CRN’s 2022 Solution Provider 500 – is a Concord, Calif.-based company with partners including Microsoft, Hewlett Packard Enterprise (HPE), Cisco and NetApp. Adapting to new customer demands around using cloud technology to transform specific business functions, like finance, has resulted in a transformation of E360 itself, Strohl told CRN in an interview.
“All of those things for companies like ours – who have done things the way they’ve always done things – it is a big pivot and lift,” Strohl said. “It’s learning to speak a new language. We’re looking at things like putting in field CFOs (chief financial officers) to help customers because you can’t teach a technical account manager or an SE (systems engineer) financial optimization – it's a whole other rotation. So where value comes from is a whole different place when it comes to those types of things.”
What Is E360?
E360’s investment in FinOps has come about because of customer confusion over managing the cost of cloud consumption.
“With FinOps, you’re talking about an ongoing increase in consumption of cloud and cloud services overall,” Strohl said. “Most customers don’t know how to manage that cost. There’s all these stories of companies that went too fast to the cloud, thought they understood it, and then pulled everything back out, with the expense being just enormous. So the FinOps isn’t really about ROI of soft costs. It's really about the management and optimization of their cloud spend. And that’s why it is so important.”
While signs of an upcoming recession haven’t resulted in clients pulling back spending with E360, the supply chain crisis has been difficult to overcome, Strohl said.
“Vendors have been pushing people to – especially with things that are eight months out, buy now for 2023,” he said. “That’s all well and good. Except I have clients that have done this and – without telling anybody – vendors start shipping now. And the problem is the customer has no budget for now, because it was all supposed to be 2023 budget.”
He continued: “It puts a lot of burden on us. I spend a good 20 percent of my week just dealing with managing these types of things and reinforcing and making people remember what they committed to. All the not fun stuff in this kind of job.”
Here’s what else Strohl had to say.
What vendors are key for E360 nowadays?
I would say HP is a long-standing stalwart for us. Cisco is a major vendor for us. Google is a major vendor for us. … NetApp is emerging again as a major vendor for us. … Probably Microsoft as well. … And then I have this other category. And there are, especially in the cyber in the cloud space, emerging vendors that may be smaller if you were looking at revenue spend but have become key to our success.
What E360 offerings are popular with customers lately?
Technically, we’re partnered with all three (cloud hyperscalers) … (Microsoft, Google and) AWS as well.
But the scenario is the same. When you look at the things that are critical, and making the pivot from being a traditional data center infrastructure reseller to being an effective cloud reseller has been a lot of investment, a lot of time, a lot of mistakes made, lessons learned and a depth of persistence like none I've ever had to have before.
And so, the things that really stand out with this stuff, one is capabilities within those clouds when it comes to things like software development, or refactoring of applications.
It has to do with automation, and it has to do with the things we've always done in regular data centers, but now doing them in clouds and having them work in whatever hybrid mode – because everybody’s in a hybrid mode, whether they admit it or not.
Overall, making them work with maybe some of the other more traditional infrastructure. All of that stuff is key in it. And knowing cybersecurity as it relates to DevSecOps (development, security and operations) and cloud security as a whole.
And then the other big one – big, big, big one – is understanding client contracts. So we own the contracts for many, many clients where we're the ones doing the billing. We’re the ones sorting out and making sure they're only being charged for what they’re using.
But then that requires an additional skill set, which is around FinOps (financial operations) in particular. So optimization of their spend – it's not just getting them to spend more, it’s getting them to spend intelligently.
And then that leads into the ability to resell to clients through marketplaces as opposed to traditional distribution manners of doing things.
And so all of those things for companies like ours – who have done things the way they've always done things – it is a big pivot and lift. It’s learning to speak a new language.
We're looking at things like putting in field CFOs (chief financial officers) to help customers because you can’t teach a technical account manager or an SE (sales engineer) financial optimization – it's a whole other rotation.
So where value comes from is a whole different place when it comes to those types of things.
How important is FinOps?
It used to be if you didn't have good technical capabilities, you would be out the door as fast as you were in the door with a client.
But with this, the technical capability has to be there. But if you don't have your FinOps practice together, you don’t understand the tooling, how to read the tooling, how to help clients, and you start sending bills over.
The bills don't go to the IT manager to be signed off and paid. They go all the way, in some cases, to the board of directors. And it doesn’t matter if you have all the skill in the world. If you get that wrong, you’re done. Completely.
