a question about your relationship with hardware vendors the trend towards applications being purpose built into hardware can you speak specifically to your vision and relationship with hardware manufacturers with Oracle doing the Sun deal HP's relationship with Microsoft is there any plans to build the applications into the hardware for faster better recovery etc let me address this also the previous question about about Oracle I think the way we fundamentally look at the world is that the world is a heterogeneous world the customer landscapes are never homogeneous they are always state of change they are always in a state of evolution so the way we see on the work done with our hardware partners for example is to get rid of the layers and in fact not to crunch them and then buy hardware and then put all the layers inside the hardware if you look at what we are doing with our in memory technology for example we believe that we can get rid of several layers of the cockfest i can bring an incredible efficiency to our customers not to mention real time to our customer so we can make the gap between transaction and analytical applications go away we can make the gap between the warehouses and the transaction systems go away so layers of the stack will start to fall as you work with partners but in order to do that it is necessary to work with an ecosystem of partners which is what is announced you know all this innovation that we do comes together with Intel which makes the processors with memory vendors like Samsung as well as the companies like HP and IBM then make the hardware around that so the layers of the stack go away when you work together collaboratively with any customer partners not when you just buy on the acquisitions so you're currently integrating in with which manufacturers we are working with on the process of side with Intel good we are optimizing our in memory technologies with engines for example we are working with memory vendors all kinds of DRAM vendors we are working with companies like EMC we are working with VMware to make the software virtualizer fill across on dimension on demand on premise on device VMware can help us make it elastic across these deployments so you have to have it in your vino and single me up on the ecosystem name to work together with partners and we believe that it is a better way to deliver value to our temple on when you hear the customers they don't want them to lock it so as shall write we said these are heterogeneous environments they don't buy a stack they're buying an idea they're buying a business outcome something that can change the way they run their company and to have an open independent business software company that can work with any and all partners to give the customer what they want which is the best business idea at the lowest possible cost and the fastest time to value is the model that we believe in the 20th century model that Oracle is chosen to replicate is one of the past and we think it will be one of the past and history will play it out that way James Taylor decision management question about analytics

>>Hello and run. Welcome back to the Cube's live coverage here. Day three of Cube's coverage, two sets, wall to wall coverage. Third set upstairs in the Executive Briefing Center. I'm John Furry, host of the Cube with Dave Alon. Two other hosts here. Lot of action. Dave. The cheer here is the CEO of MongoDB, exclusive post on Silicon Angle for your prior to the event. Thanks for doing that. Great to see >>You. Likewise. Nice to see you >>Coming on. See you David. So it's great to catch up. Prior to the event for that exclusive story on ecosystem, your perspective that resonated with a lot of the people. The traffic on that post and comments have been off the charts. I think we're seeing a ecosystem kind of surge and not change over, but like a an and ISV and new platform. So I really appreciate your perspective as a platform ISV for aws. What's it like? What's this event like? What's your learnings? What's your takeaway from your customers here this year? What's the most important story going on? >>First of all, I think being here is important for us because we have so many customers and partners here. In fact, if you look at the customers that Amazon themselves announced about two thirds of those customers or MongoDB customers. So we have a huge overlap in customers here. So just connecting with customers and partners has been important. Obviously a lot of them are thinking about their plans going to next year. So we're kind of meeting with them to think about what their priorities are and how we can help. And also we're sharing a little bit of our product roadmap in terms of where we're going and helping them think through like how they can best use Mongadi B as they think about their data strategy, you know, going to next year. So it's been a very productive end. We have a lot of people here, a lot of sales people, a lot of product people, and there's tons of customers here. So we can get a lot accomplished in a few days. >>Dave and I always talk on the cube. Well, Dave always goes to the TAM expansion question. Expanding your total stressful market, the market is changing and you guys have a great position growing positioned. How do you look at the total addressable market for Mongo changing? Where's the growth gonna come from? How do you see your role in the market and how does that impact your current business model? >>Yeah, our whole goal is to really enable developers to think about Mongo, to be first when they're building modern applications. So what we've done is first built a fir, a first class transactional platform and now we've kind expanding the platform to do things like search and analytics, right? And so we are really offering a broad set of capabilities. Now our primary focus is the developer and helping developers build these amazing applications and giving them tools to really do so in a very quick way. So if you think about customers like Intuit, customers like Canva, customers like, you know, Verizon, at and t, you know, who are just using us to really transform their business. It's either to build new applications quickly to do things at a certain level of performance of scale they've never done before. And so really enabling them to do so much more in building these next generation applications that they can build anywhere else. >>So I was listening to McDermott, bill McDermott this morning. Yeah. And you listen to Bill, you just wanna buy from the guy, right? He's amazing. But he was basically saying, look, companies like he was talking about ServiceNow that could help organizations digitally transform, et cetera, but make money or save money or in a good position. And I said, right, Mongo's definitely one of those companies. What are those conversations like here? I know you've been meeting with customers, it's a different environment right now. There's a lot of uncertainty. I, I was talking to one of your customers said, yeah, I'm up for renewal. I love Mongo. I'm gonna see if they can stage my payments a little bit. You know, things like that. Are those conversations? Yeah, you know, similar to what >>You having, we clearly customers are getting a little bit more prudent, but we haven't seen any kind of like slow down terms of deal cycles or, or elongated sales cycles. I mean, obviously different customers in different sectors are going through different issues. What we are seeing customers think about is like how can I, you know, either drive more efficiency in my business like and big part of that is modernization of my existing legacy tech stack. How can maybe consolidate to a fewer set of vendors? I think they like our broad platform story. You know, rather than using three or four different databases, they can use MongoDB to do everything. So that that resonates with customers and the fact that they can move fast, right? Developer productivity is a proxy for innovation. And so being able to move fast to either seize new opportunities or respond to new threats is really, you know, top of mind for still C level executive. >>So can your software, you're right, consolidation is the number one way in which people are save money. Can your software be deflationary? I mean, I mean that in a good way. So >>I was just meeting with a customer who was thinking about Mongo for their transactional platform, elastic for the search platform and like a graph database for a special use case. And, and we said you can do all that on MongoDB. And he is like, oh my goodness, I can consolidate everything. Have one elegant developer interface. I can keep all the data in one place. I can easily access that data. And that makes so much more sense than having to basically use a bunch of peace parts. And so that's, that's what we're seeing more and more interest from customers about. >>So one of the things I want to get your reaction to is, I was saying on the cube, now you can disagree with me if you want, but at, in the cloud native world at Cuban and Kubernetes was going through its hype cycle. The conversation went to it's getting boring. And that's good cause they want it to be boring. They don't want people to talk about the run time. They want it to be working. Working is boring. That's invisible. It's good, it's sticky, it's done. As you guys have such a great sticky business model, you got a great install base. Mongo works, people are happy, they like the product. So it's kind of working, I won't wanna say boring cuz that's, it's irrelevant. What's the exciting things that Mongo's bringing on top of the existing base of product that is gonna really get your clients and prospects enthused about the innovation from Mongo? What's what cuz it's, it's almost like electricity in a way. You guys are very utility in, in the way you do, but it's growing. But is there an exciting element coming that you see that they should pay attention to? What's, what's your >>Vision that, right, so if you look back over the last 10, 15 years, there's been big two big platform shifts, mobile and cloud. I think the next big platform shift is from what I call dumb apps to smart apps. So building more intelligence into applications. And what that means is automating human decision making and embedding that into applications. So we believe that to be a fundamentally a developer problem to solve, yes, you need data scientist to build the machine learning algorithms to train the models. Yeah. But ultimately you can't really deploy, deployed at scale unless you give developers the tools to build those smart applications that what we focused on. And a big part of that is what we call application driven analytics where people or can, can embed that intelligence into applications so that they can instead rather having humans involved, they can make decisions faster, drive to businesses more quickly, you know, shorten it's short and time to market, et cetera. >>And so your strategy to implement those smart apps is to keep targeting the developer Yes. And build on that >>Base. Correct. Exactly. So we wanna essentially democratize the ability for any customer to use our tools to build a smart applications where they don't have the resources of a Google or you know, a large tech company. And that's essentially resonating with our customer base. >>We, we were talking about this earlier after Swami's keynote, is most companies struggle to put data at the core of their business. And I don't mean centralizing it all in a single place as data's everywhere, but, but really organizing their company and democratizing data so people can make data decisions. So I think what you're saying, essentially Atlas is the platform that you're gonna inject intelligence into and allow developers to then build applications that are, you know, intelligent, smart with ai, machine intelligence, et cetera. And that's how the ones that don't have the resources of a Google or an Amazon become correct the, that kind of AI company if >>You, and that's, that's the whole purpose of a developer data platform is to enable them to have the tools, you know, to have very sophisticated analytics, to have the ability to do very sophisticated indexes, optimized for analytics, the ability to use data lakes for very efficient storage and retrieval of data to leverage, you know, edge devices to be able to capture and synchronize data. These are all critical elements to build these next generation applications. And you have to do that, but you don't want to stitch together a thousand primitives. You want to have a platform to do that. And that's where we really focus. >>You know, Dave, Dave and I, three, two days, Dave and I, Dave Ante and I have been talking a lot about developer productivity. And one observation that's now validated is that developers are setting the pace for innovation. Correct? And if you look at the how they, the language that they speak, it's not the same language as security departments, right? They speak almost like different languages, developer and security, and then you got data language. But the developers are making choices of self-service. They can accelerate, they're driving the behavior behavior into the organizations. And this is one of the things I wrote about on Friday last week was the organizational changes are changing cuz the developers set the pace. You can't force tooling down their throat. They're gonna go with what's easy, what's workable. If you believe that to be true, then all the security's gonna be in the developer pipeline. All the innovations we've driven off that high velocity developer site, we're seeing success of security being embedded there with the developers. What are you gonna bring up to that developer layer that's going to help with security, help with maybe even new things, >>Right? So, you know, it's, it's almost a cliche to say now software is in the world, right? Because every company's value props is driven by, it's either enabled to find or created through software. What that really means is that developers are eating all the work, right? And you're seeing, you saw in DevOps, right? Where developers basically enro encroach into the ops world and made infrastructure a programmable interface. You see developers, to your point, encroaching in security, embedding more and more security features into their applications. We believe the same thing's gonna happen with data scientists and business analysts where developers are gonna embed that functionality that was done by different domains in the Alex world and embed that capability into apps themselves. So these applications are just naturally smarter. So you don't need someone to look at a dashboard and say, aha, there's some insight here now I need to go make a decision. The application will do that for you and actually make that decision for you so you can move that much more quickly to run your business either more efficiently or to drive more, you know, revenue. >>Well the interesting thing about your business is cuz you know, you got a lot of transactional activity going on and the data, the way I would say what you just described is the data stack and the application stacks are coming together, right? And you're in a really good position, I think to really affect that. You think about we've, we've operationalized so many systems, we really haven't operationalized our data systems. And, and particularly as you guys get more into analytics, it becomes an interesting, you know, roadmap for Mongo and your customers. How do you see that? >>Yeah, so I wanna be clear, we're not trying to be a data warehouse, I get it. We're not trying to be like, you know, go compete. In fact, we have nice partnership with data bricks and so forth. What we are really trying to do is enable developers to instrument and build these applications that embed analytics. Like a good analogy I'd use is like Google Maps. You think about how sophisticated Google Maps has, and I use that because everyone has used Google Maps. Yeah. Like in the old, I was old enough to print out the directions, map quest exactly, put it on my lap and drive and look down. Now have this device that tells me, you know, if there's a traffic, if there's an accident, if there's something you know, going will reroute me automatically. And what that app is doing is embedding real time data into, into its decision making and making the decision for you so that you don't have to think about which road to take. Right? You, you're gonna see that happen across almost every application over the next X number of years where these applications are gonna become so much smarter and make these decisions for you. So you can just move so much more quickly. >>Yeah. Talk about the company, what status of the company, your growth plans. Obviously you're seeing a lot of news and Salesforce co CEO just resigned, layoffs at cnn, layoffs at DoorDash. You know, tech unfortunately is not impacted, thank God. I'm not that too bad. Certainly in cloud's not impacted it is impacting some of the buying behavior. We talked about that. What's going on with the company head count? What's your goals? How's the team doing? What are your priorities? >>Right? So we we're going after a big, big opportunity. You know, we recognize, obviously the market's a little choppy right now, but our long term, we're very bullish on the opportunity. We believe that we can be the modern developer data platform to build these next generation applications in terms of costs. We're obviously being a little bit more judicious about where we're investing, but we see big, big opportunities for us. And so our overall cost base will grow next year. But obviously we also recognize that there's ways to drive more efficiency. We're at a scale now. We're a 1.2 billion business. We're gonna announce our Q3 results next week. So we'll talk a little bit more about, you know, what we're seeing in the business next week. But we, we think we're a business that's growing fast. You know, we grew, you know, over 50, 50% and so, so we're pretty fast growing business. Yeah. You see? >>Yeah, Tuesday, December 6th you guys announce Exactly. Course is a big, we always watch and love it. So, so what I'm hearing is you're not, you're not stepping on the brakes, you're still accelerating growth, but not at all costs. >>Correct. The term we're using is profitable growth. We wanna, you know, you know, drive the business in a way that we think continues to seize the opportunity. But we also, we always exercise discipline. You know, I, I'm old enough where I had to deal with 2000 and 2008, so, you know, seen the movie before, I'm not 28 and have not seen these markets. And so obviously some are, you know, emerging leaders have not seen these kinds of markets before. So we're kind of helping them think about how to continue to be disciplined. And >>I like that reference to two thousand.com bubble and the financial crisis of 2008. I mentioned this to you when we chat, I'd love to get your thoughts. Now looking back for reinvent, Amazon wasn't a force in, in 2008. They weren't really that big debt yet. Know impact agility, wasn't it? They didn't hit that, they didn't hit that cruising altitude of the value pro cloud agility, time of value moving fast. Now they are. So this is the first time that they're a part of the economic equation. You're on, you're on in the middle of it with Amazon. They could be a catalyst to recover faster if plan properly. What's your CEO take on just that general and other CEOs might be watching and saying, Hey, you know, if I play this right, I could leverage the cloud. You know, Adams is leading into the cloud during a recession. Okay, I get that. But specifically there might be a tactic. What's your view on >>That? I mean, what, what we're seeing the, the hyperscalers do is really continue to kind of compete at the raw infrastructure level on storage, on compute, on network performance, on security to provide the, the kind of the building blocks for companies like Monga Beach really build on. So we're leveraging that price performance curve that they're pushing. You know, they obviously talk about Graviton three, they're talking about their training model chip sets and their inference model chip sets and their security chip sets. Which is great for us because we can leverage those capabilities to build upon that. And I think, you know, if you had asked me, you know, in 2008, would we be talking about chip sets in 2022? I'd probably say, oh, we're way beyond that. But what it really speaks to is those things are still so profoundly important. And I think that's where you can see Amazon and Google and Microsoft compete to provide the best underlying infrastructure where companies like mongadi we can build upon and we can help customers leverage that to really build the next generation. >>I'm not saying it's 2008 all over again, but we have data from 2008 that was the first major tailwind for the cloud. Yeah. When the CFO said we're going from CapEx to opex. So we saw that. Now it's a lot different now it's a lot more mature >>I think. I think there's a fine tuning trend going on where people are right sizing, fine tuning, whatever you wanna call it. But a craft is coming. A trade craft of cloud management, cloud optimization, managing the cost structures, tuning, it's a crafting, it's more of a craft. It's kind of seems like we're >>In that era, I call it cost optimization, that people are looking to say like, I know I'm gonna invest but I wanna be rational and more thoughtful about where I invest and why and with whom I invest with. Versus just like, you know, just, you know, everyone getting a 30% increase in their opex budgets every year. I don't think that's gonna happen. And so, and that's where we feel like it's gonna be an opportunity for us. We've kind of hit scap velocity. We've got the developer mind share. We have 37,000 customers of all shapes and sizes across the world. And that customer crown's only growing. So we feel like we're a place where people are gonna say, I wanna standardize among the >>Db. Yeah. And so let's get a great quote in his keynote, he said, if you wanna save money, the place to do it is in the cloud. >>You tighten the belt, which belt you tightening? The marketplace belt, the wire belt. We had a whole session on that. Tighten your belt thing. David Chair, CEO of a billion dollar company, MongoDB, continue to grow and grow and continue to innovate. Thanks for coming on the cube and thanks for participating in our stories. >>Thanks for having me. Great to >>Be here. Thank. Okay, I, Dave ante live on the show floor. We'll be right back with our final interview of the day after this short break, day three coming to close. Stay with us. We'll be right back.

