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    ACCELERATING BUSINESS INNOVATION VMware IT Performance Annual Report 2017

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    Table of Contents VMware IT Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4 CIO Letter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5 Accelerating Business Innovation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6 Laying the Foundation for the Future . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6 The Private Cloud Journey . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10 Transforming the Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12 Empowering the Workforce . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14 Integrating Security into Everyday Work . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17 Energizing Our People . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23 Driving Business Growth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26 V M WA R E I T P E R F O R M A N C E A N N UA L R E P O R T 2 0 1 7 | 3

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    IT SPENDING COLLEAGUE SUPPORT COST REDUCTION Continuing to invest in our people, innovation, business, and employee productivity 1/3 cost per case against the industry average colleague 18% reduction in IT spend/revenue over 2 years 90% satisfaction rate 85% first-contact resolution rate 12% reduction in IT cost per colleague over 2 years OPERATING SYSTEM 50% WINDOWS DISTRIBUTION 10% OTHER 33% less spent on infrastructure than our industry peers 40% MAC VMware IT Accelerating innovation through people, process, and technology MOBILE 30 IT-developed mobile apps 42K+ supported devices using VMware Workspace ONE™ IT-MANAGED ENVIRONMENT 9 data centers 4 public clouds 6K VMware ESXi™ hosts 100% virtualized 212K managed VMs apps micro- VMware containers launched 38 segmented using VMware NSX® 54PB total raw storage 8.4PB vSAN™ raw storage 40K and destroyed per week ~12M lines of custom code 400+ business applications 5.3K features delivered 64 software in 2017 releases 4 | V M WA R E I T P E R F O R M A N C E A N N UA L R E P O R T 2 0 1 7 12/17

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    Welcome from the CIO VMware believes in the power of the individual to affect change. We enable a culture of possibility so you can build what you need, the way you need it. VMware IT plays a crucial role in enabling innovation in order to provide the solutions and services to make this a reality. At VMware, IT has moved from the backroom to the public square where our employees live and work. With strong partnerships across VMware as well as the Dell Technologies family, we are able to anticipate business needs, take BASK IYER action to drive innovation, and provide thought leadership. CIO DELL AND VMWARE VMware IT deploys VMware software before its general release. Through VMware on VMware, we directly influence the company’s top line by running the full VMware portfolio of products in a real enterprise environment. We find issues, then provide direct feedback to correct the issues and improve product quality and value. We work closely with our field teams to ensure that our customers are able to meet their transformation goals. We adopted a mobile-first and apps-driven agile mindset for development, and our employees were thrilled. We set out in 2017 with a focus on these strategic areas: business transformation, cloud, mobility, workforce productivity, risk and security, and sustainability. Propelling this strategy is improving our colleague experience to create a better customer experience. 2017 CIO HALL OF FAME INDUCTEE BASK IYER I am pleased to state we made great strides in all these areas, as you will read in this report. In the coming year, (fiscal year 2019), we will continue to provide leadership in driving innovation in areas such as IoT (Internet of Things), AI (artificial intelligence) and machine learning. We will sharpen our focus on our talent, ensuring they continue to learn and grow in an inclusive environment that promotes diversity of all kinds. I see new opportunities for IT to drive VMware’s transformation by reimagining and optimizing our end-to-end business processes, accelerating cloud adoption—private and public—and transforming our workplace. It is my hope that by sharing VMware IT’s transformation story—our successes, challenges, opportunities, and plans for improvement—we can help other business leaders and fellow IT organizations transform their own companies. We also want to hear and learn from you. Because we can all be better when we work together.  Read blogs by Bask Iyer —Bask V M WA R E I T P E R F O R M A N C E A N N UA L R E P O R T 2 0 1 7 | 5

