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What Does It Mean for IT to Be Customer-Focused?

By John Worthington

worthingtonp-cropBy definition a service is a means of delivering outcomes that a customer wants to achieve, so it’s important not to forget where these outcomes originate in order for IT to be customer-focused.

Transforming IT from a technology-oriented to a services-oriented organization is at the heart of IT service management.  The “specialized organizational capabilities for delivering value to customers in the form of services” must be developed, refined, and continually improved with business outcomes in mind.

If IT is working well, with a true service orientation, your customer will see that:

  • IT actions align with the business, particularly in ways that help the business serve external business customers
  • IT costs are controlled and reduced wherever possible
  • Quality of end-to-end IT services is improved
  • IT agility in responding to business needs is improved
  • IT is focused on customer results
  • Prioritization of IT expenditures and actions is based on business priorities

For the IT organization, this service orientation starts with defining what constitutes a “service” in the context of the particular business and cataloging all the services available. Then the resulting service catalog, and the full service portfolio of which it is a part, become the means of ensuring that IT and the business are always completely in synch around IT services and their value.

What your customers want from IT
When I work with IT organizations that are building their initial catalog of services, I’m interested to see who views whom as the “customer.”  This is fundamental, however, since it is IT’s customer who defines value.

Frequently, service definition work is driven between particular IT groups, which can essentially put the entire effort within the boundaries of the IT organization, as illustrated in Figure 1.  This can result in an internally focused view of the customer/supplier relationship.  The focus is on supporting services, and parts of the IT organization itself end up being treated as “customers” of other parts of IT.

Figure 1 – Supporting Service Focus

Undoubtedly supporting services are important, since these are the building blocks that provide the capabilities that enable the customer-facing, outcome-oriented services.  But they are not what the business is ultimately concerned with.  Enumerating supporting services does not provide for the benefits the business expects – surely we don’t intend the service catalog to be limited to the IT organization!

Another approach I see my clients commonly take is to begin defining services that face the internal customers — the business — which establishes service catalog boundaries within the enterprise as illustrated in Figure 2.  Services are defined as what IT does for the business itself, without reference to the external customers of the business.

Figure 2 – Internal Customer Focus

This approach reflects a critical step in the evolution of an IT organization’s maturity as a service provider.  IT has begun to look at customer outcomes, with the customer being the business the IT organization serves.  I believe such an approach can lead to a more coordinated, collaborative way of working within IT; the various IT groups focus their attention on end-to-end service provisioning, not merely on their own IT silos.

So while initial service catalogs often start with the existing applications and infrastructure and package that for customers, a best practice approach that I recommend is to begin with the outcomes that customers desire and define services based on them as illustrated in Figure 3.

Figure 3 – External Customer Focus

The truth is, there will need to be multiple cycles of service definition and re-definition that need to continue indefinitely, since customers’ desired outcomes and perceptions are under constant change.

Defining services from the top down, starting with external services, is also a recommended approach. But this is easier said than done, since it quickly exposes a need to define both internal customer-facing services and supporting services.

Accelerating the journey to IT as a Service
This is the exciting part of being part of VMware. By establishing re-usable supporting IT services enabled by a software-defined data center and transformation road maps that make sure people and process changes are in place to realize the IT-as-a-service vision, I can help the IT organizations I work with to accelerate their ability to be truly customer-focused.


John Worthington is a VMware transformation consultant and is based in New Jersey. Follow @jMarcusWorthy and @VMwareCloudOps on Twitter.

A New Angle on the Classic Challenge of Retained IT

By Pierre Moncassin

Pierre Moncassin-cropWhen discussing the organization models for managing cloud infrastructure with customers, I have come across situations where some if not all infrastructure services are outsourced to a third party. In these situations my customers often ask – does your (VMware) operating model still apply? Should I retain cloud-related skills in-house? If so, which ones?

The short answer is: Yes. The advice I give my customers is that their IT organization should establish a core organization modeled on the “tenant operations” team as defined in Organizing for the Cloud, a VMware white paper by my colleague Kevin Lees.

Let’s assume a relatively simple scenario where a single outsourcer is providing “standard” infrastructure services — such as computing, storage, backups. In this scenario, the outsourcer has accepted to transform at least some of its services towards software-defined data center (SDDC), which is by no means an easy step (I will return to that point later).