>>Hey guys. Welcome back to the Cubes coverage of Ansible Fast 2022. This is day two of our wall to wall coverage. Lisa Martin here with John Ferer. John, we're seeing this world where companies are saying if we can't automate it, we need to, The automation market is transforming. There's been a lot of buzz about that. A lot of technical chops here at Ansible Fest. >>Yeah, I mean, we've got a great guest here coming on Cuba alumni, Dean Newman, future room. He travels every event he's got. He's got his nose to the grindstone ear to the ground. Great analysis. I mean, we're gonna get into why it's important. How does Ansible fit into the big picture? It's really gonna be a great segment. The >>Board do it well, John just did my job for me about, I'll introduce him again. Daniel Newman, one of our alumni is Back Principal Analyst at Future and Research. Great to have you back on the cube. >>Yeah, it's good to join you. Excited to be back in Chicago. I don't know if you guys knew this, but for 40 years, this was my hometown. Now I don't necessarily brag about that anymore. I'm, I live in Austin now. I'm a proud Texan, but I did grow up here actually out in the west suburbs. I got off the plane, I felt the cold air, and I almost turned around and said, Does this thing go back? Yeah. Cause I'm, I've, I've grown thin skin. It did not take me long. I, I like the warm, Come on, >>I'm the saying, I'm from California and I got off the plane Monday. I went, Whoa, I need a coat. And I was in Miami a week ago and it was 85. >>Oh goodness. >>Crazy. So you just flew in. Talk about what's going on, your take on, on Ansible. We've talked a lot with the community, with partners, with customers, a lot of momentum. The flywheel of the community is going around and round and round. What are some of your perspectives that you see? >>Yeah, absolutely. Well, let's you know, I'm gonna take a quick step back. We're entering an era where companies are gonna have to figure out how to do more with less. Okay? We've got exponential data growth, we've got more architectural complexity than ever before. Companies are trying to discern how to deal with many different environments. And just at a macro level, Red Hat is one of the companies that is almost certainly gonna be part of this multi-cloud hybrid cloud era. So that should initially give a lot of confidence to the buying group that are looking at how to automate their environments. You're automating workflows, but really with, with Ansible, we're focused on automating it, automating the network. So as companies are kind of dig out, we're entering this recessionary period, Okay, we're gonna call it what it is. The first thing that they're gonna look at is how do we tech our way out of it? >>I had a wonderful one-on-one conversation with ServiceNow ceo, Bill McDermott, and we saw ServiceNow was in focus this morning in the initial opening session. This is the integration, right? Ansible integrating with ServiceNow. What we need to see is infrastructure automation, layers and applications working in concert to basically enable enterprises to be up and running all the time. Let's first fix the problems that are most common. Let's, let's automate 'em, let's script them. And then at some point, let's have them self resolving, which we saw at the end with Project Wisdom. So as I see it, automation is that layer that enterprises, boards, technologists, all can agree upon are basically here's something that can make our business more efficient, more profitable, and it's gonna deal with this short term downturn in a way that tech is actually gonna be the answer. Just like Bill and I said, let's tech our way out of it. >>If you look at the Red Hat being bought by ibm, you see Project Wisdom Project, not a product, it's a project. Project Wisdom is the confluence of research and practitioners kind of coming together with ai. So bringing AI power to the Ansible is interesting. Red Hat, Linux, Rel OpenShift, I mean, Red Hat's kind of position, isn't it? Kind of be in that right spot where a puck might be coming maybe. I mean, what do you think? >>Yeah, as analysts, we're really good at predicting the, the recent past. It's a joke I always like to make, but Red Hat's been building toward the future. I think for some time. Project Wisdom, first of all, I was very encouraged with it. One of the things that many people in the market probably have commented on is how close is IBM in Red Hat? Now, again, it's a $34 billion acquisition that was made, but boy, the cultures of these two companies couldn't be more different. And of course, Red Hat kind of carries this, this sort of middle ground layer where they provide a lot of value in services to companies that maybe don't use IBM at, at, for the public cloud especially. This was a great indication of how you can take the power of IBM's research, which of course has some of the world's most prolific data scientists, engineers, building things for the future. >>You know, you see things like yesterday they launched a, you know, an AI solution. You know, they're building chips, semiconductors, and technologies that are gonna power the future. They're building quantum. Long story short, they have these really brilliant technologists here that could be adding value to Red Hat. And I don't know that the, the world has fully been able to appreciate that. So when, when they got on stage and they kind of say, Here's how IBM is gonna help power the next generation, I was immediately very encouraged by the fact that the two companies are starting to show signs of how they can collaborate to offer value to their customers. Because of course, as John kind of started off with, his question is, they've kind of been where the puck is going. Open source, Linux hybrid cloud, This is the future. In the future. Every company's multi-cloud. And I said in a one-on-one meeting this morning, every company is going to probably have workloads on every cloud, especially large enterprises. >>Yeah. And I think that the secret's gonna be how do you make that evolve? And one of the things that's coming out of the industry over the years, and looking back as historians, we would say, gotta have standards. Well, with cloud, now people standards might slow things down. So you're gonna start to figure out how does the community and the developers are thinking it'll be the canary in the coal mine. And I'd love to get your reaction on that, because we got Cuban next week. You're seeing people kind of align and try to win the developers, which, you know, I always laugh cuz like, you don't wanna win, you want, you want them on your team, but you don't wanna win them. It's like a, it's like, so developers will decide, >>Well, I, I think what's happening is there are multiple forces that are driving product adoption. And John, getting the developers to support the utilization and adoption of any sort of stack goes a long way. We've seen how sticky it can be, how sticky it is with many of the public cloud pro providers, how sticky it is with certain applications. And it's gonna be sticky here in these interim layers like open source automation. And Red Hat does have a very compelling developer ecosystem. I mean, if you sat in the keynote this morning, I said, you know, if you're not a developer, some of this stuff would've been fairly difficult to understand. But as a developer you saw them laughing at jokes because, you know, what was it the whole part about, you know, it didn't actually, the ping wasn't a success, right? And everybody started laughing and you know, I, I was sitting next to someone who wasn't technical and, and you know, she kinda goes, What, what was so funny? >>I'm like, well, he said it worked. Do you see that? It said zero data trans or whatever that was. So, but if I may just really quickly, one, one other thing I did wanna say about Project Wisdom, John, that the low code and no code to the full stack developer is a continuum that every technology company is gonna have to think deeply about as we go to the future. Because the people that tend to know the process that needs to be automated tend to not be able to code it. And so we've seen every automation company on the planet sort of figuring out and how to address this low code, no code environment. I think the power of this partnership between IBM Research and Red Hat is that they have an incredibly deep bench of capabilities to do things like, like self-training. Okay, you've got so much data, such significant size models and accuracy is a problem, but we need systems that can self teach. They need to be able self-teach, self learn, self-heal so that we can actually get to the crux of what automation is supposed to do for us. And that's supposed to take the mundane out and enable those humans that know how to code to work on the really difficult and hard stuff because the automation's not gonna replace any of that stuff anytime soon. >>So where do you think looking at, at the partnership and the evolution of it between IBM research and Red Hat, and you're saying, you know, they're, they're, they're finally getting this synergy together. How is it gonna affect the future of automation and how is it poised to give them a competitive advantage in the market? >>Yeah, I think the future or the, the competitive space is that, that is, is ecosystems and integration. So yesterday you heard, you know, Red Hat Ansible focusing on a partnership with aws. You know, this week I was at Oracle Cloud world and they're talking about running their database in aws. And, and so I'm kind of going around to get to the answer to your question, but I think collaboration is sort of the future of growth and innovation. You need multiple companies working towards the same goal to put gobs of resources, that's the technical term, gobs of resources towards doing really hard things. And so Ansible has been very successful in automating and securing and focusing on very certain specific workloads that need to be automated, but we need more and there's gonna be more data created. The proliferation, especially the edge. So you saw all this stuff about Rockwell, How do you really automate the edge at scale? You need large models that are able to look and consume a ton of data that are gonna be continuously learning, and then eventually they're gonna be able to deliver value to these companies at scale. IBM plus Red Hat have really great resources to drive this kind of automation. Having said that, I see those partnerships with aws, with Microsoft, with ibm, with ServiceNow. It's not one player coming to the table. It's a lot of players. They >>Gotta be Switzerland. I mean they have the Switzerland. I mean, but the thing about the Amazon deal is like that marketplace integration essentially puts Ansible once a client's in on, on marketplace and you get the central on the same bill. I mean, that's gonna be a money maker for Ansible. I >>Couldn't agree more, John. I think being part of these public cloud marketplaces is gonna be so critical and having Ansible land and of course AWS largest public cloud by volume, largest marketplace today. And my opinion is that partnership will be extensible to the other public clouds over time. That just makes sense. And so you start, you know, I think we've learned this, John, you've done enough of these interviews that, you know, you start with the biggest, with the highest distribution and probability rates, which in this case right now is aws, but it'll land on in Azure, it'll land in Google and it'll continue to, to grow. And that kind of adoption, streamlining make it consumption more consumable. That's >>Always, I think, Red Hat and Ansible, you nailed it on that whole point about multicloud, because what happens then is why would I want to alienate a marketplace audience to use my product when it could span multiple environments, right? So you saw, you heard that Stephanie yesterday talk about they, they didn't say multiple clouds, multiple environments. And I think that is where I think I see this layer coming in because some companies just have to work on all clouds. That's the way it has to be. Why wouldn't you? >>Yeah. Well every, every company will probably end up with some workloads in every cloud. I just think that is the fate. Whether it's how we consume our SaaS, which a lot of people don't think about, but it always tends to be running on another hyperscale public cloud. Most companies tend to be consuming some workloads from every cloud. It's not always direct. So they might have a single control plane that they tend to lead the way with, but that is only gonna continue to change. And every public cloud company seems to be working on figuring out what their niche is. What is the one thing that sort of drives whether, you know, it is, you know, traditional, we know the commoditization of traditional storage network compute. So now you're seeing things like ai, things like automation, things like the edge collaboration tools, software being put into the, to the forefront because it's a different consumption model, it's a different margin and economic model. And then of course it gives competitive advantages. And we've seen that, you know, I came back from Google Cloud next and at Google Cloud next, you know, you can see they're leaning into the data AI cloud. I mean, that is their focus, like data ai. This is how we get people to come in and start using Google, who in most cases, they're probably using AWS or Microsoft today. >>It's a great specialty cloud right there. That's a big use case. I can run data on Google and run something on aws. >>And then of course you've got all kinds of, and this is a little off topic, but you got sovereignty, compliance, regulatory that tends to drive different clouds over, you know, global clouds like Tencent and Alibaba. You know, if your workloads are in China, >>Well, this comes back down at least to the whole complexity issue. I mean, it has to get complex before it gets easier. And I think that's what we're seeing companies opportunities like Ansible to be like, Okay, tame, tame the complexity. >>Yeah. Yeah, I totally agree with you. I mean, look, when I was watching the demonstrations today, my take is there's so many kind of simple, repeatable and mundane tasks in everyday life that enterprises need to, to automate. Do that first, you know? Then the second thing is working on how do you create self-healing, self-teaching, self-learning, You know, and, and I realize I'm a little broken of a broken record at this, but these are those first things to fix. You know, I know we want to jump to the future where we automate every task and we have multi-term conversational AI that is booking our calendars and driving our cars for us. But in the first place, we just need to say, Hey, the network's down. Like, let's make sure that we can quickly get access back to that network again. Let's make sure that we're able to reach our different zones and locations. Let's make sure that robotic arm is continually doing the thing it's supposed to be doing on the schedule that it's been committed to. That's first. And then we can get to some of these really intensive deep metaverse state of automation that we talk about. Self-learning, data replication, synthetic data. I'm just gonna throw terms around. So I sound super smart. >>In your customer conversations though, from an looking at the automation journey, are you finding most of them, or some percentage is, is wanting to go directly into those really complex projects rather than starting with the basics? >>I don't know that you're, you're finding that the customers want to do that? I think it's the architecture that often ends up being a problem is we as, as the vendor side, will tend to talk about the most complex problems that they're able to solve before companies have really started solving the, the immediate problems that are before them. You know, it's, we talk about, you know, the metaphor of the cloud is a great one, but we talk about the cloud, like it's ubiquitous. Yeah. But less than 30% of our workloads are in the public cloud. Automation is still in very early days and in many industries it's fairly nascent. And doing things like self-healing networks is still something that hasn't even been able to be deployed on an enterprise-wide basis, let alone at the industrial layer. Maybe at the company's on manufacturing PLAs or in oil fields. Like these are places that have difficult to reach infrastructure that needs to be running all the time. We need to build systems and leverage the power of automation to keep that stuff up and running. That's, that's just business value, which by the way is what makes the world go running. Yeah. Awesome. >>A lot of customers and users are struggling to find what's the value in automating certain process, What's the ROI in it? How do you help them get there so that they understand how to start, but truly to make it a journey that is a success. >>ROI tends to be a little bit nebulous. It's one of those things I think a lot of analysts do. Things like TCO analysis Yeah. Is an ROI analysis. I think the businesses actually tend to know what the ROI is gonna be because they can basically look at something like, you know, when you have an msa, here's the downtime, right? Business can typically tell you, you know, I guarantee you Amazon could say, Look for every second of downtime, this is how much commerce it costs us. Yeah. A company can generally say, if it was, you know, we had the energy, the windmills company, like they could say every minute that windmill isn't running, we're creating, you know, X amount less energy. So there's a, there's a time value proposition that companies can determine. Now the question is, is about the deployment. You know, we, I've seen it more nascent, like cybersecurity can tend to be nascent. >>Like what does a breach cost us? Well there's, you know, specific costs of actually getting the breach cured or paying for the cybersecurity services. And then there's the actual, you know, ephemeral costs of brand damage and of risks and customer, you know, negative customer sentiment that potentially comes out of it. With automation, I think it's actually pretty well understood. They can look at, hey, if we can do this many more cycles, if we can keep our uptime at this rate, if we can reduce specific workforce, and I'm always very careful about this because I don't believe automation is about replacement or displacement, but I do think it is about up-leveling and it is about helping people work on things that are complex problems that machines can't solve. I mean, said that if you don't need to put as many bodies on something that can be immediately returned to the organization's bottom line, or those resources can be used for something more innovative. So all those things are pretty well understood. Getting the automation to full deployment at scale, though, I think what often, it's not that roi, it's the timeline that gets misunderstood. Like all it projects, they tend to take longer. And even when things are made really easy, like with what Project Wisdom is trying to do, semantically enable through low code, no code and the ability to get more accuracy, it just never tends to happen quite as fast. So, but that's not an automation problem, That's just the crux of it. >>Okay. What are some of the, the next things on your plate? You're quite a, a busy guy. We, you, you were at Google, you were at Oracle, you're here today. What are some of the next things that we can expect from Daniel Newman? >>Oh boy, I moved Really, I do move really quickly and thank you for that. Well, I'm very excited. I'm taking a couple of work personal days. I don't know if you're a fan, but F1 is this weekend. I'm the US Grand Prix. Oh, you're gonna Austin. So I will be, I live in Austin. Oh. So I will be in Austin. I will be at the Grand Prix. It is work because it, you know, I'm going with a number of our clients that have, have sponsorships there. So I'll be spending time figuring out how the data that comes off of these really fun cars is meaningfully gonna change the world. I'll actually be talking to Splunk CEO at the, at the race on Saturday morning. But yeah, I got a lot of great things. I got a, a conversation coming up with the CEO of Twilio next week. We got a huge week of earnings ahead and so I do a lot of work on that. So I'll be on Bloomberg next week with Emily Chang talking about Microsoft and Google. Love talking to Emily, but just as much love being here on, on the queue with you >>Guys. Well we like to hear that. Who you're rooting for F one's your favorite driver. I, >>I, I like Lando. Do you? I'm Norris. I know it's not necessarily a fan favorite, but I'm a bit of a McLaren guy. I mean obviously I have clients with Oracle and Red Bull with Ball Common Ferrari. I've got Cly Splunk and so I have clients in all. So I'm cheering for all of 'em. And on Sunday I'm actually gonna be in the Williams Paddock. So I don't, I don't know if that's gonna gimme me a chance to really root for anything, but I'm always, always a big fan of the underdog. So maybe Latifi. >>There you go. And the data that comes off the how many central unbeliev, the car, it's crazy's. Such a scientific sport. Believable. >>We could have Christian, I was with Christian Horner yesterday, the team principal from Reside. Oh yeah, yeah. He was at the Oracle event and we did a q and a with him and with the CMO of, it's so much fun. F1 has been unbelievable to watch the momentum and what a great, you know, transitional conversation to to, to CX and automation of experiences for fans as the fan has grown by hundreds of percent. But just to circle back full way, I was very encouraged with what I saw today. Red Hat, Ansible, IBM Strong partnership. I like what they're doing in their expanded ecosystem. And automation, by the way, is gonna be one of the most robust investment areas over the next few years, even as other parts of tech continue to struggle that in cyber security. >>You heard it here. First guys, investment in automation and cyber security straight from two analysts. I got to sit between. For our guests and John Furrier, I'm Lisa Martin, you're watching The Cube Live from Chicago, Ansible Fest 22. John and I will be back after a short break. SO'S stick around.

The Cube Presents UI Path Forward five. Brought to you by UI Path. >>I Ready, Dave Ante with David Nicholson. We're back at UI Path forward. Five. We're getting ready for the big guns to come in, the two co CEOs, but we have a really special analyst panel now. We're excited to have Daniel Newman here. He's the Principal analyst at Future and Research. And Andy Dai, who's the Vice president and Principal Analyst at Constellation Research. Guys, good to see you. Thanks for making some time to come on the queue. >>Glad to be here. Always >>Good. So, >>Andy, you're deep into ai. You and I have been talking about having you come to our maor office. I'm, I'm really excited that we're able to meet here. What have you seen at the show so far? What are your big takeaways? You know, day one and a half? >>Yeah, well, so first of all, I'm d AI because my last name has AI and I >>Already talk about, >>So, but, but all jokes aside, there are a lot of good things I heard from the conference, right? I mean, one is the last two years because of the pandemic, the growth has been phenomenal for, for a lot of those robotic automation intelligent automation companies, right? So because the low hanging through position making processes have been already taken care of where they going to find the next growth spot, right? That was the question I was looking answers to. And they have some inverse, one good acquisition. They had intelligent document processing, but more importantly they're trying to move from detrimental rules based RPA automation into AI based, more probabilistic subjective decision making areas. That's a huge market, tons of money involved in it, but it's going to be a harder problem to solve. Love to see the execut. >>Well, it's also a big pivot for the, for the company. It started out as sort of a a point product and now is moving to, to platform. But to end of the macro is not in UI pass favor. It's not really in any, you know, tech company's favor, but especially, you know, a company that's going into a transition transitioning to go to market cetera. What are you seeing, what's your take on the macro? I mean, I know you follow the financial markets very closely. There's a lot of negative sentiment right now. Are you as negative as the sentiment? >>Well, the, the broad sentiment comes with some pretty good historical data, right? We've had probably one of the worst market years in multiple decades. And of course we're coming into a situation where all the, the factors are really not in our favor. You've got in interest rates climbing, you've got wildly high inflation, you've had a, you know, helicopters dumping money on the economy for a period of time. And we're, we're gonna get into this great reset is what I keep talking about. But, you know, I had the opportunity to talk to Bill McDermott recently on one of my shows and Bill's CEO of ServiceNow, in case anybody there doesn't know, but >>Former, >>Yeah, really well spoken guy. But you know, him and I kind of went back and forth and we came up with this kind of concept that we were gonna have to tech our way out of what's about to come. You can almost be certain recession is gonna come. But for companies like UiPath, I actually think there's a tremendous opportunity because the bottom line is companies are gonna be looking at their bottom line. A year ago it was all about growth a deal, like the Adobe Figma deal would've been, been lauded, people would've been excited. Now everybody's looking at going, how are they paying that price? Everybody's discounting the future growth. They're looking at the situation, say, what's gonna happen next? Well, bottom line is now they're looking at that. How profitable are we? Are you making money? Are you growing that bottom line? Are you creating earnings? We're >>Gonna come in >>Era, we're gonna come into an era where companies are gonna say, you know what? People are expensive. The inflationary cost of hiring is expensive. You know, what's less expensive? Investing in the cloud, investing in ai, investing in workflow and automation and things that actually enable businesses to expand, keep costs somewhat contained fixed costs, and scale their businesses and get themselves in a good position for when the economy turns to return to >>Grow. So since prior to the pandemic cloud containers, m l and RPA slash automation have been the big four that from a spending data standpoint have been above the line above all kind of the rest in terms of spending momentum up until last quarter, AI and RPA slash automation declined. So my question is, are those two areas discretionary or more discretionary than other technology investments you heard? >>Well, I, I think we're in a, a period where companies are, I won't say they've stopped spending, but you listened to Mark Benioff, you talked about the elongated sales cycle, right? I think companies right now are being very reflective and they're doing a lot of introspection. They're looking at their business and saying, We hired a lot of people. We hired really fast. Do we need to cut? Do we need to freeze? We've made investments in technology, are we getting a return on 'em? We all know that the analytics, whether it's you know, digital adoption platforms or just analytics in the business, say, What is all this money we've been spending doing for us and how productive are we? But I will tell you universally, the companies are looking at workflow automations that enable things. Whether that's onboarding customers, whether that's delivering experiences, whether that's, you know, full, you know, price to quote technologies, automate, automate, automate. By doing that, they're gonna bring down the cost, they're gonna control themselves as best as possible in a tough macro. And then when they come out of it, these processes are gonna be beneficiary in a, in a growth environment even more so, >>Andy UiPath rocketed to a leadership position, largely due to the, the product and the simplicity of the product relative to the competition. And then as you well know, they expanded into, you know, platform. So how do you see the competitive environment? A UI path is again focusing on that platform play Automation Anywhere couldn't get to public market. They had turnover at the go to market level. Chris Riley joined a lot of, lot of hope left Microsoft joined into the fray, obviously is having an impact that you're certainly seeing spending momentum around Microsoft. Then SAP service Now Salesforce, every software company the planet thinks they should get every dollar spent on software. You know, they, they see UI pass momentum and they say, Hey, we can, we can take some of that off the table. How do you see the competitive environment right now? >>So first of all, in in my mind, UI path is slightly better because of a couple of reasons. One, as you said, it's ease of use. >>They're able to customize it variable to what they want. So that's a real easy development advantage. And then the, when you develop the bots and equal, it takes on an average anywhere between two to maybe six weeks, generally speaking, in some industries regulated government might take more so that it's faster, quicker, easier than others in a sense. So people love using that. The second advantage of what they have in my mind is that not only they are available as a managed SA solution on, on cloud, on Azure Cloud, but also they have this version that you can install, maintain, manage any way you want, whether it's a public cloud or, or your own data center and so on so forth. That's not available with almost, not all of them have it, Few have it, but not all of the competitors have it. So they have an advantage there as well. Where it could become useful would be one of the areas that they haven't even expanded is the government. >>Government is the what, >>Sorry? The government. Yeah, related solutions, right? Defense, government, all of those areas when you go, which haven't even started for various reasons. For example, they're worried about laying off people, worried about cost, worried about automating things. There's a lot of hurdles to overcome. But once you overcome that, if you want to go there, nobody's going to use, or most of them will be very of using something on the cloud. So they have a solution for version variation of that. So they are set up to come to that next level. I mean, I don't know if you guys were at the keynote, the CEO talked about how their plans to go from 1 billion to 5 billion in ar. So they're set up to capture the market. But again, as you said, every big software company saw their momentum, they want to get into it, they want to compete with them. So >>Well, to get to 5 billion, they've gotta accelerate growth. I mean, if you do 20% cer over the next, you know, through the end of the decade, they don't quite get there. So they're gonna have to, you know, they lowered their forecast out of the high 20 or mid twenties to 18%. They're gonna have to accelerate that. And we've seen that before. We see it in cloud where cloud, you know, accelerates growth even though you got the lower large numbers. Go ahead Dave. >>Yeah, so Daniel, then how do we, how do we think of this market? How do we measure the TAM for total addressable market for automation? I mean, you know, what's that? What's that metric that shows how unautomated are we, how inefficient are we? Is there a, is there a 5% efficiency that can be gained? Is there a 40% efficiency that can be gained? Because if you're talking about, you know, how much much of the market can UI path capture, first of all, how big is the market? And then is UI path poised to take advantage of that compared to the actual purveyors of the software that people are interacting with? I'm interacting with an E R p, an ER P system that has built into it the ability to automate processes. Then why do I need 'EM UI path? So first, how do you evaluate TAM? Second, how do you evaluate whether UI Path is gonna have a chance in this market where RPAs built into the applications that we actually use? Yeah, >>I think that TAM is evolving, and I don't have it in front of me right now, but what I'll tell you about the TAM is there's sort of the legacy RPA tam and then there's what I would sort of evolve to call the IPA and workflow automation tam that is being addressed by many of these software companies that you asked in the competitive equation. In the, in the, in the question, what we're seeing is a world where companies are gonna say, if we can automate it, we will automate it. That's, it's actually non-negotiable. Now, the process in the ability to a arrive at automation at scale has long been a battle front within the nor every organization. We've been able to automate things for a long time. Why has it more been done? It's the same thing with analytics. There's been numerous studies in analytics that have basically shown companies that have been able to embrace, adopt, and implement analytics, have significantly better performances, better performances on revenue growth, better performances and operational cost management, better performances with customer experience. >>Guess what? Not everybody, every company can get to this. Now there's a couple of things behind this and I'm gonna, I'm gonna try to close my answer out cause I'm getting a little long winded here. But the first thing is automation is a cultural challenge in most organizations. We've done endless research on companies digitally transforming and automating their business. And what we've found is largely the technology are somewhat comparable. Meaning, you know, I, I've heard what he is saying about some of the advantages of partnership with Microsoft, very compelling. But you know what, all these companies that have automation offerings, whether it's you know, through a Salesforce, Microsoft, whether it's a specialized rpa like an Automation Anywhere or a UI path, their solutions can be deployed and successful. The company's ability to take the investment, implement it successfully and get buy in across the organization tends to always be the hurdle. An old CIO stat, 50% of IT projects fail. That stat is still almost accurate today. It's not 50% of technology is bad, but those failures are because the culture doesn't get behind it. And automation's a tricky one because there's a lot of people that feel on the outside rather than the inside of an automation transformation. >>So, Andy, so how do you think about the, to Dave's question, the SAPs the service nows trying to, you know, at least take some red crumbs off the table. They, they're gonna, they're gonna create these automation stove pipes, but in Automation Anywhere or, or UI path is a horizontal play, are they not? And so how do you think about that progression? Well, so >>First of all, all of this other companies, when they, they, whether it's a build, acquire, what have you, these guys already have what, five, seven years on them. So it's gonna be difficult for them to catch up with the Center of Excellence knowledge on the use cases, what they got to catch up with them. That's gonna be a lot of catch up. Just to give you an idea, Microsoft Power Automate has been there for a while, right? They're supposedly doing well as well, but they still choose to partner with the UiPath as well to get them to the next level. So there's going to be competition coming from all areas, but it's, it's about, you know, highlights. >>So, so who is the competition? Is it Microsoft chipping away an individual productivity? Is it a service now? Who's got a platform play? Is it themselves just being able to execute >>All plus also, but I think the, the most, I wouldn't say competition, but it's more people are not aware of what areas need to be automated, right? For example, one of the things I was talking about with a couple of customers is, so they have a automation hub where you can put the, the process and and task that need to be automated and then you prioritize and start working on it. And, and almost all of them that I speak to, they keep saying that most of the process and task identification that they need to do for automation, it's manual right now. So, which means it's limited, you have to go and execute it. When people find out and tell you that's what need to be fixed, you try to go and fix that. But imagine if there is a way, I mean the have solutions they're showcasing now if it becomes popular, if you're able to identify tasks that are very inefficient or or process that's very inefficient, automatically score them up saying that, you know what, this is what is going to be ROI and you execute on it. That's going to be huge. So >>I think ts right, there's no shortage of, of a market. I would, I would agree with you Rob Sland this morning talked about the progression. He sort of compared it to e R P of the early days. I sort of have a love hate with E R P cuz of the complexity of the implementation and the, and the cost. However, first of all, a couple points and I love to get your thoughts for you. If you went back, I know 25 years, you, you wouldn't have been able to pick SAP out of a lineup and say that's gonna be the leader in E R P and they ended up, you know, doing really, really well. But the more interesting angle is if you could have figured out the customers that were implementing e r p in, in a really high quality fashion, those are the companies that really did well. You buy their stocks, they really took off cuz they were killing their other industry competitors. So, fast forward to automation. Will automation live up to its hype and your opinion, will it be as transformative and will the, the practitioners of automation see the same type of uplift in their markets, in their market caps, in their competitiveness as did sort of the early adopters and the excellent adopters of brp? What are your thoughts? Well, >>I think it's an interesting comparison. Maybe answer it slightly different way. I think the future is that automation is a non-negotiable in every enterprise organization. I think if you're a large organization, we have absolutely filled our, our organizations with waste too much overhead, too much expense, too much technical debt and automation is an answer. This is the way we want to interact, right? We want a chat bot that actually gives us good answers that can answer on a Tuesday at 11:00 PM at night when we want to know if the right dog food, you know, and I'm saying that, you know, that's what we want. That's the outcome we want. And businesses have to be driven by the outcome. Here's what I'm not sure about, Dave, is we have an era where over the last three to five years, a lot of products have become companies and a lot of 'EM products became companies ended up in public markets. >>And so the RPA space is one of those areas that got this explosive amount of growth. And you look at it and there's two ways. Is this horizontally a business rpa or is this going to be something that's gonna be a target of those Microsofts and those SAPs and say, Look, we need hyper automation to be deeply integrated at the E R P crm, hcm SCM level. We're gonna build by this or we're gonna build this. And you're already hearing it in the partnerships, but this is how I think the story ends. I I think either the companies like UiPath get much bigger, they get much more rounded in their, in their offerings. Or you're gonna have a large company like a Microsoft come in and say, you know what? Buy it rather >>Than build can they can, they can, can this company, maybe not so much here, but can a company like Automation Anywhere stay acquisition? Well, >>I use the, I use the Service now as an, as a parallel because they're a company that I thought would always end up inside of a bigger company and now you're like, I think they're too big. I think they've they've dropped >>That, that chart. Yeah, they're acquisition proof. I would agree. But these guys aren't yet Nora's automation. They work for >>A while and it's not necessarily a bad thing. Sometimes getting bit bought is good, but what I mean is it's gonna be core and these big companies know it cuz they're all talking >>About, but as independent analysts, we want to see independent companies. >>I wanna see the right thing. >>It just makes it fun. >>The right thing >>Customers. Yeah, but you know, okay, Oracle buy more customers, more >>Customers. >>I'm kidding. Yeah, I guess it's the right thing. It just makes it more fun when you have really good independent competitors that >>We >>Absolutely so, and, and spend way more on r and d than these big companies who spend a lot more on stock buyback. But I know you gotta go. Thanks so much for spending some time, making time for Cube Andy. Great to see you. Good to see as well. All right, we are wrapping up day one, Dave Blan and Dave Nicholson live. You can hear the action behind us, forward in five on the Cube, right back.