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    Accelerating Business Innovation Like most global companies, VMware is experiencing disruptive change at VMWARE ON VMWARE an exponential rate. VMware IT has the opportunity to influence how the As part of the VMware on company will accelerate its growth and leverage technology to create greater VMware program, VMware IT business value. With strong internal partnerships, IT can help drive innovation partners with R&D to deploy VMware product releases in both solutions and service delivery. into various environments This VMware IT Annual Performance Report showcases how VMware is throughout the development fostering a culture of innovation by leveraging new technologies to transform process. We report bugs and recommend feature business operations, increase workforce productivity, support data-driven enhancements based on our decision-making, and improve its security profile and risk management. experience with the product. Implementing products at scale in a global IT operation is invaluable to product development. We share our Laying the Foundation wealth of knowledge and best practices as IT professionals with customers on the VMware for the Future on VMware portal, in blogs, The World Economic Forum states that in the fourth industrial revolution, the and on Twitter. business and technology models of every company will fundamentally change. VMware IT understands this shift will have an important impact on the way we live, work, and collaborate with each other—making the ability to foster innovation even more critical. “We stand on the brink of Innovation takes many shapes within VMware IT. Under a fail fast mentality, a technological revolution we invest in and nurture great ideas by fast-tracking the adoption process that will fundamentally from ideas to successful outcomes. For example, our IT Center of Excellence alter the way we live, work, teams actively assess new technologies that can be used to improve and relate to one another.” efficiency. Experiments in neural networks using text-mining and deep learning techniques are being conducted to analyze opinions based on public WORLD ECONOMIC FORUM and private data in near real-time. 6 | V M WA R E I T P E R F O R M A N C E A N N UA L R E P O R T 2 0 1 7

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    An artificial intelligence (AI) lab provides a place to explore business productivity apps that incorporate text with voice and natural language processing technologies into a single digital experience. An Internet of Things (IoT) lab is a sandbox for trying out new digital experiences using mobile, bots, and sensors. Other recent innovative solutions include the use of data center security monitoring via VMware AppDefense™ and iBeacon technology for workplace hoteling. The VMware Office of the CTO has recognized the value of these IT projects through its xLabs initiative, which funds innovation within VMware. “VMware needs to be a Core IT applications are also embracing innovative thinking to reduce role model for all of our turnaround times. Machine learning is being incorporated into the customer customers on what great Auto-Support system so that it can learn from past customer support ticket IT looks like. Our IT shop recommendations and accelerate the auto-assignment of tickets to the right and team are shining resources. Neural networks are being used to further optimize the process, examples of how IT can with the ultimate goal of moving from a rules-based ticket resolution framework to a machine learning-based Auto-Support process. be functional—secure and reliable—while also One of the challenges of the fourth industrial revolution is creating new being cool and delivering technologies and workplace environments that empower people to collaborate, whether across geographies or disciplines, and act on business value.” opportunities. VMware IT believes that innovation lies at the core of this PAT GELSINGER cultural shift. CEO VMWARE V M WA R E I T P E R F O R M A N C E A N N UA L R E P O R T 2 0 1 7 | 7

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    Accelerating Growth Using Real-Time Analytics Data analytics is a key component to VMware IT’s pursuit of innovative solutions. One group in IT is streamlining how quickly data can be collected, analyzed, and delivered to the right people at the right time. In 2017, this group was recognized by the CIO 100 for its Advanced Analytics initiative that applies the principles of advanced analytics and data science to predictive modeling to help drive sales efficiency, improve customer service, and increase revenue. As part of its transformation effort, IT also merged INNOVATION IN THE OFFICE several data repositories into a single warehouse, giving executives access Employees in VMware’s to key data in near real-time for more informed decision-making. Melbourne, Australia office use an IT-developed Smart Our data analytics expertise is also playing a key role in the development of Workplace app—which leverages VMware Skyline™, a proactive support technology the company introduced Bluetooth low energy beacons in 3Q 2017. Partnering with R&D and Global Services, IT designed a data —to reserve workspaces. Watch platform to collect and analyze the large volumes of customer data using the video to see the app in action. telemetry and Hadoop technologies. These data insights will help VMware customers improve the stability and reliability of their IT environments. Passion for Innovation Providing learning opportunities is a core IT value. We encourage our employees to foster innovation by applying their skills in new ways. Two IT employees designed and now teach a Design Thinking workshop, a one-day, intensive, hands-on class that introduces participants to the human-centered design process. Employees can use the design process to build and test tangible ideas through rapid prototyping and feedback. DESIGN-THINKING WORKSHOP Hands-on workshops taught by employees encourage collaboration and “fail fast” thinking. 8 | V M WA R E I T P E R F O R M A N C E A N N UA L R E P O R T 2 0 1 7