For now let’s also assume a cooperative situation where customer and outsourcer are collaboratively working towards a cloud model. The question is — what skills and functions should the customer retain in-house? Which skills can be handed over to the outsourcer?

The question is a classic one. In traditional infrastructure outsourcing, we would talk about a “retained IT” organization.  For the SDDC environment, here are some skill groups that I believe have to be preserved within the core, in-house team:

  • Service Design and Self-service Provisioning is clearly a skillset to keep in-house. The in-house team must be able to work with the business to define services end-to-end, but the team should also be able to grasp accurately the possibilities that automation offers with software such as VMware vCloud Automation Center.  Though I am not suggesting that the core team needs to be expert in all aspects of workflows, APIs or scripting, they do need a solid grasp of the possibilities of automation.
  • Process Automation and Optimization.  A solid working knowledge of automation software is useful but not enough.  The in-house teams are required to decide which processes to automate and how. They need to make business-level decisions. Which processes are worth automating? What is the benefit of automation versus its cost?
  • Security and Compliance is often a top priority for cloud adopters. The cloud-based services need to align with enterprise policies and standards.  The retained IT function must be able to demonstrate compliance and where needed, enforce those standards in the cloud infrastructure.
  • Service Level Management and Trend Analysis. Whilst the retained IT organization does not need to be involved in the day-to-day monitoring and troubleshooting, they need to be able to monitor key service levels. Specifically, the business users will be highly sensitive to the performance of some business-critical applications. The retained IT organization will need to keep enough knowledge of these applications and of performance monitoring tools to ensure that application performance is measured adequately.
  • Application Life Cycle (DevOps). We have assumed in our scenario an infrastructure-only outsourcing — the skills for application development remaining in-house.  In the SDDC environment, the tenant operations team will work closely with the application development teams. Amongst other skills, the retained IT will need detailed knowledge not only of application provisioning, but also the architectures, configuration dependencies, and patching policies required to maintain those applications.

I have reviewed skills groups needed as more automation is used, but there will be less reliance on skills that relate to routine tasks and trouble-shooting. Skills that can typically be outsourced include:

  • Routine scripting and monitoring
  • System (middleware) configuration
  • Routine network administration

The diagram below is a (very simplified) summary of the evolution from traditional retained IT to tenant operations for SDDC environments.

Retained IT modelIt is also worth noting that the transformation from traditional infrastructure outsourcing to SDDC is a far from obvious step from the point of view of an outsourcer. Why should the outsourcer invest time and cost to streamline services, if the end customer has already contracted to pay for the full cost of service? Gaining buy-in from the outsourcer to transform its model can be a significant challenge. Therefore it is prudent to key to gain acceptance either:
-  early in the contract negotiations, so that the provider can build in a cloud delivery model in its service offering,
- or towards the end of a contract when the outsourcer is often highly motivated to obtain a renewal.

Finally outsourcers may initiate their own technology refresh programs, which can create a win-win situation when both sides are prepared to invest in modernization towards SDDC.

3 Key Take-Aways

  1. Organizations that undertake their journey to SDDC with an outsourcer are advised to establish a core SDDC  organization including most tenant operations skills; a key focus is to leverage automation (whilst routine, repetitive tasks can be outsourced).
  2. The exact profile of the tenant operations (retained IT) will depend on the scope of the outsourcing contract.
  3. Early contract negotiations, renewals, or technology refresh can create opportunities to encourage an outsourcer to move towards the SDDC model.

———
Pierre Moncassin
is an operations architect with VMware’s Global Operations Transformation Practice and is based in the UK. Follow @VMwareCloudOps on Twitter for future updates.

VMware vCenter Operations Manager Users: Raise Your Hands!

Keng-Leong-Choong-cropBy Choong Keng Leong

I innocently asked attendees in a workshop I was delivering at one of my clients, “Who uses VMware vCenter Operations Management Suite in your company?“ I got two simple answers: “Cloud administrator” or “VM administrator.”  This triggered me to write this blog and hopefully will change your thinking if you have the same answer.