>> From theCUBE studios in Palo Alto in Boston, bringing you data-driven insights from theCUBE in ETR. This is breaking analysis with Dave Vellante. >> ServiceNow is a company that investors love to love, but there's caution in the investor community right now is confusion about transitory inflation and higher interest rates looms. ServiceNow also suffers from a perfection syndrome of sorts. The company has seen that the slightest misstep can cause many freak outs from the investor community. So what it's done is it's architected a financial and communications model that allows it to beat expectations and raise its outlook on a consistent basis. Regardless, ServiceNow appears to be on track to vie for what its CEO Bill McDermott refers to as the next great enterprise software company. Wait, I thought Marc Benioff had his hands on that steering wheel. Hello everyone, and welcome to this week's Wikibon CUBE insights powered by ETR. In this breaking analysis, we'll dig into one of the companies we began following almost 10 years ago and provide some thoughts on ServiceNow's March to 15 billion by 2026, which we think is a highly probable achievement. In 2020, despite the contraction in IT spending, SeviceNow outperformed both the S&P 500 and the NASDAQ, but here's a view of 2021. And you can see while the stock has done well since it saw a softness in May and again in early June, and it bounced off that double bottom, it's performance is well below those other benchmarks. This is not a big surprise given the fact that this is a high growth stock and we all know that those names with high multiples get hurt in an inflationary environment, but still the gaps are notable. This is especially true given the performance of the company. It's not often that you see a company with four to $5 billion in revenue growing at a 30% clip, throwing off billions of dollars in free cash flow and increasing operating margins at 100 basis points a year and promising to do that over the next several years. In fact, I don't think we've ever seen that before. I remember years ago, when the trade press was criticizing SeviceNow for its lofty valuation, despite the fact that it was losing money, then CEO, Frank Slootman said to me, "Dave, we can be highly profitable tomorrow if we want it to be, but this is a marathon and we're planning to go big." So essentially Slootman was telling me that this company was going to be an ATM machine that prints money. And that seems to be how it's shaping up. I happened to be at SeviceNow headquarters in 2017, literally the first day on the job for John Donahoe, the CEO replaced Slootman, and I remember while I was there thinking Donahoe was certainly capable, but why the heck I said, would the board let Frank Slootman get away? You know what? It turned great for Slootman, he's at snowflake. Donahoe, I always felt was a consumer guy anyway, and not long for SeviceNow. And now you have this guy, new CEO, Bill McDermott at the helm. He's not a more qualified CEO for the company in my view. About two months ago, McDermott led a virtual investor day. We've had McDermott on theCUBE a couple of times back when he was CEO of SAP and this individual is very compelling. He's got JFK like looks and charisma, but more than that, he's passionate and convincing. And he obviously knows enterprise software. And with conviction, he laid the groundwork for how SeviceNow will get to $10 billion in revenue by 2024 on its way to 15 billion two years thereafter. And one of the big things McDermott's stressed was they're going to get there without any big M&A moves. And that's important because previously the door was left open for that possibility. And now the company is assuring investors that it can get there organically, even with slower growth. So this chart implies no big M&A, and you can see Slootman handed over the reigns at that year one tick on the horizontal axis. This was not a turnaround story. It was a rocket ship at the time. And look at the logos on this chart. This is a revenue view and SeviceNow is aiming to be the fastest to get to 10 billion in software industry history. SeviceNow is valuation just to sort of shift gears here for a minute blew by workdays years ago. Its sites are now set on SAP which is currently valued at 170 billion. And then there's Oracle and Salesforce. They're at around 250 billion and 225 billion in valuation respectively. And these lines back to revenue show the trajectory that these companies took to get to 10 billion. And you can see how SeviceNow plans to get there with those dotted lines. And this is why I call this a collision course with Salesforce, because I think Marc Benioff might say, "Hey, we are ready." Are the next great enterprise software company. We have no plans to give up that post, that mantle anytime soon. I want to share a clip from four years ago. something we've been saying for a long, long time. Roll the clip. >> As they say their goal now is to be four billion by 2020. It feels like, you know, when we first covered SeviceNow knowledge, we said, wow, this company reminds us a lot of the early days of Salesforce. They've got this platform you can develop on this platform, you know, call it paths or, you know, whatever you want to call it, but we at the time said, they're on a collision course with Salesforce. Now there's plenty of room for both of those companies in the marketplace. Salesforce obviously focused predominantly on Salesforce automation, SeviceNow really on workflow automation, but you can see those sort of two markets coming together. >> Now you may be thinking isn't Salesforce's revenue like 5X that of SeviceNow? And yes it is. But I would say a couple of things. One is that Salesforce has gotten to where it is with a lot of M&A, more than 60 acquisitions. At some high profile wants to like slack and Tableau as well as MuleSoft and Heroku back in the day and many others. So we'll see how far McDermott can get before he reverts to his inquisitive self that we saw at SAP. But the second thing I'll say is serviceNow positions itself as the platform of platforms. And the thing is it runs its own cloud. And when it does acquisitions, it replatforms the acquiree into the now platform so that it can drive integrations more seamlessly. That's fundamentally part of its value proposition, a big part of its value proposition. And that means it's somewhat limited on the acquisitions it can make, it has to be pretty selective. Otherwise it's got to do a heavy lift to get it the now platform. It's the power of the models, especially if customers can get to a single CMDB, that configuration database management system, which by the way, a lot of customers never get to that kind of skirt that, but remember SeviceNow is like the ERP for IT. So the more you can get to a single data model, the more effective you're going to be, especially in this data era where you got to put data at the core of your organization, something we've talked about a lot. And the third thing I'll mention the SeviceNow wants to use this platform to attack what it sees as a very large TAM as shown here. Now, a couple of things I want to point out. One is when SeviceNow IPO in 2012, a lot of the analysts said that they were way overvalued because they were in a market. It was help desk and writing tickets was a $2 billion business that was in decline and BMC remedy. Wasn't really that big of a base to attack. In 2013, the Wikibon team took a stab at sizing the TAM. I dug back into the old Wiki. We had well over 30 billion at the time and we expected the company to move deeper into IT and then beyond IT into lines of business and line of business management. Yeah, we felt we were being conservative. We thought the number could be as big as 100 billion, but we felt like putting that number out there, was too aggressive but, you know, it turns out from SeviceNow standpoint, it sees these new software opportunities coming together. And SeviceNow in a way they can double dip both in and beyond their current markets. What I mean by that is it can partner with, for instance, HCM vendors and then at the same time offer employee workflows. They can partner or even purchase RPA tools from specialists like UI path or automation anywhere. And it can go acquire a company which it did like Intel a bot and integrate what I would consider lighter-weight RPA into its platform. So it can manage workflows for best of breed and pick off functionality throughout the software stack. Now what's interesting in this chart is first, the size of the TAM that SeviceNow sees 175 billion, but also how it's now reorganizing its business around workflows, which you see in the left-hand side. This was done of course, to simplify the many, many, many things that you can buy from SeviceNow. But there's also speculation that SeviceNow is leveraging its orchestration and service catalog capabilities, which are meaningful from a revenue standpoint and using them to power these workflows because the way it was organized was both confusing and not as effective as it could be. Now, it's well known that SeviceNow has ITSM this comprises the biggest piece of its revenue pie, probably a couple billion. And it's adding to that with ITSM pro and ITSM enterprise going deeper, deeper into the ITSM space. And it's ITAM business is also doing well against the likes of Datadog and Elastic and Splunk and others and its acquisition of LightStep. It's going to push it further into this space, which is both crowded is morphing into observability as we've been reporting. What's unclear though is how well, for instance, HR and the CSM businesses are doing as sort of standalone businesses, you might remember they used to be standalone businesses with standalone GMs. They've sort of changed that up a little bit. So this is potentially not only a way to simplify, but also shuffle the deck chairs a bit and maybe prop up the non IT workflows, which then allows SeviceNow to show this chart, which essentially says to the street, see, we have this huge TAM and our TAM expansion strategy is working as the overall business is growing nicely yet the mix is shifting toward customer, employee and creator workflows. See how awesome our business is and see how smart we are. So this is possibly a way to hide some of the warts and accentuate the growth. Look, there's not a lot to criticize SeviceNow about, but they've been pretty good at featuring what some perceive as weaknesses. Like for instance, the way it marketed it's a multi-instance and turned that into an advantage as a better model. Even though the whole cloud world was going multitenant and within a ServiceNow you got to really plan new releases, which they drop every six months, although CJ decide. So he's SeviceNows head of products. He did say at the investor meeting, that event that they held last May, that they do certain releases now bi-monthly and even some bi-weekly. So, yeah, maybe a little bit of nitpicking here, but I always liked to question when such changes are made to the reporting structures to the street. And if workflows are the new black, so to speak, I wonder will SeviceNow start pricing by workflows versus what really has been a legacy of, you know, what's your ticket volume and how many agents need access to the model and we'll charge you accordingly? Now, I'm not a service pricing expert and they don't make it easy to figure out that pricing. So let's dig a little bit more on that and keep an eye on it. Now I want to turn to the customers survey data from ETR on ServiceNow. First, here's the latest update on IT spending from ETR, something that we've been tracking for quite some time. We've been consistently saying to expect this year a seven to 8% growth for 2021 IT spend off of last year's contraction. And the latest ETR survey data puts it right at 8%. So we really liked that number. You know, could even be higher push 10% this year. Now, let's look at the spending profile within the ETR dataset. Of the 1100 plus respondents to this quarter, there were 377 SeviceNow customers, and this chart shows the breakdown of net score or spending velocity among those respondents. Remember, net score is a measure of that spending momentum. What it does is it takes the lime green bar, which is adopting new, that says 11% of that 377 customers are adopting ServiceNow for the first time. It takes that lime green and it adds the forest green bar that's growth in spending of 6% or more this half relative to the first half. That's 43% of the customers that have been surveyed here. And then it subtracts out the reds, which is that pinkish is spending less, that's 3%, small number of spending less. And then the bright red is we're leaving the platform. That's a minuscule 1% of the respondents. And you can see the rest in that gray area is flat spending, which is ignored. And so what this does is it calculates out, you'd take the greens minus the reds. It calculates out to a net score 50% for SeviceNow, which is well above that magic 40% elevated mark that we'd like to see. It's rare for a company of this size, except for the hyperscalers. You see AWS and Microsoft and Google are up that high and oh, there's another great enterprise software company at the 45% net score level. Guess who that is, salesforce.com. But anyway, it's rare to see that large of a company have that much spending momentum in the ETR surveys. Now let's take a look at the time series data for ServiceNow. This chart shows the net score granularity over time. So you see the bars, that time series, the blue line is net score. And you can see that it was dragged down during last year's lockdown. As, even though SeviceNow did pretty well last year and it's now spiking back to pre-COVID levels, which is a very positive sign for the company. That red call-out that ETR makes it shows market share. That's an indicator of pervasiveness in the dataset. I'm not overlyconcern there that downturn. I don't think it's a meaningful indicator because ServiceNow revenue is skewed towards a big spender accounts and this is an account unit indicator, if you will not spending level metric. And okay, and here's another reason and why I'm not concerned about SeviceNow is a so-called market share number in the ETR dataset as ETR defines it. This is an X, Y Z view chart that we'd like to show here. We've got net score on the vertical axis and market share in the horizontal plane. This is focusing on enterprise software. So remember that 40% red line is the magic level, anything above that is really indicative of momentum. Oh look, there's Salesforce and ServiceNow on that little collision course that I talked about. Now, CEO McDermott, I would say as by the way, would his predecessors, look, we're a platform of platforms and we partner with other companies, we'll meet at the customer level and sure we'll integrate functions where we think it can add value to customers. But we also understand we have to work with the vendors that our customers are using. So it's all good, plenty of room for growth for all of us, which by the way is true. But I would say this, anyone who's ever been in the enterprise software industry knows that enterprise software execs and their salespeople believe that every dollar spent on software should go to them. And if it's a good market with momentum and growth, they believe they can either organically write software to deliver customer function and value, or they can acquire to fill gaps. So, well, what McDermott would say is true. The likes of Oracle, Microsoft, SAP, Salesforce, Infor, et cetera, they all want as big of a budget piece as possible in the enterprise software space. That's just the way it is. Now, we're going to close with some anecdotal comments from ETR insights, formerly called VENN, which is a round table discussion with CXOs. You can read the summaries when we post on Wikibon and SiliconANGLE but let me summarize. This first comment comes from an assistant VP in retail who says SeviceNow is a key part of their digital transformation. They moved off of BMC remedy two years ago for the global ticketing system. And this person is saying that while the platform is extremely powerful, you got to buy into specific modules to just get one feature that you want. You may not need a lot of the other features, so it starts to get expensive. The other thing this individual is saying is initially, it's a very services heavy project. And so I'll tell you, when you look at the SeviceNow ecosystem the big SIs, the big names, they have big appetites. They love to eat at the trough as I sometimes say, and they want big clients with big budgets. So if you're not one of those top 500 or 700 customers, the big name SIs, you know, they might not be for you. They're not going to pay attention to you. They're going after the big prizes. So what I would suggest is you call up someone like Jason Wojahn of third era, he's the CEO over there and he's got a lot of experience in this space or some more specialized SeviceNow consultancy like them because you're going to get better value for the money. And you're going to get short-term ROI faster with a long-term sustainable ROI as a measurable objective. And I think this last comment sums it up nice, let me to skip over the second one and go just jump to the third one. This basically says the platform is integrated. It's like a mesh. It's not a bunch of stovepipes and cul-de-sacs. Yes it's expensive, but people love it. And like the iPhone, it just works. And their feature pace is accelerating. So pretty strong testimonials, but I want to keep an eye on price transparency any possible backlash there and how the ecosystem evolves. It's something that we called out early on. It's an indicator and SeviceNow needs to continue to invest in that partner network is especially as it builds out its vertical industry practices and expands internationally. Okay, we'll leave it there for now. Remember I publish each week on wikibon.com and siliconangle.com. These episodes they're all available as podcasts. All you got to do is search for breaking analysis podcast. You can always connect with me on Twitter @DVellante or email me @david.vellantesiliconangle.com. Appreciate the comments on LinkedIn. And don't forget to check out etr.plus for all the survey data. This is Dave Vellante for theCUBE insights powered by ETR. Be well, and we'll see you next time. (upbeat music)

>>President. >>Hello everyone and welcome to wien on 2021. My name is Dave Volonte and you're watching the cubes continuous coverage of the event. You know, VM is a company that made its mark riding the virtualization wave, but quite amazingly has continued to extend its product portfolio and catch the other major waves of the industry. Of course, we're talking about cloud backup. SaS data protection was one of the early players there making moves and containers. And this is the VM on power panel with me or Danny Allen, who is the Ceo and Senior vice president of product strategy at VM. Dave Russell is the vice President of enterprise Strategy, of course, said Vin and Rick Vanover, senior director of product strategy at VM. It's great to see you again. Welcome back to the cube. >>Good to be here. >>Well, it had to be here. >>Yeah, let's do it. >>Let's do this. So Danny, you know, we heard you kind of your keynotes and we saw the general sessions and uh sort of diving into the breakouts. But the thing that jumps out to me is this growth rate that you're on. Uh you know, many companies and we've seen this throughout the industry have really struggled, you know, moving from the traditional on prem model to an an A. R. R. Model. Uh they've had challenges doing so the, I mean, you're not a public company, but you're quite transparent and a lot of your numbers 25% a our our growth year of a year in the last quarter, You know, 400,000 plus customers. You're talking about huge numbers of downloads of backup and replication Danny. So what are your big takeaways from the last, You know, 6-12 months? I know it was a strange year obviously, but you guys just keep cranking. >>Yeah, so we're obviously hugely excited by this and it really is a confluence of various things. It's our, it's our partners, it's the channel. Um, it's our customers frankly that that guide us and give us direction on what to do. But I always focus in on the product because I, you know, we run product strategy here, this group and we're very focused on building good products and I would say there's three product areas that are on maximum thrust right now. One is in the data center. So we built a billion dollar business on being the very best in the data center for V sphere, hyper V, um, for Nutanix, HV and as we announced also with red hat virtualization. So data center obviously a huge thrust for us going forward. The second assess Office 3 65 is exploding. We already announced we're protecting 5.8 million users right now with being back up for Office 3 65 and there's a lot of room to grow there. There's 145 million daily users of Microsoft teams. So a lot of room to grow. And then the third areas cloud, we moved over 100 petabytes of data into the public cloud in Q one and there's a lot of opportunity there as well. So those three things are driving the growth, the data center SaAS and cloud >>Davis. I want to get your kind of former analyst perspective on this. Uh you know, I know, you know, it's kind of become cliche but you still got that D. N. A. And I'm gonna tap it. So when you think about and you were following beam, of course very closely during its ascendancy with virtualization. And back then you wouldn't just take your existing, you know, approaches to back up in your processes and just slap them on to virtualization. That that wouldn't have worked. You had to rethink your backup. And it seems like I want to ask you about cloud because people talk about lift and shift and what I hear from customers is, you know, if I just lift and shift to cloud, it's okay, but if I don't have a plan to change my operating model, you know, I don't get the real benefit out of it. And so I would think back up data protection, data management etcetera is a key part of that. So how are you thinking about cloud and the opportunity there? >>Yeah, that's a good point, David. You know, I think the key area right there is it's important to protect the workload of the environment. The way that that environment is naturally is best suited to be protected and also to interact in a way that the administrator doesn't have to rethink, doesn't have to change their process so early on. Um I think it was very successful because the interface is the work experience looked like what an active directory administrator was used to, seeing if they went to go and protect something with me where to go recover an item. Same is true in the cloud, You don't want to just take what's working well in one area and just force it, you know, around round peg into a square hole. This doesn't work well. So you've got to think about the environment and you've got to think about what's gonna be the real use case for getting access to this data. So you want to really tune things and there's obviously commonality involved, but from a workflow perspective, from an application perspective and then a delivery model perspective, Now, when it comes to hybrid cloud multi cloud, it's important to look like that you belong there, not a fish out of water. >>Well, so of course, Danny you were talking to talking about you guys have product first, Right? And so rick your your key product guy here. What's interesting to me is when you look at the history of the technology industry and disruption, it's it's so often that the the incumbent, which you knew now an incumbent, you know, you're not the startup anymore, but the incumbent has challenges riding these these new waves because you've got to serve the existing customer base, but you gotta ride the new momentum as well. So how rick do you approach that from a product standpoint? Because based on the numbers that we see it doesn't you seem to be winning in both the traditional business and the new business. So how do you adapt from a product standpoint? >>Well, Dave, that's a good question. And Danny set it up? Well, it's really the birth of the Wien platform and its relevance in the market. In my 11th year here at Wien, I've had all kinds of conversations. Right. You know, the perception was that, you know, this smb toy for one hyper Advisor those days are long gone. We can check the boxes across the data center and cloud and even cloud native apps. You know, one of the things that my team has done is invest heavily in both people and staff on kubernetes, which aligns to our casting acquisition, which was featured heavily here at V Mon. So I think that being able to have that complete platform conversation Dave has really given us incredible momentum but also credibility with the customers because more than ever, this fundamental promise of having data backed up and being able to drive a recovery for whatever may happen to data nowadays. You know, that's a real emotional, important thing for people and to be able to bring that kind of outcome across the data center, across the cloud, across changes in what they do kubernetes that's really aligned well to our success and you know, I love talking to customers now. It's a heck of a lot easier when you can say yes to so many things and get the technical win. So that kind of drives a lot of the momentum Dave, but it's really the platform. >>So let's talk about the future of it and I want all you guys to chime in here and Danny, you start up, How do you see it? I mean, I always say the last 10 years, the next 10 years ain't gonna be like the last 10 years whether it's in cloud or hybrid et cetera. But so how Danny do you see I. T. In the future of I. T. Where do you see VM fitting in, how does that inform your roadmap, your product strategy? Maybe you could kick that segment off? >>Yeah. I think of the kind of the two past decades that we've gone through starting back in 2000 we had a lot of digital services built for end users and it was built on physical infrastructure and that was fantastic. Obviously we could buy things online, we could order close we could order food, we we could do things interact with end users. The second era about a decade later was based on virtualization. Now that wasn't a benefit so much to the end user is a benefit to the business. The Y because you could put 10 servers on a single physical server and you could be a lot more flexible in terms of delivery. I really think this next era that we're going into is actually based on containers. That's why the cost of acquisition is so strategic to us. Because the unique thing about containers is they're designed for to be consumption friendly. You spin them up, you spin them down, you provision them, you d provisions and they're completely portable. You can move it >>from on >>premises if you're running open shift to e k s a k s G k E. And so I think the next big era that we're going to go through is this movement towards containerized infrastructure. Now, if you ask me who's running that, I still think there's going to be a data center operations team, platform ups is the way that I think about them who run that because who's going to take the call in the middle of the night. But it is interesting that we're going through this transformation and I think we're in the very early stages of this radical transformation to a more consumption based model. Dave. I don't know what you think about that. >>Yeah, I would say something pretty similar Danny. It sounds cliche day valenti, but I take everything back to digital transformation. And the reason I say that is to me, digital transformation is about improving customer intimacy and so that you can deliver goods and services that better resonate and you can deliver them in better time frame. So exactly what Danny said, you know, I think that the siloed approaches of the past where we built very hard in environments and we were willing to take a long time to stand those up and then we have very tight change control. I feel like 2020 sort of a metaphor for where the data center is going to throw all that out the window we're compiling today. We're shipping today and we're going to get experience today and we're going to refine it and do it again tomorrow. But that's the environment we live in. And to Danny's point why containers are so important. That notion of shift left meaning experience things earlier in the cycle. That is going to be the reality of the data center regardless of whether the data center is on prem hybrid cloud, multi cloud or for some of us potentially completely in the cloud. >>So rick when you think about some of your peeps like the backup admit right and how that role is changing in a big discussion in the economy now about the sort of skills gap we got all these jobs and and yet there's still all this unemployment now, you know the debate about the reasons why, but there's a there's a transition enrolls in terms of how people are using products and obviously containers brings that, what what are you seeing when you talk to like a guy called him your peeps? Yeah, it's >>an evolving conversation. Dave the audience, right. It has to be relevant. Uh you know, we were afforded good luxury in that data center wheelhouse that Danny mentioned. So virtualization platform storage, physical servers, that's a pretty good start. But in the software as a service wheelhouse, it's a different persona now, they used to talk to those types of people, there's a little bit of connection, but as we go farther to the cloud, native apps, kubernetes and some of the other SAAS platforms, it is absolutely an audience journey. So I've actually worked really hard on that in my team, right? Everything from what I would say, parachuting into a community, right? And you have to speak their language. Number one reason is just number one outcomes just be present. And if you're in these communities you can find these individuals, you can talk their language, you can resonate with their needs, right? So that's something uh you know, everything from Levin marketing strategy to the community strategy to even just seating products in the market, That's a recipe that beam does