#CounterpunchWithSVG E06: Red Hat Believes Open Hybrid Cloud Is The End Goal. But Is It?

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The year 2020 has turned out to be a rather dramatic one so far. The COVID-19 pandemic has literally halted the world in its tracks. While parallels are being drawn to World War II, this pandemic is far graver and probably the greatest humanitarian and economic challenge that we have ever fought. The fact is, despite all the planning and forecasting, no organization is being spared, and their leaders are having to rewrite the playbook on-the-go. This is also true for technology vendor organizations who are being forced to recalibrate expectations and drink their own kool-aid of technology-enabled remote working.

To understand how technology leaders are rethinking 2020 and beyond, we at Greyhound Research are hosting some noteworthy names on #CounterpunchWithSVG. After all, no better than hearing from those occupying the corner office. Well, in the current times, it’s most likely their coffee table or their children’s bedroom!

For the first, and hopefully many such dialogues, we decided to speak to Paul Cormier, President & CEO, Red Hat on how he is steering the company through this pandemic. Paul is credited with taking Red Hat beyond Linux roots to a full, modern enterprise IT stack based on open source innovation and for pioneering the move that replaced Red Hat’s freely downloadable and boxed business model for Red Hat Linux in 2002 with an enterprise subscription model. While this dialogue gives a first-hand perspective of Paul’s mindset, it also talks rather eloquently about the changing mindset of technology decision-makers globally and how this pandemic is ushering in irreversible changes to the value technology is expected to bring to an organization’s digital agenda.

P.S.: For the uninitiated, #CounterpunchWithSVG is an executive dialogue series by Greyhound Research. As the name goes, this series is about sharp, honest, and unfiltered conversations. The format is simple. SVG throws punches at his opponent (asks tough questions that most wouldn’t) and gives his opponent an equal opportunity to counterpunch. In a world full of marketing hype, we at Greyhound Research believe #CounterpunchWithSVG makes an insightful read. We bet you will share our sentiment once you’ve read this exchange!

SVG: Paul, thanks very much for agreeing to participate in #CounterpunchWithSVG. Truly appreciate it. Firstly, can you please highlight how the Red Hat business has been impacted in the early quarters due to the pandemic? And has the company revised guidelines on new deals and cash flows for the remainder of 2020?

Paul: In early March, we made the decision for all Red Hatters to work from home rather than a Red Hat office, though some of our associates had begun working from home prior to that.  We’ve always had a globally distributed team, with more than 25% of our workforce working remotely historically. Our strategy at Red Hat, especially in engineering, has been to hire the best person for the role, regardless of their physical location. So in that respect, we were fortunate that we were already fairly experienced when the need arose for our workforce to go fully remote in light of COVID-19. 

While we were ahead of the game in some ways, we’ve used this situation to shore up our business continuity work to build customer confidence that they can count on us through this crisis. For us, one of the biggest challenges we are facing is the uncertainty around what the impact on our customers’ businesses might be. Some industries, like travel or hospitality, are being hit harder and need to adjust their IT needs to simply weather the storm, while some, like telecommunication companies and the federal government, might have more business and need to scale accordingly. No matter what our customers’ needs are, we’re adjusting and working to support them. 

We’re also learning to be even more agile and flexible because any plans we had at the beginning of the year have an entirely new set of factors to contend with. – @PaulJCormier of @RedHat

We have set our plans in place and are making adjustments in all areas of the company on a daily basis but our focus remains on working with our customers to help them not just survive, but thrive. 

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SVG: How are you ensuring the productivity and safety of your employees as they WFH during these testing times? Have you had to make additional investments to enable access to resources? Please give an overview of the technology implemented to enable this remote setup?

Paul: The safety and health of our associates is always a top priority for us, but this pandemic has brought new meaning to how we approach that. It became clear early on that this situation would create a lot of complex challenges for Red Hatters and that meant we had to change how we support them. 

