VCE Taps Cisco Veteran As New CEO

VCE, the joint venture of Cisco and EMC focused on the tightly integrated converged data center stack Vblock, named a top Cisco executive to be its new CEO.

Praveen Akkiraju, a 19-year veteran of Cisco and most recently Cisco's senior vice president and general manager, Services Routing Technology Group, will be taking over leadership of the VCE company and joining VCE's board.

In a statement, VCE said Akkiraju is joining VCE as an "extension" to the VCE management team that already includes President Frank Hauck, who also is joining the VCE board.

[ Related: VCE Intros New Higher-End Vblock, Integrates EMC Data Protection ]

VCE has been without a CEO since company Chairman Michael Capellas moved out of the CEO position he was named to in 2011 and into his current role.

"As the company continues to accelerate its business, product and market expansion, Praveen brings an ideal combination of business and technical experience that will enable VCE to meet growing customer demand for its products and solutions," Capellas said in a statement Thursday.

VCE was formed in 2009 as a joint venture of Cisco and EMC with buy-in from VMware and Intel. Its product is the Vblock, a prevalidated, vendor-approved stack consisting of various Cisco server and networking, EMC storage and VMware virtualization products and services. Solution providers working with VCE -- it had 153 partners as of May 2012 -- chase Vblock deals and pass along customer requirements to VCE, which builds the infrastructure according to those requirements and promises delivery of the full "data center in a box" in 30 days.

Akkiraju's hire is significant in that it marks the first instance of a major Cisco executive stepping in at a company management team heavily dominated by former EMC executives. In interviews with CRN last July and this past spring, Rob Lloyd, Cisco's executive vice president, worldwide operations, said Cisco would be taking a more active role in managing VCE and would continue to invest in the venture.

Akkiraju's oversight of Cisco's Services Routing Technology Group included management of its Wireless Networking Business Unit, Application Delivery Business Unit and Enterprise Routing businesses. In previous roles during nearly two decades at Cisco, Akkiraju was heavily involved in Cisco's carrier-grade routing platforms, having managed all of the major releases from Cisco's 800 series up through its current CRS-3 Carrier Routing System.

NEXT: Is VCE Making Money?

VCE currently has 1,200 employees and an annualized order run rate approaching $1 billion, although it hasn't disclosed much about its actual revenue.

According to regulatory filings, EMC invested $383.2 million in VCE during its fiscal 2011 and recognized $133.9 million in VCE revenue for the year, with a cumulative loss on the venture of $253.8 million over a three-year period. As of its fiscal second-quarter 2012, Cisco, which has a 35 percent stake in VCE, had made a cumulative investment of $264 million with a $165 million share of VCE's cumulative loss.

Both EMC and Cisco have maintained that looking at VCE's numbers as losses is deceptive. VCE's costs show up as operations expense lines in their balance sheets, but with the company set up as a joint venture, both parents recognize revenue from sold Vblocks on their respective P&Ls.

"The profit and revenue flow back through the parents," EMC CEO Joe Tucci told CRN in May. "So therefore, the more successful VCE is, in theory, the more money they'll lose. But what we do, underneath it all, is keep a management P&L. If we were losing that much money, we wouldn't doing it."

One thing Akkiraju will need to address is VCE's ongoing channel strategy, as well as its competition with other converged stack offerings such as FlexPod, which is a NetApp-centric reference architecture that also uses Cisco and VMware products, and EMC's own VSPEX, also a reference architecture approach.

VCE's channel program, however, is an area major networking and data center solution providers have told CRN is much improved in the past year.

Solution providers salute the efforts of D. Martin, vice president of global channels, and his team for being much-needed channel advocates at VCE and fine-tuning partner programs to include things such as a global price list, and various training and pre- and post-sale support options. VCE also launched a single program for registering Vblock deals last fall, eliminating the hassle of dealing with the various deal-registration processes of the vendors involved.

"Both D. and Andrew [Lickly, senior marketing manager, global channel marketing communications] are very responsive to email and direct calls," Kent MacDonald, vice president of business development for Calgary-based Long View Systems, told CRN in May. "Their team support of the channel is truly appreciated, as is their help managing field engagement with the EMC sales teams."

"We've been a partner with VCE from its Acadia days. All along, I've said that VCE did a good job of listening to the channel," Bob Olwig, vice president of business strategy and marketing at St. Louis-based World Wide Technology, told CRN in May. "It has changed its deal-registration and discount programs for partners in a good way. We have no concerns at all."

PUBLISHED JULY 19, 2012