Virtual Instruments CEO: We’re the bridge between physical and virtual

Every transition in computing spawns a new market in management tools — the evolution to highly virtualized data centers and the cloud is no different. Virtual Instruments is squarely focused on delivering the next generation of management for, as its name implies, this new virtual world. But Virtual Instruments is different from other startups trying to tackle the virtual management challenge.

First, it’s not a start-up at all. Rather, the company began as a 2008 spin-out from optical network company Finisar Corp. Second, Virtual Instruments sports one of the tech industry’s most seasoned chief executive officers in John Thompson, former CEO of security vendor Symantec and, earlier, top executive at IBM. In this installment of the CEO Interview Series, Thompson spoke with InfoWorld Editor-in-Chief Eric Knorr and IDG Enterprise Chief Content Officer John Gallant about what makes Virtual Instruments different from existing management companies and why enterprises from PayPal to Unilever have committed to the company’s technology.

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Q: What’s the unique proposition behind Virtual Instruments and what’s the value you deliver in this highly virtualized moving-to-cloud world?

A: What’s very clear is that there is another transition under way in our industry. They happen about every eight to 10 years, and we’re in the midst of yet another one — one that, as I’ve said to many customers around the world, is inevitable. The physical, the virtual-to-cloud transition will happen, and what we’re doing at Virtual Instruments is positioning our product platform to be the performance management platform for that environment.

As you make the transition from physical to virtual, there are risks that crop up in the environment, and we believe it will require a level of visibility that heretofore hasn’t been available to many, many clients, or the tools that have been available have been a hodgepodge or a collection of tools for doing that. Hence, by delivering a completely integrated platform, to be able to provide deep visibility from the server through the switch fabric and back, gives us an opportunity to help customers manage this transition to the cloud and do it in a way that minimizes risk, improves operating expense and, quite frankly, improves the deployment of capital more smartly across the environment.

Q: If you take the traditional infrastructure management tools that our readers know, what’s different? What are the key elements you bring to the table that you wouldn’t find in that portfolio?

A: Those traditional tools emerged or evolved two transitions ago. They were built during the client/server transition of the early 1990s. I think what history would say is that while they still are effective, they are unlikely to be as effective in a highly virtualized, cloud-based environment. Having a newly architected platform that looks at performance-related information in real time on the wire is what makes us unique, and quite frankly will cause some of those older platforms to question just how viable they are for this new environment that’s being created.

Q: Pin that down to a few key capabilities that you have to be able to deliver that they can’t.

A: First, real-time performance management: I don’t mean polling the device and aggregating information and looking in my rearview mirror to tell you what performance is, but I mean right now, on the wire, watching all of the traffic as it flows. Second, the ability to correlate insight across the server stack, the switch stack and the [storage] array to get a real sense of what the performance of the entire infrastructure is like. Third, to be able to predict, based upon what we see now, how things might evolve as you move workloads around. If you think about the promise of the cloud, particularly the private cloud, it’s that I’ll be able to dynamically allocate workload based upon the real-time demands that may be coming from users. Well, without knowing what the current performance implications of that infrastructure truly are, I don’t know how you adequately dynamically allocate resources without problems.

Q: Is this at both the physical and the virtual level?

A: Absolutely. We all talk about the virtualized world, but the virtualized world runs on a physical infrastructure, and unless you have really, really deep insight into what’s going on in the physical infrastructure, you can’t be predictive at all about what’s going to happen in the virtualized or cloud-based world. The deep level of inspection that we provide for the physical infrastructure and our ability to provide analytical capability about the implications of that in a cloud or virtualized world, is what’s unique about Virtual Instruments.

Q: You have a long background in the tech industry, and you’ve worked with some very successful companies. Why was this opportunity so enticing to you?

A: I started here as an investor, not as an operator, and the thesis that drove me to make the investment in the spring of 2010 was that there was an inevitable transition going on. Right then, I was thinking physical to virtual and that this company had a unique capability to help people manage the physical-to-virtual aspect of that transition. Just as antivirus technology existed before Web enablement, it became big after Web enablement. Just as provisioning and systems management tools existed before we client/server-enabled everything, they became really big after we client/server-enabled everything.

My view was that performance-related, availability related technologies existed before, but they will become even more important as we virtualize the infrastructure. That prompted me to invest. I got involved with the company as a board member, and as is not uncommon with early-stage companies, we hit a little bump in the road a year later. I stepped in to try to figure out what happened and why did it happen, and it stuck to me like flypaper and I’ve been here ever since. I’m having a great time, too.

Q: Since you’ve taken over, can you give us some sort of sense of where you are in this mission? I mean what kinds of metrics are you looking for accomplishment at this point?