I think one of the most important things we’ve done is to openly communicate with both associates and managers the need to be flexible right now. To be human, come to every situation from a place of compassion, and recognize that people are dealing with stressors from multiple angles right now. 

A remote workforce requires a different communication style and more engaged leadership. And the truth is, it’s almost impossible to over-communicate. – @PaulJCormier of @RedHat

I and other leaders at Red Hat have stepped up to create virtual office hours and (remote) face time with their teams. We’ve asked leaders to go beyond conveying the latest information and updates about projects and work, but to make sure they check in with their teams and listen to their concerns or just keep our bonds strong.

Something else I’ve been doing is town halls with the whole company every two weeks. It gives our associates a chance to hear updates and ask questions directly of me and other Red Hat leaders. We created a site on our internet that is dedicated to all things related to COVID-19. It serves as a one-stop-shop with anything associates need to know from all the email updates and recordings of the town halls to tips on how to stay productive and volunteer opportunities.

Something else we noticed is that associates, between taking care of dependents or having the computer right next to our beds, are having an “always-on” experience. Other people haven’t wanted to take PTO since they can’t travel or unwind as they have in past years. At the end that isn’t sustainable. So, for the rest of the year, we are identifying one day each quarter as a Red Hat Recharge day. It will be an extra day off for Red Hatters around the globe to step away from the keyboard and phone to re-energize. 

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SVG: Our estimates at Greyhound Research tell us that demand for IT products and services will pick up by the OND quarter later this year. Assuming this lands correct, what are your expectations in terms of demand coming back, and which of your offerings do you believe will be most relevant to customers both during and post COVID times?

Paul: Given the emphasis on remote work and operations and the increasingly critical nature of on-demand and online services, I would expect the hybrid cloud to remain front and center for our customers. The beauty of hybrid cloud solutions is that they start in a corporate datacenter with Linux on bare-metal servers, virtualization, and private cloud, and then scale out to encompass public cloud services.

It’s true that there is no silver bullet in enterprise IT, but the open hybrid cloud is about as close to a panacea as there is. – @PaulJCormier of @RedHat

As I’ve previously said, some customers may simply be trying to maintain their operations through the pandemic. For these organizations, it’s about getting the most out of existing resources and using technologies to extend operations to remote or distributed teams. Red Hat Enterprise Linux provides a scalable, reliable foundation for these efforts while the Red Hat Ansible Automation Platform delivers extensive automation capabilities, making it easier for IT teams with limited manpower to keep services up and running.

On the other side of the equation, businesses with services that are in demand need to scale and they need to scale now. They’ll look to the public cloud as the most efficient and effective means of doing this, but these organizations can’t abandon their existing IT investments, many of which will be on-premises. These IT teams need to effectively bridge existing mission-critical systems and applications with cloud-native services – Red Hat OpenShift provides a standardized plane across all of these footprints, enabling IT teams to retain existing resources while still pushing forward innovation in the cloud.

Combined with OpenShift virtualization, virtual machines can now even be brought forward onto cloud-native infrastructure like Kubernetes, breaking down the silos that once existed between developers working on the “here and now” and the future.

Really, I see the hybrid cloud as what will be most in-demand, but it’s truly a spectrum of needs. – @PaulJCormier of @RedHat

From our point of view, we’re ready to help our customers wherever they sit on this curve – if they just want a more reliable operating system to fuel their on-premises operations or if they need to push the envelope to meet the demand for digital services, we’ll be there. And we’re ready to help.

SVG: Paul, thank you. This has been a wonderful conversation, and I hope to catch-up soon for another, deeper round of conversation on the future of Open Source as you see it, the future of Red Hat under IBM, and a lot more! Thanks again for your time.

<strong>Analyst: Sanchit Vir Gogia</strong>
Analyst: Sanchit Vir Gogia

Sanchit is the Chief Analyst, Founder & CEO of Greyhound Research, a Global, Award-Winning, Digital & Technology Research & Advisory firm.

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