What’s helped you evolve the business into a channel partner for 2022?
Definitely, hiring as an aspect of it. We hired somebody (Nikki Vijeh, E360 cloud enablement director) whom I would classify as a cloud wizard. All cloud programs. I don't mean technical. I mean programs. And how you get certified in different things, how you navigate the system. This person is also … a Microsoft licensing guru. … And with all the changes and all the screwiness that’s going on with the NCE (new commerce experience) stuff and everything else.
It's not just being good at this stuff. It’s rapid program changes, rapid policy changes, rapid licensing changes and what customers are and aren't entitled to overall.
It's understanding consumption. It’s understanding background. The one great thing about the public cloud providers is they all have major professional service funds that they will contribute to us to help accelerate clients’ adoption of cloud. … The legacy, brick-and-mortar hardware and software companies, they all want the partners to invest in customer success programs.
But customer success efforts and rotations are very expensive. And yet they continue to cut margins, and they don't contribute dollars to customer success, which is supposed to be focused on adoption.
They have not figured out what the public cloud providers have figured out, and that's where to put the money.
Do you work with distributors?
We're doing a mix of both. We use distributors for the Ciscos, HPs, et cetera of the world.
However, with the cloud ones, we have a mix of direct and indirect things. To be honest with you, indirect, where we're able to use distributors, the distributors – they’re not great, exactly, at what they're doing to be honest with you. We have a lot of struggles. … We’re also using distributors in many cases for our public cloud resale as well.
Because dealing (with the cloud hyperscalers) … it’s like working directly with a telecom company.
If you work directly with them, they'll just send you a million lines of stuff that nobody understands. Whereas the distributors will filter some of that. They don’t do it very well. But by the time we get it, they've taken a lot of cycles away from us and removed a lot of the opportunity for error.
What would you like to see from distributors looking ahead?
Investment in things like FinOps tools.... helping partners with that type of stuff. Enablement, training – there’s not enough Google engineers to even circle 10 percent of the planet with demand at this point in time – and it’s not much better with the other two (hyperscalers), either.
Do you worry about losing good employees to the vendors?
My company is based all over California and then Arizona. And so all the major recruiters or companies, big ones, whether they're cloud providers or other, they’ve got the cash to just come take them. So it is hard, overall.
How will FinOps become more important for you looking ahead?
That definitely will be a beachhead for us. Without question. … Once upon a time, the accounting function for resellers lived in the back office where nobody saw them. And now they're at the front of the front office where everybody sees them.
So it's not just having a practice. It’s what you bill. It's how you bill. It’s how you analyze the data that's coming in. How you help your customers with that data option by spend. How you present it to them overall, because your business … depends on that type of thing.
The old-school mentality used to be ROI (return on investment) analysis. But ROI analysis was always designed for manufacturers to somehow find a way to sell more by identifying soft cost savings, not hard cost savings.
And so, with FinOps, you're talking about an ongoing increase in consumption of cloud and cloud services overall.
Most customers don't know how to manage that cost. There’s all these stories of companies that went too fast to the cloud, thought they understood it, and then pulled everything back out, with the expense being just enormous.
So the FinOps isn't really about ROI of soft costs. It’s really about the management and optimization of their cloud spend. And that's why it is so important.
But from our perspective, typically, if we are controlling the customer’s cloud contracts, then we're getting paid on consumption. We’re getting paid on other services. We're getting paid on managed services. And we’re getting paid on marketplace sales.
So our intent is to, in most cases, offer it as a service when we are the partner of record – if you want to call it that – or the actual resale partner for those accounts overall.
How can cloud vendors be more helpful for your business?
Most tools for selling (spending guardrails) are third party tools. To be honest with you, the cloud vendors aren't really putting a lot into that. That’s on the partners to do. They're moving too fast, selling too much.
That's where we actually have been bringing value back to them. It’s funny because the whole notion with cloud providers is sell a multi-year committed contract.
And then somewhere in the middle of it, negotiate based on consumption growth another three-year, five-year contract that's even bigger with a commit.
So the customers are going to spend, but if the customers are … 70 percent higher than what they were expecting, and there's no answer, or no FinOps and cost optimization, then the odds are the opposite is going to happen.
They’re going to look at other cloud providers. They’re going to look at bringing workloads back in house, the things that the cloud providers don't want to happen. … In the cloud world, there’s so many things where (solutions) … aligns the cloud vendor, partner and the customer.
