Max Clark speaks with Chuck Price, COO at Effectual, who offers invaluable information on the future of hyperscale cloud and serverless environments, and details what Effectual is doing to ensure the lasting success of their customer base as they migrate away from traditional data centers.
INTRO: [00:00] Welcome to the Tech Deep Dive podcast, where we let our inner nerd come out and have fun getting into the weeds on all things tech. At Clarksys, we believe tech should make your life better, searching Google is a waste of time, and the right vendor is often one you haven’t heard of before.
Max: [00.18] Hi, I’m Max Clark and I’m talking with Chuck Price, who’s the COO and co-founder of Effectual. Chuck, thanks for joining.
Chuck: [00.23] Thank you Max, it’s great to be here.
Max: [00:25] Chuck, you’ve been in the internet industry for quite some time – I won’t say exactly how long – but you know, your path, as LinkedIn reports, it’s traditional IT and corporate IT. You’ve got – actually I think the one note I saw that was more interesting was the CIO for the SANS Institute for a while, and you know, security practitioner – that stands out to me. But, data centers, different professional services organizations… Can you give me a quick background for the context of how you’ve ended up co-founding Effectual, and what led into that?
Chuck: [01.03] Sure, it’s been a long and storied path – prior military, first Gulf War, then I did government contracting for about ten years after I got out, writing software and C++ programming. You know, I ended up writing software that flew on the space shuttle and for Tomahawk missile systems, so some fairly detailed – you know, technology stuff. I worked on weapons systems in the military, so double E sort of stuff. And then I became a CTO managing agile software delivery of products globally, and then moved from that CTO, sort of software product, SAAS product development world, into infrastructure and started managing data centers and larger teams, you know, built professional services companies along the way and ended up at Coresight. Coresight’s probably a data center provider that lots of folks would know about. I joined them to help them do an IPO, so we did the IPO there, and then right about that time – 2010 or so – the cloud was really starting to take shape, if that’s not an oxymoron, but you know, the data center industry was worried about the cloud industry eating its lunch, and I said, “That’s not going to happen, right? The cloud lives in data centers at the end of the day.” So, I really saw this vision for building a cloud services company that was by CIOs for CIOs, you know? I had lots of pure CIOs that were struggling with the same challenge, and that’s how I got into the industry really, and kind of went on from there. You know, I ended up working for the SANS Institute which was an amazing opportunity for me, I really, really enjoyed that team, I learned a ton being part of that business – the world’s largest cybersecurity training company. We trained about… Almost fifty thousand students globally every year, so that was a great ride. Then I ended up working for a cloud service provider that was an AWS partner. And so I really started learning a lot more about IAAS and hyperscale, infrastructure. Not too long after that I was introduced to the founder of Effectual – Rob Allen – and also Michael Parks, our CTO. Those guys built Data Pipe – I think a lot of your listeners will probably remember Data Pipe, the second-largest privately held business when they were acquired by Rackspace back in ‘17. You know, twenty-nine operating locations locally and the first AWS premier partner, just a fantastic reputation in the business. Of course, I knew them from competing with them and getting beat by them! And so, I really hit it off with Rob and Mike and many of the other team – the leadership team from Effectual came from that team that Rob and Mike built over eighteen years. And so, I really feel fortunate to have met those folks and you know, we’re birds of a feather and so, super excited to be a part of the EFfectual team now.
Max: [04.07] Let’s talk about Effectual – this isn’t DataPipe 2.0, so what is Effectual and where can you see yourselves fitting in this world over the next couple of years?
Chuck [04.21] Sure! Effectual was founded to be cloud-first, right? We’re an innovative, cloud-first, professional and managed services company. AWS is our alliance partner – our key alliance partner – and VMWare is also another alliance partner of ours, and we work with VMWare for VMC on AWS, we help companies move to AWS using VMC. But you know, we – Rob and Mike and the others saw this opportunity to build a business that is more innovative, cloud-first… If we never have to own another physical server in our life, that’s our goal, right? Our goal is to help companies figure out to make that a reality, and we’re fortunate to get to that every day, and so we do across – not just commercial business and large businesses – but public sector. So, we’re growing organically, we’re growing acquisitively; you can look at some of the press release action there. Our first round, the A round, you know a lot of company’s A rounds are two or three million dollars… Our A round was fifty million dollar A round from a couple of key private equity investors. So you know, just the experience, the depth of expertise from the whole team, from the deck plates, ground level, infrastructure, technical, all the way up to Rob as our CEO – it’s just incredible.
Max: [05:40] For a while, the presence of the cloud was… Okay, we can go to the cloud, we don’t have to own servers anymore, right? There was that sort of angle to it. It feels like a lot of companies also went into it like, “oh, we’re in the cloud now, we don’t have to approach IT the same way, or we don’t need as much IT, or we don’t need a managed services provider and relay.” That really hasn’t been the case at all, I mean cloud has become its own incredibly complex animal, that’s kind of like… It’s really incredible, so I’m curious, you know, how you would really describe that and what that means to you as a professional services organization with AWS, and what you’re doing for companies and your customers now?
