In this episode, Tyler Goodlett (Director of Sales at Rackspace) gives a superb insight into managed services in the hyperscale cloud environment and how customers leverage Rackspace to get to the next level.
INTRO: [00:00] Welcome to the Tech in 20 Minutes podcast, where you’ll meet new tech vendors and learn how they can help your business. At ITBroker.com, 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 Tyler Goodlet, who’s the Director of Sales at Rackspace. Tyler, thank you for joining.
Tyler: [00:22] Absolutely Max, I appreciate the time, we’re happy to be with you today.
Max: [00:27] Tyler, for people that don’t know Rackspace, what does Rackspace do?
Tyler: [00:30] Rackspace really has a long history of IT services, but really in the last couple of years Rackspace is transitioning to a managed services provider of IT as a service, really. We’re specializing in hyperscale cloud, public cloud, as well as colocation and special services.
Max: [00:50] That description is more about, you know, IT management and the services on top of infrastructure and not necessarily what the infrastructure is anymore. I mean, Rackspace’s lineage was physical servers and bare metal and data centers and now you know, in the introduction of hyperscalers, it’s supporting infrastructure wherever the customer is, right? Is that kind of accurate?
Tyler: [01:14] Yeah Max, that’s actually spot on – the tenure I’ve had at Rackspace, I’ve actually been with the company for ten years, so I started in the days of selling traditional dedicated servers, Windows Linux, and watched the company evolve over time. To be in the spot where we’re now, you know, overstructure [UNINTELLIGIBLE] agnostic and help customers move to whatever platform makes sense to their workloads has been a refreshing opportunity and really opened up the conversation with customers to talk about what their needs are – from an IT services perspective – not necessarily having to think about pushing the company towards one thing or another. It’s really about what’s best for the workload and the apps.
Max: [01:50] As it relates to public cloud management, what problem are you solving for enterprises today?
Tyler: [01:55] You know, that’s a unique question Max. If you had asked me that three months ago the answer would have been probably a little bit different than it is today. But with the pandemic hitting and the work from home and remote services and things that are interchanging… landscape of what we’re helping customers do, you know. What we’re seeing today is customers really needing help to not only move workloads and applications to hyperscale clouds, but help – not only managing from an IT perspective – but helping manage cost as well. We see that becoming a glaring need for customers when it comes to you know, third party cloud.
Max: [02:25] So when you say managing costs, you’re talking abou budget and forecasting, or you’re talking about cost constraints and governance, what does that actually mean?
Tyler: [02:42] Yeah so, you know – what’s unique, at least in the space that we play in here at Rackspace, is we have a lot of customers that obviously provide applications to their end users, right? A lot of these companies maybe aren’t selling more seats, maybe they’re not selling more licenses, but their customers are consuming more of the licenses that they’ve already purchased. Folks are going remote, you know – online learning, things of that nature are causing these folks to see costs of third party cloud and their infrastructure increase, sometimes two, three hundred percent, right? That doesn’t necessarily correlate to revenues to these customers, so a lot of where we’re helping customers today – specifically through the COVID crisis is – how can we help customers take advantage of things like savings plans on top of AWS? How can we look at the way they’re architected on top of GCP as an example, to make sure that they’re taking advantage of all the technologies and the cost optimization that’s available on those different platforms? So, it’s unique in every case and one of the things I like about working at Rackspace is you get a very diverse customer base. But you know, regardless of who you’re working with, customers want to get the most out of their IT spend, and they don’t always know how to do that. So, that’s an area where we help customers in a lot of different ways ultimately get the most bang for their buck when it comes to spending on you know, third party cloud services.
Max: [04:03] It’s an interesting conversation to have here, because when you say you get the most bang for the buck out of their IT spend and cloud services, this is partly – let’s say it’s an emotional response? You know, “am I spending correctly, do I have the right – have I bought the right thing, am I in the right place, did we take the right approach to this?” Or, it’s also kind of reactionary of, “why is our AWS bill, our GCP bill so expensive, or what is it going to be next month, or how do we forecast this four months down the road?” I mean, that becomes a very… both tactical and strategic integration and interaction now with the customer and helping them figure that out and what they do with that.
