Dell's Marius Haas Lays Out Partner Opportunities Around VMware-Pivotal, 5G And Flexible Consumption

‘By putting [Pivotal] inside of VMware, now we've got a tremendous software development application platform sitting on top of an amazing industry-leading management platform for our customers and our partners,’ says the Dell Technologies president and chief commercial officer.

Haas Takes Center Stage

Dell Technologies President and Chief Commercial Officer Marius Haas sees big opportunities ahead for channel partners after VMware completes its pending acquisition of cloud-native platform provider Pivotal.

"By putting [Pivotal] inside of VMware, now we've got a tremendous software development application platform sitting on top of an amazing industry-leading management platform for our customers and our partners," Haas said during an on-stage interview with CRN Editor, News Steven Burke at the 2019 Best of Breed Conference, hosted by CRN parent The Channel Company.

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Dell partners stand to do well with flexible consumption-based offerings, security and the coming 5G wave, Haas said. An excerpt of the conversation follows.

Why is the sum of Dell Technologies bigger than the parts?

[With Dell's acquisition of EMC and VMware,] you've got the makings of a platform company. The ability to create and back up native cloud applications with Pivotal, the ability to have a data platform that cuts across all the assets we have, the ability to go manage a full software-defined ecosystem on compute, on storage, on network, on all management, on any cloud, any device, any application. And obviously we've got the infrastructure that sits across the board. So when you're a partner with your customer you said, 'What am I going to bet on long term?' because you're going to bet on the players that you know are going to be there, you're going to bet on the players that you know are going to continue to put $4.5 billion of R&D innovation into it every year to make sure that that is the most efficient and effective engine that you can build your business on. And that's the exciting part of how we've been able to transform the company and put us in a whole different conversation. And that's what makes it fun for our team members because when we show up with our partners, nine times out of 10 we win.

Where in the Dell portfolio is the channel underinvested?

I don't think the channel is underinvested in it. I think we underinvested in some of it. I think we are not enabling the channel to go do the things that we all want them to do. On the Pivotal side, for example, there is no doubt that there is a massive migration toward companies that want to be able to control the ability to deliver more value to customers. So how are they going to do it? They're going to go look at the assets they have, which in many cases is the data and the information that they own. How do I now render it in such a way that I can make faster, better decisions? How can I serve my customers better? How can I disrupt my industry with the capabilities? Almost all of that is going to be in the way that I am developing applications more seamlessly at a much, much shorter cycle time. Time to value is extremely short. I need to reskill my people, but I need to have a platform to do it. I need to be able to have, for example, Kubernetes, which allows you to then move that data in that application seamlessly through any cloud ecosystem in a containerized manner. In order for that to work well, we need to have a whole industry ecosystem established. So one of the things we've all talked about is, 'How do we make that happen quickly? How do we enable our partners to get certified on providing these capabilities? How can they help do agile development?'

One of the reasons we actually had VMware buy Pivotal, and that was announced a month or two ago, was because we lacked the scale on the go-to-market side to go build strong channel programs, as an example. By putting that asset inside of VMware, now we've got a tremendous software development application platform sitting on top of an amazing industry-leading management platform for our customers and our partners. So we're going to see a lot more of Pivotal Software enabling those capabilities.

Has Dell become more of a software company?

It's interesting. A lot of people think about Dell as an infrastructure company, but if you actually decompose our R&D spend, 80 percent of it is on software. On the data center side, more and more of the core infrastructure is really compute node. So you can see our VxRail hyper-converged infrastructure is based on a Dell server. More and more storage arrays that are going out have a core Dell server component driving the engine. There are so many parts that are leveraging all of the synergies across our infrastructure. The other thing that we've learned is that, for parts of the business, what we used to do is just buy another company, add another asset, sell that, and never really did organic R&D very well. So everything was done in silos. Every time you wanted to deploy new capabilities, you had to do it sequentially. And so now what we've done is spend an enormous amount of time making sure, 'OK, we've got a management capability across the whole ecosystem' so that when you do drive new capabilities around compression and deduplication management you can deploy them across all platforms at the same time versus doing everything in a sequential manner. And all of a sudden, the time to value of those shrinks significantly. And guess what, you can spend more time on driving the next set of innovation quicker because the cycles change at a much, much quicker pace. It's been great to see that evolution happen with the transformation we can do within our ecosystem in order to again drive more value, hopefully more value, for our partners.