Chuck: [06.25] Yeah, for sure! More and more companies are moving to the cloud, right? Gartner’s estimating that by 2024, fifty-percent of cloud services deals will include everything from application development services, cloud native, cloud infrastructure, using professional and managed services… Fifty percent. And that’s up from about ten percent from 2019, so ninety percent of organizations that don’t use professional services’ assistance for cloud infrastructure as a service and migrations for more agility and efficiency, ninety percent of those organizations have challenges in doing that. And then, ninety-percent of Fortune 100 companies use a partner to leverage AWS services. So, if you look at some of those trends, right, and we say, what are larger companies doing that perhaps have more resources and better insights – can afford the Gartner analysis-type vision? They’re leveraging partners to do this. And so, it is more complex, it’s not as simple as a lift and shift, you know? Let’s take my VMDK on VMWare in my data center and just drag it over to an EC2 instance. Now certainly, that’s how companies can do that and get started in cloud infrastructure very quickly, and we do recommend that in a lot of cases, right? Because the other side of that coin is, well we can’t move to the cloud because we’re got to redevelop our application to be cloud-native, we’ve got to re architect our database, we’ve got to re architect the whole network, and we don’t have the skills associated with operating in a cloud environment. Actually doing a lift and shift migration is a very rapid way to decrease cost, physical on-prem type cost, or colo cost, to get into an infrastructure as a service platform like AWS. And then from there, you have a lot more tools available to transform and modernize. So, our modernization engineers are skilled and passionate about helping companies transform that infrastructure to more cloud-native. The reason you need some more expert experience right, is because AWS has over two hundred services that are available. So, imagine a toolbox of two hundred tools that you can put together, or I use Legos, right? Imagine all these different Legos – someone comes into your office and dumps out a bucket of Legos and says, “Somewhere in that pile there’s a Millenium Falcon – build it!” If you’re not a master builder, you’ll just kind of look at that pile and go, “Oof! That’s going to take me a while.” So, we’ve got a company of monster builders and we love taking all the tools and the services – and they’re changing at a rapid pace, you know this right? Every quarter they’re releasing more and more changes to those services. We have over one hundred and fifty certifications in the business, so we really love coming alongside our customers and being a partner to them, not just being a vendor like… I hate that word, ‘vendor’, because if we get looked at like a vendor, we’re failing, right? We really want to be a part of our customers’ teams and understand their business, understand their business challenges, from go to market, to finance – all those things – and be a part of their team, be the part that says “hey, we understand how those Legos work, we can help you build it and migrate and operate in a cloud, in a secure and compliant way.”
Max: [09.49] What is that like for you know, a company as they onboard with Effectual? I mean, how do you actually embed and integrate with them, and go through that evaluation – these are your business processes, you know? This isn’t just a lift and shift from VMWare on-site, to VMC in AWS. Let’s actually get deeper into this. How do you guys approach that?
Chuck: [10:11] That’s a great question. So, if you look at company’s cloud journeys, they happen in these phases. Over time, we’ve learned that you know, as companies start to try to adapt, adopt to cloud infrastructure, they start out in this phase where they need to do a strategy, a strategic engagement, or do an assessment, right? Cloud readiness assessment, maybe they have compliance needs for PCI, or HIPAA or FEDRAMP in the government space, they want to do a TCO analysis. So, our professional services team can engage with them and guide them through that process from a strategic analysis: what are your business goals, what are your business outcomes you’re looking for, what are your cost dynamics of your business? Some companies that we meet, they say, “We just need to get there really fast and we have a bit more capital to go faster.” And some companies say, “We’re a little more risk averse, we want to be a bit more deliberate about the process and meter it out over time.” Some companies we meet, however, are in this sort of modernization and migration phase. They’ve already said, “We’re in the cloud, we’re doing proof of concepts or we have one application, it’s a production application, and we need to scale up. We need better DevSecOps, we need automation, we need infrastructure, code, we need to expand and scale our business.” So that’s in the sort of modernization and migration life cycle of a customer adapting or adopting the cloud. And then there’s companies who say, “We’re kind of all-in on the cloud, we just need some assistance in managing our infrastructure, our database footprint is going, how do we leverage the two hundred services to optimize our environment.” And that last phase is companies who are born in the cloud, and how do they optimize their environment further with cost optimization. So, we do immersion days with them, we do well-architected reviews with them on their workloads. We can put together various scalability architecture, we can help them transform more to infrastructure as a code, leverage – rather than EC2 instances all the time, containerization, right? So, how do we leverage containerization – and again, our modernization engineers really like this. Hey, we appreciate you using EC2 instances and you have autoscaling and that works great. How about Cooper Nettys, how about Docker and ECS and Fargate? How do we help you get more performance and agility out of your existing infrastructure. So, that’s the broad picture from a phase of life cycle that the customer is in, and how we would engage them in those different life cycles.
Max: [12.38] You know, I think about when you say that, it’s – all of these questions on the surface seem very simplistic, but each one of them is a very deep conversation. I mean, EC2 to containers, right? Are you going to run containers on EC2 instances, are you going to run Cooper Nettys on your own EC2 instances? Are you going to run ECS or EKS or Fargate, you know? Are you going to run Ranchers? And that… the depth of each one of those steps of question – I mean, you get really deep pretty quickly. You know, are you running Dynamo or do you want to run Cassanda or SICL, you know, are you going to run… And back to the Lego analogy, which I love, how you piece these pieces together – you can get to the same end result in lots of different ways, right? But how you get there, what it looks like and how it costs become very different as well.
Chuck: [13.27] They matter, yeah, that’s exactly right. So, we had a customer who was trying to transform – you know, they had three data centers, about a thousand servers, and it was a very highly optimized environment – for high transaction volume processing. So, they said, “Look, we’ve purchased these servers, we’ve built these servers, they’re specialized, there’s no way we can move to the cloud. Our CFO is pushing us saying, hey, everyone else is doing cloud, why aren’t we doing cloud? And we just said there’s no way, right? It’s not possible, we’ve optimized it, it’s cost efficient for this physical environment.” So, they worked with other folks and they’ve even worked with AWS and AWS’ economics team put together a model for them that said yeah, we’re not really saving money here. So, they came to us and we said, “Well, you’re not using containerization, right? You could drop those thousand servers down to handfuls – tens of very beefy I3 instances, EC2 instances on AWS, and you could get a lot of performance and containzieraiton.” They were like, “No way, we can’t containerize this application, there’s just no way.” Well, long story short, we worked with them over about four months to build out a model, prove the model, and not just the performance of it, but the economics of it. We knocked their cost down by almost two-thirds. And you know, these are sharp guys, they’ve been in the IT industry for a long time, and they were like, “Hey, show us how!” So, they learned some new tricks, we got to build some cool new, innovative stuff, and it was awesome.