A: We are just about to complete today — hopefully — our final round of funding. I think it would be fair to say that we are very, very pleased with investor reaction to our progress given the pre-money valuation they gave us. It’s up three times from what it was the last round two years ago. What gave them that view was not just the products that we’ve delivered over the last 12 to 18 months, but their view of the problem we address with current products and the product road map that we’ve outlined for them, which was why they were willing to invest. We grew revenues last fiscal year 80-plus percent. We grew our customer base by almost a factor of two.

The thrust for us since I’ve been here has been more about new customer acquisition, build out our product portfolio and drive top-line revenue growth. Let’s manage this company like a startup as opposed to managing it like a private equity carve-out, which is what it was. The reality was we didn’t have that much revenue, therefore, as a carve-out, so focusing on gross margins and cash flow made no sense to me. We should have focused this company from the very beginning on this: We’ve got a technology lead, how do we extend that lead? How do we capture as many customers as we can and then drive incremental revenue from those customers with, candidly, a land-and-expand kind of strategy? That’s what we’ve been doing for the last 2-1/2 years or so, and it seems to be working.

Q: When does an enterprise become a great candidate for you from a sales perspective? What’s the problem that they’re facing that makes them say, “I’ve got to talk to these guys”?

A: If you have two attributes that are critical to your business, the first of which is the performance of your systems drives a level of sensitivity in your interactions with customers. So if you have a hugely important online-critical infrastructure, [for example,] Wells Fargo, you know for sure that if the banking system is down that has implications on the brand, it has implications quite frankly on the business overall.

Or if you’re a hospital and systems aren’t available, it has tremendous implications on your ability to serve patients in that hospital. Because every doctor, every nurse, every orderly, every person in the hospital is dependent upon that system as the platform from which services are delivered. If performance and availability and health of the infrastructure are critical issues for you, then you need our tools. Make no mistake about it.

Q:  Can you tell us about a couple great customers? Who are some folks that are using your technology?

A: We have almost 200 clients now, hopefully more than that by the time this quarter ends. Right here locally, perhaps one of our strongest clients is PayPal. PayPal is what I would say is our second largest customer worldwide. The company has fully instrumented both of its data centers with our technology, so every storage port has a Virtual Instruments probe attached to it. And the company monitors traffic routinely, all day, every day. The simple idea for [PayPal] is if the systems are slow or down, and someone shows up to check out and it’s not available or it’s slow, it has an alternative, and therefore, that can be measured in true revenue terms — very, very large dollars of revenue per second are just lost if they don’t have adequate performance or don’t have availability.

Or if you were to go to Europe and look at Unilever, a more traditional SAP infrastructure that runs the whole company, and if the SAP infrastructure is not up and running, guess what? The company doesn’t work. Every factory, every purchasing organization, every PR or AR organization reports through, if you will, the SAP infrastructure. And it has now plumbed its entire infrastructure with our technology: one very much focused on performance and availability, the other one, candidly, more focused on availability because of the critical nature of the application. If you were to think about almost every customer we have, the point of view into the marketplace has been one of those two: I have a huge performance problem I want to solve, or I have an availability issue, I need to make sure it doesn’t bring my systems down.

Q: Does your technology replace or augment existing tools?

A: We approach it as a complementary solution to things that customers already have. Our customers have tools for provisioning, for capacity planning, for device-level management.

The unique thing about our approach is we take a systems view, not a device view, and we focus almost exclusively on performance, system-wide performance. Most of the tools are device level and don’t focus on performance, they focus on capacity planning. They may focus on provisioning. In other words, how do I get a new device on the network working? We are very complementary to what every one of those other tools might be, and I don’t envision us in the near future tuning our focus or expanding our focus to worry about provisioning or capacity planning. There’s so much work to be done around performance, utilization and health of the infrastructure that we think we can build a huge business around those three domains.

Q: You mentioned PayPal instrumenting storage ports with your probes. How does this work?

A: What’s unique about what we do is a hardware probe that we have built that allows us to provide real-time, on-the-wire insight into the traffic as it flows through the infrastructure. We take that data and correlate it to other information that we will gather from the server tier or the switch tier so the customer gets a holistic view about performance, if you will. Were it not for that unique real-time component of hardware, we’d look like many of the other tools that are out there that do polling and aggregation of information. That hardware view that we provide is the true differentiator for our company.

Q: When we talk to, say, CA Technologies or HP or anyone who is in the management space, they talk about all the same kinds of things you do. They say they’re equipped for the cloud, ready for the private cloud, ready for virtualized environments. What’s wrong with what they’re saying?

A: What is truly different about us is, one, we are a new technology platform, architected for the environment that exists today, not the one that was built 20 years ago. Two, we are truly real time. It would be interesting for you to do a keyword search of how many providers now talk about real-time performance management. Then do one layer deeper and ask them to describe that. Is it on the wire or is it polling techniques where every five minutes or 10 minutes or 30 minutes you look at the device and have the device tell you what’s going on at that moment, and then you aggregate that over a day or a week and you interpret what the performance is. That’s not real time. That’s looking in the rearview mirror trying to move forward.

