EMC is thinking big when it comes to the cloud. Today, the company announced a $1.2 billion cash deal to acquire Virtustream, part of a larger push to encourage enterprises to run all their applications in the cloud.

Virtustream, founded in 2009, already handles some critical enterprise applications in the cloud — SAP HANA, in particular. SAP even invested $40 million in Virtustream in 2013.

Virtustream's customers include some big names such as The Coca-Cola Co. and Domino Sugar. (And Kawasaki, just so you know Virtustream isn't on some kind of sugar crusade.)

The deal, expected to close in the third quarter, would have Virtustream added to EMC's Federated Enterprise Hybrid Cloud Solution. Today, that program is all about on-premises private clouds and about providing on-ramps to public clouds. EMC would probably prefer that public cloud to be VMware vCloud Air, but it will work with other options such as Amazon Web Services (AWS).

Virtustream would give EMC the added possibility of supporting off-premises private clouds. More importantly, EMC would gain Virtustream's ability to support mission-critical applications, lending credence to the idea of putting all enterprise applications into the cloud.

Virtustream CEO Rodney Rogers, who founded the company along with President and CTO Kevin Reid, would remain with EMC and would report to EMC CEO Joe Tucci.

EMC shares were down 55 cents (2%) at $26.30 in midday trading.