Max: [15.03] That story is so repetitive and so familiar in terms of, you know, “We’re going to move an existing application and we’re just going to migrate it as-is into a cloud platform and oh – surprise, it may be more expensive than what they were operating beforehand, or we have this existing application that’s running in AWS and it’s expensive and -” You know, if you change it a little bit, you get a massive cost savings. I mean, you see – or stories, almost on a daily basis of people, you know, of big SAAS companies saying, “Hey, we re architected our data pipeline and we saved seventy percent of our monthly bill.” You know, now it’s almost like I assume every company has a thirty to forty percent waste in their AWS environment. Without even talking to them, you start that conversation off with, “Yeah, you could probably save thirty to forty percent if you just look at your architecture.” I mean, are you seeing the same kind of generality starting to apply as you engage?
Chuck: [15.55] Yeah, there’s always opportunity for improvement, right? We’re part of a program in AWS called the Well Architectured Program; part of the Well Architected Program is we do these reviews and we look at different – we’ll analyse a workload and we’ll look at different pillars. So, we’ll look at cost, we’ll look at performance, security, operations, and we dive deeper in – you know, there’s like a hundred questions in each of these different areas, and so if a customer is wanting to – if they’re more concerned about cost, then we can focus more on cost optimization. And to your point, you know they’re probably doing the first-level things, like, “Yeah, you know, we’ve right-sized our instances based on performance.” And we say, “Okay, well what about these dev environments or these QA environments? Do you have it built so that it automatically spins up and spins down when – spins up when developers come to work and spins down when they go home? Or do you have them autoscaling, or do you have them the same size every time? Or are you leveraging RI instances in the background to optimize the cost of that? Or… you know, there’s a number of cost strategies that we can apply when we look at a particular pillar going through this Well Architected review. And to your point, when we look deeper into each of these pillars, we continue to find ways to optimize and enhance their security. I remember when I was at SANS, you know we had a lot of conversations about “the cloud is not secure”, right? And look, it’s a set of tools, you can build an insecure infrastructure in a data center with physical equipment, just like you can build an insecure infrastructure in the cloud. So, it takes skilled artisans to know how to put the Lego blocks together, who’ve done it before and understand how harding works, and immutable infrastructure, and all those sorts of things. So, we do find opportunities to improve, and AWS actually recommends we – that customers go and look at this work on a workload basis, do a well architected review every quarter, because the set of tools, the set of Lego blocks, the set of services are continuing to grow so rapidly today, and continue to adapt and adopt new architecturing capabilities.
Max: [18.17] In counter to what would be like conventional wisdom, Amazon and AWS in some cases incentivize customers that go through these processes – I mean, they want people to improve their infrastructure, reduce their cost and be more efficient. I mean, it sounds a little crazy but they want people to be improving their infrastructure and decreasing their costs.
Chuck: [18.39] It’s true! To be a part of the Well Architected program you’ve got to have a certain number of certified engineers and all that sort of things, to even make it over the hurdle, but part of the requirement is we do Well Architected reviews for customers for free. That’s a requirement of the program, you can’t charge for them! So you know, if a customer wants us to come and do an assessment of a particular workload – and we can do it in a few hours, in a day, and then sort of the next day provide the recommendations back, so this red, yellow, green roadmap of improvement ideas, how they can improve that environment. So, it’s a very rapid way to engage. It’s a very… AWS is sort of encouraging people, lowering the bar, lowering the hurdle to be able to leverage their infrastructure and their services, and so they, you know, we do those assessments for free, we return them very quickly, and we always find opportunities.
Max: [19.34] Mentioning SANS and talking about the cloud is not inherently secure… I mean, nothing is inherently secure, right? You talked about that. The cloud gives – I think – more opportunities to make bigger oops. You know, you have more opportunities to configure an IM incorrectly and have a security key, a root key that gets out into a GitHub repository, or, “whoops, we’ve exposed a database to the internet, our S3 bucket is exposed to the internet.” You know, these sorts of things can happen very easily and you find out about them because there’s a horror story that hits the internet of like, somebody’s S3 bucket was public. You know, we have all our medical transcription files for a hundred thousand patients on the internet – and that’s kind of a problem in the HIPAA world, you know? These sorts of things apply. When you look at the service depth and the amount of change and flux in these infrastructure… I mean, how do you help customers go through and make sure – I mean, this isn’t – it’s not your infrastructure. I mean, in the old data center hosting worlds, right, a service provider owned the infrastructure, kind of set boundaries of, you know, “Hey customer, you can only do X, Y and Z and you don’t have root access to your servers.” In the cloud world, you’re helping them support their AWS environment, but it’s their AWS environment. What’s it like working with these larger enterprises and helping them – helping the organization protect itself, but at the same time, it’s still owned by that organization?