The vCenter Operations Management Suite consists of four components:

  • vCenter Operations Manager : Allows you to monitor and manage the performance, capacity and health of your SDDC infrastructure, operating systems and applications
  • vCenter Configuration Manager : Enables you to automate configuration management across virtual and physical servers, and continuously assess them for compliance with IT policies, regulatory, and security compliance
  • vCenter Hyperic : Helps to monitor operating systems, databases, and applications
  • vCenter Infrastructure Navigator : Automatically discovers and visualizes application components and infrastructure dependencies

If I were to map the vCenter Operations Management Suite to the IT processes it can support, it would look like the matrix shown in Table 1:

Table 1: A Possible vCenter Operations Management Suite to Process Mapping

What Table 1 also implies is that multiple roles will be using and accessing vCenter Operations Manager, or be a recipient of its outputs, i.e., reports. For example, the IT Director can access the vCenter Operations Manager Dashboard to view the overall health of the infrastructure. The Application Support team accesses it via a Custom Dashboard to understand applications status and performance. The IT Compliance Manager reviews the compliance status of IT systems on the vCenter Operations Manager Dashboard and gets more details from the vCenter Configuration Manager to initiate remediation of the systems.

Table 2 below shows a possible list of roles accessing the vCenter Operations Management Suite.

Table 2: Possible List of Roles Using vCenter Operations Management Suite

Tables 1 and 2 illustrate clearly that vCenter Operations Management Suite is not just another lightweight app for the cloud or VM administrator — it supports multiple IT operational processes and roles.

Taking a step further, you need to embed vCenter Operations Management Suite into operational procedures to take maximum advantage of the tools’ full potential and integrated approach to performance, capacity, and configuration management. To draw an analogy –  if you deploy a new SAP system without defining the triggers or use cases for a user to access the SAP system; establishing the procedural steps on which modules to access and how to navigate in the system; what to input; how to query and report and so on; it is unlikely the system will be rolled out successfully.

Although vCenter Operations Management Suite is not as complex, the concept is the same. You need to define procedures with tight linkage to the tools to ensure they are used consistently and in the way it is designed or configured for.

I hope that my blog motivates you to start thinking about transforming your IT operations to make full use of the capabilities of your VMware technology investment.

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Choong Keng Leong is an operations architect with VMware Professional Services and is based in Singapore. You can connect with him on LinkedIn

VMware’s Call to IT Professionals: Be Brave

At VMworld last week, VMware CEO Pat Gelsinger laid it out: IT is no place for the timid. In a world where business has become not only lightning fast, but also increasingly fluid, he said, “…the biggest risk is perpetuating the status quo.” Success depends on willingness to move fast, be decisive, and take calculated risks.

No matter where you are on your IT transformation journey, learning from others who have taken those risks and moved their organizations forward can help you take the next step. VMworld attendees had plenty of opportunities to do just that, with companies like Medtronic and Boeing sharing their stories of operational transformation. In addition, VMware consultants and experts dug into practical application around SDDC and more.

Medtronic: Taking Risks to Improve Health
Medtronic SessionAs the world’s largest healthcare technology company, Medtronic provides some of the most critical types of technology solutions: those that alleviate pain, restore health, and extend life. Steve Arsenault, Medtronic Vice President of Global Application and Infrastructure Services, subscribes fully to risk taking as a requirement for IT. He told the keynote audience that even more important than taking risks, “…you have to be able to articulate those risks to your business stakeholders in a way that they understand.”

Later in the day, Medtronic IT’s Adrian Woodward and John Bistodeau shared how Medtronic is leveraging the VMware vCloud Automation Center and the vCloud Suite to jumpstart IT transformation and ultimately lead them to delivering both infrastructure and platforms as a service.

There was also an air of realism in their IT journey, as they had to be bold within the confines of the all-too-familiar flat IT budgets. Remarkably, they were able to reduce a 27-step process to four steps, and from 10 days to a single day turnaround time. The results speak for themselves, and it’s safe to say that VMware is helping Medtronic IT live up to its internal marketing slogan “Medtronic runs on IT.”

Boeing: Virtual Technology, Real Results
Operating within a company that has innovation in its DNA, Senior IT Director Enes Yildirim introduced ways that Boeing IT has shown tangible business results through its move to IT as a service. The aerospace giant’s cloud strategy includes program goals around performance, cost, operational maturity, differentiation, and strategy. Within that framework, the organization follows guiding principles that lay a foundation for a culture of innovation in IT:

  • Bank on Success
  • Leverage the Good
  • Self-Fund Innovation
  • Partner for Success
  • Don’t Accept the Status Quo!