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    VMware Enterprise Data Warehouse Transformation 6,000+ 200+ Business Users Mobile App APIs 5,000 45+ Operational and Subject Areas Analytical Reports (near real-time) Data Backbone for 10+ Mobile Apps V M WA R E I T P E R F O R M A N C E A N N UA L R E P O R T 2 0 1 7 | 9

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    The Private Cloud Journey During the past three years, VMware IT has undergone a transformation to build an agile foundation from which VMware can accelerate its growth and facilitate its transition from a software to a services company. One of the primary objectives of this strategy was the design and implementation of a private cloud that allows capacity to be centrally deployed, shared, and managed; is competitive with third-party vendors; and can rapidly deliver product feedback to R&D. The adoption of a private cloud has dramatically improved efficiency and STATE BANK OF INDIA the speed of deployment. Infrastructure can now be provisioned in under VMware IT’s Meghdoot team is 22 hours instead of four to six weeks. A continuous provisioning approach assisting the State Bank of India speeds up the code release cycle and supports the evolution to a hybrid on its cloud adoption journey. cloud architecture. Users of the private cloud include Technical Marketing, Education Services, R&D, Global Support Services, Hands-on Labs, the Cloud Business Unit, and pre-sales demo and support. An automated, self-service portal speeds provisioning by offering pre-designed development and test environments that can be easily set up or deleted. A single cloud team, blending internal and external IT skills, manages cloud operations and serves as a single point for issue resolution. The cloud uses VMware products, including VMware vCloud Suite® and VMware vRealize® Suite, to centralize cloud management of performance and availability. Virtual machines (VMs) can be easily added or deleted, further improving stability. In addition, the team uses VMware vRealize Code Stream™ to simplify release automation and continuous delivery of applications and IT code. Embracing the Hybrid Cloud In 2017, our cloud platform was extended to embrace the integration of VMware Cloud™ on AWS, which features VMware-managed software running on a dedicated Amazon Web Services (AWS) infrastructure. This solution combines public cloud flexibility with private cloud manageability. COST (USD) 50% COST REDUCTION VMs 1 GHz CPU, 2 GB memory 50% COST REDUCTION 1 0 | V M WA R E I T P E R F O R M A N C E A N N UA L R E P O R T 2 0 1 7

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    A hybrid cloud strategy gives us the flexibility to leverage multiple cloud DEVOPS JOURNEY ENABLED BY PRIVATE CLOUD environments, regardless of location, complexity, or scale. The public cloud serves as a jumping-off point for burst use cases such as business continuity and disaster recovery. This strategy supports IT’s evolution from a capital YEAR 1 expense model to an operating expense model, and greater flexibility. INSTANCE STABILIZATION Cloud Technologies Foster Agility Move to Cloud 99.95% SLA Adoption of cloud technologies such as containers and microservices were also major contributors to increased IT efficiency in FY18. We launch and destroy more than 40,000 containers per week. By abstracting an application from its host systems using containers, developers can more easily move apps between development, test, and production. Containers provide a YEAR 2 lightweight development environment that complements the robust, fully PROVISIONING AUTOMATION automated features of virtual machines (VMs) in a global IT operation. Automate Instances Multitenant Support VMware IT also began migrating to a loosely coupled, microservices-based, application architecture for delivery of new services. By using microservices to distribute compute and storage but retaining central management, apps can be scaled more quickly and changes deployed globally with just a few clicks. YEAR 3 (TODAY) BUSINESS AGILITY Developer Automation: Upping the Stakes Enable CD/CI During 2017, VMware IT completed its DevOps transition, which eliminated Deploy when ready development silos and increased the visibility of investments across IT, thus optimizing spending and resource allocation. Under the DevOps model, product development is centralized in self-contained teams under one delivery owner. Updates are released when they are ready instead of a predefined cadence. A continuous development/continuous integration (CD/CI) methodology automates service delivery within the private cloud. Since its implementation, we have seen a significant reduction in delivery cost per feature, with an average of more than one release per week and more than 5,300 features released in 2017, 10 percent more than last year. These changes become even more striking given VMware’s commitment to increasing revenue from services. By leveraging the cloud, we have improved infrastructure management and developer productivity—key requirements for moving to an agile delivery model. The cloud supports flexibility and scale through a robust infrastructure, microservices, and a hybrid architecture. It also ensures security is architected across multiple applications and platforms from the start of any development project. V M WA R E I T P E R F O R M A N C E A N N UA L R E P O R T 2 0 1 7 | 1 1