Chuck: [20.57] Yeah, that’s where that partnership comes in, right? We really want to be a part of their team and have that conversation, so… Like you said, in a physical environment, you can have security, vulnerabilities, and the thing about it is the response time often times is longer in a physical environment, right? From the time you detect something to the time you can remediate it often is a longer period of time than you’re able to do in cloud infrastructure. The way that you achieve that in cloud infrastructure is to automate things, and to have specific architectural patterns from the beginning. AWS has this sort of modern architecture view now, called “landing Zones”, and they have a new capability – I mean, not super new, it’s been out for a couple of years – but AWS Organizations. So, there’s a way to architect at scale, enterprise environments, from the beginning, to bake in security and bake it compliance, from the very beginning. It’s not – most people when they think about AWS like, “Oh, I’m going to open an account.” An account, right? Those companies have tens or hundreds of accounts and it’s important to do that now because it decreases the blast zone – blast radius of an impact… of a security flaw, or something like that. So that’s just one of the architectural tenets that we apply when we build out a new environment for a customer, is these built-in security things, built-in guardrails, built-in checks, with trusted advisors and you know, a number of AWS security services that we can leverage. The automation piece of it is another thing that people don’t quite grasp right out of the gate. I mean, imagine building a multi rack infrastructure in a data center of servers and network and storage and all the security, firewalls – everything that goes into that. How long it would take you to do that – if everything was available, forget the procurement process, everything is there, you’ve just got to turn it on, configure it, and put it on the internet. It’s weeks – months, right?
Max: [23.14] We used to calculate twenty minutes a server to rack, right? To break down pallets of boxes with servers in them, the math was basically twenty minutes a server to put it into a rack. That wasn’t the hold S load and everything else, that was getting the machine physically mounted and getting the cardboard dealt with.
Chuck: [23.34] Yeah, there’s human physics involved – you can only go so fast there. In the cloud world, we can literally automate infrastructure as a code. You say that, and people sometimes roll their eyes and go, “oh, infrastructure as a code,” but imagine that a server is a piece of code and you can version it, and I can spin it up in seconds or minutes. And now, imagine I can string together an automation script – if you will – that infrastructure as a code builds out multiple accounts, associated with multiple organizations, with the proper IM roles and guardrails, security, compliance checks, reporting, monitoring, dashboards. I mean, everything that you would think of that you would want to build in a data center enterprise environment, in an ONM you know, to monitor and manage that system, we can literally build in hours, not kidding. I can start the script and have fifty servers with a full enterprise architecture in hours, stood up. And then we get to doing the business value stuff, like what applications do we need to run, where does the data need to live, how do we expose it to the customer? All that guardrail stuff is built in now.
Max: [25.45] How does this evolve the role of the IT department within a company? You know, traditionally IT departments are very physical, right? You have to go touch a machine under a desk, change a monitor, fix a printer, go install a server, change tapes… I mean, when you look at – when you talk about over two hundred services in AWS and specialization – of those services – I mean, that’s a big shift in IT and how IT functions for a company. So, I’m – you know, what’s actually happening here?
Chuck: [25.14] We see it really as providing more tools and capabilities to our customers’ IT teams. We’re not replacing them, right? We’re again being a partner to them, we’re augmenting their team and we’re providing new skills and tools and capabilities. So, a development team that used to – in order to deploy code – had to you know, it was a big, long deployment process: you’ve got to bluegrain deployment, you’ve got to take the server offline, deploy some code, test it, this whole process for deployment. Today, we can build continuous integration and continuous development pipelines, where a developer can write some code or a marketing person can develop some content for a website, drop that content into a repository, into a Git repo somewhere, and we can have automation watching that and automatically deploy that to production, where it’s not patching – you don’t have to do patching in that world, right? You just delete the software version of the server and rebuild the new one with the new code already in it, with the new patches already in it. And so, we’re giving them new tools – they can go back to their business now and they can say, “Hey the marketing team wants to deploy changes, content changes, to our marketing site, faster. We could never do it because our development process, our deployment process, was just sort of physically this long. Now we can empower them, enable them, almost self-service, like. They just drop the content in and it flows to production.” And so, those types of tools free that IT team up to focus on their roadmap things. So now their company can come back to them and say, “Wow, these additional capabilities for our product that we’ve been wanting to build out, we suddenly have human capacity to go do this. We’ve just effectively hired a half a FTE or another FTE or two FTE,” because they have this capacity to do more value-adding work for their business.
Max: [27.12] A stat that you mentioned earlier that I want to touch on for a second. I mean, Effectual at its core is a professional services organization and you’re focused on AWS and VMWare in the cloud, so VMC… A fifty million dollar raise – so, you have acquisitions that come into that, right? But when you say a fifty million dollar raise, it’s fifty million dollars of money being raised to build out human capital to support professional services in a specialization for AWS. I don’t care how big of a company you are – you don’t have the budget to invest fifty million dollars in people to go out and build out an expertise around AWS – I mean, that makes no economic sense for anybody, you know? When I hear you – and I listen to all this, and kind of coming back to it, it’s… You know, why would you try to do this yourself? You can’t replicate the skillset… A company has no shot in actually, I mean, also I’ll assume that just the talent pool… You know, it’s like security, it’s not competitive for companies to try and hire security practitioners because it’s harder to keep them motivated and engaged and present, you know? The turnover is so high! Is AWS specialization going that same way, where it’s just going to be harder and harder for companies to hire, train and retain you know, staff to support these environments for themselves? I mean, especially when you start talking about application development or business enablement, but really that – how do you actually support and manage the actual AWS platform itself?
