In a few short years, Virtustream has gone from a startup worried about making payroll, to a cloud provider selling to the largest global customers as part of the year-old Dell Technologies tech giant.
That’s according to Rodney Rogers who co-founded Virtustream in 2009 and sold it to EMC for $1.2 billion six years later. A year after that, Dell founder Michael Dell announced plans to buy EMC and its affiliated companies and completed that deal last fall. Rogers remains CEO of the Virtustream business unit of Dell Technologies.
Virtustream is not the most familiar name in cloud computing, a market dominated by Amazon Web Services and Microsoft Azure. But it’s fairly well known to executives at companies like Coca-Cola (KO), General Electric (GE), Hershey, and Cargill.
They are all Virtustream customers, and with Dell’s army of sales people and much bigger budget behind it, he thinks Virtustream can gain more traction. And Dell, unlike Virtustream by itself, is a household name with existing relationships with most, if not all, of the Fortune 500.
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Virtustream, along with Microsoft (MSFT) and Amazon (AMZN), sell cloud computing services to business customers as well as the software companies that sell to those business customers. So, just as business software makers like Salesforce (CRM), Tableau (DATA), and Workday (WDAY) have said they will use AWS or Azure to run their software, Virtustream says it’s signing up other software providers to use its cloud.
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Rogers thinks that there are many other such software providers still looking for a partner, creating a huge potential market.
Salesforce and a handful of others are the stars of online, or cloud-based, business software. But Rogers argues that there are “literally thousands” more like them. All of these software companies must weigh whether it’s cheaper and more efficient to use a public cloud than run their own data centers. Clearly, Rogers thinks that many will decide to have a third-party company like Virtustream handle the hassle for them.
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Many of those software companies are smaller and more targeted than companies like Salesforce, which sells sales and marketing software that can be used by all sorts of customers. Much of the software running on Virtustream’s cloud performs narrower tasks like managing manufacturing processes, inventory, and how products are shipped. Such software is often custom-written for a particular industry, but is just as important to many companies as sales software.
Overall, Dell Technologies has a complicated relationship with the cloud. On the one hand, Dell sells servers and storage that cloud companies can use in their data centers; they are its customers. The company also partners with AWS and Microsoft. But in Virtustream’s case, Dell is backing a competitor to those same outside cloud companies.
That may be somewhat contradictory, but as Dell Technologies’ chief executive and chairman Michael Dell has said since embarking on the EMC acquisition two years ago, the goal is to offer customers a choice of clouds. Virtustream’s public cloud will have a prominent spot on that menu.