What's the next phase of the Dell-EMC-VMware integration?

Obviously, the big part was the acquisition of VMware within the Dell Technologies family, making sure that the operating engines that scale are working extremely well together. And that was one example of, 'Look, we've got assets within our portfolio that will do even better in the markets if we create much more leverage.' You think about it, just within the commercial world, we generated in the last 12 months just over 4,900 net-new logos for VMware. So that's new customers for what I think is a tremendous asset and a tremendous capability and a great control point within the architecture. That's given us customers that we didn't have a year ago, and from there, what you can do is you can create these capabilities and go into hybrid cloud solutions, moving assets from any time securely, you can then go into developing new applications for your business. The possibilities are endless.

How big of an opportunity is there for partners to make money with pay per use?

I think that, one, it's big, and two, how do you wrap your own services around it, which is big, too? I think Ken [Lamneck, president and CEO of solution provider Insight Enterprises] said it yesterday: Most of his profits come from the services that they deliver on a managed services basis. So we believe the same thing, and we see more and more of the partners are building those capabilities that wrap around the technology that we provide. We think that's a great way to create a sustainable, trusted relationship with customers, a great way to build a skill set within your organizations that you can continue to build on.

What's the difference between the way Dell is approaching pay per use versus HPE GreenLake?

Flexible consumption is not new. It's been around for a long time. Last time I checked we have about $2 billion of assets in a flexible consumption model with our customers. I spent nine, 10 years at HP and another four years at Compaq, so I have tremendous respect for the company, for the brand, and they do very good marketing. But it's not new. What we're doing is making sure that, from a use case perspective, we're best aligned with what the customer needs are at that particular time. We're making sure that it isn't just a single point solution, but it is a broad view of what at the end of the day are the core business objectives that they are driving for their business and how do we best enable them to get on that journey. It isn't just, 'Here's an offering that solves for this particular problem.' It's a blueprint of a journey that we are on together to give you the best possible outcome long term. And we believe that we're best positioned to do that with our partner ecosystem and with the technology portfolio that we have.

Are you going to invest a lot there? HPE built out cloud metering by acquiring Cloud Cruiser. Can you talk about the investments Dell is making there in terms of Data Center as a Service?

We've got a November analysts' conference, and there will be many announcements along these lines that we will be providing at that point in time. So more to come. More to come around the areas that you've indicated.

What's the difference between the Dell EMC infrastructure and Amazon Web Services Outposts as they come into the market here to go on-premises with a hybrid solution?

For a very, very long period of time, we're going to have private clouds, on-prem, or hosted private cloud environments. That's not going away. You've got 93 percent of CIOs saying, 'I'm going to have on-prem or hosted private cloud for my most critical applications and my most critical data.' No doubt, it's happening, so guess what, I'm going to trust Dell to deliver that infrastructure. I'm going to put it on a VMware Cloud Foundation to manage it, and I'm going to be able to do it seamlessly like I do today. But we've got 600,000 customers on vSphere, we know how that works. It's a known entity, and the Dell Technologies family is going to make that easier and easier for us to manage. So that's one part of the ecosystem. Ninety-two percent of the CIOs also say, 'Look, there are going to be use cases, there's going to be workloads, where I'm going to use a public cloud or equivalent ecosystem because it just makes sense for that particular use case. So I'm going to have a multi-cloud environment.' But 83 percent of the CIOs also say, 'I only want to have one management ecosystem to deal with that cuts across all these clouds. I don't want to have one for private and one for public. I want to make that seamless.' So they're looking at us to say, 'How do you do that?'

So how do you do that?