Chuck: [28.51] There’s definitely a challenge for talent today and you know, we see that and our bar is pretty high, as you might imagine, but you know, we still see the kind of… The ‘war on talent’ going on, right? It’s a supply and demand thing, right? As companies understand that the capabilities exist to have faster times to market, at a more cost-effective rate, if they invest in people who have these skills, then that will be the demand, and IT folks will – I mean, we’re lifelong learners, you know, just by our profession, right? We love learning new things, we love building, and so I think there – you know, there continues to be a pipeline of engineers that are getting trained and you know, doing more and more training, getting more and more certifications. I think the supply of skills available will – at some point here in the next two years – start to provide less of a stress on the system, you know? Whether you’re us trying to hire skilled people or an enterprise company trying to build their own teams. What you can’t forget about is, it’s one thing – you know, we know this, right – it’s one thing to go out and get a cert. So, we can go and take the test and get the AWS Associate Solution Architect cert. You can take that and you can go and work for a company and work on an environment and an application – or a set of applications – and you’ll learn and grow at a certain rate. You know, Andy Jassy says there’s no compression algorithm for experience. There’s no way to shortcut that, you know! So, what we get to see, because of the nature of our business, is we see so many different challenges and opportunities and ways to solve problems like it’s an accelerated path for our team, right, because we see so many different ways to solve problems. That’s part of the benefit of partnering with another service provider, right? Your team can only go so fast, they’re only going to get exposure to a certain set of problems that they need to solve, whereas you could bring a partner alongside that says, “These guys have seen this ten times, they’ve tried it eight ways that haven’t worked as well.” We might have gone through those eight ways for two years before we figured that out, so that accelerates their time to market in a more cost effective way by leveraging the experience of our team.
MID-ROLL: [31.14] Hi, I’m Max Clark and you’re listening to the Tech Deep Dive podcast. At Clarksys we believe tech should make your life better, searching Google is a waste of time, and the right vendor is often one you haven’t heard of before. With thousands of negotiated contracts, Clarksys has helped hundreds of businesses source and implement the right tech at the right price. If you’re looking for a new vendor and want to have peace of mind knowing you’ve made the right decision, visit us at Clarksys.com to schedule an intro call.
Max: [31.40] AWS is a massive, massive business by itself. When you look at the numbers, it’s staggering, and the other part of it that’s just mind boggling is how fast it continues to grow. We’re nowhere near peak cloud adoption, I mean this is – it feels like this is still like infancy, like early nineties internet adoption, worldwide, in terms of what’s actually going on to the cloud. For a while it was, okay, I think transitioning existing IT infrastructure, or we have this data center that’s renewing or we have to – you know, we’re aging out, we’ve depreciated all of our gear and we have to replace it because we’re at lifecycle. Okay, let’s take that to the cloud – and those were very low-hanging fruit kind of… tactical project realities, and what we’ve seen with machine learning and data lakes and these sorts of things have become… How do you actually now, you know, utilize your data and information that you’re collecting already just by nature of being in business, and now create additional value and uniqueness and competitive nature, for an organization, out of this information that you already have? You know, we already have it, now what do we do with it? And you guys are helping people figure these things out. I mean, this is somewhere where… How do we get into machine learning, and what does this mean for us, and what is a data lake, and how do we build these pipelines? I mean, how do you help companies when they say, “Oh, we’ve never heard of this thing before but we want to think about it.” What is that like?
Chuck: [33.10] Yeah so, your first point about how fast the business is growing – AWS, you know, 451 Research estimated a while ago that hyperscale providers are going to grow at a CAGR of forty-six percent.
Max: [33.29] That’s insane.
Chuck: [33.30] And it clips one hundred and six billion dollars in annual revenue by 2021, by next year, right? And AWS represents fifty-six percent of that. So, you know, there’s still the – others are catching up, right, but they’re still the leader for sure in that. And so, you know, the way that we help customers sort of, introduce these new concepts is you know, we’re doing this with the company now, right? They’re in a data center, they were in a colo environment with another large provider, and you know, they weren’t in a true cloud environment. And they said, “We’ve got this application, this application, we have very large customers, banks, et cetera. We’re a bit risk averse, how do we take advantage of cloud infrastructure?” And so we said, “Well, there’s this technology out there that’s called Hadoop, right? There’s these clusters, and they’re like..”, “Woah, woah, woah, we’re risk averse, let’s be careful here, right?” And so we said, “Well, let’s do some sort of proof of concept stuff, right?” We’ll do things for customers that are very fast – I mean, within a few weeks, time to market, to test these things called minimum viable clouds. You’ve heard of MVPs, right? Minimum Viable Products. So, we’ll build a minimum viable cloud, and we’ll say, “Well look, we’ll automate it and we’ll iterate on it.” So, because it’s automated, we can make revisions to it and re-run it again. We can do it over and over and over, if it doesn’t work, blow it away – boom. Let’s run it again, make some changes, boom, run it again. And so, we were able to build this sort of minimum viable cloud to prove out this idea of this new technology that… The CLOUD empowers or enables, that this company hadn’t been able to – it didn’t know a huge amount about. Of course it had heard about it and everything, but we were able to prove it out in a way that was about their business, with their data and you know, with their application in this minimum viable cloud sort of approach. So that’s what we do, we’ll build these proof of concepts for customers that exemplify some of these capabilities and make it about their problem set, you know, their market, their customers, their environment, and we can do it very rapidly with them.
Max: [35.40] What’s your experience been in terms of integration and interaction with the business? You know, are we still seeing this dominated from IT teams and CIOs and CTOs leading the charge, or CFOs, CMOs, CROs… What’s actually happening over the last year in terms of what’s driving these conversations and applications coming down the pipe?