By fostering innovation and adopting the cloud strategy, Boeing IT has significantly reduced cost per virtual machine, while increasing capacity to serve the business.

vCenter Operations Manager: People and Process Considerations
One of the most popular sessions in the Operations Transformation track at VMworld was Rich Benoit, VMware operations architect, presenting Maximizing the Out-of-the-Box Functionality of vCenter Operations Manager: People and Process Considerations. Rich cautioned the group against the “technology-only” approach. Instead, he encouraged getting in front of change by identifying roles and processes that will be impacted even before initiating a project. This way, as the silos break down and collaboration begins, people can focus on moving forward. In an implementation as broad as vCenter Operations Manager, Rich detailed the new organizational requirements and how to ensure the top 20 dashboards in the tool are used and the data shared to show business value. Stay tuned for a future blog and deeper dive by Rich.

Medtronic and Boeing have embraced the calculated risk taking required to make operational changes. With the right technology tools and an open approach to people and process changes, it’s a little easier to take Pat’s advice and be brave in the face of IT challenges.

Check out videos from VMworld 2014.

 

 

How to Create a More Accurate, Useful, and Equitable Service Costing Process

By Khalid Hakim

In my last post, I described the pressing need for a more effective IT service costing process (as a solution to the pressing need for tighter business/IT alignment!). The question now… is how.

How can companies create a service costing process that is fast, accurate, transparent, granular, fair, and consistent—without introducing yet another time-consuming and expensive project to the IT docket?

To answer this question, I’ll use a real-world example—a company that has recently been through the process and achieved excellent results.  I won’t name the company but I can assure you it’s a real enterprise, and the results were also quite real. I’ll refer to it as “The Company.”

In the past, The Company charged for IT services by simply allocating the total IT costs among service consumers based on the number of desktops and laptops they used. This “lump sum” cost allocation of course led to the perception that “IT is always expensive.” The Company knew it needed to move to a more service-oriented, customer-centric model.

Our team provided guidance in setting up a better service costing process. The implementation began with three key steps:

1. Create a service-based cost model diagram.
A cost diagram depicts the flow of IT costs from the general ledger or cost sources all the way to the services being provisioned—in such a way that IT can present consumers with a statement showing all service costs.

2. Develop a service-based cost allocation strategy.
The Company already had a cost allocation process in place, but it did not deal with service-to-service cost allocation. So The Company’s lump-sum allocation did not demonstrate any IT value but only the cost of IT when running the business. That’s why a service-to-service costing method was needed that would account for everything:

  • Servers and their related hardware
  • Network and security allocation to servers
  • Data center, storage and data center facilities costs
  • Software and enterprise license agreements
  • Support and operations contracts
  • IT project costs
  • Labor costs
  • IT overhead

This way The Company was able to fully load IT costs into services being delivered and transfer these costs to the business.

3. Develop a service-based cost classification strategy.
The Company classified all IT service costs into the following categories:

  • In/Out Service Costs: All direct service-related costs should be part of a service cost, while non-related service costs should be part of accounting period costs.
  • Fixed vs. Variable costs. Variable costs vary based on usage or time (i.e. data center utility bills, support tickets, or service consumption). Fixed costs are fixed regardless of service or resource usage (i.e.  software license costs, hardware purchases and support contracts).
  • Direct vs. Indirect. A direct cost is directly related to a service and can be easily traced. Indirect costs are indirectly related to a service and are typically spread over a number of services.
  • CapEx vs. OpEx. Capital expenditures are major expenses incurred whose costs have to be depreciated (split over) over the useful life of an IT asset, while operational expenditures are incurred periodically.

After the strategic IT/business processes were carried out, service-specific tasks began. These included defining and charting individual services, developing service-specific cost packages, and tracking and managing service costs over time.

Next it was time to consider the “people” aspects of service costing. Technology cannot provide a solution on its own; it must be developed and deployed in conjunction with stakeholders.

Along the same lines, handling IT financial management (ITFM) activities is not a one-man show. At The Company, the following roles were defined, along with specific responsibilities:

  • Financial Controller
  • IT Financial Manager
  • Service Manager
  • IT Manager
  • CIO
  • Customer Relationship Manager
  • VP of Infrastructure Services

Developing a roles/responsibilities chart (known as a RACI) then provided a concise and easy way to track who does what along with the level of contribution and accountability.

