New NetApp President Cesar Cernuda: Here’s How NetApp Will See ‘Exponential Growth In Cloud’

“We have 5,000 channel partners across the globe, with a presence in more than 100 countries where we sell. But very important, the products that we have built with companies like Microsoft, Google or even Amazon are quite unique,” says NetApp President Cesar Cernuda in one of his first interviews since joining the company in May.

Taking NetApp Further Into The Multi-Cloud, Hybrid Cloud World

NetApp in May made one of its most significant moves in a multiyear push to show the IT world that, even as it continues developing its best-in-class storage hardware, it has turned the page to become a leading-edge developer of software and services for helping businesses manage data in any cloud, in multiple clouds, on-premises and across all of them.

That move was appointing Cesar Cernuda, a 23-year Microsoft veteran, as its new president to spur the Sunnyvale, Calif.-based company’s further push into cloud-native and digital-native services.

Cernuda, in one of his first interviews since joining NetApp, told CRN that he will be leading the go-to-market side of the company, freeing up CEO George Kurian to focus on R&D. In his new role, he plans to call on his experience with Microsoft and the cloud to ensure NetApp continues to build the technology so that it is able to help businesses manage the storage, compute and virtual desktop infrastructure environments to make the cloud more friendly, lower-cost and efficient.

“When I say we’re going to have exponential growth in cloud it’s because we’re going to bring new businesses, we’re going to capture new logos that weren’t necessarily close to NetApp before and they’re now joining NetApp through the partnerships that we have with Google, with Microsoft, with AWS, and as well with our sales force,” Cernuda said.

Here’s a look at how Cernuda plans to help NetApp take cloud to the next level.

What made you decide to come to NetApp?

One year ago, I got this call where NetApp was basically looking for somebody to come and really work on the transformation of the company. For the last 23 years, I’d been at Microsoft. And for many, many years I’ve been telling CEOs and boards and leadership teams what to do to transform their companies. And here I am with one of the Fortune 500 companies with great technology, great background, great legacy coming and saying, ‘Hey, we believe there’s a great chapter ahead of us. We need to transform the company. And your international background meets our needs to transform the company.’

I’m not an expert on the hardware side of the business or necessarily living in storage as such. So we had a very open dialogue, and they said, ‘The reality is NetApp is transforming to become a cloud-centric data company, a data-centric company, and we need somebody with your background to really help us transform our go-to-market and ensure that we engage with our partners, and our partners with our customers, in different ways and take advantage of all the great things that we have had in the last 30 years, and build a great future ahead.’

So, long story short, I got really excited about the opportunity. I thought that my background could contribute to make it happen. I’d seen it from Microsoft. I saw the technology. There’s a great partnership with Microsoft and with other public cloud vendors. So when I saw what NetApp was doing and looked at my skills, I just thought it was a great match.

As president of NetApp, where does your work start and CEO George Kurian’s (pictured) end?

Very different. George is our CEO. I’m the president. So to be more precise, I basically lead all of our go-to-market. So sales, marketing, support services, customer success, that’s pretty much what I spend my time on.

George, of course, oversees everything. And we work together on the go-to-market piece. But he spends more time now on the R&D side. But again, he oversees everything, so I report to George.

What can we expect from this week’s NetApp Insight conference and beyond?

On one hand, we’re going to spend a good amount of energy talking about modernizing data centers. We’re going to talk about how customers with our partners will be able to take advantage of recurring investments and how they can go and modernize their current data centers with new technology and be more efficient, and of course take advantage of the latest technology that we bring to them. ...

More and more of our customers are saying, ‘Hey, we’re living in a hybrid cloud world. It’s not just about modernizing my data center, but I want to have better discussions with you on how do I lift and shift some of the apps. How do I go and expand some of my apps into a public cloud environment, into private cloud environments.’ And we’ve been talking about this Data Fabric concept for the last several years, but this has come into reality, and it’s really expanding and growing as we’ve been investing with the public cloud vendors.