Tyler: [04:38] You know, the thing that has been unique about this transition is, a lot of conversations that Rackspace was having was primarily with the CTO you know, VPs of IT, Directors of IT, things of that nature, talking about architecture, right? Cloud governance, things of that nature. How do I move my application to AWS or GCP or Azure? And now, we’re starting to see the conversation start from the CFO’s office, right? And the CFO wants to know why his bill for AWS has increased so much, and how his team is leveraging the platform and so, it’s a balancing act – where can we knock down and help the customer as quickly as possible. So, what we’re seeing right now – today – is customers coming to us saying, “hey, help us reduce our costs immediately, that’s the most important thing.” Whether that’s leveraging enterprise discounts programs, savings plans, any of the different services that these third party cloud providers offer in helping guide customers through it, negotiating the right contracts, that’s kind of step one, right? Really just helping get their spend under control. It may be more than they want to spend, but it’s helping them get it under control, right, advising them through the process. And then what we see is really customers wanting us to help them take advantage of cloud via cloud assessments, or maybe as workflow automation – whatever it is that the customer needs based on workloads, applications, we’re starting to see it kind of come in a couple of different steps. Really, that first step is “help me get my costs under control, help me figure out why I’m spending so much and where can I start to save money.” Then from there, the discussion gets much more technical in nature, in regards to making sure it’s architected correctly, the right workloads are on the right clouds… So, it’s become a very unique conversation.
Max: [06:21] Rackspace took and transitioned its support infrastructure and operations from operating data centers into a cloud practice and supporting clouds for your customers. In addition to that, you’ve also acquired a lot of companies to enhance and increase your cloud practice and your expertise around that. I mean, there was a relatively big one recently. How does that work? What’s the decision of that buy process, what are you adding when you leverage on and take on another company and bring them into the Rackspace fold? What is this doing for your customers?
Tyler: [06:52] So I think when you know, when Rackspace takes a look at acquiring a new company, it’s… What capabilities do your customers need, what capabilities do our customers want that we can;’t provide or we can’t build? There are often times that we can build or enhance products to meet our customers needs, and we do. But, there are times when it’s quicker and easier and – more helpful for our customers, frankly – to acquire top-notch companies. The most recent one that, if you’re doing your research on Rackspace, or follow us at all, is the acquisition of Onica. Onica is a very unique company, major player in the AWS ecosystem, but a very different company than Rackspace and the two complement each other very well. Onica is traditionally very heavy in the professional services, so helping customers move to AWS or helping customers take advantage of AI and machine learning within AWS. A little sidebar, one of my favorite stories about Onica is one of their biggest projects that gets a lot of accolades, is they actually built an application on top of AWS for Disneyland, basically to help them manage the trash cans, right? To understand when the trash cans get the fullest, when should they change them, which parts of the park’s trash cans fill up the quickest. So, it’s a really unique company and very different than the traditional Rackspace, which is more in the managed services realm: helping keeping the lights on, being an extension of your IT team, and so bringing Onica into the fold allowed us to really step up our capabilities around AWS. It also helped us step up our capabilities around AI and machine learning. Also, to help customers from a code perspective, right? To help customers develop code, help them manage the CI/CD pipeline, workflow automation, things of that nature, and really the company that they’ve built is quite unique in that regard. It compliments what we do on the Rackspace side quite well, and so we’ve really seen an increase – not only in our AWS business from new customers reaching out for help – but as well as our stall base customers, right – asking how can I leverage this relationship to move my legacy workloads to AWS, or how can I leverage you all from a professional service perspective, to help me in this different areas, right, whatever those may be. So, it’s been an exciting transition and it’s been wildly successful, that’s one of the things that’s been unique to watch is how quickly the two companies have come together. Historically, that’s not very easy, for two large IT companies to come together, specifically when they’re really two different verticals, right? You have a heavy professional services company, you have a heavy managed services company, and then to bring them together and then have them compliment each other isn’t always an easy transition, right? I’ve been through a few acquisitions at Rackspace, some have been wildly successful and easy to integrate, others have been extremely difficult. This was one where I think we did the right amount of homework, we did the right amount of research and we purchased a company that compliments what it is that we’re trying to do for our customers and what it is that we bring to market. So, it’s been exciting, it really has. It’s like I said, it’s been wildly successful and it’s also given us some real clout in the AWS marketplace, right, which is something that is unique for us.