Next came identifying the right technologies to use in the service costing process. In this case The Company made a strategic investment with VMware and deployed the VMware IT Business Management Suite. This is the technology that will help them gain cost transparency, align with the business, enable the CIO’s transformation agenda, and control and optimize the IT budget and costs.

In addition, The Company has implemented basic CIO and Service Manager dashboards to provide insight into the financial performance of all managed services. The dashboards define the visual layout of the user experience. Each dashboard is composed of frames that display customized information designed for the intended user. The dashboards enable the CIO, IT Financial Manager, and Service Managers to gain access to cost information and make data-driven decisions.

SCP white paper coverToday The Company’s IT department is well on its way to being more business-oriented and service-oriented through better service costing. The Company can now trace IT costs from general ledger all the way to all business units consuming IT services. The new costing model also lays out the key roles and responsibilities, and VMware technology helps provide cost automation, transparency, and service-based cost modeling.

I’d encourage you to get full details about the service costing process outlined in this blog post by reading my white paper, Real IT Transformation Requires a Real IT Service Costing Process.”

Until next time—may all of your IT service costs be allocated with fine granularity and full transparency!
—-

Khalid Hakim is an operations architect with the VMware Operations Transformation global practice. You can follow him on Twitter @KhalidHakim47.

VMworld-graphicAnd if you’re heading to VMworld, don’t miss Khalid’s session #OPT1572!

Accelerate Your IT Transformation — How to Build Service-based Cost Models with VMware IT Business Management (ITBM)
A recent VMware survey showed 75% of IT decision makers list the number one challenge in IT financial management as lack of understanding of the true cost of IT services. ITBM experts and VMware Operations Transformation Architects Khalid Hakim and Gary Roos shed light on this alarming figure, and give practical advice for obtaining in-depth knowledge of the cost of IT services so you can provide cost transparency back to the business.

When you visit the VMworld 2014 Schedule Builder, be sure to check out the SDDC > Operations Transformation track for these and other sessions to help you focus on all the aspects of IT transformation.

 

How to Drive Tighter Alignment Between Business and IT

Many IT stakeholders have limited trust in the IT organization as a result of the way it has operated in the past. In this short video, Kevin Lees shares tips on how IT can deal with this real-world problem that is almost always overlooked.

Kevin Lees is principal architect of the VMware Global Operations Transformation Practice. Coming to VMworld? Don’t miss his session OPT1547 – Organizing for the Software-Defined Data Center (SDDC): Practical Advice for Practitioners

Driving Biz Alignment front coverRelated: Read Kevin’s recent post 5 Ways Cloud Automation Drives Greater Cost and Operational Transparency and download eBook Driving Business Alignment Through IT Transformation for more information.

Operations Transformation at VMworld: What’s in it for you?

VMworldVerticalGIF_07.14.14 (1)

Your CIO expects great things, and you deliver by understanding and implementing great technology. But now it’s time to take it up a notch – show that you understand how technology change affects the entire organization. Bring forward ideas for people, process and technology evolution. This year at VMworld, the Operations Transformation track gives you the tools and examples you need to take a holistic view of change and drive it forward for success.

You’ll be able to explain how virtual computing can be extended to increase agility, transform storage to lower costs and raise performance, virtualize the network to improve speed and efficiency, and automate IT operations so your team can redeploy resources to focus on innovation. Learn from VMware experts as well as IT leaders who have made IT transformation happen inside large enterprises, and take their successes and lessons learned back to your role.

Combining technology with a new way of operating to become more service-oriented and bring more business value is every IT organization’s ultimate goal. Sessions are filling fast, so make sure you fill up your VMworld 2014 schedule with items from the SDDC > Operations Transformation track to bring essential big-picture thinking back to your department.

The Missing Link of IT: An Effective Service Costing Process

By Khalid Hakim

For years now, there has been much discussion about the urgent need for tighter alignment between business and IT. Why are we still talking about the “need for” alignment and not the “results of” better alignment? Because all too often, IT cannot answer one of the key questions business leaders ask: “What exactly does this service cost?”