really well. So yeah, it's a moving target for sure. >>Dave you were talking about the cliche of digital transformation and I'll say this may be pre Covid, I really felt like it was a cliche, there was a lot of, you know, complacency, I'll call it, but then the force marks the digital change that uh and now we kind of understand if you're not a digital business, you're in trouble. Uh And so my question is how it relates to some of the trends that we've been talking about in terms of cloud containers, We've seen the SAs ification for the better part of a decade now, but specifically as it relates to migration, it's hard for customers to just migrate their application portfolio to the cloud. Uh It's hard to fund it. It takes a long time. It's complex. Um how do you see that cloud migration evolving? Maybe that's where hybrid comes in And again, I'm interested in how you guys think about it and how it affects your strategy. >>Yeah. Well it's a complex answer as you might imagine because 400,000 customers, we take the exact same code. The exact same ice so that I run on my laptop is the exact same being backup and replication image that a major bank protects almost 20,000 machines and a petabytes of data. And so what that means is that you have to look at things on a case by case basis for some of us continuing to operate proprietary systems on prem might be the best choice for a certain workload. But for many of us the Genie is kind of out of the bottle with 2020 we have to move faster. It's less about safety and a lot more about speed and favorable outcome. We'll fix it if it's broken but let's get going. So for organizations struggling with how to move to the cloud, believe it or not, backup and recovery is an excellent way to start to venture into that because you can start to move data backup ISm data movement engine. So we can start to see data there where it makes sense. But rick would be quick to point out we want to offer a safe return. We have instances of where people want to repatriate data back and having a portable data format is key to that Rick. >>Uh yeah, I had a conversation recently with an organization managing cloud sprawl. They decided to consolidate, we're going to use this cloud, so it was removing a presence from one cloud that starts with an A and migrating it to the other cloud that starts with an A. You know, So yeah, we've seen that need for portability repatriation on prem classic example going from on prem apps to software as a service models for critical apps. So data mobility is at the heart of VM and with all the different platforms, kubernetes comes into play as well. It's definitely aligning to the needs that we're seeing in the market for sure. >>So repatriation, I want to stay on that for a second because you're, you're an arms dealer, you don't care if they're in the cloud or on prem and I don't know, maybe you make more money in one or the other, but you're gonna ride whatever waves the market gives you so repatriation to me implies. Or maybe I'm just inferring that somebody's moved to the cloud and they feel like, wow, we've made a mistake, it was too fast, too expensive. It didn't work for us. So now we're gonna bring it back on prem. Is that what you're saying? Are you saying they actually want their data in both both places. As another layer of data protection Danny. I wonder if you could address that. What are you seeing? >>Well, one of the interesting things that we saw recently, Dave Russell actually did the survey on this is that customers will actually build their work laid loads in the cloud with the intent to bring it back on premises. And so that repatriation is real customers actually don't just accidentally fall into it, but they intend to do it. And the thing about being everyone says, hey, we're disrupting the market, we're helping you go through this transformation, we're helping you go forward. Actually take a slightly different view of this. The team gives them the confidence that they can move forward if they want to, but if they don't like it, then they can move back and so we give them the stability through this incredible pace, change of innovation. We're moving forward so so quickly, but we give them the ability to move forward if they want then to recover to repatriate if that's what they need to do in a very effective way. And Dave maybe you can touch on that study because I know that you talked to a lot of customers who do repatriate workloads after moving them to the cloud. >>Yeah, it's kind of funny Dave not in the analyst business right now, but thanks to Danny and our chief marketing Officer, we've got now half a dozen different research surveys that have either just completed or in flight, including the largest in the data protection industry's history. And so the survey that Danny alluded to, what we're finding is people are learning as they're going and in some cases what they thought would happen when they went to the cloud they did not experience. So the net kind of funny slide that we discovered when we asked people, what did you like most about going to the cloud and then what did you like least about going to the cloud? The two lists look very similar. So in some cases people said, oh, it was more stable. In other cases people said no, it was actually unstable. So rick I would suggest that that really depends on the practice that you bring to it. It's like moving from a smaller house to a larger house and hoping that it won't be messy again. Well if you don't change your habits, it's eventually going to end up in the same situation. >>Well, there's still door number three and that's data reuse and analytics. And I found a lot of organizations love the idea of at least manipulating data, running test f scenarios on yesterday's production, cloud workload completely removed from the cloud or even just analytics. I need this file. You know, those types of scenarios are very easy to do today with them. And you know, sometimes those repatriations, those portable recoveries, Sometimes people do that intentionally, but sometimes they have to do it. You know, whether it's fire, flood and blood and you know, oh, I was looks like today we're moving to the cloud because I've lost my data center. Right. Those are scenarios that, that portable data format really allows organizations to do that pretty easily with being >>it's a good discussion because to me it's not repatriation, it has this negative connotation, the zero sum game and it's not Danny what you describe and rick as well. It was kind of an experimentation, a purposeful. We're going to do it in the cloud because we can and it's cheap and low risk to spin it up and then we're gonna move it because we've always thought we're going to have it on prem. So, so you know, there is some zero sum game between the cloud and on prem. Clearly no question about it. But there's also this rising tide lifts all ship. I want to, I want to change the subject to something that's super important and and top of mind it's in the press and it ain't going away and that is cyber and specifically ransomware. I mean, since the solar winds hack and it seems to me that was a new milestone in the capabilities and aggressiveness of the adversary who is very well funded and quite capable. And what we're seeing is this idea of tucking into the supply chain of islands, so called island hopping. You're seeing malware that's self forming and takes different signatures very stealthy. And the big trend that we've seen in the last six months or so is that the bad guys will will lurk and they'll steal all kinds of sensitive data. And then when you have an incident response, they will punish you for responding. And they will say, okay, fine, you want to do that. We're going to hold you ransom. We're gonna encrypt your data. And oh, by the way, we stole this list of positive covid test results with names from your website and we're gonna release it if you don't pay their. I mean, it's like, so you have to be stealthy in your incident response. And this is a huge problem. We're talking about trillions of dollars lost each year in, in in cybercrime. And so, uh, you know, it's again, it's this uh the bad news is good news for companies like you. But how do you help customers deal with this problem? What are you seeing Danny? Maybe you can chime in and others who have thoughts? >>Well we're certainly seeing the rise of cyber like crazy right now and we've had a focus on this for a while because if you think about the last line of defense for customers, especially with ransomware, it is having secure backups. So whether it be, you know, hardened Linux repositories, but making sure that you can store the data, have it offline, have it, have it encrypted immutable. Those are things that we've been focused on for a long while. It's more than that. Um it's detection and monitoring of the environment, which is um certainly that we do with our monitoring tools and then also the secure recovery. The last thing that you want to do of course is bring your backups or bring your data back online only to be hit again. And so we've had a number of capabilities across our portfolio to help in all of these. But I think what's interesting is where it's going, if you think about unleashing a world where we're continuously delivering, I look at things like containers where you have continues delivery and I think every time you run that helm commander, every time you run that terra form command, wouldn't that be a great time to do a backup to capture your data so that you don't have an issue once it goes into production. So I think we're going towards a world where security and the protection against these cyber threats is built into the supply chain rather than doing it on just a time based uh, schedule. And I know rick you're pretty involved on the cyber side as well. Would you agree with that? I >>would. And you know, for organizations that are concerned about ransomware, you know, this is something that is taken very seriously and what Danny explained for those who are familiar with security, he kind of jumped around this, this universally acceptable framework in this cybersecurity framework there, our five functions that are a really good recipe on how you can go about this. And and my advice to IT professionals and decision makers across the board is to really align everything you do to that framework. Backup is a part of it. The security monitoring and user training. All those other things are are areas that that need to really follow that wheel of functions. And my little tip here and this is where I think we can introduce some differentiation is around detection and response. A lot of people think of backup product would shine in both protection and recovery, which it does being does, but especially on response and detection, you know, we have a lot of capabilities that become impact opportunities for organizations to be able to really provide successful outcomes through the other functions. So it's something we've worked on a lot. In fact we've covered here at the event. I'm pretty sure it will be on replay the updated white paper. All those other resources for different levels can definitely guide them through. >>So we follow up to the detection is what analytics that help you identify whatever lateral movement or people go in places they shouldn't go. I mean the hard part is is you know, the bad guys are living off the land, meaning they're using your own tooling to to hack you. So they're not it's not like they're introducing something new that shouldn't be there. They're they're just using making judo moves against you. So so specifically talk a little bit more about your your detection because that's critical. >>Sure. So I'll give you one example imagine we capture some data in the form of a backup. Now we have an existing advice that says, you know what Don't put your backup infrastructure with internet connectivity. Use explicit minimal permissions. And those three things right there and keep it up to date. Those four things right there will really hedge off a lot of the different threat vectors to the back of data, couple that with some of the mutability offline or air gapped capabilities that Danny mentioned and you have an additional level of resiliency that can really ensure that you can drive recovery from an analytic standpoint. We have an api that allows organizations to look into the backup data. Do more aggressive scanning without any exclusions with different tools on a flat file system. You know, the threats can't jump around in memory couple that with secure restore. When you reintroduce things into the environment From a recovery standpoint, you don't want to reintroduce threats. So there's protections, there's there's confidence building steps along the way with them and these are all generally available technologies. So again, I got this white paper, I think we're up to 50 pages now, but it's a very thorough that goes through a couple of those scenarios. But you know, it gets the uh, it gets quickly into things that you wouldn't expect from a backup product. >>Please send me a copy if you, if you don't mind. I this is a huge problem and you guys are global company. I admittedly have a bit of a US bias, but I was interviewing robert Gates one time the former defense secretary and we're talking about cyber war and I said, don't we have the best cyber, can't we let go on the offense? He goes, yeah, we can, but we got the most to lose. So this is really a huge problem for organizations. All right, guys, last question I gotta ask you. So what's life like under, under inside capital of the private equity? What's changed? What's, what's the same? Uh, do you hear from our good friend ratner at all? Give us the update there. >>Yes. Oh, absolutely fantastic. You know, it's interesting. So obviously acquired by insight partners in February of 2020, right, when the pandemic was hitting, but they essentially said light the fuse, keep the engine's going. And we've certainly been doing that. They haven't held us back. We've been hiring like crazy. We're up to, I don't know what the count is now, I think 4600 employees, but um, you know, people think of private equity and they think of cost optimizations and, and optimizing the business, That's not the case here. This is a growth opportunity and it's a growth opportunity simply because of the technology opportunity in front of us to keep, keep the engine's going. So we hear from right near, you know, on and off. But the new executive team at VM is very passionate about driving the success in the industry, keeping abreast of all the technology changes. It's been fantastic. Nothing but good things to say. >>Yes, insight inside partners, their players, we watched them watch their moves and so it's, you know, I heard Bill McDermott, the ceo of service now the other day talking about he called himself the rule of 60 where, you know, I always thought it was even plus growth, you know, add that up. And that's what he was talking about free cash flow. He's sort of changing the definition a little bit but but so what are you guys optimizing for you optimizing for growth? Are you optimising for Alberta? You optimizing for free cash flow? I mean you can't do All three. Right. What how do you think about that? >>Well, we're definitely optimizing for growth. No question. And one of the things that we've actually done in the past 12 months, 18 months is beginning to focus on annual recurring revenue. You see this in our statements, I know we're not public but we talk about the growth in A. R. R. So we're certainly focused on that growth in the annual recovering revenue and that that's really what we tracked too. And it aligns well with the cloud. If you look at the areas where we're investing in cloud native and the cloud and SAAS applications, it's very clear that that recurring revenue model is beneficial. Now We've been lucky, I think we're 13 straight quarters of double-digit growth. And and obviously they don't want to see that dip. They want to see that that growth continue. But we are optimizing on the growth trajectory. >>Okay. And you see you clearly have a 25% growth last quarter in A. R. R. Uh If I recall correctly, the number was evaluation was $5 billion last january. So obviously then, given that strategy, Dave Russell, that says that your tam is a lot bigger than just the traditional backup world. So how do you think about tam? I'll we'll close there >>and uh yeah, I think you look at a couple of different ways. So just in the backup recovery space or backup in replication to paying which one you want to use? You've got a large market there in excess of $8 billion $1 billion dollar ongoing enterprise. Now, if you look at recent i. D. C. Numbers, we grew and I got my handy HP calculator. I like to make sure I got this right. We grew 44.88 times faster than the market average year over year. So let's call that 45 times faster and backup. There's billions more to be made in traditional backup and recovery. However, go back to what we've been talking around digital transformation Danny talking about containers in the environment, deployment models, changing at the heart of backup and recovery where a data capture data management, data movement engine. We envision being able to do that not only for availability but to be able to drive the business board to be able to drive economies of scale faster for our organizations that we serve. I think the trick is continuing to do more of the same Danny mentioned, he knows the view's got lit. We haven't stopped doing anything. In fact, Danny, I think we're doing like 10 times more of everything that we used to be doing prior to the pandemic. >>All right, Danny will give you the last word, bring it home. >>So our goal has always been to be the most trusted provider of backup solutions that deliver modern data protection. And I think folks have seen at demon this year that we're very focused on that modern data protection. Yes, we want to be the best in the data center but we also want to be the best in the next generation, the next generation of I. T. So whether it be sas whether it be cloud VM is very committed to making sure that our customers have the confidence that they need to move forward through this digital transformation era. >>Guys, I miss flying. I mean, I don't miss flying, but I miss hanging with you all. We'll see you. Uh, for sure. Vim on 2022 will be belly to belly, but thanks so much for coming on the the virtual edition and thanks for having us. >>Thank you. >>All right. And thank you for watching everybody. This keeps continuous coverage of the mon 21. The virtual edition. Keep it right there for more great coverage. >>Mm

>> From theCUBE studios in Palo Alto, in Boston bringing you data-driven insights from theCUBE and ETR. This is breaking analysis with Dave Vellante. >> SaaS companies have been some of the strongest performers in this COVID era. They finally took a bit of a breather this month, but they remain generally well-positioned for the next several years with their predictable models and cloud platforms. Meanwhile, the demise of on-prem legacy players from COVID shock, seems to have been overstated, in part because of the return of the laptop and in the case of Oracle with some see as a cloud play, Hmm. Then there's Bitcoin which is seeing public companies use their balance sheet liquidity to invest in the cryptocurrency. (chuckles) Wow. What does that all mean? I'll leave that for another day. Hello everyone and welcome to this week on Cube insights powered by ETR. On this breaking analysis, we'll pick out some of the more recent themes from this month and share our thoughts in some major enterprise software players, the future of on-prem, a review of our take on cloud and what cloud will look like in the 2020s. Wow. It's true, trees really don't grow to the moon. As predicted, the stock market has been a little bit crazy this month. February saw some leading SaaS names like Workday, Salesforce, and ServiceNow take a bit of a breather in the second half of the month. Workday and Salesforce announced earnings on the 25th. Workday had its first billion dollar subscription revenue quarter at 16% revenue growth a revenue and earnings beat. And of course the stock closed down Friday, more than 2%. Salesforce had a nearly $6 billion revenue quarter 20% growth, a revenue and earnings beat. And the day after it announced earnings the stock was down more than 6%. The market is worried about rising interest rates, and maybe concerned that an inflation fears are going to kill the stimulus bill. And so any whiff of caution by company managements is met with dampened enthusiasm. Meanwhile, it's looking like some of the big on-prem legacy firms, notably Dell, HPQ and HPE are making it through COVID, and might even come out in the other side stronger maybe. Dell handily beat expectations on the 25th on the strength of 17% growth in its client business. That's PCs. It's the gift that keeps on giving. HPQ had a strong beat as well, and we're anticipating a solid quarter from HPE next week on March 2nd. And then there's Oracle. Barron's had a big article on February 19th, entitled, "Oracle is turning into a cloud giant and why it's stock is a buy". It moved the market. And many investors rotated out of growth stocks, tech growth tech stocks into Oracle, others who had owned Oracle for a while scooped up some profits. Is Oracle a cloud giant? Hmm. We'll discuss that in a moment. And then there's all this Bitcoin mania. You know, our interest there is much more beyond the price fluctuations rather we're interested in the innovations in crypto. Look, we're going to table this for another day, but it's an interesting side note of this February madness. Let's take a look closer look at the February chill for SaaS companies. Here's a chart showing the relative performance of some of the big SaaS names in the latter half of this month. Now despite the strong earnings for Workday and Salesforce you can see the market's negative response on the 26th. Snowflake and ServiceNow they had epic runs last year, and they've been softening although on Friday morning ServiceNow shut down quickly on the open on sympathy with Workday and ServiceNow and then investors, you know, came back in. Very weird action in the market these days, again, not surprising. And look at the reaction investors had to the Barron's article on the 19th. They anointed Oracle as a cloud giant. Kudos to the Oracle PR team for that one. Now, let's take a look at these companies and put them in context. Even though they're not direct competitors it's instructive to model some of the top enterprise software players in positions, and line them up against each other. This chart here shows two dimensions from the ETR data. On the vertical axis is net score or customer spending momentum. And the horizontal axis is market share or pervasiveness in the survey. The table inset shows the net score measurement in the shared end. That's the metric that plots the dots. In both cases bigger is better. Note, that red dotted-line there is the 40% line. 40% to us is the magic number. Anything above that line is considered elevated. So we have ServiceNow and Salesforce they're up to the right. They're both big companies. They have significant market presence amongst the CIO and both have elevated spending velocity in the 50% range. And I've said for years, these two companies are on a collision course and I stand by that. It started happening and McDermott Bill McDermott, new CEO he's going to accelerate that in our view. We put a cloud around Snowflake tongue in cheek, because they are literally in the clouds on this chart. They stand alone, with a solid market presence that continues to grow in an off the charts net score of 83.3% now. For context you can see Oracle Fusion, NetSuite and Taleo. In addition, we put Slack and Coupa on the graphic, two names that have been on the radar lately and SAP, which continues to show decent spending momentum despite its challenges. All right, let me make a few comments on some of these companies. Snowflake, we've talked about a lot. I said earlier that their IPO, that if you really wanted to own it and couldn't wait for a better price, which I thought you'd get. And by the way you did, but then if you really wanted to own it on day one hold your nose and buy it and then wait a few years. So, you know, good luck. And I think you'll, it'll turn out okay for you. Now, the data really continues to show strong demand for Snowflake. There's no signs of them slowing down. So they announced earnings on March 3rd. We didn't have more data there. So we would expect confirmation of our analysis but you never know. Now Workday, here's our take. In our view the market is catching up to Workday. They had about a three-year lead at least in human capital management and the cloud and that whole model. And they had the best product. It was really simple and it was quite disruptive. But now you got Oracle, ADP, Ceridian they're catching up. Workday's expansion into financial management has been much more challenging and as it gets bigger, things get tougher. It's still though an enduring name. Salesforce, we see a bit differently. Salesforce is so big now, it's really hard for it to move the needle. And so it's been on an acquisition binge, and to grow that's likely going to continue. It could work well for the company. I mean, similar to the ways in which Oracle consolidated software names and picked up a lot of customers. Salesforce is a great name, and we think is going to continue to grow. ServiceNow is interesting. It's entering a new chapter under CEO, Bill McDermott, new CEO. He wants to double the company's revenue. And I think he's got a reasonable chance at that through a combination of great go-to-market and expanding the platform and in McDermott style doing acquisitions. SAP's market value tripled under his watch, and he knows the customers. And he's a magnet for attracting talent. Now ServiceNow is not without its challenges. Its customers often complain that ServiceNow is pricing is really high and it's becoming the Oracle of service management. But as McDermott aims more at SAP and Oracle customers, they create a nice umbrella for ServiceNow to work with. And technically, we think ServiceNow has other challenges around its multi-instance. We call it, if you can't fix it feature it architecture. That may present some issues down the road at scale. We don't have time to go into that in detail but suffice it to say that ServiceNow runs on its own cloud. So it's not running on a hyper scale cloud. Yeah. Good news it doesn't have to pay it through that. The bad news is, has got to manage all that infrastructure. It's basically be a cloud supply supplier but it doesn't do multi-tenant which means fundamentally, it has a more expensive cost structure. Okay. Let's turn our attention to what's happening on-prem with some of the big legacy names. Here's the same X Y chart with some of the big names that have a presence on-prem. First you can see VMware and Cisco, Oracle, Dell, IBM and HP. Look at them on the horizontal scale. They've got a large market share of presence in the ETR dataset. Unlike the larger SaaS companies however, none is above that magic 40% net scoreline. Pure, Dell's laptop business, Red Hat, OpenShift. They're above the line with Nutanix just about there at the line. The other major laptop players, Lenovo and HPQ showing momentum from the whole remote work trend. And for context, we put in NetApp so you can get a sense of where they're at. Pure beat its earnings last week but only grew 2% last quarter. Now remember the ETR survey, this is a forward-looking survey. So this potentially bodes well for the companies that are above that 40% line. Okay. So most so sorry of the companies on this chart only IBM and Oracle, those two own a public cloud. And we'll dig further into that in a moment, but virtually every name shown here, even Oracle has a mandate to redefine cloud. Meaning it has to put forth in our view in North star vision and execute on it. That will unify the experience between on-prem, hybrid cloud, public clouds, cross clouds and the edge. Now I say even Oracle, because in my view, Oracle is in a stronger position than the others, because of it's more coherent software architecture. Now the other companies on this chart, they have to architect a platform that abstracts the underlying complexity of clouds, leverage cloud native tooling in the respective public clouds. Connect on-prem infrastructure and build a layer, that stretches out and accommodates edge workloads. I think Oracle will follow suit and is actually ahead of most in a narrower context, i.e hybrid. But it doesn't have to race toward this vision. It can sit back as it often does, watch everyone else fumble around and make mistakes. And then Oracle will keep investing in R&D, watch the market, you know make its own experimental mistakes, and then enter the market and act like we invented it. Now, Cisco will come at this from a strong networking and security perspective. And it has a nice story on programmable infrastructure with Cisco DevNet. But unfortunately it does not own VMware as does Dell, but Dell is in the middle of a fairly remarkable journey. And it will be interesting to see what happens with the VMware spin-out and the cozy commercial relationship that Dell is structuring with VMware as you know, and as we've reported, Dell has used VMware's cash for a lot of this restructuring. And so we'll see, as it exits the current phase and enters a new phase, how it will be able to pursue that vision. It's going to be, whatever it does it's going to be much different than that vertically integrated Oracle approach, which of course brings me to IBM. Potentially Red Hat with OpenShift is the most powerful card in the deck right now. OpenShift I mean, it's open it's everywhere. It has momentum as we showed. And I like their position. My concern is IBM, IBM is still unwinding and restructuring its business. And it's taking a long time as we've seen, with its outsourcing business. And now the Watson health assets, Irvine is continuing that downsizing trend that we saw under Ginny, shedding non-strategic businesses that don't