Nutanix, Broadcom-VMware and the rise and demise of vendors focused on delighting CIOs

Nutanix, Broadcom-VMware and the rise and demise of vendors focused on delighting CIOs

At Nutanix’s Barcelona conference it was hard to miss the impacts of VMware’s abrupt changes, the importance of second-source suppliers and the fracturing of the cloud-everywhere movement

Today, the world obsesses over CX and EX: the experiences, often technology-enabled, via which organisations seek to persuade, compel, excite and delight users and employees. Perhaps, with the fall-out of Broadcom’s acquisition VMware still echoing, we need another term for the ways that vendors treat (or mistreat) CIOs and other IT buyers and influencers.

Call it the CIO-X (or make your own term up) but I’ve been thinking about this for the last week after attending Nutanix’s European conference in Barcelona. This event was unusual in that much of the debate that permeated the floors of the massive Fira exhibition space and beyond concerned another company. Namely, VMware and its new owner Broadcom.

Almost every session touched on VMware by Broadcom’s decision effectively to raise prices for buyers in what appears to me to be the starkest example of customer disrespect I can recall in well over three decades of writing about this business.

It would be easy to have fun with this and suggest that Broadcom has taken leave of its senses. You might jest that it is making the worst decisions since Caligula made his horse a senator and predict that it will need to take remedial action to avoid squandering the golden goose it bought. But no, this is just a cynical manoeuvre that’s designed to fill coffers rather than win over customers and it’s especially worrying for smaller customers.

This fire will be a slow burn, however. Most of VMware’s remaining customers operate across multi-year deals and won’t easily switch rapidly to alternative providers. They have been left in a holding pattern and those that are no longer or never were VMware customers are relieved. Broadcom-VMware has effectively asked customers to do things they don’t want to do, and it is playing fast and loose with relationships. It is saying that the old business idea that the customer is always right is… wrong.

For some Nutanix customers such as Gregg Lowe, CIO of Boyd Gaming, this is a replay of an earlier experience when Broadcom bought CA. Up go fees and down go innovation and creativity as research and development investment is cut.

“I was a big fan of CA. When Broadcom took over, they took away a lot of that innovation,” Lowe said. “I don’t see them investing and that’s where my concern would be [for VMware customers].”

In deals like this, the things that creative CIOs want are squandered. You might make a list here of value for money, creative thinking, spark, a long-term platform, a partner that will grow with then and understand their needs, frustrations, and opportunities.

Nutanix offers a study in contrasts. The company is a Californian neighbour and rival of VMware but there the comparisons stop… at least with the new iteration of VMware. Nutanix has always been  a pioneer and, just as important, it garners high customer satisfaction ratings with a Net Promoter Score hovering in the 90s. This means that customers recommend to other customers and growth becomes a viral phenomenon. Delighted in the way they have been treated, customers and partners organically create communities. A valuable multi-way exchange of views ensures the best chance of customers learning from customers and vendor learning to be iteratively better at serving them.

Eventually, as VMware terms come up for renewal and as customers seek options, it’s my bet that companies like Nutanix and others will win business because as Nutanix CEO Rajiv Ramaswami said, Broadcom-VMware is a deal “that’s good for the shareholders, not good for the customers”.

You might argue that CIOs have put themselves in a tight spot by being so deeply invested in VMware but then VMware is one of the great pioneers in modern computing. You don’t have to work there to believe as I do that it fundamentally reinvented the datacentre, taking existing infrastructure and radically repurposing it. It has been a brilliant engineering concern and it did an excellent job of going beyond the virtualisation hypervisor and extending its domain to create a second act for the company. CIOs, CTOs bought into its vision and now… this.

For veteran CIOs, this should act as reminder, as Simon Robinson an analyst at Enterprise Strategy Group concurred, that having a “second-source” supplier is always smart wherever that is possible.

In IT, however, things don’t always change fast and they are slowest to change in large enterprises where infrastructure is held together by complex software hosting lots of dependencies.

As Steve McDowell of NAND Research put it, “VMware is not going anywhere; they’re laser-focused on high-margin, high-revenue business [even as they are] disenfranchising the mid-part of the model.”

Of course, VMware will carry on and could even bounce back to recapture some of its erstwhile lustre with a different direction. But if it wanted to concern customers, create negative waves of publicity and disenchant developers, it went the right way about it. Nutanix reported plenty of CVs heading its way from VMware. “It’s actually quite sad,” said Thomas Cornely, Nutanix SVP of product management. “VMware has been a great company.”

… and now for the end of the de facto cloud standard

Another takeaway from Nutanix: we’re starting to see the beginning of the end for the cloud-first/cloud everywhere trend that has run for more than 10 years. I was overwhelmed by the number of customers who are balancing their investments to include on-premises systems and traditional licensing where that makes sense. That means usually where workloads are spiky and dynamic but can also include where data sovereignty and governance are rendered awkward by cloud models or simply where cloud vendors have become too greedy.

Sometimes, even smart people can get washed away by hype. Certainly, some CIOs have fallen into that category, suffered bill shock and are now resetting plans.

The middle ground, covering bases and having a Plan B (and C, D, E…) are not usually where the headlines are but they are a pragmatic response to a world where “black swan” events appear to be becoming scarily common. Companies like Nutanix that play nicely with hybrid, potentially morphing IT strategies win again here.

This then is the CIO-X: a world where vendors are creative in terms of engineering but conservative with customers. Are your suppliers offering that combination and do you feel confident that your core suppliers have your best interest in heart for the visible future? If not, perhaps it’s time to prepare for an eventual change.

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