Our view is we are right on the wire, right now, telling you what’s going on. That’s what makes us different. HP doesn’t do that. CA doesn’t do that. IBM doesn’t do that. BMC doesn’t do that. None of them do that, which is why many of our customers will use us for that level of inspection of the infrastructure, then combine that data with things that they might see from their HP OpenView or their Tivoli infrastructure.

Q: It’s tough to make inroads into the management market because people have spent a lot of money over the years on tools that they don’t use fully or they don’t get the value that they hoped for. How do you make inroads into those environments? I mean is this through partnerships, is it direct sales?

A: There’s no question that many of the largest enterprises in the world have had, for the last year or two or more, tools rationalization programs in place. They’ve bought tools for each device or the providers of those devices have delivered tools with the device. I have a tool to manage a Cisco fabric, a tool to manage my EMC arrays, a tool to manage my HDS stuff, on and on and on and on.

But I don’t have a way of looking at a systems-wide view. And while many of the systems management platforms purport to be performance oriented, they tend to be capacity and deployment oriented, and therefore we represent something unique in that regard. As long as we can demonstrate our value — focus on performance, utilization and health — we then can show people how they can save operating dollars and capital expense by the deployment of our technology.

We use an interesting and unique approach for positioning our technology in a new account. Many startups use a concept called “proof of concept,” where I want to prove that my stuff works. Well, we don’t want to prove that our stuff works. We know it works, and oh, by the way, we’ve got a litany of customers who will tell you it works.

What we want to do is prove that it has value for you. So we sit down with a customer on the front end and work through a set of criteria that would lead them to say: Yes, I will buy. If I can show you what operational benefits will accrue from the deployment of this technology, if I can show you how over time capital costs will come down through the deployment of this technology, that provides the foundation upon which you can say yes. That proof-of-value concept, while I was a little bit suspicious of it when I first got here, really works.

Q: Just going back to how you work with existing tools, do you provide a separate data center-wide view or is this intended to plug into something like OpenView?

A: We could certainly pass information to OpenView or any of these management frameworks to the extent that that’s the way the customer wants to look at our data. We would prefer, however, to have our data be separate, where if you truly are concerned about performance, let’s not fuzz it up by trying to integrate it with something that is an abstraction layer on top of that. If you go into some of our clients, they have two consoles: one that talks about what is going on with network traffic and network performance and another that talks about the infrastructure from the server down. And those two platforms represent their best view of performance, availability, utilization and health of their environment. Microsoft, AT&T, PayPal — they are good examples of customers who have all of the Tivolis of the world deployed, but oh, by the way, their view of their infrastructure is reflected in our console and whatever monitoring tools they use for the IP network.

Q: Who looks at that data? Typically we’ve had people who worry about the network or the apps or the servers. Who’s monitoring the whole thing?

A: One of the unique things about our platform compared to many of the preexisting tools is the preexisting tools give you a canned view of the world. As long as you want to know these eight things, we can show you how those eight things are doing right now.

In our tool, we provide widgets that allow you to build unique views based upon the data that we capture. If you monitor the SAN, if you’re the SAN administrator for one of these enterprises, we can construct a view for you about what’s going on in SAN. However, if you are an application owner, say you run the ERP system for the same company, you’ll have a set of issues that are more important to you than they might be the SAN administrator. We can construct a unique view for you. You’re looking at essentially the same data, but you’re taking a slightly different twist on the theme, if you will, that makes it relevant for you in your job as opposed to everybody looking at common data and having to interpret from that common data what makes sense for them

Q: Let’s talk about hybrid cloud. Can this manage beyond your own data center — say, if I’m shifting workloads up into Amazon or another cloud provider?

A: We don’t do federation today. In our next-generation product, the 4.0 product, we will be able to federate. We’ll be able to look across not only the private infrastructure, but to the extent that the public provider has our technology, we will be able to aggregate those two things. We are very much focused on the private cloud world.

To be candid, it’s because it’s about solving a problem today, and the problem we’re trying to solve today is around mission-critical application performance. If you look at what work has migrated to public clouds, it’s not the most mission-critical work. It’s work that I care about, but not that much. The stuff that I care about a lot, I’ve kept inside. Therefore, our focus is on helping customers manage that which is mission critical — brand and revenue impacting, if you will.

Q: If you’re getting real-time feedback, that puts you in a unique position to optimize the performance of virtual resources. Is that something you’re also looking at?