fit, Irvine has a lot to deal with. And I want to point out that this idea of an abstraction layer across clouds is not trivial. First, all of these companies have to stop being so defensive about the public cloud. To a large extent, VMware and Red Hat have found a happy place. But in my view, they all should be thanking AWS, Azure, and Google for building out this great global distributed system, that they can leverage and build on top of. And second, this is going to be expensive. And Cisco, Dell VMware, IBM, they're all really stretched thin from an R&D perspective. They a lot of mouths to feed across the portfolio. So is HPE stretched thin, and it doesn't have the R&D budget at less than $2 billion annually. So my concern is that we're going to have lots of complexity across these obstructions layers by vendor. Now maybe the good news for companies. This may be good news for companies like Hashi or specialists with a vision to do this within a domain like a clumial, or a vast data, but this is big, and they are small. So it's going to take the better part of a decade to play out. Now, let's take a quick look at the cloud players. OMG when I saw that article in Barron's last weekend my mouth dropped. What a headline and it had this illustration of a stout Larry Ellison rising above the clouds. Here's a picture of the ETR data for the cloud players. It's the same X, Y plotting or net score and market share. If you follow this program, you know we believe there are four and only four hyper scale cloud players, with the resources to compete and differentiate as horizontal infrastructure players, which really is how we view the origination of modern cloud computing. AWS created it with S3 and EC2 with 2006. Those four are AWS and Azure, which have a large lead over the pack. Google cloud and Alibaba. And you can see we've circled the on-prem pack which comprises Oracle and IBM along with Dell VMware. And we snuck Google just stuck them at the edge of that circle because the differentiate they're cozying up to companies with strong enterprise sales teams and Google's, they're smart, they're patient. And so we, by no means, count them out. They're spending like mad and they have a lot of cash. They've done some really interesting open source things with containers. And so, you know, no doubt they're a player, but they are behind. Now in that on-prem pack, IBM and Oracle they actually own their own public clouds. IBM, they acquired soft layer which was a bare metal hosting company at the time to get IBM into the game. They retooled the platform over several years. Now here's the thing, try and unpack IBM's cloud business looking at its financial or in earnings reports. It's just a mess. I hope Irvine cuts the nonsense and actually develops and reports a set of metrics that are meaningful to cloud observers and IBM observers, because the way IBM reports its cloud business today is opaque and it's nonsense. It's frankly embarrassing to the company. It needs to end sooner rather than later is fundamentally meaningless to any observers. Now observers of cloud. If you care about the big chunk of whatever then maybe it has meaning. Now Oracle for its part, they announced the public cloud years ago, its version of one datto cloud was crap. And the company, they hired a bunch of really smart cloud engineers and they spent a lot of money to fix that. Now neither IBM nor Oracle have the CapEx resources of the big four, not even close, yet they'll build out data centers and yes they'll have a play, but they're different and that's okay. Now in the Barron's article on Oracle, the author was quite positive on Oracle, noting that quote, "On a recent earnings call CEO Safra Catz said that Oracle cloud infrastructure revenue was up 139% for the quarter". So, (laughs) we have really no sense or a stake in the ground is to up from what? Anyway, noting further the author said, quote, "Alas! Oracle doesn't break out OCI sales and comps can be messy". Hmm, indeed. Oracle is hiding the ball on OCI, that's because if they did break it out, which by the way they used to report, AIS revenue explicitly, but if they did break it out, they would only be highlighting that they are a minor player in AIS. Further, the article continues, quote, "Catz says that hers is the only tech company that has both a global cloud and a full set of enterprise applications". Unquote, bingo. There it is. That's why Oracle is in a better position than many of or most of the on-prem players listed in this chart. By the way, I would argue that Microsoft has a pretty impressive set of enterprise applications in a fairly global cloud. But what Safra is talking about is applications that support the world's most mission critical work. And when it comes to that, Oracle is number one. Don't fool yourself and get caught up in the Oracle lock-in and high pricing narrative, thinking that they're going to get crushed. They're not. Oracle is the best in the mission critical workload game. There is no one better, period. But guys, come on. The big four last year grew 41% and accounted for $86 billion in AIS revenue, AKA real cloud revenue. And they're going to surpass $115 billion this year combined. Real cloud companies don't grow in the single digits today. So talk to me when we reach equilibrium on that front. Okay. So let's wrap by looking at what does a cloud company look like in the 2020s? Now, I'm not saying that the rest of the pack shouldn't redefine cloud they should. But I hope we can all agree by now that modern day cloud computing was defined in business terms by AWS. They are number one in cloud computing, make no mistake. However, AWS is bringing the cloud into the wheelhouse of the on-prem players, cleverly saying that it's bringing AWS to the edge and it looks at the data centers. Just another edge node is great positioning but that is not trivial. Just look it out posts and how AWS has had to evolve its pricing strategy in terms, can't just turn it off like you can, the public cloud. I have an entire rant on all the, SaaS service transformations. It's really interesting to watch as AWS goes out, and the on-prem players come in and go hybrid. I got a lot of thought on what's happening there both in terms of SaaS, which I think is an outdated pricing model, and the infrastructure as a service players that are really getting into this game, we would love to do a session on that sometime. And it's a real disruption I think coming. Anyway, AWS competitors should absolutely try to redefine cloud. By AWS moving to the edge, it's opened up the door to that possibility. Microsoft is obviously in the best position I think by far here. They've earned the right and I'll never accuse them of cloud washing. Google, they got some work to do in this regard, but they probably have the largest physical cloud infrastructure in the world. As I've said, they just need to pull their heads out of their ads and quadruple down on cloud. But this idea of abstracting away the underlying complexity of the cloud, leveraging cloud native capabilities and building on top of the shoulders of the cloud giants such as David Floyer has expressed in this chart, moving from stateless to state full, integrating across clouds, advancing automation not only through the stack, but across domains and ultimately using metadata to govern where workloads should live or be moved, be disintegrated and recombined with low latency and be highly secured. I look at this, I think about this and I say one there is this technically feasible and smart techies tell me yes, so I keep trying to dig here for signs and I definitely see some movement in this direction. And two, I don't think any one vendor is going to do this themselves. They're not going to, it's not going to be owned by one company. I think what's going to happen is you'll get successes within layers of the stack. I mean, think about Snowflakes data cloud. We're going to see that for storage. See it for backup, data management, security maybe security within different domains. You see endpoint and identity access management. Maybe that cloud comes together as cloud security. You see it in applications, but without clear standards, it's going to be a challenge. And with respect to my friends at Snowflake, we might even see it in database sometime LOL, but look you all have a lot of work to do. And to my CIO friends, you know the drill much better than I, technology is going to keep relentlessly coming at you and you can deal with that. It's the people and the change management in the culture. Those are your bigger challenges, but don't screw up the tech. Okay. Thanks for watching. Remember, these episodes are all available as podcasts wherever you listen, just search breaking analysis podcasts, and please subscribe to the series, we appreciate that. Check out ETR's website at ETR.plus sorry, ETR.plus. We also publish a full report every week on wikibon.com and siliconangle.com. You can email me at David.Vellante@siliconangle.com or DM me on Twitter at DVellante that's @DVellante or comment, excuse me on my LinkedIn posts. This is Dave Vellante for theCUBE Insights powered by ETR. Stay safe, be well, get the jab if you have an opportunity. And we'll see you next time. (soft music)

>> Woman: From theCube studios in Palo Alto in Boston, connecting with thought leaders all around the world. This is theCube conversation. >> Hey, welcome back everybody. Jeff Frick here with theCube coming to you from our Palo Alto studios to have a Cube conversation with a real leader in the industry he's been publishing for a long, long time. I've been following him in social media. First time I've ever get the met in person and kind of a virtual COVID 20, 20 way. And we're excited to welcome into the studio. Bob Evans. He's a founder and principal analyst, the Cloud Wars Media coming to us. Bob where are you coming to us from today? >> In Pittsburgh today. Jeff. Good to see you. >> Awesome. Pittsburgh Pennsylvania. There's a lot of Fricks in Pittsburgh Pennsylvania cause Henry Clay was there many moons ago so that's a good town. So welcome. >> Thank you, Jeff. Thanks. Great to be here. And I look forward to our conversation. >> Absolutely. So let's, let's jump into it. So I know you attended today, the Citrix Cloud Summit you know, we've covered Citrix energy in the past this year, they decided to go we'll obviously virtual like everybody did but they, you know, they did something a little creative I think as, and they broke it into pieces, which, which I think is the way of the future. There's no reason to necessarily aggregate all of your news, all of your customer stuff, all your customer appreciation, the party the partners, all for three days in Vegas. Cause that's the only time you could get the Science Convention Center. So today was the Cloud Summit all day long. First off, just, you know, your general impressions of the event, >> Jeff, you know, I just thought that the guys had hit a really good note about what's going on in the outside world. You know, sometimes I think it's a little awkward when tech companies come in and the first thing they want to talk about is themselves, which I guess in some ways fine but I think the Citrix guys did a really good job at coming outside in here's what's going on in the outside world. Here's how we as a technology player trying to adapt to that and deliver the maximum value to our customers in this time of unprecedented change. So I thought they really nailed that with cloud and some of the other big topics that they laid out >> Great. And you've been covering cloud for a long time and, and you know, COVID is, we're still in it. There's a lot of really bad things that are happening. There's hundreds of thousands of people that are dying and a lot of businesses are getting crushed especially hospitality, travel you know, anything that relies on an aggregation of people. Conversely though we're, we're fortunate to be in the IT industry and in the information industry. And for a lot of industries, it's actually been kind of an accelerant. And one of the main accelerants is this, you know kind of digital transformation and new way to work. And some of these things that were initiatives in play but on March 15th, approximately it was go, right? It was Light switch no more planning, no more talking, it's here now. Ready, set, go. And it's in, you know, Citrix is in a pretty good position in terms of the products that they offer, the services that they offer, the customer base that they have to take advantage of that opportunity and, and you know, go to this, we've all seen the social media memes right? Who's driving your digital transformation the CEO, the CIO, or COVID. And we all know what the answer to the question is. They're pretty well positioned and it seems like, you know, they're doing a good job kind of doubling down on the opportunity. >> Jeff. Yeah. And I'd sure echo your, your initial point there about the nightmare that everybody's experienced over the last six or seven months. There's, there's no way around that yet. It has forced in these categories like, you know, that we've all heard hundreds of thousand time digital transformation to the point where the term almost becomes a cliche but in fact right? You know, it has become something that's really you know, one of the driving forces, touching everybody in the planet, right? There's, and I think digital transformation. Isn't so much about the technology, of course but it's because, you know, there's a couple billion people around the world who want to live digitally enhanced digitally driven lifestyles. And the pandemic only accelerated that as you said. So it triggered things you know, in our personal lives and our new set of requirements and expectations sort of rippled up to the B2C companies and from them back up to the B2B companies So every company on earth, every industry has had to do this. And like you said, if they were, deluding themselves maybe telling themselves these different companies that yeah, we're going fast, we're aggressive. Well, when this thing hit earlier this year as you said, they just had to really slam their foot down. I think that David Henshall from Citrix said that they had some companies that had, they were compressing three years into five months or he said in some cases even weeks. So it's really been extraordinary. And cloud has been the vehicle for these companies to get over into their digital future. >> Right. And let's talk about that for a minute because you know, Moore's law is my favorite law that nobody knows which was, you know, we tend to underestimate, excuse me we tend to overestimate the impact of technology in the short term of specific technology and underestimate the longterm impact. You know, Gardener kind of uses a similar thing with the hype cycle. And then you know, the thing goes at the end, you know, had COVID hit five years ago, 10 years ago, 15 years ago you know, the ease in which the information workers were able to basically just not show up and turn on their computer at home and have access to most of their tools and most of the security and most of their applications that wasn't even possible. So it's a really interesting, you know, just validation on the enabler that we are actually able to not go to work on Tuesday the 16th or whatever the day was. And for the most part, you know, get most of our work done. >> Yeah. Yeah. Jeff, you know, I've thought about it a lot over the last several months. Remember the big consultant companies used to try to do these measures of technology and they'd always come out and say, well, we've done all these studies. And despite the billions of dollars of investment we can't show that IT has actually boosted productivity or, you know, delivered an ROI that customers should be happy with. I was always puzzled by some of the things that went into those. But I would say that today over these last six or seven months to your point, we have seen extraordinary validation of these investments in technology broadly. But specifically I think some of these things that are happening with the cloud, you know, as you've said how fast some companies have been able to do this and then not remarkable thing, Jeff right. About human nature. And we hear a lot about in, in when companies change that relative to changing human behavior changing technology is somewhat easy but you try to change human behavior and it's wicked. Well, we had this highly motivating force behind it, of the pandemic. So you had a desire on the part of people to change. And as you pointed out, there's also this corresponding thing of, you know, the technology was here. It was right. You've got a fast number of companies delivering some extraordinary solutions. And, you know, I thought it was interesting. I think it was a Kirsten Kliphouse from Google cloud. One of Citrix's partners who said that we're two best of breed companies, Citrix and Google cloud. So I thought that, that coming from Google you know, that is very high praise. So again, I think the guys at Citrix are sort of coming into this at the right time with the right set of outside in-approaches and having that flexibility to say that we're moving into territory nobody's ever been both been in before. So we better be able to move as fast as possible. >> Right. Right. And, and just to keep going down the quote line, you know once everyone is taken care of and you, you deal with the health and safety of your people which is a number one, right? The other thing is the great Winston Churchill quote which has never let a good crisis go to waste. And I think you know, David talked about in that, in his keynote that this is an opportunity, He said to challenge assumptions, challenge the models of the past. So, you know get beyond the technology discussion and use this really as a catalyst to rethink the way that you do things. And, you know, I think it's a really interesting moment because there is no model right? There is no, there is no formula for how do you reopen, there was no playbook for how do you shut down? You know, it was, everybody's figuring it out. And you've got kind of all these concurrent processes happening at the same time as everyone tries to figure it out and come to solutions. But clearly, you know, the path to, to leverage as much as you can, is the cloud and the flexibility of the cloud and, you know the ability to, to expand, add more applications. And so, you know, Citrix again, right place, right time right. Solution, but also you know, taking an aggressive tact to take advantage of this opportunity, both in taking care of their customers, but really it's a real great opportunity for them to change a little bit. >> It is. And Jeff, you know, I think if I could just piggyback on you know, your, your guy there Winston Churchill, one of his other quotes, I love it too. And he said, if find yourself crawling through hell, keep going. And I think so many companies have really had to do that now. It's, it's not ideal. It's not maybe the way they plan it but this is the reality we're facing here in 2020 and a couple of things right? I think it requires a new type of leadership within the customer companies right? What, how the CEO gets engaged in saying, I, I'm not going to relegate this to the CIO for this to happen and something else to the CMO. They've got to be front and center on this because people are pretty smart. And then the heightened sensitivity that everybody in every business has around the world today if you think your CEO is just paying lip service to this stuff about digital transformation and all these changes that everybody's going to make, the people aren't going to buy into it. So you've got the leadership thing happening on the one side and into that it's not a vacuum, but into that void or that opportunity of this unprecedented space that you mentioned come the smart, capable forward-looking technology companies that are less concerned with the stuff that they've dragged along with them for years or decade or more. But instead of trying to say, what is the new stuff that people are going to be desperately in need of and how can I help these customers do things that they never did before? It's going to require me as a tech company to do stuff that I've never done before. So I, I've just been really inspired by seeing a lot of the tech companies doing what they are helping their customers to do which is take a product development cycle, look at all the new stuff that came out around COVID and back to work, workspaces. And so on what Citrix, you know others are doing like this, the product development cycles Jeff, you study this stuff closely. It's, it's almost unimaginable. If you had said that somebody within three months within two months, we're going to have a new suite of product available we would have said it just, it's not possible the nice idea but it can't work, but that's happening now, right? >> Yeah. Isn't it interesting that had you asked them on March 10th, they would have told you it's not possible. And by March 20th, they were doing it. >> Yeah. >> At scale, huge companies. And to your point, I think that the good news is they had kind of their own companies to eat their own dog food and get their own employees you know, working from home and then, you know, bake that into the way that they had their go to market. But let's talk a little bit more specifically about work from home or work from anywhere or the new way to work. And it's funny cause that's been bantered about for, for way too long, but now, now it's here. And most indications are that for many people, many companies are saying you're not going to go back for a while. And even when you do go back it's going to be a lot different. So, you know, the new way to work is really important. And there's so much that goes into that. And one of the big pieces that I'm encouraged to hear is how do you measure work? And, you know, there's a great line I heard where, you know work is an output. It's not a place to go. And, you know, I had Martin Michaelson early on in this thing, and he had the great line, you know it's so easy to fake it at work, you know, just look busy and walk around and go to all the meetings where with a work from home or work from anywhere. What the leadership needs to do is, is a couple of things. One, is measure output right? Not activity. And you know, it's great. People can have dinner with their family or go see the kid's baseball game. Or I guess they don't have a baseball games right now but, you know, measure output, not activity which is, doesn't seem to be that revolutionary. But I think it kind of is. And, and then the other thing is really be an enabler and be a, an unblocker for people in terms of a leadership role right? Get out, help get stuff out of the way. And, but unfortunately, the counter is, you know how many apps does a normal person have to interact with every day? And how many notifications do those apps fire off every day between Slack and Asana and Salesforce and, and texts and tweets and everything else. You know, I think there's a real opportunity to take a whole nother level of productivity improvement by removing these, these silly distractions automating, you know, as much of the crap away as we can to enable people to use their brains and have some quiet time and think about things and deliver much better value than this constant reaction to nonstop notifications. >> Yeah. Yeah. Jeff, you know, I loved your point there about the difference between people's outlook on March 10th versus on March 20th. And I believe that, you know, all limitations are self-imposed, right? We tend to form constructs around how we think and allow those then to shape and often restrict or confine our behavior. And here's an example of the CEO of Novartis Pharmaceutical Company. He said, we have been brought up in the pharmaceutical industry to believe that it is immutable law of physics that it's going to take 12 and a half years and two and a half billion dollars to get a new drug approved. And he said in the past with the technology and the processes and the capabilities that that was true it is not true today yet too often, the pharmaceutical industries behave like those external limitations are put in there. So flip that over to one of the customers that, that was at the Citrix Cloud Summit today Jim Noga, who's the CIO at Mass General Brigham. I thought it was remarkable what he said when you asked about how are things going with this work from home? Well, Jim Noga the CIO there said that we had been averaging before COVID 9,000 virtual visits a month. And he said since then that number has gone up to a quarter of a million virtual visits a month or it's 8,000 a day. So they're doing an a day what they used to do in a month. Like, you said it, you tell them that on March 10th, they're not going to believe it but March 20th, it started to become reality. So I think for the customers, they're going to be more drawn to companies that are willing to say, I see your need. I see how fast you want to move. I see where you need to go and do things you never did before. I'm willing to lock elbows with you, and go in on that. And the tech number is that sort of sit back and say, ah well, I'd like to help you there, but that's not what I do. They're going to get destroyed. They're going to get blown out. And I think over the next year or two, we're going to see this massive forcing function in the tech industry. That's going to separate the companies that are able to move at the pace of market and keep up with their customers versus those that are trapped by their past or by their legacy. And it is, going to be a fascinating talk. >> So I throw on a follow up to make sure I understand that number. Those are patient visits per unit time. >> Yeah. At Mass Brigham. So he said 9,000 virtual visits a month is what they're averaging before COVID. He said, now we're up to 250,000 virtual visits per month. >> Wow. >> So it's 8,000 a day. >> Wow. I mean the thing that highlights to me, Bob, and the fact that we're doing this right now, and none of us had to get on an airplane is, you know, I think when people think back or sit back and look at what does this enable? right? What does digital enable? Instead of saying instead of focusing what we can't do, like we can't go out and get a cup of coffee after this is over and we can't and that would be great and we'd have a good time but conversely, there's so many new things that you can do right? And you can reach so many more people than you could physically. And, and for like, you know, events like the one today. And, you know, we cover events all the time. So many more people can attend if they don't have the expense, of flying to Vegas and they don't have to leave the shop or, you know, whatever the limitations are. And we're seeing massive increases in registrants for virtual events, massive increase in new registrants. Who've never attended the, the events before. So I think he really brings up a good point, which is, you know, focus on what you can do and which is a whole new opportunity a whole new space, if you will, as opposed to continuing to whine about the things that we can't do because we can't do anything about those anyway >> No, and you know, that old line of a wish in one hand and spit in the other and see which one fills up first (laughs) you know, one of the other guests that that was on the Cloud Summit today Jeff, I don't know if you got to see 'em, but Steve Shute from SAP who heads up their entire 40,000 person customer success organization he said this about Citrix. "Citrix workspace is the foundation to provide secure cloud based access for this new generation of remote workers." So you get companies like SAP, and, you know, you want to talk about somebody that has earned its way into the, you know the biggest companies in the world and how they go along. You know, it's pretty powerful. They end up, your point Jeff, about how things have changed, focus on what we can do. The former CEO of SAP, Bill McDermott. He recently said, we think of phones as, you know, devices that help us be more productive. We think of computers as devices that help us be more productive. He said, now the world's going to start thinking of the office or the headquarters. It's a productivity tool. That's all it is. It's not the place that measures Hey, he was only at work, four days today. So, you know, he didn't really contribute. It's going to be a productivity tool. So we're going to look at a lot of concepts and just flip them upside down what they meant in February. Isn't going to to mean that much after this incredible change that we've all been through. >> Right. Right. Another big theme I wanted to touch base with you on it was very evident at the at the show today was multicloud right and hybrid cloud. And, you know, I used to work for Oracle in, in the day. And you know Amazon really changed the game in, in public cloud. The greatest line, one of Jeff's best lines is you know, we had seven year headstart. Nobody even was paying attention to the small book seller in Seattle and they completely changed enterprise technology. But what came across today pretty clearly right? As horses for courses, and really focusing at the application first right? The workload first and where that thing runs and how that thing runs, can be any place in that in a large organization you know, this is pick an airline or, or a big bank right? They're going to have stuff running at Oracle. They're going to have stuff running at AWS. They're going to have stuff running on Google. They're going to to have stuff running in Azure. They're going to have stuff running in their data center. IBM cloud, Ali Baba. I mean there's restrictions for location and, and data sovereigncy and all these things that are driving it. And really, you know, kind of drives this concept where the concept of cloud is kind of simple but the actual execution day to day at the enterprise level and managing and keeping track of this stuff, it is definitely a multicloud hybrid cloud. Pick your, pick your, your adjective but it's definitely not a single cloud world. That's for sure. >> Yeah. Yeah. And Jeff, you know, the Citrix customer that I mentioned earlier, Jim Noga is