Max: [10:15] Rackspace is a large company, you’ve been around for a long time, you have very interesting stats. You know, years ago you bought a mall and converted it into data centers, you talk about facilities and millions of pounds of server equipment in these data centers. As part of that size, you have a lot of international presence. You’re not a US-focused company. You see LATAM, you see Asia-Pacific, you see Europe… These are all very distinct segments and focuses with Rackspace. How did that come about, and really how do you approach customers that are multinationals now, or not HQ’d in the US to, you know, support their operations and make their lives easier in the process?
Tyler: [11:00] Yeah so, interesting stats about Rackspace, right? I think the fact that we have global reach is definitely something that makes us unique. We – as a company – have a little over 140,000 customers in 150 different countries, right? So, we don’t have one or two folks spread throughout the globe, we operate at scale, and we have over forty data centers – those are Rackspace data centers – that doesn’t include our relationships with AWS, Azure and GCP, which extends our data center reach as well. So, really we’ve – over the years – built a follow the sun model for servicing our customers which really allows us to continually provide our three thousand plus cloud experts to our customers on a real-time basis, right? I mean, that’s one of the things that makes Rackspace unique, is this notion of fanatical support, really the DNA of what we were built on, and to be available 24/7/365 – not only to answer the phone and say hello to customers and help them with issues – but to actually have the scale of expertise to fix their issues, at whatever time they call us, or whatever the issue might be that they need our help on. You know, and I really feel that comes from the twenty-plus years of managed services experience that we’ve had and the rigour that we’ve built into our company. Of course over the years, things like automation and helping to alleviate ticket flows and backlogs and things of that nature has made us more effective at putting the right level of engineers on the phone with the customers at the right time, but it’s something that we continually work on, right? We are always looking at ticket time, success rates of tickets, how complicated the tickets are that are coming in, what our customers are rating us at solving those problems for them. It’s always a work-in-progress, right? It’s never good enough, it’s always got to get better, but it’s something we continually work on and focus on to make sure that we deliver to our customers that scale globally, right? Whether they’re US-based or APJ or whatever the case may be, every customer is unique and different and needs to be serviced in a different way, and we provide that unique experience to our customers regardless of where they need to host, regardless of where they’re located. It’s really about servicing the customer and their needs at whatever scale is appropriate for their business.
Max: [13:14] With 140,000 customers, this is obviously not something where you’re targeting Fortune 100 or Fortune 1000 only. So, in that base of business, who becomes a good customer profile? What’s a good fit for Rackspace? Is it verticals or – I mean, obviously not geography where you guys are spread out 150 countries with your customers. So, who would be a good fit for you and vice versa? If I’m a customer running a company, how would I know that Rackspace would be a good fit for me?