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    Transforming the Business 25% reduction in the As the waves of technology adoption accelerate, the business must be able to respond to market opportunities much faster. This includes investing in core business applications that will transition to a digital future. VMware IT is sales-planning-to- a critical component and enabler of this transformation. deal-execution cycle The pace of change requires us to cast off its historical role as a technology 50% reduction in book service provider to become a full partner with the business and quickly identify and implement innovative solutions to drive agility. This closing time transformation is driven by three core objectives: simplify the architecture, automate wherever possible, and improve the colleague experience. The transformation initiative had an impact on many areas within business operations, including sales operating efficiency. An overhaul of the sales process and applications resulted in a 25 percent reduction in the sales- 53% of employees attributed planning-to-deal-execution cycle. Introduction of a new finance system resulted in a 50 percent reduction in book closing time. improvements in mobile workforce effectiveness as a result of digital workspace The Mobile Experience initiatives* Mobility is a close second to the cloud as one the biggest technology *Based on survey respondents. disruptors of the past year. On-the-go employees require access to business VMware, “The State of the Digital applications from a wide variety of devices and locations. Delivering a simple, Workspace,” 2016 consumer-like experience can enhance employee success and improve the user experience. We employ a digital workspace or bridge strategy that utilizes consumer- grade mobile apps to enhance the user experience while maintaining corporate compliance. Using VMware’s Workspace ONE technologies, IT implements applications on personal devices, such as a tablet or phone, in a way that respects its use as a personal device but maintains corporate risk and security policies. Workspace ONE also centralizes software delivery across devices, regardless of location, which improves supportability and security. 1 2 | V M WA R E I T P E R F O R M A N C E A N N UA L R E P O R T 2 0 1 7

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    For successful adoption of mobile apps, they must be essential for everyday business use, provide a great user experience, and be secure. To date, we have introduced 30 consumer-grade mobile apps. Popular apps simplify information retrieval: People Search helps employees find and communicate with other employees, vApprove consolidates approval requests from multiple sub-systems into a single app, and Oasis delivers online access to IT support. Apps such as SalesPulse, Partner Mobile, and Executive Pulse distill sales information for specific user groups from disparate systems into a single app. We have seen strong adoption of these apps because they address the immediate need for information, a reflection of the mobile world we now live and work in. V M WA R E I T P E R F O R M A N C E A N N UA L R E P O R T 2 0 1 7 | 1 3

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    Empowering the Workforce Computerworld Best Like most global enterprises, VMware comprises a mixed environment of Places to Work in IT multiple operating systems, devices, and service needs. A desktop computer (2017) #6 in a company office is no longer the norm. VMware IT is pushing the virtual desktop into a whole new realm that isn’t constrained by connections to a Fortune Future 50 specific device or geographic location. We believe it’s critical to shift our view (2017) #6 from users to colleagues who fuel each other’s success, regardless of our roles. Understanding colleague technology needs requires a continual evaluation Fortune 40 Best of how to improve daily work routines, from provisioning and security and Workplaces in authentication to efficient support services. We rely on a cloud-enabled, Technology (2018) #9 integrated technology platform to deliver a seamless workspace and minimize the friction points between people, devices, and locations. Fortune 100 Best The digital workspace is an ecosystem of VMware products—Workspace ONE, Companies to VMware AirWatch®, and VMware Horizon®. AirWatch serves as the single pane Work For (2017) #42 of glass for monitoring and updating workspaces. This ecosystem enables IT Forbes Just 100: to update colleagues to the latest operating system while reducing the America’s Best number of versions to support. Workspace ONE supports single sign-on Corporate Citizens (SSO) across platforms making access the same experience, regardless of (2017) #26 the hardware. Glassdoor Employees’ A key area for the next year will be boosting employee efficiency by Choice Award (2018) delivering personalized experiences. Baseline imaging of computing devices, #33 including ‘out of the box’ applications and tool downloads at the manufacturing facility, is being adopted. Streamlined provisioning will help Thomson Reuters Top 100 Global colleagues get up and running much faster. We are also investigating AI and Technology Leaders other emerging technologies in our quest to deliver a seamless experience (2018) between desktop and mobile. 1 4 | V M WA R E I T P E R F O R M A N C E A N N UA L R E P O R T 2 0 1 7