Well, this is how we do it. Instead of them having an AWS console with an M2 hypervisor ecosystem in an AWS infrastructure, or do the same and have my Azure Portal on Hyper-V on whatever Azure infrastructure—it happens to be mostly Dell—but they keep changing quite a bit as well. I don't care about that. I want to be able take my apps, my data, and I want to seamlessly manage that across all my cloud ecosystems. The VMware cloud-based foundation PC app does that for you, enables you to have one management ecosystem that can go seamlessly to AWS, can go seamlessly into Azure, will go seamlessly into Google Cloud, and go seamlessly into Oracle, all the SaaS providers online and so on. So, at first, when I saw [VMware CEO] Pat [Gelsinger] and the VMware team getting really close and aligning with AWS, I was worried. Are we creating our own competitive ecosystem? In hindsight, it looks brilliant, because now they bridge the ability to manage an on-prem environment—which customers are really comfortable with and understand—and now you can seamlessly start to harness the opportunities that the public clouds provide for certain workloads. And again, the SaaS companies are realizing that that's also the wave of the future in their ecosystem. So they're lining up and the first one that came knocking on the door is Oracle, obviously a big database company, clearly data is important, and they realize that that ecosystem is evolving as well. And you can imagine the other SaaS providers are lining up as well.

Dell has a wide breadth of security products: RSA , Secureworks, VMware just closed its acquisition of Carbon Black. But it seems somewhat fragmented. What's the Dell plan to bring that together into a cohesive security story for the channel?

What we've found and what customers are finding is the more different assets they have within their environment, the more vulnerable they actually become because the threat landscape becomes bigger. You try to focus on one thing and before you know it the risk is somewhere else that you're not paying attention to. So there is no doubt [customers want] a holistic, broad-brush view of what is my threat landscape, what are the processes and procedures that I put in place as an organization in order to protect myself as much as possible, what's the information I have as to where the threats are coming from? Those are the things that actually protect you from a foundational standpoint much better than just going after point solutions in the environment.

Now we want to make sure that every layer of the architecture, of the security, is embedded in that. It's no longer, ‘Hey, let's build a couple of moats around our environment.’ It's truly ‘build it from the bottom up, all the way to the BIOS level.’ There's a great capability that we have, and we don't talk enough about it, but it's an example: We've built the capability into our client devices where it's 100 percent location-based, and it's 100 percent embedded deep into the BIOS. It's literally the first thing that boots up when the machine has any kind of power. It connects either through Bluetooth or through Wi-Fi, and what it does is it then defines where you are, and based on your location it identifies what is the persona or the user of the device and what access does that person have on any information based on where they are. So you can imagine a highly sensitive location with sensitive information, you can only have access to that information while you're in the building but the device is completely wiped clean, dataless, as soon as it leaves the building. And it even works when the machine is turned off, which is impressive. That gives you a sense of security that [we're building.]

One of the big things we're pushing for is the virtualization of the network ecosystem. And let me give you an example. It's hard to crack a network when the only time the network exists is when it's transporting either an application or data. It exists for a nanosecond at a time, fully encrypted while it exists. So it creates a whole different mind-set as to how you secure your environment, and you do it at every layer of the architecture. And all of that capability sits within our four walls.

What's the Dell edge strategy and how can partners take advantage of it?

Let me go out a couple of years. This is actually fun to think about. So what's the big debate going on right now? 5G. And how has the next generation of wireless technology typically rolled out? Huawei's got their platforms, and then everyone's pushing on an Ericsson, a Nokia, to go develop their platforms at a more accelerated rate. Where is the U.S.-based 5G ecosystem? Not really where it needs to be. So what can we do collectively to go drive 5G innovation here in the U.S.? Here's an exciting opportunity that we see emerging, and a lot of people are jumping on this as well. Imagine where we no longer have these big monolithic engines, boxes, a Nokia/Ericsson/Huawei infrastructure that defines what the next generation of communications looks like. We actually start to bifurcate that environment and say, 'Look, why don't we have common building blocks because, guess what? We use it for every large-scale web tech company on the planet. Why can't it be used for communications as well? Why can't we start to bifurcate the transport layer or the remote access network layer from the rest of the infrastructure? Why can't you virtualize that environment so that when I talked about virtualizing the network, well why don't we virtualize our communication ecosystem so that when you move from carrier to carrier to carrier, you're not relying upon the contracts the carriers have with one another? The actual communication itself carries all the communication protocols with it. So it all happens seamlessly and it then disappears. Why wouldn't you want to have an environment where a whole next generation of venture capital from Sand Hill Road is spent on a U.S.-centric 5G-and-beyond ecosystem because we have now bifurcated the environment, we're standardizing the core building blocks, you're creating a virtualized VRAN or Virtualized Radio Access Network, and you start building innovation on top of that network with new startups, new money, a new exciting engine of innovation for us all to jump on? 6G, 7G, 8G will come up a lot faster.