With some of the legacy partners that are out there that aren’t offering customer success, their version of customer success is, 'Well, you bought an ELA (enterprise license agreement) from us and we threw a bunch of these products in there that you never asked for to begin with. And now we want you, Mr. Partner, to go get them to adopt those. And then we'll pay you if they do.’
The customer didn't ask for it, per se. The partner didn’t really sell it – just kind of added it in there. So everybody is not in alignment with one another.
Whereas in the cloud world, they may be committed to spending $7 million a year. And when they reach that number, they get discounts as well as us getting rebates. Everybody's aligned to the same cost from day one.
Are recession concerns affecting spending?
The spending is there. We’re up and to the right. We’re growing. We're investing. Our only issue is supply chain. And it is a big one for us. … The customers, they know the game.
Unfortunately, there's a confluence of inverse things happening in that universe that are diametrically opposed to one another.
The first one is, obviously, the vendors keep pushing out the dates for delivery. … It used to be, if you're a CTO (chief technology officer) and you had a budget allocated and you didn’t get your project done, you were in trouble or you lost your job.
And now, that can't be the case because nobody can guarantee that. So that’s problem one.
And then on the inverse side of things vendors have been pushing people to – especially with things that are eight months out, buy now for 2023.
That’s all well and good. Except I have clients that have done this and – without telling anybody – vendors start shipping now. And the problem is the customer has no budget for now, because it was all supposed to be 2023 budget.
And so it's problem after problem after problem. And a lot of the vendors are not fast. They always move slow to begin with because they’re big battleships. But now is the time to maybe move a little faster in terms of certain types of things.
And it puts a lot of burden on us. I spend a good 20 percent of my week just dealing with managing these types of things and reinforcing and making people remember what they committed to. All the not fun stuff in this kind of job.
Has this affected the cloud practice?
It's the exact opposite. It’s actually fueling the cloud practice because people need to get stuff done. And you can get it done in the cloud.
Are E360’s managed services growing?
Managed services in general have been growing dramatically. And that's all driven by the fact that people can’t find people. They don't want to focus on maintaining their environments. They want to focus on other, more strategic initiatives.
That is a wheel that's turning. And then our cloud and our cyber in particular. Everything is up and to the right with those practices.
What cybersecurity vendors do you use?
How do you decide whether to invest in a smaller vendor?
There are a couple of different thought processes with this. The first is just the word 'innovation.’
One of the value-add things that customers want from companies like ours is exposure to new technologies that will solve real problems that can't be solved with the traditional vendors within that segment overall.
Then you take our very, very deep and experienced crew in the cyber side of our business, and they're looking at this stuff all the time because a lot of them are ex-CISOs (chief information security officers) as an example, and they would be looking at this stuff anyway.
So if you go to a customer and all you're doing is selling a product, then you’re at one level.
If you're in there identifying and solving problems with new technology, overall, your status as trusted increases on the trusted scale as a whole.
So to me, it's something you have to do. And, by the way, there are a lot of companies in our space that claim to be security partners, but what they do is they resell … one vendor or two vendors that can resell the product. They might be able to install it. But they don’t speak cyber by any stretch of the imagination.
They might have a guy or girl, whereas we've built an entire business with experts in everything from privacy to SOC (Service Organization Control) to compliance to pen(etration) testing, everything that fills those gaps.
How big is E360, and what verticals do you serve?
We have more than 200 people. … I could name drop across all verticals. We definitely have a heavy presence in health care, a heavy presence in state government.
What do you view as the best ways to grow looking ahead?
We’re growing in a number of ways. One, I could say geographically because that is happening. We did just open Arizona and the Pacific Northwest.
We have, I think, a pretty good story. And so we've been attracting some pretty solid, high-performing sales teams into our organization as a whole. The investment in cloud and cyber are fueling a lot of the interest and excitement around what we’re doing as an organization.
What’s one of the secrets to your success?
My company is nothing without the people that we have. And if you can see the level and depth of talent in our organization that isn't and doesn’t leave our company, regardless of this crazy hiring and the ‘great resignation’ and all that other stuff that’s going on.
I am lucky and humbled to have the people that I have, to have the leadership that I have, to have the engineering talent that I have. And if there is one common bond that drives this company forward, it is the passion that everybody has for what they do and the impact that it has on the customer community.