In many cases IT does not have an adequate service costing process, which means it does not have a fast, accurate, consistent, fair way to provide cost information about IT services to constituents. And the lack of an effective service costing process is costing both IT and the business—big time.

Cost transparency is important not only because IT service users want to know what they’re paying for, but also because it provides an opportunity for IT to quantify its value to the business.

If IT can provide accurate cost information, both business and IT leaders can make better decisions about IT investments, outsourcing, cost cutting, business strategy, and competitive differentiation.

We’ve all heard the mantra “Minimize IT costs while maximizing business value,” or its short form: “Do more with less.” It’s a core principle of IT business management (ITBM). But without an accurate, transparent service costing process, how can IT leaders truly deliver IT as a service (ITaaS) and run IT like a business?

Take a closer look at your existing service costing process and ask yourself a few tough questions:

  • Is it accurate? Does it take into account all of the CapEx and OpEx elements of delivering an IT service?
  • Is it equitable? Does it charge the right constituents the right amounts for IT services, based on their actual consumption—or does it simply charge a lump sum based on voodoo economics?
  • Is it transparent? Can constituents get an accurate breakdown of what’s included in the final price tag and what isn’t?
  • Is it improving IT investment planning? Your service costing process should enable business and IT leaders to create more finely honed investment strategies that cut costs while creating new competitive advantages. Is it?

If you can look in the mirror and answer “yes” to all those questions, congratulations—you’re a member of a small minority of enterprise IT departments with an effective service costing process. If not, ask yourself the next logical question: How can you develop a better service costing process?

I’ll address that question in my next blog post. So stay tuned.
——-
Khalid Hakim is an operations architect with the VMware Operations Transformation global practice. You can follow him on Twitter @KhalidHakim47.

VMworld-graphicAnd if you’re heading to VMworld, don’t miss Khalid’s session!

Accelerate Your IT Transformation — How to Build Service-based Cost Models with VMware IT Business Management (ITBM)
A recent VMware survey showed 75% of IT decision makers list the number one challenge in IT financial management as lack of understanding of the true cost of IT services. ITBM experts and VMware Operations Transformation Architects Khalid Hakim and Gary Roos shed light on this alarming figure, and give practical advice for obtaining in-depth knowledge of the cost of IT services so you can provide cost transparency back to the business.

When you visit the VMworld 2014 Schedule Builder, be sure to check out the SDDC > Operations Transformation track for these and other sessions to help you focus on all the aspects of IT transformation.

Don’t Miss Out: Ops Transformation is Big at VMworld

VMworldVerticalGIF_07.14.14 (1)Have you built your schedule for VMworld yet? Don’t forget to add sessions from the Operations Transformation track, with options that include:

Moody’s IT Transformation
Learn how credit rating giant Moody’s is transforming its IT department into a service brokerage, starting with implementing VMware vCloud Automation Center. SVP of Infrastructure Services Rajiv Doshi presents with VMware Operations Architect Rohan Kalra to share practical guidance and insights – including steps other enterprises can take to modernize and transform IT.

California Natural Resources Agency (CNRA) – Transforming to a Cloud-Based Shared Services IT Organization
Managing the largest water delivery system in the United States requires real-time data access and swift response time. CNRA has made great strides on the journey to become a shared services provider, with incredible results, including an overall IT CAPEX reduction of 42% and OPEX reduction of 35%. IT Director Tim Garza shares the organization’s journey and experience with the full VMware suite.

McAfee Meets Business Unit Demand with Elastic Cloud
Would you love to provide increased agility to your business unit partners while also reducing costs? McAfee has the story you need to hear. Hear Sr. IT Director Meerah Rajavel detail the U.S.-based security enterprise’s transformation, and how that transformation remains focused on business achievements with virtualization, automation and monitoring technology. Find out how to get the “quick wins” that provide necessary credibility and propel the process forward.

When you visit the VMworld 2014 Schedule Builder, be sure to check out the SDDC > Operations Transformation track for these and other sessions to help you focus on all the aspects of IT transformation.

The Forecast Is Sunny for Cloud Careers

This infographic distills data behind what’s driving the demand for IT professionals with cloud-related skills and why the hunt is on for top talent. Scroll through the entire image for a final section of lucrative careers and top companies hiring.

 

140123-VMWare-CloudCareers-Infographic