Chuck: [36.01] That’s an interesting question. So, it used to be I think that there was a lot of talk around, “well our CFO is driving this”, you know? But frankly what we see is, we see it equivalent across the board. There’s no heavier, like… We always get it from the business side, or we always get it from the IT side. What’s been different about it – I think – is that there is support on both sides. It used to be like – when the IT team would want to play with some new toys and try out some new cool stuff in the cloud, the business was like, “Hold on a second, you guys just want to spend more money, or whatever, right?” Or when the business side would say, “We need to figure out a way to spend more money,” the IT team would be like, “We’re doing the best we can, this is what you’ve given us,” kind of thing. But now, there seems to be more kind of partnership, frankly, between IT teams and the business, and you know, there seems to be more, sort of, support from both sides. They’ll say, “Yeah, we understand there’s benefit there, we understand the benefit is financial, we understand it’s security and performance, how do we work together to get there?” You know, you talked about what is our process? I mean, part of that experience is… We have an engagement model that we call The Effectual Way, and this engagement model with customers is a project model that helps sort of take our customers through a process that involves members of their business team, it involves members of their IT team. We have an executive sponsor on our side that comes along their executive sponsor to make sure we can have that business conversation, and we have architects and engineers on the technical side, and we have bi-weekly meetings with our executive sponsors, to make sure that we’re focused on the business outcomes and the financial goals, and they’re hitting their strategic goals. And of course, we’re having daily tactical meetings with the technical team to achieve the milestones or the deliverables, but one of the things we do – I think that seems to be our customers tell us is competitively differentiate anyway is – we have a client collaboration portal, and we actually invite everyone into the portal. We say, “here’s the plan, the plan’s out there,” because customers hire us to be prescriptive. They’ll say, “We hired you guys to tell us how we’re supposed to go do this,” and so here’s the plan, right? We put it in the portal, we invite them into the portal, and then they’re a part of the process. So, it’s kind of like – I don’t know if people know what Salesforce chatter looks like – but there’s sort of threading, threaded discussion capability in this platform, where you can actually talk about tasks or milestones or upload documents, and collaborate together as a customer and a partner and a business team. That’s very – the transparency builds a level of trust and confidence, and it really works well.
Max: [38.47] Late 2000s, right? So, a decade-plus-ish ago, when AWS came out and the cloud started, I think there was a lot of fear in terms of IT and traditional IT, in terms of what does this mean, and how does this evolve? It’s actually been really exciting for me in watching this shift and this transition, because companies are looking at IT now as strategic assets for their business, and it’s less about cost and expensive centers that have to be constrained, and more about how are we leveraging IT as a strategic enabler for our employees and for our customers, and to accelerate our business? And that’s – in the sense of IT and people getting into IT now – it’s a very exciting transition and change, versus what’s historically been the case for the last twenty, twenty-five years. We talked about onboarding and migration and application architecture and reviews. We haven’t really talked a lot about ongoing managing and interaction, and support. This becomes also a very important thing in terms of maintaining and supporting a functioning cloud environment, you know? If you have an issue with AWS, what do you do? You open an email ticket, or you wait on hold, you know. That’s not really a fantastic pathway for a company that needs support – and especially if they don’t have a lot of exposure to it. How do you fit into that, and how does Effectual help an enterprise with the… let’s say the more mundane day-to-day of the support cycle, and then of course the – what becomes the exciting events, you know, with support issues?
Chuck: [40.19] Yeah, that’s great. So, the core of what we do is managed services, right? So, these other professional services are to help get people into an operating state, right? The professional services side of things is sort of a temporal thing, right? We’ve got to migrate to the cloud, we’ve got to build something on the cloud, but at the end of the day you need to operate your business, right, so that’s where the core depth of expertise is and the focus for our business, and you can think about all these different aspects of operations and maintenance around patching – or just broadly – security compliance, monitoring, you know? And then you dig deeper in those and you have backups, and patching, then you can go more broad – what about workspaces, or virtual desktops. That capability to enable more of the business users in a business. How do you maintain that and operate that and be responsive to your customer base around that? So, we have – we talked about how automation is helpful to customers… Automation is helpful for us as a business. We’re always looking to automate some of those more mundane things. So, how do we automate a patching process, do we even need a patching process, right? If you have an immutable infrastructure, you actually don’t even need it right?
Max: [41.35] Right, containers change that equation very quickly, right?
Chuck: [41.39] Right! So, that’s another one of those sorts of… Innovative, modernization engineer introductions of, “Hey, I know your business has talked to you about patching for a long time, but here’s another idea. What do you think about this?” So, automating things that are more mundane, sort of the house keeping things, in an environment like patching in backups and monitoring – some of the more guardrail type security things, and the automated monitoring and remediation – automated remediation around compliance, protecting HIPAA data or PCI. So, we automate those things to as much extent possible. We have a runbook that we develop with a customer, and we say, “Here’s all the ways that we’re going to automate these things for you. Here’s our engagement model.” It’s not just a ticketing platform – there is a ticketing platform of course – but we also use Slack and we use you know, more interactive models to be a part of their team. Again, the goal is to be a part of their team. We’ve seen this in our history, right? Some providers will say, “We have a new managed customer and you sign a three-year deal,” and you kind of don’t hear from them unless there’s a problem. So, if there’s a problem in your infrastructure you’ll send a ticket and somebody will call you maybe. You know, you hear about them again when the contract comes up for renewal in three years: “Yeah, your contract is up for renewal, you should renew for another three years.” You’re like, “I haven’t heard from you in three years, unless there’s a problem and I call you!” We just flipped that on its head. We’re like, “We can’t be a partner unless we’re engaged with them on a regular basis and their business.” So, we have monthly service reviews. We have a service delivery manager who, that’s their whole job – it’s to make sure that we’re partnering with our customers well. So, they conduct monthly service reviews and quarterly business reviews where they drag the executive sponsor out there and say, “Hey, we’re going to share what’s going on in our business, also, not just what’s going on in your business. Let’s tell you what’s going on in our business.” I think the model for our engagement of managing customers in a more automated, innovative way, in addition to the human engagement aspect of it, right, is a big differentiator for us.