that the CIO at mass General Brigham, one of the other points he made about this was he said he's been very pleased about some of the contributions that cloud has made in, in, in his hospital organizations, you know transformation, what they've been able today and all the new things that they're capable of doing now that they were not people poor. But he said, you know, cloud is a tool. He said, it's not Nirvana. It's not a place for everything. He said, we have some on-premises systems. He said, they're more valuable now than they were a couple of years ago. And then we've got edge devices and we have something else over here. He said, so I think his point was it's important to put the proper value on cloud for all the things it can do for a specific organization, but not the thing that it's a panacea for everything though, big fan, but also a realist about it. >> Great. >> And so from that to the hybrid stuff and multicloud and I know all the big tech vendors would love it and say Oh no, it's not a multicloud, but just be my cloud. Just, just use my stuff. Everything will be easy, but that's not true. So I think Citrix position itself really well big emphasis on security, big emphasis on the experience that employees need to have. It isn't just sort of like a road war you loose five or seven years ago, as long as he, or she can connect through email and, you know, sending a sales data back and forth, they're all set. Now. It's very different. You've got people sitting in a wildly different environments for, you know, six, eight, 10 hours a day and chunk of an hour or two or three here or there. But that, that seamless experience always dependable, always reliable is just, you know, it can't be compromised. And I just thought you have one you know, high level thought about what happened. It was impressive for me to see that Citrix certainly a fine company put it. It's not one of the biggest tech companies in the world but look at the companies we have, the Microsoft, SAP talking about Google Cloud, AWS, you know, up and down the line. So I just thought it was really impressive how they showed their might as sort of a part of a network effect that is undeniable right now. >> Right. Right. And I think it's driven, you know, we hear over and over right? I mean, co-opertition is a very Silicon Valley thing. And ultimately it's about customer choice and the customer's going to choose you know, kind of by workload, even if you will or by budget as to what they're going to do where so you have to be able to operate in that world or you're going to be you're going to get, you're going to get left out unless you're just super dominant and it's a single application and they built it on you and that's it. But that's not realistic. I want to shift gears a little bit Bob, since I'm so happy to be talking to you on another topic, that's, that's a big mega trend and we're slowly seeing more and more applications. That's machine learning and artificial intelligence and you know, and, and the generic conversations about these remind me of the old big data conversations. It's like okay. So what you know, who cares? It doesn't really matter until you apply it. And with all these new applications and even just around the work from home that we discussed earlier, you know, there's so many opportunities to apply machine learning and AI, to very specific functions and tasks to, again, help people prioritize what they're going to do help people not have to deal with the crap that they shouldn't have to do. And really, you know at a whole another level of, of productivity really, based on a smarter way to help them figure out what am I going to do in my next, my next marginal minute? You know, cause ultimately that's the decision that people make when they're sitting down getting work, done it, how do they do the best work? And I think the AI and machine learning opportunities are gargantuan. >> Jeff. The point you made a few minutes ago about, you know, we tend to overestimate the impact of a new technology in the short term and underestimate it, what it'll be overtime well, we've been doing that with AI for the last 40 years but this is going to be sort of the golden age of it. And one of the reasons why I have been so bullish on cloud is it presents like the perfect delivery system for it. This is we see in medicine, there's sometimes breakthroughs at the laboratory level where they've got the new breakthrough medication but they don't have the bullet. They don't have the delivery system to get it in there, cloud's going to be an accelerator for that. And it gives the tech companies, which and this is going to be very good for customers, every big tech company. Now as a data company, every company says, it's an analytics. Everybody says I'm into AI. Every company says I'm into ML. And in a way that's real good for customers cause the competitive level is going to soar. It's going to bring more choice. As you said, the more customers more types of solutions, more sorts of innovation. And it's also going to be incumbent on those tech vendors. You've got to make it as easy as possible, as fast as possible for these customers to get the benefit of it. I think it was Thomas Kurian, the CEO of Google cloud said, Hey, you know, if, if a shoe company or a retailer or a bank had fantastic expertise in data science, they could go out and hire 200 data scientists do this all themselves. He said, but that's not what they do. And they don't want to do that. >> Right. >> So he said, come to the companies who can do it. And I think that we will see changes in how business works driven by ML and AI, unlike anything that we've ever seen. >> Yeah. >> And that's going to happen over the next 12, 18 months. >> Yeah. Baked into everything. Well, Bob, I really am excited that we finally got to catch up in, in person COVID style. Like I said, I've been following you for a long time. So I just gave you the last word before we sign off. You know, you've been in this business for a long time. You've seen lots and lots of waves. You know, this is just another wave with this, with this, you know, gasoline thrown on the fire with, with COVID in terms of the rate of change. And the, you know there's no more talking, the time to move is now, share kind of your perspective as to kind of where we are. And, you know, we're, we're not that far from flipping the calendar to 2021, which is a good thing you know, as you, as you look forward a little bit you know, what's in your mind, what's getting you excited. What's getting you up in the morning. >> Yeah. Jeff, I guess it comes down to this thing of, we, I think here late in 2020, everybody's got a reason to be pretty proud of what we have done, not only in the last six months but over the last several years, if you look at the improvements that have been made in health care and making it available to more people, in education the things that teenagers or young teenagers or even pre-teenagers can do now to learn and explore the world and communicate with people from all over the globe, there's a lot of great things going on, but I think we're going to look back on this point and say, this was, this was a pivot point here in mid and late 2020, when we stopped letting in some ways, as you described it earlier worrying so much about the things we can't do. And instead put more time into what we can do, what breakthroughs can we make. And I think these things we've talked about with AI and ML are going to be a big part of that, the computer industry or the tech industry, maturing and understanding they're not in charge. It's the customers who are in charge here. And the tech companies have to reorient themselves and reimagine themselves to meet the demands of this new fast changing world. And so I think those are some of the mega trends and more and more Jeff, I think these tech companies are going to say that the customers are demanding that the tech companies give them the gift of speed, give them the gift of engaging with customers in new ways, give them the gift of seeing the world as other people see it rather than just through the narrow lens of, you know sometimes the tech bubble that can percolate somewhere out sometimes out in the Palo Alto area. So I, I'm incredibly optimistic about what the future is going to bring. >> Well, Thank you. Thanks for Bob for sharing your insight. You can follow Bob on Twitter. He's got podcasts, he's very prolific writer and again, really, really a great to meet you in person. And thanks for sharing your thoughts >> Jeff, thanks so much. You guys do a fantastic job and it's been a pleasure to be with you. >> Thank you. Allright. He's Bob Evans. I'm Jeff Frick. You're watching theCube from our Palo Alto studios. Thanks for watching. We'll see you next time. (soft music)

>>from the Cube Studios in Palo Alto and Boston connecting with thought leaders all >>around the world. This is a cube conversation, Everyone. Welcome to this week's Cube insights, powered by ET are My name is Dave Volante, and we've been reporting every week really on the code. 19. Impact on Budgets Docker Korakia is back in with me soccer. It's great to see you really >>again for having >>your very welcome. Soccer is, of course, the director of research, that we are our data partner and man. I mean, you guys have just been digging into the data or a court reiterate We're down, you know, roughly around minus 5% for the year. The thing about what we're doing here and where they want to stress in the audience that that's going to change. The key point is we don't just do ah, placeholder and update you in December. Every time we get new information, we're going to convey it to you. So let's get right into it. What we want to do today is you kind of part two from the takeaways that we did last week. So let's start with the macro guys. If you bring up the first chart, take us through kind of the top three takeaways. And just to reiterate where we're at >>Yeah, no problem. And look, as you mentioned, uh, what we're doing right now is we're collecting the pulse of CIOs. And so things change on and we continue to expect them to change, you know, in the next few weeks, in the next few months, as things change with it. So just kind of give a recap of the survey and then kind of going through some of our top macro takeaways. So in March mid March, we launched our Technology Spending Intention Survey. We had 1250 CIOs approximately. Take that survey. They provided their updated 2020 verse 2019 spending intentions, right? So effectively, they first Davis, those 20 21st 19 spending intentions in January. And then they went ahead and up state of those based on what happened with move it and then in tandem with that, we did this kind of over 19 drill down survey where we asked CEOs to estimate the budget impact off overnight in versus what they originally forecast in the year. And so that leads us to our first take away here, where we essentially aggregated the data from all these CIOs in that Logan 19 drill down survey. And we saw a revision of 900 basis points so down to a decline of 5%. And so coming into the year, the consensus was about 4% growth. Ah, and now you can see we're down about 5% for the year. And again, that's subject to change. And we're going again re measure that a Z kind of get into June July and we have a couple of months under our belt with the folks at night. The second big take away here is, you know, the industries that are really indicating those declines and spend retail, consumer airlines, financials, telco I key services in consulting. Those are the verticals, as we mentioned last week, that we're really seeing some of the largest Pullbacks and spend from consumers and businesses. So it makes sense that they are revising their budgets downwards the most. And then finally, the last thing we captured that we spoke about last week as well as a few weeks before that, and I think that's really been playing out the last kind of week in 1/2 earnings is CIOs are continuing to press the pedal on digital transformation. Right? We saw that with Microsoft, with service now last night, right, those companies continued the post good numbers and you see good demand, what we're seeing and where those declines that we just mentioned earlier are coming from. It's it's the legacy that's the on premise that your place there's such a concentration of loss and deceleration within some of those companies. And we'll kind of get into that more a Z go through more slides. But that's really what kind of here, you know, that's really what we need to focus on is the declines are coming from very select vendors. >>Yeah, and of course you know where we were in earning season now, and we're paying close attention to that. A lot of people say I just ignore the earnings here, you know, you got the over 19 Mulligan, but But that's really not right. I mean, obviously you want to look at balance sheets, you want to look at cash flows, but also we're squinting through some of the data your point about I t services and insulting is interesting. I saw another research firm put out that you know, services and consulting was going to be OK. Our data does, you know, different. Uh, and we're watching. For instance, Jim Kavanaugh on IBM's earnings call was very specific about the metrics that they're watching. They're obviously very concerned about pricing and their ability. The book business. There we saw the cloud guys announced Google was up in the strong fifties. The estimate is DCP was even higher up in the 80% range. Azure, you know, we'll talk about this killing it. I mean, you guys have been all over of Microsoft and its presence, you know, high fifties aws solid at around 34% growth from a larger base. But as we've been reporting, you know, downturns. They've been they've been good to cloud. >>That's right. And I think, you know, based on the data that we've captured, um, you know, it's people are really pressing the pedal on cloud and SAS with this much remote work, you need to have you know, that structure in place to maintain productivity. >>Okay, let's bring up the next slide. Now. We've been reporting a lot on this sort of next generation work loads Bob one Dato all about storage and infrastructures of service. Compute. There's an obviously some database, but there's a new analytics workload emerging. Uh, and it's kind of replacing, or at least disinter mediating or disrupting the traditional e d ws. I've said for years. CDW is failed to live up to its expectations of 360 degree insights and real time data, and that's really what we're showing here is some of the traditional CDW guys are getting hit on Some of the emerging guys, um, are looking pretty good. So take us through what we're looking at here. Soccer. >>Yeah, no problem. So we're looking at the database data warehousing sector. What you're looking at here is replacement rates. Um And so, as example, if you see up in with roughly 20% replacement, what that means is one out of five people who took the survey for that particular sector for that vendor indicated that they were replacing, and so you can see here for their data. Cloudera, IBM, Oracle. They have very elevated and accelerating replacement rates. And so when we kind of think about this space. You can really see the bifurcation, right? Look how well positioned the Microsoft AWS is. Google Mongo, Snowflake, low replacements, right low, consistent replacements. And then, of course, on the left hand side of the screen, you're really seeing elevated, accelerating. And so this space is It kind of goes with that theme that we've been talking about that we covered last week by application, right when you think about the declines that you're seeing and spend again, it's very targeted for a lot of these kind of legacy legacy vendors. And we're again. We're seeing a lot of the next gen players that Microsoft AWS in your post very strong data. And so here, looking within database, it's very clear as to which vendors are well positioned for 2020 and which ones look like they're being ripped out and swapped out in the next few months. >>So this to me, is really interesting. So you know, you you've certainly reported on the impact that snowflake is having on Terra data. And in some of IBM's business, the old man, he's a business. You can see that here. You know, it's interesting. During the Hadoop days, Cloudera Horton works when they realize that it didn't really make money on Hadoop. They sort of getting the data management and data database and you're seeing that is under pressure. It's kind of interesting to me. Oracle, you know, is still not what we're seeing with terror data, right, Because they've got a stranglehold on the marketplace That's right, hanging in there. Right? But that snowflake would no replacements is very impressive. Mongo consistent performer. And in Google aws, Microsoft AWS supports with Red Shift. They did a one time license with Park Cell, which was an MPP database. They totally retooled a thing. And now they're sort of interestingly copycatting snowflake separating compute from storage and doing some other moves. And yet they're really strong partners. So interesting >>is going on and even, you know, red shift dynamodb all. They all look good. All these all these AWS products continue screen Very well. Ah, in the data warehousing space, So yeah, to your point, there's a clear divergence of which products CIOs want to use and which ones they no longer want in their stack. >>Yeah, the database market is very much now fragment that it used to be in an Oracle db two sequel server. As you mentioned, you got a lot of choices. The Amazon. I think I counted, you know, 10 data stores, maybe more. Dynamodb Aurora, Red shift on and on and on. So a really interesting space, a lot of activity in that new workload that I'm talking about taking, Ah, analytic databases, bringing data science, pooling into that space and really driving these real time insights that we've been reporting on. So that's that's quite an exciting space. Let's talk about this whole workflow. I t s m a service now. Just just announced, uh, we've been consistently crushing it. The Cube has been following them for many, many years, whether, you know, from the early days of Fred Luddy, Bruce Lukman, the short time John Donahoe. And now Bill McDermott is the CEO, but consistent performance since the AIPO. But what are we actually showing here? Saga? Yeah, You bring up that slot. Thank you. >>So our key take away on kind of the i t m m i t s m i t workflow spaces. Look, it's best in breed, which is service now, or some of the lower cost providers. Right There's really no room for middle of the pack, so >>this is an >>interesting charts. And so what you're looking at here, there's a few directives, so kind of walk you through it and then I'll walk through. The actual results is we're looking within service now accounts. And so we're seeing how these companies are doing within or among customers that are using service. Now, today, where you're looking at on the ex, access is essentially shared market share our shared customers, and then on the Y axis you're seeing essentially the spend velocity off those vendors within service. Now's outs, right? So if the vendor was doing well, you would see them moving up into the right, right? That means they're having more customer overlap with service now, and they're also accelerating Spend, but you can see if you will get zendesk. If you look at BMC, it's a managed right. You can see there either losing market share and spend within service now accounts or they're losing spend right and zendesk is another example Here, Um, and what's actually interesting is, and we've had a lot of anecdotal evidence from CIOs is that look they start with service. Now it's best in breed, but a few of them have said, Look, it's got expensive, Um, and so they would move over Rezendes. And then they would look at it versus a conference that last year, and we had a few CEO say, Look at last quarter of the price of zendesk. Andi moved away from Zendesk and subsequently well, with last year. And so it's just it's interesting that, you know, during these times where you know CIOs are reducing their budgets on that look, it's either best of breed or low cost. There's really no room in the middle, and so it's actually kind of interesting. In this space, it's It's an interesting dynamic and being usually it's best of breed or low cost. Rarely do you kind of see both win, and I think that's what kind of makes the space interesting. >>I've been following service now for a number of years. I just make a few comments there. First of all, you know, workday was the gold standard in enterprise software for the longest time and, you know, company and and and I I always considered service now to be kind of part of that you know Silicon Valley Mafia with Frank's Loop. But what's happened is, you know, Sluman did a masterful job of identifying the total available market and executing with demand, and now you know, his successors have picking it beyond there. You know, service now has a market cap that's not quite double, but I mean, I think workday last I checked was in the mid thirties. Service now is market valuation is up in the 60 billion range. I mean, they announced, um uh, just recently, very interestingly, they be expectations. They lowered their guidance relative to consensus guide, but I think the street hose, first of all, they beat their numbers and they've got that SAS model, that very predictable model. And I think people are saying, Look there, just leaving meat on the bone so they can continue to be because that's been their sort of m o these last several years. So you got to like their positioning and you get to talk to customers. They are pricey. You do hear complaints about that, and they've got a strong lock spec. But generally I got my experiences. If people can identify business value and clear productivity, they work through the lock in, you know, they'll just fight it out in the negotiations with procurement. >>That's right, and two things on that. So with service now and and even Salesforce, right, they are a platform like approach type of vendors right where you build on them. And that's what makes them such break companies, right? Even if they have, you know, little nicks and knacks here and there. When they report people see past that right, they understand their best of breed. You build your companies on the service now's and the sales forces of the world. And to the second point, you're exactly right. Businesses want to maintain consistent productivity on, and I think that, you know, is it kind of resonates with the theme, right, doubling down on Cloud and sas. Um, as as you have all this remote work, as you have kind of, you know, questionable are curating marquee a macro environment organizations want to make sure that their employees continue to execute that they're generating consistent productivity. And using these kind of best of breed tools is the way to go. >>It's interesting you mentioned, uh, salesforce and service now for years I've been saying they're on a collision course we haven't seen yet because they're both platforms. I still, uh I'm waiting for that to happen. Let's bring up the next card and let's get into networking way talk. Um Ah. Couple of weeks ago, about the whole shift from traditional Mpls moving to SD win. And this sort of really lays it out. Take us through the data here, please. >>Yeah, no problem. So we're just looking at a handful of vendors here. Really? We're looking at networking vendors that have the highest adoption rates within cloud accounts. And so what we did was we looked inside of aws azure GCC, right. We essentially isolated just those customers. And then we said which networking vendors are seeing the best spend data and the most adoptions within those cloud accounts. And so you get you can kind of see some, uh, some themes here, right? SD lan. Right. You can see Iraqi their VM. Where nsx. You see some next gen load balance saying are they're on the cdn side right then. And so you're seeing a theme here of more next gen players on You're not really seeing a lot of the mpls vendors here, right? They're the ones that have more flattening, decreasing and replacing data. And so the reason just kind of going on this slide is you know, when you kind of think about the networking space as a whole, this is where adoptions are going. This is this is where spends billing and expanded, arise it. And what we just talked about >>your networking such a fascinating space to me because you got you got the leader and Cisco That has helped 2/3 of the market for the longest time, despite competitors like Arista, Juniper and others trying to get in the Air Force and NSX. And the big Neisseria acquisition, you know, kind of potentially disrupted that. But you can see, you know, Cisco, they don't go down without a fight. And ah, there, let's take a look at the next card on Cdn. You know, this is interesting. Uh, you know, you think with all this activity around work from home and remote offices, there's a hot area, But what are we looking at here? >>Yeah, no problem. And that's right, right? You would think. And so we're looking at Cdn players here you would think with the uptake in traffic, you would see fantastic. That scores right for all the cdn vendor. So what you're looking at here and again there's a few lenses on here, so I kind of walk. You kind of walk the audience through here is first we isolated only those individuals that were accelerating their budgets due to work from home. Right. So we've had this conversation now for a few weeks where support employees working from home. You did see a decent number of organizations. I think it was 20 or 30% of organizations at the per server that indicated they're actually accelerate instead. So we're looking at those individuals. And then what we're doing is we're seeing how are how's Cloudflare and aka my performing within those accounts, right? And so we're looking at those specific customers and you could just see within Cloudflare and we practice and security and networking which by more the Cdn piece, How consistent elevated the date is right? This is spend in density, right? Not overall market share is obviously aka my you know, their brand father CD ends. They have the most market share and if you look at optimized to the right. Now you can see the spend velocity is not very good. It's actually negative across boats sector. So you know it's not. We're not saying that. Look, there's a changing of the guard that's occurring right now. We're still relatively small compared talk my But there's just such a start on trust here and again, it kind of goes to what we're talking about. Our macro themes, right? CIOs are continuing to invest in next gen Technologies, and better technologies on that is having an impact on some of these legacy. And, you know, grandfather providers. >>Well, I mean, I think as we enter this again, I've said a number of times. It's ironic overhead coming into a new decade. And you're seeing this throughout the I T. Stack, where you've got a lot of disruptors and you've got companies with large install bases, lot of on Prem or a lot of historical legacy. Yeah, and it's very hard for them to show growth. They often times squeeze R and D because they gotta serve Wall Street. And this is the kind of dilemma they're in, and the only good news with a comma here is there is less bad security go from negative 20% to a negative 8% net score. Um, but wow, what a what a contrast, but to your point, much, much smaller base, but still very relevant. We've seen this movie before. Let's let's wrap with another area that we've talked about. What is virtualization? Desktop virtualization? Beady eye again. A beneficiary of the work from home pivot. Um, And we're focused here, right on Fortune 500 net scores. But give us the low down on this start. >>Yeah, So this is something that look, I think it's it's pretty obvious to into the market you're seeing an uptake and spend across the board versus three months ago in a year ago and spending, etc. Among your desktop virtualization players, there's FBI, right? So that's gonna be your VPN right now. Obviously, they reported pretty good numbers there, so this is an obvious slide, but we wanted to kind of throw it in there. Just say, look, you know, these organizations are seeing nice upticks incent, you know, within the virtualization sectors, specifically within Fortune 500 again, that's kind of, you know, work from home spend that we're seeing here, >>right? So, I mean, this is really a 100% net score in the Fortune 500 for workspaces is pretty amazing. And I think the shared in on this that the end was actually quite large. It wasn't like single digits, Many dozens. I remember when Workspaces first came out, it maybe wasn't ready for prime time. But clearly there's momentum there, and we're seeing this across the board saga. Thanks so much for coming in this week. Really appreciate it. We're gonna be in touch with with you with the TR. We're gonna continue to report on this, but start Dr stay safe. And thanks again. >>Thanks again. Appreciate it. Looking for to do another one. >>All right. Thank you. Everybody for watching this Cube insights Powered by ET are this is Dave Volante for Dr Sadaaki. Remember, all these episodes are available as podcasts. I published weekly on wiki bond dot com Uh, and also on silicon angle dot com Don't forget tr dot Plus, Check out all the action there. Thanks for watching everybody. We'll see you next time. Yeah, yeah, yeah, yeah, yeah