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    Unified Collaboration With thousands of colleagues to enable globally and an explosion in software tools and capabilities, providing a rich collaboration experience is critical. IT SERVICE DESK & TECH BAR This year our focus was to increase capabilities while reducing the number of solutions being managed. Next year, VMware IT will continue to focus on ensuring our colleagues have a delightful experience with technology. 9 on-campus tech bars Fast, Efficient Support Improving the efficiency and impact of Oasis, our IT Service Desk, continues to be a key priority. Oasis offers a variety of support channels—live chat, 17,000+ help requests handled monthly email, video, social, telephone, and face to face—to ensure we meet colleagues where they are most comfortable. ‘The doctor is in’ tech bars have emerged as the preferred option for support, with more than 75 percent choosing them over opening a ticket and waiting for a technician to reach out. 2,170 walk-ins per month Colleagues who work remotely or in smaller offices receive the same high- quality support through Oasis online. In addition, the Oasis mobile app provides easy access to make appointments, help requests, and equipment orders. The key measurement of Oasis’ success is how many technology issues are resolved on first contact, regardless of the medium (phone, chat, etc.). During the year, a substantial investment in staffing education and employee communications was made to improve first-contact resolution. The resolution rate has increased to more than 85 percent, colleague satisfaction to more than 90 percent, and the cost per case is now one-third the industry average. Employee Success To modernize the IT service request process, IT introduced HelpNow+, a searchable help system that responds to any employee inquiry, including HR, Finance, Workplace, or IT, within two seconds. The colleague-centric platform Since 2015, VMware employees at seven offices have been able eliminates non-value-added tasks, such as lengthy forms, and automates to obtain IT peripherals, such as other tasks for a more pleasant experience. Colleagues can even use the one- headsets, mice, and power cables, touch interface to attach a photo for ticket creation. Next on the list: enabling from IT vending machines using both colleagues and fulfillers to rate their experiences. their badges. In 2017, 13 machines supplied more than 12,000 items, Other improvements include deployment of vending machines to dispense IT a 95% increase in just two years. peripherals on a self-service basis, insertion of program managers directly Three more machines are being into infrastructure and end-user services teams to improve accountability and added in early 2018. responsiveness, and expedited transfer of employee IT assets following a VMware acquisition. 1 6 | V M WA R E I T P E R F O R M A N C E A N N UA L R E P O R T 2 0 1 7

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    Integrating Security into Everyday Work VMware IT partners with the business to securely and transparently enable agility and speed at the pace of the business. One of the top priorities is protecting corporate assets and information. Recognizing the complexity of applications relies on numerous networked services, IT has designed an DELIVERING A DIGITAL end-to-end security program that stretches from within the data center to WORKSPACE mobile endpoints. IT leverages Workspace ONE to simply and securely deliver We collaborate with other VMware departments to identify better ways to and manage any app on any globally implement policies and tightly integrate security into all business device. It integrates identity, operations. By capitalizing on virtualization and microservices in the security application, and mobility management into a single architecture, we ensure applications and data are protected. platform. Our colleagues use VMware’s security posture also extends into product development. VMware Workspace ONE on both their desktop and mobile IT actively works with R&D’s Security Engineering, Communications, and devices to simplify how and Response (vSECR) on the integrity of our services as well as the development where they work. of our products such as VMware AppDefense, a technology that protects applications running in virtualized environments. IT also played an important role in the integration of security best practices into VMware Cloud on AWS, a cloud service that combines VMWare software with the Amazon public cloud. NSX to the Rescue 60,000+ VMs running NSX, one of the Security lies at the heart of VMware IT’s adoption of the VMware NSX largest NSX deployments for Network Virtualization and Security platform. The power of micro- vSphere in the world segmentation using NSX distributed firewalls is most visible in VMware’s SAP implementation. Policies can be defined according to logical groups, such as enterprise applications, training, or business intelligence, and down to the VM level. NSX enables IT to rapidly deploy applications while maintaining a global security posture. We can centrally configure and enforce security policies down to the VM level. So far, we have micro-segmented 38 apps in the production environment. In a second NSX use case, IT manages one of the largest NSX deployments for VMware vSphere® in the world, with more than 60,000 VMs for the private cloud. With NSX, IT can provide large-scale self-service network creation to tenants using virtual networking features. V M WA R E I T P E R F O R M A N C E A N N UA L R E P O R T 2 0 1 7 | 1 7