So that’s what you’re going to see. Much of the modernization of the data center is a core discussion, but also our public cloud offering, and then at the core this hybrid cloud environment.

Do you see NetApp still having a big hardware focus going forward? Or do you see the company moving away from the hardware side and doing more with the cloud and software-defined storage?

There’s no doubt that we’re pivoting into a really good growth opportunity, which is what our customers are asking us, which is the software and cloud world. More and more of our customers are saying, ‘I want to make sure that I can run my applications regardless of where they are. So regardless of if I’m moving into this hybrid world, public cloud world or private cloud world, I want to make sure that you guys give me the performance, the latency, the security that you have given me the last 30 years.’ And many of these customers are moving many of their workloads to the cloud.

So yes, we’re investing and growing much more in that sense. Last quarter, we grew our public cloud services annualized recurring revenue by 192 percent. So that’s a clear area for growth and opportunity for us. But I want to be honest. We see many of our customers saying, ‘I want to make sure that you keep giving me the technology that I need for my data center.’ So I don’t want our customers to be confused, or our partners, by thinking NetApp isn’t going to invest any longer here. We are. We’re very committed. The beauty of our commitment is that the layer that we have for this kind of hybrid public cloud is OnTap, which is kind of the brain system that we’re using in the cloud, on-prem, and in the overall hybrid cloud environment. The integration that we do with our operating system and our hardware is quite unique. Therefore, you can expect us to grow what we call our core business, which is on-prem. We’re growing that business. But we’re expecting exponential growth on the cloud side with software.

How do you compare what NetApp is doing to its competitors like Pure Storage, Dell EMC or Hewlett Packard Enterprise? What’s NetApp doing that’s different?

I think the biggest differentiator is our Data Fabric approach. In reality, it’s how do we really and truly bring the best of what NetApp has been doing the last three years of helping our customers lead with their data. ...

We have 5,000 channel partners across the globe, with a presence in more than 100 countries where we sell. But very important, the products that we have built with companies like Microsoft, Google or even Amazon are quite unique. Today, when you think about Azure and the customers going with Microsoft, for example, there’s a technology called Azure NetApp Files which is a first-party service that Microsoft is providing that is based on our technology. Or the same with Google. So when you think about NetApp CVS [Cloud Volumes Services], which is our technology basically offered by Google, that’s a first-party service, and that’s a huge differentiation. And that’s something that our partners and our customers as well are looking for. And this is a great opportunity for our channel and even for new partners that were previously not close enough to NetApp. So there’s partners of Microsoft or Google that are starting to use that technology and offer that to customers. And there’s partners of ours that are starting to get up to speed on that technology as well. I’m getting partnerships with Microsoft, Google or Amazon offering that to our customers or their customers, or that are joint customers. And that’s a unique value proposition. I think we have a very good opportunity there.

NetApp is among the first data center infrastructure vendors to look at how to integrate customers’ move to the cloud with on-premises infrastructures. The company already has native cloud services on some of the public clouds, and the ability to migrate data back and forth. What’s next for Netapp? Where is NetApp looking to improve how it works with the cloud?

First of all, if we are honest with ourselves and we think about the growth of the cloud and what has happened so far and what is going to happen in the future, I think you will agree with me that first of all, every single day or every year, every month, there’s more data. So it’s not that we’re in a business where there’s going to be less data to be stored. There’s going to be more data to be stored. And more and more data will move into the cloud.

The second question is, which types of workloads have already moved to the cloud, and which types have not yet moved to the cloud? When you think of mission-critical applications, when you think about enterprise applications, you probably would agree with me that there’s a lot of work to be done to move many of those applications into public cloud environments. And there’s several industries that are not moving into the cloud in the short term, or at least into the public cloud environment, for regulatory issues, for privacy issues, for other reasons. But we’re expecting over time many of those enterprise applications and mission-critical applications to move into the cloud.