>> Announcer: Live from Las Vegas, it's theCUBE, covering UiPath Forward Americas 2019. Brought to you by UiPath. >> Welcome back, everyone, to theCUBE's live coverage of UiPath Forward here at the Bellagio. I'm your host, Rebecca Knight, co-hosting alongside of Dave Vellante. We have two guests for this segment. We have Sanjay Sadasivan, he is attended automation process lead at EY. Thank you so much for coming on the show. >> Sure, thank you for having us. >> Rebecca: And we have Goutham Goudgere, he is the attended automation lead at EY. >> Great to be here. >> Thank you so much for coming on the show. >> Thank you. >> So, about a year ago, you embarked on an attended automation project within EY. EY, of course, is a company that helps other companies with their RPA transformations, but this is one you did on your own. I want to hear about the impetus for this project. Why did you start it? What was going on? >> Sure. >> Yeah, so I can take that one. So we started this project, like you mentioned, about a year ago. We both are from EY's SAP practice, and EY has been undergoing SAP transformation for the past few years, and so, we're kind of replacing a whole bunch of, almost 1,400 systems and moving to a single-instance SAP project, which covers everything that our client servers do in the market, entering client information, all the things that CRM does, project management, engagement economics, as well as the whole finance and procurement work. So I think we've got, right now, 100,000 users on the SAP single instance. And SAP is great at what it does, which is essentially entering transactions into the system efficiently at scale, but the feedback that we were getting from our end users, especially those end users that end up using the system maybe once a week to maybe once a quarter, was that it was sometimes too difficult for them to navigate into the system, try to remember all the things that they had to do in the SAP system. So we were at the Miami event last year, and so, we heard about attended automation from UiPath, and we kind of went back and did a POC to see, can we use attended bots on top of SAP system and help the user go through some of those usability challenges? So we started last year, and we are currently live as a pilot. EY is 250,000 users, so our pilot is huge, so it's got about 20,000 users as of this week. >> Why attended bots? What are attended bots? What's the motivation for attended bots? >> So, in fact, when we started the process, we had two options, to go through kind of the traditional unattended bot, which was have the user enter data in an Excel sheet or some sort of screen capture, email that information, and have the bot then enter it. We initially started with that, but that ran into several problems, like the data was already too old by the time it got into the transaction system. Then we had to rebuild the full front end of SAP, which has taken years to build. So that's why we started using attended bots, which was, can we just put a bot on the user's machine, so that when they want to enter a transaction, they just call the bot, and the bot does all the hard work for them? So that's how we've been-- >> Your question as to why attended bots, there's a certain level of intelligence, actually, the user puts in when entering these transactions, so an attended bot actually just takes some information and then plugs it in. But that's not the way EY works. For example, if you're entering an opportunity, there's a lot of thought processes the clients are actually going through. "What's the pursuit going to be?" "Who are my likely sales leads?" "What's the percentage of what I'm "winning this transaction?" So we needed the user to actually enter that information in the system. But using our normal SAP system, especially when you're on a sales lead and you're meeting with a client, entering all that information was getting a bit cumbersome. The attended automation process actually cuts down those steps. For example, if SAP requires you to enter, say, 20 fields, this actually cuts it down to five fields or five screens, and they can enter that information to the attended bot, it guides them through each process, it's a streamlined process, and they can exit out of it, that's it, they're done with the system, focus on the lead, actually. >> So you came to the conference last year, had this eureka moment, "Hey, could we do this "and help our people who are suffocating "under these dreary, tedious tasks?" So, was it a hard sell? I mean, were they easily brought along, of, "Yeah, we want to try this"? Or was there any anxiety on their part, of, "Ooh,"-- >> Sure. >> "What are we doing here?" >> We had that. >> So I think we had a great sponsor within the firm, and we are trying this out for the first time. >> Sanjay: Yeah. >> In fact, from talking with UiPath, the experts here, not a lot of other companies have tried this. So we did go through a step-by-step approach to kind of de-risk as we went through this. We started with a small POC, learned from that. We then put those bots in front of real users, got feedback, kind of Agile approach and built it over time. >> Yeah, I think one of the key points was really doing a business "let's go" definition, so we went to our partner community and asked them, you know, "What are the most frequently used processes "that we should automate with an attended "automation process? "What are the pain points? "What are the current challenges? "We want you to alleviate us." So, basically, we actually used the feedback from the partnership to focus on those particular steps to automate. So, and then change management, obviously, you have to engage with the user community all the time to make sure that, you know, getting the right feedback, maybe adjust our process or how we're building the bots accordingly as you're going through the process, I think that is key as well. >> So, the user experience now, so walk us through what it's like now for the human worker who had these tedious tasks, and now, what's it like with this attended bot? >> So, the attended bot is an application which is on the end user's laptop. So as soon as they open the laptop, it's right there as an icon on their bottom right corner. So they go there, click on that, and it lists about 15 SAP processes that they can run. So they know what they want to do in the system, they want to create a new client, they want to create a new engagement, or a project, and so, they would go there, call that, you know, just click play, and essentially sit back and watch the bot then take over their screen, navigate to the right SAP transaction. And, you know, navigating to this transaction seems easy, but when you have 15 processes that 200,000 users need to know, and it's not straightforward sometimes, the bot does three, four clicks, before they know it, brings them to the right screen, and then it also adds a message on top of every screen that says, "This is what you are supposed "to be doing on this screen. "So, before creating a new client, "first search within our MBM system, "first search within this DNB system, "to make sure you're not creating a duplicate." So we've got help messages added on top of the screens as well, so it kind of takes you through the process. >> So I think one of the main points, yeah. Yeah, I think (clears throat) a normal SAP system in a particular screen, you could always go to a help, maybe a portal, and get some help. But with attended automation, it gives an opportunity for each of those screens as well to give specific help, contextual help. So basically, if you're on a particular screen and you're having an issue with this particular screen, you don't have to pick up the phone and call, maybe, a user desk, or close the screen and look through some manuals. Right there, through the attended automation process, we gave a link where they can get actual information on that particular screen, so they can finish that step without actually closing out of the process itself. So that is one of the big-- >> So the way I explained this to internal audiences is, we have built the bot to be our best-trained employee in SAP. So instead of them calling a human to go through the SAP transactions, the bot is right there, guiding. And the bot is watching what they're doing, so if it gets a SAP error, then it can suggest to them, "Here's two ways that you can get around "this particular error." So it's doing things like it's having your friend sit next to you and tell you how to go through the process. >> Your smartest friend. >> You guys are in the SAP, sorry, you guys are in the SAP practice. >> We are, yeah. >> That's right. >> And, so it's been quite a run, the last 10 years, for Bill McDermott, and I believe they acquired an RPA company, a small, little tuck-in. >> Goutham: That's right. >> But you guys chose UiPath. (laughs) You know, I don't know what that says. >> Goutham: Yeah. >> But what are your thoughts on that? I mean, in terms of, we've been asking practitioners, best of breed, or full suite? Obviously, you went with best of breed. >> That's right, actually, we spoke with SAP before we started our journey. We actually did a POC with one of the smaller firms, an RPA firm, and we spoke with SAP as to what their capabilities were. But just looking at what's out there, in terms of the product suite and how it fits our processes, we just felt like UiPath went that step further, and really met our needs in terms of attended automation. And then, obviously, we looked at the Gartner surveys it's on, and it was right up there in the right-hand quadrant, so we felt like UiPath was the right answer for us. >> Rebecca: Great, well-- >> But we are working with SAP to actually help through this process. So, the bot has to watch the screen, like I mentioned, and kind of understand the screen layout, the screen fields, so, instead of that watching words and names on the field, it's actually using this thing called automation ID. So SAP is adding these IDs on every screen, which actually helps any RPA vendor sit on top of it. >> And that's one of the key learnings that we've been finding out, that SAP, as Goutham was mentioning, we have these automation IDs that the attended bot actually uses to transact with the system. And then we see that SAP CRM as this cloud release every quarter, and they basically push out some code to our systems, which is every quarter, and we see that more and more automation IDs are coming through the SAP systems as well. So we have our own challenges in terms of managing those quarterly releases and make sure that it doesn't break our attended bot. But UiPath so far has been good. >> Excellent. >> Yeah. >> Rebecca: Well, thank you both so much for coming on theCUBE. It was a great conversation. >> Great, thank you. >> Thank you for having us. >> I'm Rebecca Knight, for Dave Vellante. Stay tuned for more of theCUBE's live coverage of UiPath Forward. (upbeat music)

>> From the SiliconANGLE media office in Boston, Massachusetts, it's theCUBE. Now, here's your host, Dave Vellante. >> Hi, everybody, welcome to this CUBE Insights, powered by ETR. In this episode of the Breaking Analysis, we're going to take a look at SAP. Thursday, October 10th, SAP surprised the Street, they announced early, they preannounced their earnings, and at the same time they timed that with the announcement that CEO, longtime CEO Bill McDermot was stepping down, his contract was up for renewal in January of 2020, and he decided that he's going to turn it over to a co-CEO structure that I'll talk about a little bit, so that was big news. Spending on SAP has been holding pretty steady over the last several quarters, I'll share some ETR data with you. It's been quite a run by Bill McDermott, he started out as CEO, I think it was February of 2010, as co-CEO with Jim Hagemann Snabe, and then two years later was named the sole CEO and I'll share some data on that in terms of the performance of SAP during his tenure. But the bottom line is, we expect, based on the spending data, some continued momentum from SAP, I'll show you some data that shows a little bit of a mix in the numbers, ETR basically just dropped a report on Friday that I'll share with you as well, but the bottom line is we see some major challenges ahead for SAP, specifically from a technology integration point that I'll talk to you, and it really is not showing up yet in the spending numbers, but it's something that we're keeping an eye on, and it's something that we want to share with you, our community. So Alex, if you wouldn't mind bringing up the first slide, here. I'll make some key points, really around SAP's Q3 earnings and the CEO news. So as they say, they pre-announced earnings on October 10th after the close, 10% revenue growth, which is a nice, healthy double digit revenue growth, cloud was up considerably, Bill McDermott made the big emphasis when he was doing the rounds on how their cloud revenue is growing faster than competitors, 33%, but definitely from a smaller base, but their license revenue, their traditional on-prem businesses continues to be under pressure and decline, it's got a, SAP is a strong services business, services and maintenance business, and they're up to 12,000 customers with HANA, I'll make some comments on HANA in a little bit later. This may have some implications for Europe, we've been saying that Europe is over-banked, that banking is soft based on the ETR spending data, so this may be a little bit of a bright spot for Europe. Of course SAP with its ERP business of strong manufacturing, anybody who has a supply chain, so this may be a good sign for Europe, that's something that we're watching. And then, say McDermott steps down, we're going back to the dual CEO structure. Jennifer Morgan, who headed the cloud business, is a longtime SAP employee, and she essentially is going to be taking that role of the customer-facing CEO. Christian Kline is really, has history as product development and HANA, he did a stint in finance at SuccessFactors, and is really an operations guru, so back to that dual CEO role that you saw with Snabe and McDermott, where McDermott was really the front-facing, sales-facing individual, and Snabe was the product person. So that's kind of an interesting structure, we see that, we saw that in Oracle before Mark Hurd stepped down with Safra Catz as co-CEO, so it's not a unique structure, although it's not, certainly not common in the industry. The next thought I want to share with you is one that you may have seen before, every time that ETR does a survey, and this is data, fresh data from the October survey, every time they do a survey, they take spending intentions and they ask folks, "Are you spending more, "are you spending less, are you spending the same, "are you adding to the platform, "are you subtracting from the platform?" So they essentially ignore the, for this net score that I'm showing you now, they ignore the people that aren't spending, that are staying the same, flat, and they take the more minus the less, subtract amount, you get a net score, and the net score here is 27%. This is not uncommon for, from the data that I've seen out of ETR for a large company established legacy provider like SAP. Net score 27% is not great, but it's a holding steady score, it's not in the negatives, it's not in the red zone, and so you can see here that 32% of the survey respondents were saying they're going to spend more, 54% basically flat, but only a smaller number, 6%, saying they're going to spend less, so it's reasonable for SAP, but if you look at the trendline, Alex, bring up the next slide, look at the spending trendline from the survey for SAP since the July 16 survey, they do this every quarter, and so the blue is the net score, that green minus the red that I've talked about in the past, and you can see that sort of steady decline, but this is not a disaster, what it is, is it's a sign of spending momentum relative to previous years or previous quarters, and you can see the yellow line is also declining, that's market share, what that means is market share in terms of spend relative to other initiatives, so the categories that SAP participates in, enterprise software, et cetera, spending on SAP relative to other sectors has been in decline. If you look at, Alex, if you bring up the next slide, look at the SaaS business, you'll see that it's a much happier story. SAP's made a number of acquisitions that I'll talk about in a moment, of cloud/SaaS players, so you can see their SaaS position has been holding firm, ETR cites Concur, SuccessFactors, Ariba, Callidus, they kind of remaining stable versus a year ago, and you can see the market share's kind of ticking up, so pretty solid from the new growth, that high growth area, and that's something that the Street really pays very close attention to. The next data point that I want to show you on the next slide is actually quite fascinating, so SAP beat its forecasts, so it didn't beat and raise expectations for the rest of the year, but so what this shows is ETR's regression analysis, what the quants at ETR do, is they crunch the numbers, and they compare them to the consensus on Wall Street, and they actually forecast higher or lower, where they think that earnings are going to come in based on their spending data, so you can see here that green, you see that little RPM meter, they're in the green, that's where you want to be, 359 basis points ahead of the median forecast, so they're saying, so the ETR second half spending 10.4% versus consensus of 6.8%, very positive sign. I think it's no coincidence that SAP records B for the quarter, so based on that data collected in that October survey, it looks like there's some momentum for SAP. Now the next slide I want to show you is the stock chart, this is kind of the scorecard, if you will, for Bill McDermott's tenure, and you can see, so I went back to 2010, as I say, he started in 2010, as a co-CEO with Jim Snabe, and then look at the performance here, I mean it's been pretty solid. And so you see today it's up around 10%, as I say, they announced the earnings beat, they announced their revenue beat, and they basically affirmed expectations, maybe raised them a little bit going forward. The reason why the stock is up is the beat, but also McDermott has put in place sort of an efficiency improvement and a restructuring. They've made a promise to improve operating margins by 1% a year over the next five years. They've made a promise to get cloud gross margins to 75% by 2023. They've done a restructuring, I think it affects around 4400 people, and they're hiring data scientists and AI experts and machine learning people, and RPA folks, they acquired an RPA company a while ago, and kind of just threw that in 'cause it's such a hot space. Software coders all around the world, China, US, Europe, all over the place. And so that restructuring, the Street loves when you restructure, you cut the dead wood, so to speak. With all due respect to the folks that might be affected by this, but the Street loves that. So you're seeing the combination of the beat, and the uptick or the efficiencies taking place in the quarter, and they timed that with the McDermott announcement because they wanted to, I'm sure, time it with some positive news, so you can see the stocks up today, so that's kind of a scorecard on Bill McDermott, I have to say, pretty impressive performance over the last 10 years, or nearly 10 years. But here's the thing, we see some major challenges coming forth with SAP, and I want to talk about that a little bit. Before I do, Alex, if you would play the video from Bill McDermott answering a question that John Furrier asked several years ago, and then we'll come back and talk about it. >> I had a meeting with the CEO yesterday, and this is a very common conversation. He grew his business by acquisition, and now he's got a federation of a whole bunch of companies, and he feels like a holding company. What he wants to do is consolidate these businesses onto a common platform. He won't do it overnight because you can't shut down businesses, but the vision over the next few years is consolidate everything onto one common SAP platform, and take all the databases out and standardize everything on HANA. >> Now here's what's ironic. The core success of SAP historically has been what? It's been that they have a single, unified system, the general ledger and all the financial data and all the supply chain data, all of that is in the same place, accessible, single version of the truth if you will. What's ironic is SAP's made 31 acquisitions in the last nearly 10 years under the tenure of Bill McDermott. So in a way, SAP is becoming a tech holding company, kind of picking up on some of the things that Bill McDermott said in his little clip there. In our view, SAP's big technical challenge is to get all this stuff working together. As you all know, it's nontrivial when you make a lot of acquisitions, billions and billions of dollars of acquisitions, which by the way, they promised to stop that torrid pace of multibillion dollar acquisitions, very difficult to pull those together. Let's look at some of those acquisitions that they've made, Ariba, Concur, SuccessFactors, SuccessFactors is interesting because SuccessFactors was kind of talent management, you had kind of core HR from SAP and it's kind of been a challenge to put those things together. Think about the legacy R3 and R4 and all the on-prem manufacturing stuff that SAP still runs, that customers still run. Acquisition of Sybase, Callidus, so... SAP's answer to all this integration is to put everything in memory in HANA. So the motivation for HANA, however, in many ways was to compete more effectively with Oracle and not have to rely so much on the Oracle database and get people off Oracle. But here's the thing that SAP didn't do that Oracle did do, and I think, my opinion, Oracle got right. Oracle did Fusion, they bit the bullet and did Oracle Fusion, it took the better part of a decade, it actually took more than a decade, but every time Oracle buys a company, and every SAS application that it jams into the Red Stack, runs Fusion middleware, and runs the Oracle database. So, it's not the case with HANA. So it's kind of an integration nightmare, it's very very complex what SAP has got handed to the new regime. I think this is a daunting task, and I think this might be in part why the timing of Bill McDermott stepping down, I mean he sees that this is going to be a heavy lift, it's going to need more of a product-focused leadership team, that's why I think it's smart that SAP has maybe gone back to that two-headed monster of two CEOs, one that's customer-facing and one that's more product-oriented and R&D-oriented because they have a major integration challenge ahead of them. So as I say, SAP has promised to stop making these multibillion dollar acquisitions, they got to get to work on integration, which is going to be a major portion of the task in the next five years, so spending data from ETR shows some positive momentum relative to consensus, now remember, the Street works in a quarter, so they're on a quarterly shot clock, so if the Street says, "You're going to do this for earnings," and they do this, well, that means higher EPS, so the stock's going to go up. If you do this and you come in below, that means the stock's going to go down, so these are very tactical kinds of things. We're talking here about more longer terms, this could be a five to seven year integration challenge if not more, remember, it took Oracle 10 years plus in terms of integrating Fusion, so that's something that you need to keep an eye on, especially if you're a customer and you're getting pitched all these different services and cloud services, just got to think about the architecture for integration. Okay, this is Dave Vellante with CUBE Insights powered by ETR, thanks for watching, we'll see you next time. (techno music)

>> Live from San Francisco, it's theCUBE covering IBM Think 2019. Brought to you by IBM. >> Hey, welcome back everyone, we're here live with theCUBE's coverage in San Francisco, the Moscone Center for IBM Think 2019. I'm John Furrier, my co-host David Vellante. Dave, we've been doing theCUBE 10 years, our second ever CUBE event was SAP SAPPHIRE, so going back into the archives. >> Great memories. >> SAP, we've been watching the SAP evolve, we've got two guests from SAP. Scot Henney, Global VP of SAP Customer Experience CX and Marcus Venth, who's a Global VP of S/4HANA, Business and Market Development, talking about enterprise, intelligence, making data, making it reason. We've been covering you guys and I got to say, Bill McDermott has always been on the front wave of all the big waves. He was talking about data and iPads right at the beginning. And the things he was talking about in 2012, 2013 is what everyone is doing today. >> Yes. >> This has been a big part of SAP, not new to you this transformation, how's the journey going? How's the partnership going with IBM? >> So, the relationship that we have with IBM is, I guess, about 40 years old and we're not even halfway done yet. You know, we're still working together and successfully delivering great business outcomes for our customers, and I think that's because not only do you have great global reach and scale, but you also understand how data and business processes impact business outcomes. Both in the back office and also in the front office too. So you were mentioning Bill McDermott. We have a phrase with inside SAP CX called, "Be Bold." Right, it's really taken in on the mantra for us and we're making some really bold acquisitions with inside the front office space. So, one of the ones he's done recently that's really focused on data is around Qualtrics. >> Yeah Huge, huge acquisition for us about experiential data and how we bring that back to organizations and we're really keen to work with IBM on that too. >> He said that was a game changer on his press conference. I watched that, I was really interesting acquisition. >> Yeah, bold move. >> Because you bring in real time data, you bring in real telemetry, real analytics, all this stuff together in a kind of new powerful way, with an existing system that SAP has been powering business software, in all these apps, what does it mean? Does this make this enterprise more intelligent, is that where is connects? What's some of the key things there? >> So, that's a really good question. So, if you can connect the back office to the front office and then create trusted relationships, then you're going to deliver a better customer experience. And that has a huge impact on shareholder value. Specifically around Qualtrics. That enables to move that next level on into what we call the experience economy. So, not only do we understand implicit data and explicit data like you were just saying before, how many people have just seen that mail, but also how they react to you. But we could also say, "What do they feel about you? "What else would they like you to do?" "What relationship do they currently have with you "and what would they like to see improve?" >> This is interesting, one of the things we talk about all the time at theCUBE is, you know, 'cause we're in the information business, we're a media company. Information's everywhere. >> Yeah >> It's knowledge and experience is the new thread. >> Totally. >> So the outcome is the word you used to use but now you're thinking, okay, if experience and presence and knowledge, this is a new kind of user experience. Is that what the intelligent enterprise is? I mean, what is the intelligent enterprise? Give us the definition. >> Right, so I think I can take that one. So, simplistically it's about taking data that you've referenced earlier on and applying new technologies to ultimately make business processes or optimize business process or come up with entirely new business models. You know, we talk about Uber and Airbnb and all these but the reality is that there are new business models being enacted within certain industries. Whether it's direct to consumer type changes or changes moving from a productized, or selling products to selling services. And so when we look at intelligent enterprise it's about taking your business partners, which are the stakeholders that make you as a company successful, that would be your customers, your suppliers, your employees and connecting them. And then ultimately leveraging the data that you're collecting as part of those business processes, applying machine learning technology, and then looking at how can we make that more efficient, or how can we now leverage that data to create new insights that then tie in to the customer experience side of things. >> You know it's interesting, John, you talk about McDermott during the big data craze. Bill McDermott never really used that term, at least not that much, but he did talk about the importance of fast data being able to respond quickly. Obviously SAP customers have a lot of data. And so you've got this platform now, this sort of data platform. How are customers making investments to, sort of, alter or modernize that data platform for this purpose? >> So, the digital platform is really interesting because what we're looking for if we look at the sort of components of an intelligent enterprise is three components. There's the intelligence suite which includes the digital core, then there's the platform, and then we have the intelligent technologies like machine learning and artificial intelligence wrapped around all of that. The platform is really helping our customers get to a more standardized approach. Where it's helping them integrate the applications within the suite. It's also a platform with which they can then implement these machine learning scenarios. It's a platform which with they can innovate and build new applications and allowing them to do that means that they can keep their core standard. And that's the key now as customers are thinking more and more about moving to the cloud, it's all about how do I keep my core clean and standard and allow myself to take advantage of those innovations and then move some of those customer specific innovations to the platform and then layer a UI on top of that, that basically means the end user doesn't know which system they're in, they're just leveraging an integrated suite. >> Substracting all the complexities and all that intelligence out. >> Yeah >> What are the obstacles for, it sounds easy, but it's not, it's hard. What are the obstacles, what's it take? Culture, we always talk about cultural sift. >> I mean, the easy, easy one is the organizational challenges, right? We see that the executive support, the charter, having clearly defined objectives and having the talent in-house that has the courage and the skillset to implement those changes. But I think one of the biggest challenges we see touches on what I was saying before where we have a highly customized environment with lots of disparate applications that really are poorly integrated and then trying to get the customers to then move that to a new platform is very difficult. So, with that, they need the courage, in many cases, to leave that stuff behind, right? >> Completely, and I completely concur. So that's the same challenge that we find in the front office. So, we aim to create a phenomenal experience platform for our clients, but unless they're reorganized internally, to remove those siloed thinking around what do sales do, what does marketing do, then they're not going to be able to fully utilize the tools and platforms that we deliver. So, it's actually about a mind shift change and about focusing on the customer. >> I'd like to get your perspective, since you're here, 'cause we go to a lot of events, we go to 120 events last year. We go to CloudNative, Computing Foundation, AWS re:Invent, we're here at IBM Think, we used to go to SAP Sapphire, but that's a different story. But one of the things we hear about is we see new trends like Kubernetes and containers. People are doing it, but they're doing it kind of like in an experimental way, or doing it, you guys are actually implementing technology with customers. >> Yes >> Integrating it in, like, mission critical kind of integrations. You're not standing up to Kubernetes, saying, "Hey we've got a Kubernetes cluster, look at this." In one or two apps, what's your experience with it 'round the integration? Because putting these piece parts together is hard. What are some of the trends that your customers are doing around really standing up cloud-native, intelligent enterprise, apps, what is some of the real use cases that our people are doing? >> I guess first of all, if we're dealing with the SAP portfolio, we're delivering a lot of those integration points out of the box, so that sort of takes away a lot of the guesswork when we talk about integrating sort of disparate applications. And I think one of the key aspects of that is just having, the plumbing is not good enough. You really need to have a data strategy around that where our data hub is then able to provide a consistent master record strategy. Where these systems can then seamlessly talk to each other. 