Tyler: [13:41] Yeah, I think you know, looking at – and this is an inside-out view from my perspective – Rackspace was built on the SMB business, right? When in 1998 we were founded, we primarily serviced the small business market, but when we evolved, right, we gained more confidence, we had more complexity in the portfolio, we started to appeal to different sized customers. And so, we’ve crawled, walked, run into different segments and I think, looking at Rackspace, it really comes down to what are mission-critical applications, or where are areas that we can help? And I do have customers ask me all the time, what’s your specialty in regards to vertical. Well, that’s another unique thing about Rackspace. We have folks that are in healthcare, we have folks that are in financial services, you know, software; really across the board. We don’t have one particular vertical that we specialize in, and I think that’s what makes Rackspace unique is, we do appeal to a lot of different customers, but small to enterprise. And you know, small customers – we appeal to them in ways that are unique: we can help deploy things for them that are much lower cost, right? There’s not a big capex outlay. We provide them expertise at scale, right, and things that they can’t necessarily get or talent they can’t necessarily attract. You get into the mid-market space and we appeal to them, again – talent. Rackspace is unique, you mentioned the mall, we have a very unique culture that attracts people, and we have a very low attrition rate, specifically on our IT bench, right? We promote education and we promote certifications and things of that nature. We always want to make sure we have the right talent and the right people to help our customers, and so you – in the mid-market space – depending on what specifically you’re looking at, it’s hard to find cloud experts and cloud engineers, and it’s hard to keep them. It’s the same thing with security, those are all areas that are difficult to attract and maintain talent, and I think we appeal to those customers because we give them that extension, right? We help them. When you get into the enterprise space, there’s still some of that of course, but I think it’s a different story in the fact that we provide enterprises ways to consume multiple clouds under a single pane of glass, right? Single bill, single management, those types of things become extremely convenient. Besides that I think, for an enterprise specifically, it really becomes – you know, what becomes important is the fact that Rackspace’s track record of uptime and reliability. When it comes to running a mission critical application, there’s nobody better than Rackspace. So, I think that’s where you see a lot of large Fortune 100 companies leverage Rackspace. It’s not all of their IT needs; we don’t host all of their applications, whether they’re internal or external, but what we do host is their most mission critical applications, right?. Whether they’re revenue generating or they’re critical to back office, whatever the case may be, that’s really where you see enterprises leverage Rackspace.
Max: [16:36] Part of your SMB mid-market enterprise is customization, and we see that reflected in your cloud practice with service blocks. Run me through what a service block is and how this actually layers on for our customer, you know?
Tyler: [16:50] So, you know the unique thing about Rackspace is it was always kind of a buffet menu of services. We provided managed services end-to-end, and that was the DNA of Rackspace. As we moved into the hyperscale cloud we have found that customers want to consume services differently. Some customers want full end-to-end white glove managed services, as to where other customers may want different components and they want to be able to label block those components. And so, that’s really where it becomes unique with our service blocks, as we allow customers as much or as little customization as they need. And so, the service block concept is really quite simple: it’s providing the people, the process and the tools for our customer to be successful. So, our base level, kind of minimum support level, is what we call platform essentials. Platform essentials is an enterprise technical account manager, available to you 24/7/365 to help you troubleshoot and answer questions. Then, within that block we also offer our cost optimization tooling – that is a unique component that’s different than, as an example – AWS enterprise support, right? We want to make sure that we always provide our customers a unique experience. But from there, it really depends on what customers are looking for – we step into the next level of service blocks, which is manage and operate. That’s allowing Rackspace to not only manage your cloud infrastructure but also operate it: updates, patching, really break-fix type work. From there you get into complex cloud operations, that’s providing you a certified cloud engineer at different hours per month, depending on what it is that you’re looking for, all the way to a dedicated resource available to you 24/7/365. We also offer architected deploy services, we typically see customers add that service block in the beginning and then delete it as things are deployed. So, these are really the keys of the service block offering. And then from there there’s obviously some unique service blocks the customers take advantage of on a one-off basis. You know, we have cost optimization or cost optimizer as we call it – MCO service block – customers usually leverage that on a quarterly or… some customers will leverage it monthly, it really just depends on what they’re trying to accomplish. Really, the goal is the service blocks is to allow customers to pick and choose what they need, when they need it, so they get the most out of their spend, both from an infrastructure perspective but also from a services perspective from Rackspace.
Max: [19:20] Awesome, Tyler – we could go on and on and on I’m sure, thank you so much for your time, this has been great.
Tyler: [19:27] Yeah, absolutely Max, thank you for having me – I appreciate it.
OUTRO: [19:29] Thanks for joining the Tech in 20 Minutes podcast. At ITBroker.com 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 ITBroker.com to schedule an intro call.