We are a great source to make that happen. Think about SAP, for example. There’s information I think provided by IDC which says 85 percent of the SAP environment is still on-prem. But 83 percent or 85 percent of the people that you ask about SAP, they’re looking into how they’re going to move their SAP environment into the cloud. Here we come with our partnership with Google, which is certified, or Microsoft, which is certified, with our technology helping customers to move and expand or shift, even, their SAP environment into a public cloud environment.

What’s the opportunity here?

Just think about enterprise apps as a great source of growth and opportunity for our partners in the next years to come. AI, edge nodes, we’re looking to IoT and edge as well, that’s another big opportunity in some specific industries or verticals. So we see this as a growth opportunity.

We’ve done some acquisitions. If you think about CloudJumper, how we position ourselves on VDI [virtual desktop infrastructure] or VDM [virtual desktop management], we’re a great partner in that area. Or the last acquisition we made with Spot. Spot is really a unique technology and value proposition where we optimize your cloud spend. There’s other technology that [promises to] optimize your cloud spend. With Spot, it’s actually technology that, basically, you run it, and it’s automatically going and optimizing your cloud spend. And the way customers pay is based on the savings that they get. The go-to-market strategy is quite remarkable. Now guess what? That technology is also connecting to how you optimize your overall storage in the cloud using file storage through NetApp, for example. That’s another opportunity for us.

We are in beta with Project Astra, where we’re investing more and more on the container side and Kubernetes and how we can help customers use our technologies to drive container and Kubernetes adoption. So all in all, what you’re going to see is our commitment on that customer journey and being closer to our customers providing the technology to help them to be more efficient and to operate with their data regardless of where they are.

What does this mean for channel partners?

The key thing here is, how do we transform with our partners? There will be partners that will say, ‘This is my core business. I don’t want to move. I’m going to stay in the data center world. This is what I’m good at. And I’m going to keep doing this business.’ And they’re going to have a lot of opportunities there. They’re specialized. They’re going to win their own share. There’s going to be other partners who say, ‘Gosh, finally, you got it right’ or ‘This is a great opportunity for me.’ We’ll be enabling this partner to transition customers to the hybrid and public cloud environments. ..

And there’s going to be new players. There’s going to be new partners who say, ‘Well, I’ve never been on the storage business. That has never been our core. But I’ve been very strongly interested in helping customers, for example, with enterprise apps or AI And part of the reason why we have not grown more is because we don’t have technologies like you guys have to make this happen.’ Partners like that are already working with us, and we’re building plans to team up with them in a different way. They’re saying, ‘Now my application can truly become a full cloud application. I can deliver microservices around my applications and use NetApp as the center for my overall storage service and application center service.’ So that’s kind of what you’re going to see from NetApp moving forward.

Do you see NetApp doing more to bring competitive storage from companies like HPE or Dell EMC to the cloud?

Absolutely. That’s part of a strategy of our core business. When I say we’re going to have exponential growth in cloud it’s because we’re going to bring new businesses, we’re going to capture new logos that weren’t necessarily close to NetApp before and they’re now joining NetApp through the partnerships that we have with Google, with Microsoft, with AWS, and as well with our sales force.

Having all this innovation in the cloud, what we’re seeing, and it’s happening now, is our sellers are taking advantage of it. And more important, there are partners from our competitors joining and saying, ‘I want to learn more about your vision of Data Fabric.’ Customers say, ‘Look, in my new refresh, one of the differences if I go with NetApp is that, whenever I want to move afterwards to the cloud, it’s going to be easier, cheaper, and more seamless if I go with NetApp.’

So that’s helping us on the on-premises world. Some part is already saying, ‘Look, if I move my customer in the next refresh coming up, how can I take advantage of this recognition of the partnerships in the cloud to show my customer to move it to the cloud.’ So the answer is yes, it’s a big element of our strategy. And we are sharing our value proposition with our partners as well as our prospects.