A: The deeper the analytics that we can provide on top of our capture platform, the more insightful and helpful we can be to customers as they think about movement of workloads around in their environment. In the next release of our product, it is our expectation that we’ll deliver even deeper analytics than we do today. The product today collects a couple hundred metrics about what’s going on in your environment. Many of those metrics, customers have never seen before in their life. We provide an analytical capability on top of that to glean insight from those metrics. We have our own big data challenge because we produce so much data about the infrastructure itself that as we build more analytics into the product, it will start to become more intuitive and more directional, if you will, for customers.

Q: Does that mean in the future your system could help data centers automatically respond to issues or to optimize automatically?

A: Right now it is not our intent to provide remediation capability. We want to provide insight, then you use the tools that you already have to remediate.

If you’re using [VMware’s] VCenter or VMotion to move workloads around, you want the insight that we gather to provide intelligence to VCenter or VMotion about where to move things, as opposed to us trying to take on VCenter and compete with them for the automation side of the data center. We’re not trying to do that. We are very good at performance, utilization, and health, and we’re going to be the best in the marketplace at performance, utilization, and health. We’ll let other people do the provisioning, capacity planning, and remediation work. They already have tools in place for doing that.

Q: Do you view VMware as a core competitor?

A: I think it’s clear that VMware wants to move further and further away from the hypervisor to create the cloud management platform. In our view, it’s also clear you can’t have a cloud management platform that’s blind to performance, blind to the health of the infrastructure, blind to the utilization of the resources that are a part of that.

Right now I would view that we are very complementary to what VMware is doing. As a matter of fact, VMware is a customer of ours, so we don’t necessarily view that as problematic at all. But they’re a hell of a lot bigger than us. They’ve got a lot more resources than we do …

Q: And a new CEO.

A: … And they can amplify a message much, much more broadly than we can, so we’re just going to do what we do and do it well and the world will recognize us in due time.

Q: In terms of getting that recognition, what about partnerships? Who do you work with to get the product out there?

A: We’ve got a growing channel infrastructure. We have a terrific guy named Todd Osborne that leads our partner program. Last year 71 to 72 percent of our revenue was touched by a channel partner in one form or another. Our focus this year is on augmenting Todd’s team to be very complementary to the direct sales force that we have. The approach has been direct demand generation — hence our 25 teams around the world generating the demand for the product — but partner fulfillment. This year we are focused on augmenting the fulfillment side where partners will be certified and trained on the product, where they can then start to generate demand for us and fulfill for us. It’s a very logical progression.

Q: Are any of those partners offering this as a service?

A: Not yet. And we’ve been, candidly, reticent to go there.

Q: Why?

A: We’re a product company and we want to make sure that our product doesn’t get lost in the mix. Many of the service providers aren’t necessarily focused on the most mission-critical apps. They’re focused on any apps. Pick whatever the cloud provider might be — the apps that they’re running aren’t the ones that are critical to PayPal or Unilever. They’re just apps that they care less about but they want them to be available all the time. We have had untold conversations with many of the big outsourcers, and with a little luck maybe we’ll crack one this year.

Q: Would any of the existing systems or network management vendors see this as a complement, as a way to provide something that they’re not providing today?

A: Oh, I think so. They will first go through a period of denial — “Oh, we do what they do.” We’ve heard that at least 10 dozen times over the last two or three years. But I think it’s inevitable that they will have to figure out how they either do what we do or work with us to deliver this kind of capability for customers.

Q: Where do you go from here? How do you see the product evolving?

A: Good question. We started with a very discrete and finite focus on the Fibre Channel SAN world, primarily because that was the technology that we used as the seed capital, if you will, for our portfolio. What is clear to us is as customers make this inevitable transition from physical to virtual to cloud, their cloud architecture will have not just Fibre Channel SANs involved, but mass capability as well.

While VMware is certainly the prominent and dominant x86 platform for virtualization, it’s not the only virtualized server platform in the world. As a matter of fact, most of the mission-critical work in the world doesn’t run on a VMware platform. It runs on AIX LPARs or a Linux-based system. So there are a whole host of things that we intend to do to expand our portfolio around mass, around broader server platforms, around virtualized storage arrays, you know, you pick it. There is no shortage of stuff for us to do.

This most recent round [of funding] was all about the platform and extending the platform. The investors in this round have bought into the view that there is an inevitable transition going on. The tools that are in the marketplace today aren’t adequate for solving the problems that will emerge with this transition.

Q: You get 30 seconds with a CIO or senior IT executive, what do you tell them about Virtual Instruments?

A: We are the company that can help you manage the inevitable transition from physical to virtual to cloud. Take risk out, save operating costs and capital as time goes on.

This article, “Virtual Instruments CEO: We’re the bridge between physical and virtual,” was originally published at InfoWorld.com. Follow the latest developments in business technology news and get a digest of the key stories each day in the InfoWorld Daily newsletter. For the latest business technology news, follow InfoWorld on Twitter.