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    Building Enterprise Resiliency Enterprise resiliency is a critical part of VMware’s IT operations. To ensure IT is both proactive and adaptive when a disruption occurs, we have invested in a robust disaster recovery (DR) strategy that delivers fast times to recovery while protecting business assets. This year: • IT re-architected its SAP applications (e.g. Finance, Data Warehouse, Master Data) into an Active (SCDC2) / Standby (WDC) configuration that reduces DR recovery time from 2.5 hours to under 1 hour. • One weekend per quarter, an SAP failover test occurs to the DR site with the business running as usual. This failover not only tests DR processes and technology, but increases the confidence of our colleagues in IT’s capability to execute an actual event. • IT also extended DR to its Cloud Service Operation business applications, such as Jira, which are being deployed onto VMware IT infrastructure. Recovery time is now within an hour. • The Production Readiness Assessment (PRA) program ensures all VMware software-as-a-service (SaaS) offerings have their disaster recovery plans reviewed and implemented. A core element of any risk management program is preparing for potentially business-disrupting events. Under IT’s guidance, VMware launched a global enterprise resiliency program that aligns key stakeholders on business continuity plans, crisis management, and response plans for identified risks. By the end of 2017, 80 percent of our key business units were engaged in business continuity planning and had developed crisis management plans for our top business continuity risks. A key focus area now is employee education and awareness. Read the Enterprise Resiliency white paper. End to End (E2E) Networking IT developed a networking standard to improve resiliency, performance, and security across all network layers and deliver a uniform network experience across all locations. During the past two years, 22 sites have been remediated to this standard. The standard calls for a new secure wireless experience, new firewall standards, and a unified set of network client services such as DHCP and DNS. To ensure an optimal experience, we survey users for feedback. In addition, network verification and failover testing (NVFT) is done periodically and has been automated using bespoke scripting. By focusing on continuous improvement, IT not only verifies the efficacy of the entire E2E program but ensures that IT standards are working as designed. 1 8 | V M WA R E I T P E R F O R M A N C E A N N UA L R E P O R T 2 0 1 7

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    GREEN PROJECT OF THE YEAR 2017 VMware’s Palo Alto campus was awarded a Silicon Valley Structures—Green Project of the Year for 2017 from Silicon Valley Business Journal for its “campus in the forest.” V M WA R E I T P E R F O R M A N C E A N N UA L R E P O R T 2 0 1 7 | 1 9