What should partners be doing now to get ready for 5G?

No. 1, you can get very, very familiar with [VMware] NSX, as an example, and get really familiarized with how the network virtualization ecosystem is going to evolve. And then that's the building block for the next-generation capabilities.

You mentioned the $4.5 billion in R&D, and it's been about 18 months since Dell combined all of the storage R&D into a single group with Vice President of Products and Operations Jeff Clarke really taking the lead there to drive a new storage product line in the midmarket. Can you talk about where that's at and what partners can expect there?

What Jeff has brought in is that discipline to say, 'No, we're going to do this once, and we're going to go do it right, and we're going to do organic R&D.' That doesn't mean we're not going to go out and acquire companies, because we are, but the foundational base for our core tenets around R&D are going to be around the fact that we're going to leverage the capabilities that we have across multiple platforms, and we're going to accelerate our rate of innovation. So spend the money we have much more wisely, and make sure that the time to value gets strong so that at the end of the day our customers get that capability earlier and we can stay ahead of the competition.

You were a competitive soccer player at Georgetown and now you're an investor in the new Austin FC professional soccer franchise. I have to ask, what's it like having Matthew McConaughey as a partner?

My wife's got a crush on him, but I've kind of got a man-crush on him too. As you get older, you realize that you want to spend time doing the things you love. And I've always had a passion for soccer, it never goes away. I grew up in Latin America and in Europe, and that's what you did. Soccer is what you do. And so I played until I was about 35 and someone decided to take out my knee, and that was the end of that. You do the things that you love to do when you can. And then I just said that this was an opportunity I couldn't say no to. This is the 28th MLS franchise. It's coming to Austin, the first home game will be April 2021, we just did the groundbreaking of the stadium. The stadium will be a contribution we make to the Austin community. I think soccer is one of the fastest-growing sports in the country, it's obviously extremely big around the world. We're going to have a World Cup in the U.S. in a number of years. The U.S. national ladies team has done an unbelievable job as ambassadors for the sport. And so it's just exciting to be able to give back to the community in a way where I'm going to thoroughly enjoy every minute of it. Dell had Matthew [McConaughey] come to a town hall [meeting], and we broadcast it to 20,000 of our employees, real time. Matthew does a really good job inspiring people and talking about his experiences, and what it takes to collaborate and be in it, and I had him come in for 30 minutes, and he spoke to our people. And here's a great story. We have a Sales Academy, which is young, recent college grads that come and join us. They spent 13 weeks training, and then from there, we throw them into the inside sales organization. One of the young ladies happened to be a friend of my daughter's. She's a junior at Texas A&M. She sent out a Snapchat picture of that town hall event with Matthew, her caption said, 'Best day of my life.' That hits home when you see a young lady, maybe 24 years old, and you're able to go create an experience like that where they enjoy being at work. So I had an opportunity to do that, and certainly he delivered.

You'll now be a Dell customer through Austin FC?

I tried to get Dell more involved in branding and everything else, but we're a little oversubscribed in sports [sponsorships]. So now, I need to find other angles in. But the technology part of the fan experience is so important. You go to a football game or baseball game or any other sporting event now, and what's the relationship that you can build with everyone that's there on premises during the matches? But then also, more importantly, what's the relationship and social engagement you can create between the fans and the players when there isn't that two-hour event on the field? What we're trying to do for Austin is obviously create that community. It's online, since younger kids and adults can get very excited. It's all genders. It's fantastic. We're a very inclusive sport.

You're a member of the board of directors of the U.S.-China Business Council. Dell has talked about the China tariffs impacting sales. We just had the announcement of President Trump's preliminary trade deal with China. How do you feel about that, and what impact it is it going to have on the economy?