Max: [43.51] Runbooks are interesting animals. When you look at it from infrastructure as a code and CI/CD pipelines and constantly changing environments, you’re getting into these things and you’re turning up and turning off. Infrastructure inside of a cloud you know, there’s a lot of change toi that. So a runbook, it’s not in the sense of the old monolithic, static application of ‘if this happens, do this’, it changes a lot. I think what’s great with runbooks is the process of going through and establishing it, and a lot of cases just for an enterprise saying, “Here’s an area of responsibility, and here is a process that we’re going to take -” and a lot of times that discipline hasn’t existed yet, especially in the migration to the cloud. And so, having a partner actually walk through that process where you develop a runbook to help operate your environment. It really reminds me of a CTO a few years ago, and he was travelling back and – I mean, he was on a plane a lot between offices for this company. Every time he was on a plane, he realized that he was completely stressed out. Not because he had this fear that AWS was going to collapse on him while he was on the plane, it was more of the… You know, what would happen if AWS did have an outage in US East and this took down infrastructure and what would actually occur? You know, he was really looking for and interested in a partner to help provide that structure and you know, supervision almost, to know that there was somebody responsible, to make sure that things happen in an ordered and defined way, you know, in case that goes along. So, when you say runbook I go to that thought pretty quickly. I want to talk about containers. YOu know, containers give a lot of advantages and development pipelines. They give portability, they give the ability to migrate from one cloud platform to another cloud platform pretty easily. Running a desktop versus running on a cloud environment… But I mean, at this point is containers the right place to go? Should you be talking more – is serverless, I mean, serverless – should we just skip this entire container conversation now, with companies migrating applications?
Chuck: [45.56] Yeah, that’s a great point. So, serverless is obviously a more modern architectural capability, and is kind of the next evolution beyond containerization. So, there are a number of ways that serverless is beneficial and it’s not always the answer, it’s not a silver bullet, you know? Like a lot of people want to say, find the One Ring to rule them all – serverless is not quite that, but there are a lot of ways you can leverage serverless. So, in the data lake example – for example, right – you could have a containerized architecture to do analysis of data in data lakes, or you could have triggers that have serverless API calls – if you will – serverless functions that are triggered on a change in the data in the data lake, that’s more responsive. So, rather than setting up an ETL process that might be normal and run a sort of, an ETL batch process on a particular time for data analysis, you can use serverless architecture to be more responsive in real-time, and trigger on events that change in the environment, in the data lake itself. So, if a new file gets dropped in a certain place in the data lake, you can have a serverless function to respond to that and do the ingestion or the transformation or the loading aspect of that. So, we see serverless changes in data lake architecture and in large scale data processing architecture. There’s a good architecture paradigm there for serverless. And there have been cases where companies have said, “We’ve built our website using serverless, with static pages and S3 buckets, and things like that.” I would say those are probably smaller-scale websites and not really enterprise-class – SAAS application, if you will. There are pieces of that that can be enabled using serverless, but it’s not really a panacea for everything.
Max: [48.02] I mean, you get into a pretty big debate pretty quickly of monolithic versus microservices architecture and software development, and… There’s a lot of passions that come out, and everybody is pretty entrenched at this point. I like how you respond to that. I don’t think that there’s one right way, but it feels like every week, there’s just more options. When you take that and you say, “okay, every week you have another new option now of what to do,” how do you make those decisions and decide, you know, what’s the right path for it? I mean, everything becomes a good option at some point – how do you actually decide? You know, this is the best option for me?
Chuck: [48.45] I think people should talk to you about that – I think that you do a fantastic job, I think your customers are lucky to have you as their strategic advisor because you do understand that they’re not these silver bullets, or One Rings, and there’s a different… Solutions can be applied, and you know, you do understand the breadth of cloud services and physical infrastructure. Again, in your case you know, there’s no compression algorithm for experience and I think your customers benefit from that, and we benefit from that as a partner of yours, because we have a very high bandwidth conversation about ways that we can help you and your customers, and it’s a very effective relationship with us, and so really appreciate your partnership.
Max: [49.31] Thank you for the nice words, I really do appreciate that. I wish I had a crystal ball to look forward ten years. I don’t have it. I’m curious if you have it, and let’s make it a little bit harder – let’s not make it ten years, let’s talk about one to two years. I mean, you’ve got… Effectual has made a huge bet on this, and so what is your vision over the next one, two, three years – you know, beyond that becomes plan and ideals, but we know that changes. So, what does this look like over the next few quarters?
Chuck: [50.03] There are… continue to be larger companies, or the larger companies are adopting cloud infrastructure, but there’s a bigger opportunity there to impact those businesses, and that’s where we want to be, right? We want to be at the center of the hard problems, the center of the security and compliance problems. We don’t shy away from those things, because we know there’s proper solutions with cloud architecture that can be automated and cost effective for businesses, and so our goal is to continue to do that upmarket, for larger businesses and work with their teams to solve more interesting challenges. That’s where our expertise is, historically. We’ve been able to do that for some very large brands, you know, in the Data Pipe days as well. I think, where do we move? We’ll continue to see more automation, infrastructure as a code will become more of a normal vernacular, and people will understand it. You know, IT professionals will understand how to leverage that. What does infrastructure as a code mean? We’re talking about Ansible and Ansible Playbooks, we’re talking about Terraform. They’ll start to understand how to put those pieces together to automate their own infrastructures, CI/CD pipelines, for not only infrastructure deployment, but content deployment where IT professionals don’t even have to touch a server to get code deployed to a WordPress website, for example. Those things, we’re doing them today, and I think those things gain momentum, they gain more prevalence in the future. So yeah, that’s what we’re excited to do, just drive htat adoption more and more, and we hope to operate our business in a similar way as AWS does, in terms of it’s always day one, right? We’re always innovating, our engineers are always training, always learning, always getting certifications, and we’re – you know, it’s always day one. We’re always hungry to figure out ways to help our customers, and we want to stay that way.