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    VMware IT: Sharing Its Knowledge “Really appreciate your VMware IT is considered VMware’s best customer reference. Through the organization’s support VMware on VMware program, IT subject matter experts share their firsthand of the Executive experiences about product deployments, IT best practices, and thought Briefing Center leadership with customers. Discussions focus on deploying and supporting program. It is critical VMware products at scale across a global footprint. Customers respect the in providing the Ritz- credibility and experience of VMware IT peers who face the same IT issues every day. Carlton experience for our global customers. Throughout the year, VMware IT imparts its knowledge in other ways: These guys crushed it!” speaking at industry events and executive briefings, presenting in webinars and other online events, and meeting in peer-to-peer briefings. IT best VMWARE SALES EMPLOYEE practices are also shared through blogs, videos, and a VMware on VMware portal. VMworld: Highlighting a Year of Innovation One of the highlights of the year is VMworld, VMware’s annual customer conference in Las Vegas and Barcelona. IT co-sponsored a new VMworld track, Leading the Digital Transformation, which offered topics of interest to senior IT leaders and CIOs. During both events, VMware IT experts shared real-world experiences using VMware products and IT best practices. Almost 4,000 people attended 32 unique breakout sessions by IT staff. IT also met with customers in private briefings, hosted lab tours, and participated in forums, such as Meet HANDS-ON LABS: TESTING the Experts roundtables, TAM Customer Day meetings, and VMware booth PRODUCTS AT SCALE theater presentations. One of the most high-profile VMworld activities is the Hands-on Lab (HOL) that allows customers to try out VMware products. It is run jointly by R&D and 3,000+ labs in one day IT. During VMworld 2017, VMware set three records: delivering 3,000+ labs on at VMworld 2017 one day and provisioning almost 11,500 labs in one week in Las Vegas and 15,700 provisioning 4,200 labs in Barcelona. A fifth of the workload was running on VMWare Cloud on AWS. labs at VMworld 2017 in Las Vegas and Barcelona V M WA R E I T P E R F O R M A N C E A N N UA L R E P O R T 2 0 1 7 | 2 1

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    Energizing Our People Technology is only one aspect of VMware IT. Our biggest asset is our people. Attracting, growing, and retaining the best talent; promoting a diverse, inclusive work environment; and offering career and leadership development are high priorities for IT leadership. Empowering people, the human capital that underpins VMware technology, is woven into the culture. VMware embraces its values by nurturing an inclusive VMware encourages its 20,000+ and diverse culture that lives EPIC2, the name we use to describe these values: employees to live the EPIC2 values: execution, passion, integrity, customers, and community. execution, passion, integrity, customers, and community. Having a culture of integrity is the foundation for VMware’s growth. These values unify the company and differentiate it from our competition. For the company to be successful, employees must live them at every level of the company. Best Workplaces in Diversity Supporting a productive, diverse workforce takes many different forms. by Great Place to Work® and VMware’s initiative, VMinclusion, seeks to create a more inclusive and diverse FORTUNE (2017) #30 workforce to drive greater business outcomes for employees, customers, and shareholders. EPIC2 values are expressed through employee-driven Power of Difference groups or PODs that bring together communities by gender, ethnicity, and location, to nurture connections and develop leadership. The number of PODs continues to grow. Training for the Future Investing in our employees is a priority. In the past year, VMware IT employees averaged more than eight training classes per year in the areas of technical, soft skill, and manager skill improvements, and 40 percent of our employees have VMware technical certifications. In November, more than 10 percent of our teams gathered at a CIO Leadership Summit to discuss areas of focus for next year and how to spur creative thinking that drives innovation. Considerable time was spent 8 training classes per year exploring how to empower employees to pay it forward by sharing their (on average) taken by VMware knowledge, talents, and technical skills with the larger community. IT employees V M WA R E I T P E R F O R M A N C E A N N UA L R E P O R T 2 0 1 7 | 2 3

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    Giving Back, Locally and Globally VMware people have a platform to be active and engaged citizens in the 90% global community and are encouraged to support the causes they are most passionate about. Through the Service Learning program, employees receive of VMware IT employees 40 paid hours per year to invest their time and talent with the nonprofits of participate in giving back their choice. Service learning can vary, from hands-on contributions at a food bank to board positions or pro bono project work that leverages professional expertise. Last year, 90 percent of IT employees participated in at least one VMware Foundation program through service, matching gifts, milestone awards for years worked, and social investments. VMware promotes its EPIC2 values through its IT Pro Bono Program under which employees devote their time and professional expertise in their communities. The IT Pro Bono Program provides an opportunity for participants to build community, invest in their own professional development, and network through service learning. Two examples of this program are: • Bangalore IT employees volunteer at community organizations in need of IT-specific services with employees that have the needed skills, whether in computer education, marketing, web development, or project management. • Other IT team members traveled to Tanzania to volunteer at the Bitta Day Care Centre in Mbezi, Tanzania, which provides education and daily meals to 200 local underprivileged children. IT donated retired iPads to give the children access to interactive educational apps and online books. VMWARE IT LOCATIONS CORK IRELAND SOFIA BULGARIA PALO ALTO CALIFORNIA ATLANTA GEORGIA BANGALORE BROOMFIELD INDIA COLORADO COLORADO SPRINGS COLORADO 2 4 | V M WA R E I T P E R F O R M A N C E A N N UA L R E P O R T 2 0 1 7