Well, I think I'll stay away from political comments. But look, trade is a global thing, and like it or not, you can't create individual markets that have sustainable growth for an extended period of time. Trade is a global thing, and we think that the best results from an economic growth perspective exist when there is free trade around the world. We've certainly optimized our supply chain. It's probably one of the best in the world in making sure that we can deliver our solutions very effectively in a timely manner and at the right cost for customers around the globe by leveraging the global economy. When you have ecosystems where there is tension between the trade environments, it creates scenarios where we need to make adjustments. We've made them already, so any changes in the tariff ecosystem are not going to impact us. But you'd rather not spend a lot of time doing that if you don't have to. But look, I think it behooves everybody that we continue to find ways to resolve trade tensions.

Dell is now a $50 billion channel business. Talk about that channel journey and what you're most proud of.

Clearly the numbers don't lie, and that's the litmus test. Have you at least created a business that you could say from a metrics perspective is delivering on what you committed to go do? We've grown $9 million over the last couple of years, grew around 11 percent over the last 12 months, created a $52 billion channel organization, which is by far our largest route to market. You’ve got to say, ‘Yeah, you feel really good about it.’ But it's really about the relationships you build at the end of the day. I'm getting a little older these days, so you forget the numbers, but you don't forget people. You don't forget the relationships that you build and the experiences you have.

What's an example?

I got to Dell, and I realized, 'Well, why don't we have a relationship with CDW?’ It's a massive organization, one of the fastest-growing ones in the country. And, you know, so what do I do? I pick up the phone, I called Tom Richards, who was the CEO and chairman at the time, and I said 'Tom, what's going on?' And he goes, 'Marius, we just don't like one another.' I go, 'What does it take? What do we need to do?' He said, 'Marius, speak with [Dell Technologies Founder and CEO] Michael [Dell] and have him come break bread with me in Chicago. I want to see him eye to eye. And if we commit to work together that once, we're good.' Well, guess what? This quarter, we became the largest partner with CDW of all the partners they have, and it was really only four years ago we had the [meeting]. … You do things for people you enjoy working with, the people you trust, and you build these relationships to get things done. And at the end of the day, that's how business gets done to me.

So what's the next phase of this channel journey?

We always had the mantra 'simplicity, predictability and profitability’ for our partners. But we looked back over the last couple of years, and we realized that we've actually created complexity by the way we designed the programs. We did it inside-out versus customer-in. And so we've got seven product lines or lines of business, we've got 13 categories, so you multiply seven times 13 times 165,000 partners around the world. Guess what, that is immense complexity and you're going to get it wrong nine times out of 10. So you'll see us do a few things.

One is taking an outside-in approach, take the solution-orientation approach, take the customer and processes, simplify the programs to enable partners to really be able to go spend more time creating demand selling the full portfolio. We all know that they make a lot more money if they sell more than two or three lines of business. So we'll simplify the programs around it so that it becomes really predictable what you can earn by selling the solution.

And the second piece that we're doing is we're going to put $180 million into the digitalization of every process we have. It's an investment we've been making. We should be having a self-serve ecosystem for all things and solutions within Dell for our partners. We should be utilizing all the technology we have in-house to provide a predictive analytical engine as to what should a customer buy next. So that's what we're going to be doing.

Can you give us any specifics on how that might impact how Dell partners make money?

The objective is to be able to make it more predictable as to how you earn money, and the time of the deal. One of the complaints I've gotten is, 'Hey, it's unclear, it's all back-end-loaded, it’s post the quarter process.' Well, if we make this more predictable, make it less complex, and make it more real time, we can actually focus on, 'OK, at the end of the day, what's going to stick to my fingers by the time the deal gets done and I get my teammates to come through?' That's what's important.

And then the other part of the process of automating these things and driving the self-serve model is it takes way too long to get deal reg[istration] done, to get portals done, to get pricing in. And we all know –especially in a market that isn't growing at astronomical rates anymore—everything is extremely competitive. So time becomes of the essence. Time kills deals. So we want to make sure that cycle time of being able to put a competitive quote in front of the customer with the right intelligence to say, 'This is what it's going to take the win the deal' is at a time frame that puts us in a great position to win together.