Max: [51.59] So, when we talk about you know, briefly, the market with other cloud platforms, and AWS is the largest and growing the fastest right? So, Microsoft Azure and GCP – I mean, these are both also very good cloud platforms.
Chuck: [52.14] Sure, yeah.
Max: [52.16] I mean, do you think that this is going to turn into like a Coke versus Pepsi debate, are we talking about hyperspecialization, where you’re now kind of looking at it like, “oh, we’ve decided we’re on Office 365 so this automatically means that a certain x percentage of our business ends up in Azure, even if the majority of our infrastructure is in AWS, or vice versa with Google.” You know, how do you guys see this playing out right now?
Chuck: [52.36] Yeah, AWS has the lead but there are certainly – you know – some particular services that are – have better implementations, or for a particular use case, they’re better on other platforms. It depends on the use case, you know? My Dad used to say, “Use the right tool for the right job,” and it makes the world of difference. And so, I think we will see more parody among the cloud platforms as they continue to grow. They’ll still have some of their strengths and weaknesses, but I think those strengths and weaknesses over the next three to five years will become less obvious and more esoteric, almost, right? And so, I think you will be able to solve similar problems on all the platforms as you can today. There may be a more natural move toward one platform over another, given a company’s history, but just to say that because a company is a Microsoft shop and they have Microsoft EA that they’ve got to move to Azure is not – is becoming less and less of a valid argument. I’d say it’s not a perfectly valid argument today. We’re certainly seeing that. But you know, there are commercial aspects to that, not just technical aspects of that. Yeah, I think you have to take into consideration the commercial pieces with pricing and incentives from those different platform providers for those customers, as well as the technical speciality things that a company may need over time.
Max: [54.03] An interesting stat that came out recently was that more than fifty percent of the compute on Azure was running Linux –
Chuck: [54.14] Finally, right?!
Max: [54.15] I mean, God bless them, it’s amazing, right? But you can kind of look at that a couple of different ways. When I read that stat, you’re like – okay, this is incredible, Microsoft has really adopted and has really embraced a pretty amazing shift in what they were focused on historically over time, and acquisitions and focuses and developer enablement, all these things. But at the same time, you know, the flip of that is you’d think that number would be much higher if this is like, Microsoft is like incentivizing or pushing Microsoft environments into Azure, you know, it feels like… AWS has some really – there are some really interesting things that AWS does around like, instantiating and starting up Windows environments, you know, having machines, VMs, effectively ready to go so you don’t have this big build delay if you want to go into Windows. So, it’ll be fun to watch as these three competitors evolve and mature, you know? It’ll be harder and harder for upstarts and new cloud vendors to get into the market unless they’re extremely specialized into something. But the efficiency of scale and the cost economics, you know they’re all building their own hardware, they all have a lot of resources available to do that, and AWS – what Amazon is doing with their Nitro platform – it’s incredible when you actually dig into the hardware of it. We should spend another hour later just talking about Nitro, but… You know, it really is amazing, and to go back to something that you’ve said originally that I wrote down here in my note sheet – you know, a couple of years ago I racked what I hope is going to be my last Cisco ASR9000. I mean, not that I don’t like Cisco ASRs, I actually love them, but the actual concept of literally having to forklift a several hundred pound device into a cabinet and then bolt it down, and wire it and configure it… I mean, it’s cool and there’s a sense of like – even thinking about it, it’s so exciting to configure a big router, and you know… but, it’s like – it matters if you’re a network service provider. If you’re actually building network infrastructure, having network equipment matters. If you’re a data center company, having data center space matters, and if you’re a cloud provider, having cloud infrastructure matters, but for an enterprise, it doesn’t matter so much. It’s like, what are you actually trying to do? And that’s what you should focus on.
Chuck: [56.30] Yeah, that’s right, and you know, helping broaden that thinking or realize that thinking for customers – for our customers – is really the exciting part for us. Introducing them to these new ideas that they didn’t know exist before, whether it’s containers or whatever it is, and then doing a proof of concept to prove it out, right, it’s awesome to see them go, “Wow, this is an innovation that we had no idea how to do, thanks for helping us figure this out.” And it’s really cool, we love that. You know, you mentioned the physical, tangible satisfaction of looking back – I mean, I felt it when you were saying it right, like yeah, you look at rack and the beautiful wiring in the back and go, “I did that, that’s good, I’m going to go have dinner now.” You know, there’s a sense of satisfaction about that, right? So yeah, I get that, but we get that kind of satisfaction from watching a customer go, “Wow, this is amazing, right? We didn’t think we could do this and there it is,” you know?
Max: [57.27] Chuck, thank you so much for your time, it’s always a pleasure to talk to you and I feel like every time I walk away with it I’m going to be jazzed up for the rest of the day, so.
Chuck: [57.37] Thank you man, it’s always great to spend time with you and I look forward to doing it physically when we can, you know – it’ll be good to get together again.
Max: [57.44] Likewise!
OUTRO: [57.45] Thanks for joining the Tech Deep Dive podcast. At Clarksys we believe tech should make your life better, searching Google is a waste of time, and the right vendor is often one you haven’t heard of before. We can help you buy the right tech for your business, visit us at Clarksys.com to schedule an intro call.