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    Force for Good Since its 1998 inception, VMware has been committed to creating smarter, cleaner ways for the company and its customers to operate more sustainably. The company has a longstanding commitment to drive innovation that 100% of VMware’s US and EMEA contributes to a net positive future and sustainable growth. VMware strives to operations are powered by ‘leave ahead’ a better world, or put back more into the environment, society, renewable energy and global economy than the company takes. VMware’s sustainability commitment is highlighted in other ways: • VMware customers have avoided over 415 million metric tons of CO2e from entering the atmosphere, equivalent to powering over 50 percent of US households for one year (IDC Executive Summary, 2016). In 2017, the global impact model was expanded to include NSX and vSAN (IDC Executive Summary, 2017). • VMware’s US and EMEA operations are powered by 100 percent renewable energy, with a goal of 100 percent for global operations by 2020. • At our headquarters, we divert 94 percent of generated waste from landfills through composting and recycling. • VMware’s data center was one of the first data centers to earn LEED® Platinum certification and is one of VMware’s 11 LEED® certified buildings. • VMware IT decommissioned more than 7,250 devices in its data centers in 2017, reducing power usage by 5,010 kilowatts. • The Palo Alto campus was recognized by the Dept. of Energy for its large number of charging stations for plug-in electric vehicles. • VMware was recognized as a best workplace for commuters for its wide array of transit initiatives (Best Workplaces for Commuters). In 2017, VMware was awarded the prestigious Overall Excellence in Corporate Responsibility Award, now known as the Global Good Award, which celebrates business excellence and innovation in a broad range of disciplines including carbon impact, community development, staff welfare, energy, education, and leadership. The award also recognizes that VMware technology delivers both a valuable return on investment and contributes to a net positive future and sustainable growth. For more information, consult VMware’s Global Impact Report. V M WA R E I T P E R F O R M A N C E A N N UA L R E P O R T 2 0 1 7 | 2 5

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    Driving Business Growth STAY CONNECTED IT’s mission is to ensure customer success—within  Email: vmwonvmw@vmware.com VMware and with our customers and partners externally.  VMware on VMware website Our long-term vision for VMware IT:  VMware on VMware blogs • Be recognized as the best in IT and be a trailblazer, regardless of industry or geography  YouTube • See our IT leaders running core company businesses  Twitter (@VMWonVMW) • Up the game in generating revenue and being true partners to our customers • See people standing in line to work for IT We want to be recognized as a premier IT organization across the globe—as a leader in innovation, for best in-class operations, great talent, and customer-centric focus. In embracing the technology revolution and pursuing innovation, VMware IT is continually evolving to anticipate business needs and keep a laser sharp focus on the key strategic initiatives that accelerate growth and enhance agility. We look forward to seizing the opportunities of the future through the innovative creativity of our employees across the globe. 2 6 | V M WA R E I T P E R F O R M A N C E A N N UA L R E P O R T 2 0 1 7

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    V M WA R E I T P E R F O R M A N C E A N N UA L R E P O R T 2 0 1 7 | 2 7

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    VMware, Inc. 3401 Hillview Avenue Palo Alto CA 94304 USA Tel 877-486-9273 Fax 650-427-5001 www.vmware.com Copyright © 2018 VMware, Inc. All rights reserved. This product is protected by U.S. and international copyright and intellectual property laws. VMware products are covered by one or more patents listed at http://www.vmware.com/go/patents. VMware is a registered trademark or trademark of VMware, Inc. and its subsidiaries in the United States and other jurisdictions. All other marks and names mentioned herein may be trademarks of their respective companies. Item No: 74750-vmw-bro-cioreport-117 2/18

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