'Cause one of the biggest problems in integrations is not the plumbing, it's actually having these systems being able to talk to each other and rationalize this information. >> Can we, maybe, do a before and after example? I mean, take a supply chain example. So, what's the before look like? What's the after, ideal after state look like, or the sort of outcome that you're looking for? >> So let's take an example, right? Let's say you're buying goods from a supplier and you now want to be connected to that supplier so that you can see where those goods are in transit. And then you want to be notified when there's a delay in those goods so that they can then adjust your production plan to make sure you're still accommodating a customer's order cycle. Now let's say, for instance, that we start recognizing a pattern, or the system starts recognizing a pattern, that every February we seem to see a five day delay, for whatever reason. Now the system can automatically start applying an additional lead time and accommodating for those changes automatically. So, that's what we think of when we think about an intelligent enterprise. It's about an enterprise that live and able to adjust and therefore able to build the trust with the customers in order to fulfill their expectations. >> I think that's a really, really important point. Can I answer that from a customer perspective? >> Yeah, please. >> Please. >> Because we're all consumers as well, of services, and also within our business lives. I think what you want, as a customer, after you've used our services and our systems, is you want to be treated like a person, right? And you want to feel like your data has been treated with some respect, yeah? And then you want to feel that promise that customer has, sorry, that business offered you is being kept. So, you want to be treated like a person, I wasn't just a transaction to you. You understand what I needed, right? And then, you treated my data appropriately. I can trust you with our relationship and I know that you're going to fill in the promise. That's what our platform delivers >> Yeah, 100%, I mean-- >> Yeah >> I ordered something, I want to know if it's not here when you said it was going to be here? I want you to either tell me, tell me why, or do something about it, not force me to call you and find out. I mean that's, it's proactive, it's anticipatory. Not reactive, or no active. >> You got it and that can only be done if you integrate the front office to the back office. And that's what IBM and SAP are working on right now. >> That's great, I mean, that's the greatest segue into my question, which is, here in San Francisco IBM Think 2019, moved from Vegas, now they're doing so, so great. Great venue 30,000 people. What kind of conversations were you guys having here at the show? Take us through a kind of day in the life. What kind of meetings did you have, what were people talking about, what's on the top of minds of meetings, your customers, and your partners at IBM? >> Well, from my perspective, there's a lot of discussion around how to move toward the cloud and what tools we have available, and so with the collaboration with IBM, they've made a tremendous investment in SAP and SAP technologies. They've built the impact assessment tools to help customers evaluate the value and the cost of making that move. And they've also invested in the impact solution, which is the content and pre-configuration to help accelerate implementations and move towards that standard. So, a lot of the discussions I'm having with customers are taking mission critical applications and moving them to the cloud. with the support of partners like that, yeah. >> And at a speed What kind of speed? It used to be weeks, months, days, now what? Cycle time for moving. >> If you go to some of those presentations there's 12, 16 week implementations out there, right? >> And when you say moving to the cloud one could infer actually moving but it may not be moving, it may be bringing the cloud model or operating model to the data, is that fair? >> Absolutely So, when we're looking at the cloud, it's not necessarily a wholesale shift. It could be a hybrid model where we're bringing subsidiaries up on the cloud and looking at more of a two tier deployment model where we're looking at an on-prem for the core business and cloud models for subsidiaries. >> It's funny the apps are driving dictating workloads or dictating what resources and architecture to it. >> So, I've had some really exciting conversations here. I was really really impressed with the conversations I had with the IX teams in IBM but also with the GBS teams. >> What's the IX teams? >> They're a-- >> Experience. >> Okay, okay. >> VR, ART, cool stuff. >> That's it, really, really cool, forward-thinking group of design-thinking experts focused on customer experience. So, the total adjustable market opportunity for CX, commerce, marketing, sales, service is over 30 billion per year. So, I don't have to come in and tell anyone what the size of the market opportunity is, the question is, where do we begin, because there is so much opportunity ahead of us. All of our market is investing around, how do I deliver better customer experience, and that's because it has a really tangible business impact. I mean, I guess, 80% of consumers have said that they have changed brands because of poor customer experience. That's a huge financial cost. And organizations that deliver better customer experience have over 200% more shareholder value delivered back. So, we've got a great business case\ and a great platform, where do we point the gun? >> You know, they bring up a good point, I want to hear your thoughts. Dave and I, internally our research team, had looked at all the successful companies that we cover. >> Yeah >> And look at the successful ones, and, you know, the not so successful ones, and look at why they are successful. And the winners, at the top of the heap, have design thinking in all of their methodologies. >> Yes >> We just had Accenture's Innovation kickoff last week. Design thinking is at the core of this. Can you give us your view on why that's the case? I mean, I'll see, I'm thinking design, is that just customer experience? Is having more or other impacts in terms of other aspects of tech, why is design thinking such a critical component, design thinking a critical component, of these new innovations? >> 'Cause I think people are, okay. So I think thinking is the operative word there. You've got to think about your customer and what they want from you. And what you've got to think about is how do I deliver a service that is compelling to you, rather than a product you may want through a channel you may choose to buy on? So, if you look at all of those organizations, they've gone through that process of thinking, "How does digital improve my customer relationship?" Because ultimately, if you don't own your customer, then you're out of business really soon. >> Marcus, bring intelligent enterprise now in context to that. Does that close the loop on intelligent enterprise equals customer relationships and impact on outcome? Am I, how does that-- >> Intelligent enterprise definitely plays a part in that, right? So I mean, when we're looking at the intelligent enterprise, especially the intelligent suite, we're really tying all the interim components together. Whether it's dealing with your employees, your suppliers, or your customers, right? So, it's really about the full end-to-end process. My particular area is around the digital core, so that's order to cash, procure to pay, order fulfillment, revenue, these are mission critical applications, right? So, when it comes to making that transformation this is not just some thing that you want to take lightly. That's where the partnership with IBM and SAP really counts. 'Cause those are the sort of partners that you want with that kind of transformation. >> You know what's interesting John? I'll make an observation. If we go back to the early days of ERP >> Yeah >> It wasn't clear that SAP was going to win. It was hard to squint through. But if you could've bet on the companies, invested in the companies who adopted ERP early, despite its complexity and the time it took, you actually could have made a lot of money. Because those companies won in the end. And I feel like you guys are on the cusp of the intelligent enterprise narrative of the next wave of competitive advantage. >> If you combine experiential data with operational data, we're going to blow past the competition and create a whole new market category. Thanks for that observation. I completely agree. >> Yeah, and it's back to your front office back office qualigers and that's why McDermott was all giddy about the acquisition. He was like a kid in a candy store. >> We're all in. >> A spring in his step. >> We're all in. >> We don't want Billy, he's already cool. >> Be bold, be bold >> Yeah. He must do a lot of handshakes. Guys, thanks for coming on theCube. Thanks for sharing that insight. Thanks for clarifying the SAP position. Great innovation. Love following you guys, we think highly of the company. Been following you guys for 10 years and look forward to continuing to track it. SAP here on theCUBE talking about innovation, design thinking, customer experience, and intelligent enterprise. theCUBE is bringing all that intelligent data to you live here in Moscone. Stay with us for more coverage after this short break. (techno music)

>> From Orlando, Florida, it's theCUBE. Covering SAP SAPPHIRE NOW 2018. Brought to you by NetApp. >> Welcome to theCUBE, Lisa Martin with Keith Townsend. We are just wrapping up day two at SAP SAPPHIRE 2018. Keith, this event is enormous. We were just comparing our step goals. This event size is 16 American football fields. Enormous, 20,000 people. I think, combined, we have around 15,000 steps today. >> That sounds about right. >> Quite a few of them go to your longer legs than mine but this event is really been incredible, the energy that SAP's CEO Bill McDermott kicked off with yesterday morning has really been carried through this event and with our guests on the show for the last two days. >> No, we did 23, 24 interviews and every last one of them was high-energy. The guests were extremely excited about the products, the solutions, and the problems they're solving for, not just enterprise, but for society. I thought that was a really great theme of the guests today specifically. >> It's amazing, and you talk about, you know, the impact on society and SAP wants to be one of the top world's most valuable brands like Apple, Google, Coca Cola, who are all customers of SAP's and who all sell products that we can interact with, that we can taste, you know, Mercedes Benz, we can drive. They've got this invisible software product. They've been around for 46 years. And to your point, the stories that we have heard about how these invisible product, products, are transforming industries, are saving lives, was really something that I did not expect. >> Well when you make a great product that impact lives or... I compare it to making great content. theCUBE makes great content, that content would be found, people would take notice, you make a great product that impacts people's lives. It's no wonder that SAP is near the top of that brand recognition, brand value, 17th on the list. If they continue to do that, if they become the product, the ERP solution that you can talk to and you can ask a question, you know, not just business questions of what were the numbers the last quarter for Chicago, but you can ask a question, you know what, where is the best place to take my family to live in Eastern Europe during the summer months? That becomes value-add that people wouldn't be able to ignore. >> They've done a tremendous job building this partner ecosystem. There were hundreds of partner sessions alone. We've heard from a lot of their partners. We're in the NetApp booth, thanks to NetApp for having theCUBE here. NetApp is a customer and a partner of SAP and we heard a lot about how SAP is transforming to the cloud dramatically with the help of this massive partner ecosystem. >> You know what, we've had Microsoft, Fujitsu, SAP, NetApp, Nvidia, the list goes on and on of customers and partnerships of examples of companies that have come together and they've been consistent. In some areas, obviously Microsoft competes with SAP. In some areas, Microsoft competes with NetApp. But they recognize that without these alliances, without these partnerships, they can't solve these large, complex problems of ridding parts of Africa with mosquitoes. SAP can't do that by themselves. Microsoft can't do that by themselves. And this week was a great acknowledgement and a example of how the ecosystem works. >> They also talked a lot at this event about the intelligent enterprise where it's, you know, it's not just about digital transformation as table stakes. Companies that do it well have, or are working towards getting, this true 360-degree view of the customer which is essential. They talked about enabling that via certain things that they're leading in, or pioneering, which is connecting the demand chain and the supply chain. They really talked about enabling this new, this current SAP that's built for this fourth generation customer experience. Our lives as consumers have dramatically influenced business. We expect to have the ability to, you know, try and buy an app if we want it, right? And they're using that model very well to give customers in many industries, they have 390,000 customers, choice and flexibility. And the partner ecosystem is just part of that flexibility that they have to give. And they do a great job of listening to their customers who really are helping with a lot of the co-development in a very symbiotic way. >> Yeah, SAP is reentering this people-centric view of ERP, CRM, of data, saying that their relationship is about people. Bill McDermott spent a lot of time talking about trust. One of the reasons why people trust the brand of theCUBE is because we're on the ground, we're talking to the users, we're talking to the people. People can reach out and touch and feel you, there's a personal relationship between that brand and the community. The same thing with, got the same feel for what SAP is trying to do of, you know, obviously with over 20,000 people, I dunno if the number is 21,000, 22,000, but more than 20,000 people, a million people online watching the event, SAP the serious about this C/4HANA move, of being able to say, you know what, we are going to create a ecosystem of trust. We talked about trust with the app center and being able to validate applications on the platform. SAP has long been one of those companies that's serious about their partnerships and validation and certification of platforms. So whether it's HCI, storage with NetApp, the deep relationship with NetApp, SAP is going to put its brand upfront and say that if you're going to engage with one of our partnerships, there's a transient trust that goes from SAP to their partners. >> And we talked with a number of folks working in different groups within SAP focused on the customer. This morning we had on their Chief Customer, a guy from their Chief Customer Office who talked about these, kinda top 100 strategic accounts that they partner with who then also they take that information, those learnings and don't just improve the technologies but they also use them to influence much greater than a hundred customers. They're strategically utilizing that data. We talked yesterday with one of the gentlemen running the SAP four, S/4HANA community rather, and the Leonardo community and the amount of engagement that they have in that community, especially in Leonardo which has only been around for a year. The customer engagement is key but also their reaction to it, and I would say even, I think we heard a lot of how they're being proactive with creating content and enabling their customers to be able to learn at the same time as they're learning from their customers. >> Yeah some hero numbers that we heard this week: 6,000 people in that HANA, the S/4HANA community. While the Customer Success Group focuses on the top 100 customers, there were, I think 38,000 people following the Twitter account, so there's obviously outreached stretch. The Leonardo and S/4 communities have created a thousand videos on how-to. So obviously the impact of and the reach of SAP has ambitions of not just raising brand awareness and getting into that Top 10 with Apple and Google, they also have the ambitions of becoming a platform, a ecosystem. You know, we look at Microsoft as kinda one of the ultimate platform companies. Microsoft partners make more money off of Windows than Microsoft makes off of Windows. SAP seems to have the same goal of their partners, there's a hundred partners on the show floor, that should generate more revenue than SAP which would be impressive. SAP, I looked the other day, $136 billion market capital, not a small company at all. >> So you have an interesting perspective, for many reasons, but one you've run large SAP infrastructures before. And here you are now at SAPPHIRE from the press and media, the analyst perspective. What are some of the things that really surprised you in all of your experience as a user of SAP to now covering it from this angle. >> You know what, I don't know if it was a year ago. It was not even a full year, my anniversary for running my company is August. So less than a year ago I ran SAP for a large pharmaceutical. And we're in the throes of selecting where our next platform was gonna be hosted. Cloud was a possibility and it is amazing how the conversations have changed from my peers a year ago, or a year and a half or even a year ago, to now to how readily acceptable customers are of running mission-critical, the core of the business, 77% of the world's transactions, we heard today, goes through SAP, how willing customers are at running those work goals in the cloud. Second piece, which was probably a proof point, how much SAP has improved SAP in the cloud. SAP has marketed SAP HANA and SAP as cloud-ready applications, it was more of something that you... I took legacy application, I installed it on VMs in the cloud, cloud-ready. No we've given examples from the hyperscalers, specifically Google, of how, and Microsoft of how, customers are coming whipping their credit card up, spinning up instances of HANA, spinning them down. Google talked about how you can migrate your whole ECC on HANA to the cloud within 30 minutes to two hours, amazing movement in cloud. I think it's by far my biggest surprise coming to this show. I didn't expect SAP to accelerate their cloud adoption as fast as they have. >> I'm curious to your thoughts too about simplicity, simplicity of message, you know, what's their best-run businesses campaign? Best-run businesses run on SAP. Simplicity has long been part of their messaging. As we look at the SAP cloud platform and some of the announcements there today and you look at, they've got Ariba, and Concur, and Fieldglass, and SuccessFactors, with the C/4 announcement from yesterday, what is your impression on, have they been able to sort of simplify and kind of reduce customer confusion in terms of this breadth of products and technologies that SAP now delivers? >> You know, SAP is a big company and they have a lot of products. They've been around for 46 years. You know, we didn't talk about any legacy database stuff. They still own Siebel so they still own a traditional database company. It's easier said than done to simplify the message. When you come to... You know, we talked to interviewee after interviewee, customers are still overwhelmed when they look at a overall problem. They can even identify SAP as the potential partner to solve it, but 300 products is still 300 products. It's very... You can help simplify the message by throwing those products in categories, sales force, which product you lead with, so new customers, you know, sales force will help you with that. Traditional customers that don't have deep relationships with their sales force and solution providers, maybe, I think there's still a little difficulty around understanding the messaging around all of 300 products. I mean, it's 300 products. >> Well, there's always work to be done and well we have... There was a lot of product announcements, a lot of energy, and evangelicalism that you and I heard consistently throughout the event and on-set here. A third area that I think really struck me is, SAP has been very vocal about having an initiative to raise the profile of women in technology. They did an excellent job of getting women onstage during both keynote sessions, yesterday and today. From their CMO, Alicia Tillman, to Lindsey Vonn and a whole suite of women Olympic athletes that were yesterday in the general session, to some of the women that were doing some of these outstanding demos and I, I really tip my hat to SAP because for being as large and as lengthy of an incumbent as they are, they're really able to focus on some of these key areas and we at theCUBE love to cover that because it's something that really needs consistent awareness. >> Well, I dunno if people would notice but we probably, both of us, are very vested in diversity and Silicon Valley, in general, is always appreciated when companies go, not just acknowledge the challenge of diversity, it is a very, very difficult problem. It's probably one of the most difficult problems in our industry. So to actually put some meat on a bone, announce the problem, announce the challenge, and go forth and put, you know, obviously, extremely capable women and minorities in the forefront. >> Yeah. Well Keith, always a pleasure hosting with you. Thanks so much for working with me the last couple of days, it's been-- >> I always enjoy it. >> I do too. It's really been a really fun, energetic show so thanks for all of your help. >> Thank you. >> Keith and I wanna thank you for watching theCUBE. Lisa Martin for Keith Townsend, we're from SAP SAPPHIRE 2018. Thanks for watching. (energetic music)

>> From Orlando, Florida, it's theCUBE. Covering SAP SAPPHIRE NOW 2018 Brought to you by NetApp. >> Welcome to theCUBE, I'm Lisa Martin with Keith Townsend and we are in Orlando at SAP SAPPHIRE 2018. This is an enormous event, 16 football fields. American football fields is the size of this space. Incredible, we're welcoming back to theCUBE, one of our distinguished alumni. >> Thank you. >> Uddhav Gupta you are the global vice-president and GM of the SAP App Center, welcome back to theCUBE. >> Yes, thank you so much, thank you for having me. And isn't this a lovely event? >> It's amazing. >> It is. >> So much energy and excitement yesterday during Bill McDermott's keynote. He talked about SAP, 46 years old now, has 398,000 customers and is responsible for 77% you said of the world's transactions. >> Yes, yes. >> Unreal. >> And you know the best part about this is we got 77% of the transactions, and if you walk around and ask people about SAP, they don't even know SAP, right? It's funny, I'm from the Bay Area and the first time people started taking SAP and acknowledging the brand of SAP was when they start to see SAP Center. Because that's home. >> The shark tank. >> To the Sharks. >> Yup. >> And they're like, oh, that was the first time. And then the second time we put a building out. We bought SuccessFactors and we got a SuccessFactors building by the airport and then, "Oh yeah we know SAP from the building next to the airport." But now people are starting to becoming really serious of associating themselves with the brand because now they started understanding what a crucial role SAP plays in their lives, right? If SAP doesn't do what it does, the entire supply chain for many large enterprises stops, right? Which means, your beverages don't come, and your food doesn't come in, nothing, right? Your lines are stopped. >> Yeah, we're with you. Your medicine doesn't come. >> Right. >> It is just. >> Yes. >> Well you guys have had Bill McDermott has talked about for a while about, we wanna become one of the world's top 10 most valuable brands but for invisible software you know you talk about, you want to be up there with the Apples and we can engage and touch with so many of these brands, and people probably don't know, a lot of people. >> Yes. >> That they are using SAP that's driving so many businesses, industries, and you guys have done a very good job of articulating your brand value through the voices of your customers who are transforming industries, they're saving lives, and also your partner ecosystem. So talk to us about the partner ecosystem and how they're really enabling partners like NetApp. What you're doing with the App Center to really enable SAP's growth and transformation through your partner ecosystem. >> Absolutely, so one of the good things is, if you look at the different transformations that the software industry has gone and cloud is one big one, right? And right now, with the cloud that one day we've regarded is the Cloud is a completely different dynamics of software. It's a very closed environment, the software itself so not everybody can actually basically just go ahead and deploy anything within the software itself, right? So that's created a huge economy of ecosystem for us where we've got partners that are building Sas Solutions, that extend our core business products. We got partners that are building content services that can actually be consumed within our business products. Similarly, SAP has made this transition from being more of a software applications company to actually being a platform company and now taking it into the cloud. So we've got a whole new generation of partners that we kind of started working with that provide technology services into the platform, right? And that's why we work with partners like NetApp. We work with partners like (mumbles). We works with partners, even SIs. They're starting to build a whole bunch of repeatable solutions, right? So in order to bring all these innovations that are happening around the SAP ecosystem, in the hands of our customers, like NetApp is a customer of SAP, too. How do we bring that easily into their hands so they can discover these products? They can try the products, they can buy these products. And then they can manage these products. And that's the whole idea of the App Center. >> And this has only been around for a year. In fact, you just celebrated your first birthday. >> Exactly. >> But a tremendous volume of apps that are already available. >> Yes, it's amazing. >> For try and buy. >> The ecosystem has really embraced us, they put their hands open, right? So within a year we've got 1100 partners that are on the App Center. We've got 1500 solutions that are on the App Center. And we are growing like crazy, right? We've got amazing endorsements from partners and donor. We've got amazing endorsement from customers. Some customers have come and done repeated purchases on the App Center within a month, right? The number of trials we're executing for partners is huge. On the whole, it's doing really well. >> So let's talk about the range of applications. I know when I think of App Center I think of App Center on my phone. >> Yes. >> And I can go and get something as silly as a flashlight or, in my case, as life-changing as my running app that keeps track of my fitness over the course of several years and I have great data to mine from that. What types of applications and industries, what industries do they serve in the App Center? >> So the App Center is really made for businesses. >> Right. >> So definitely we don't have Candy Crush there, right? (everyone laughs) >> Don't ask them. >> I don't know if that's a good thing. >> Oh, that's good, right, but you have a bunch of fun application for enterprises, right? Which allow them to get a better insight in how the company is operating. And then we have, to give you analogy to your fitness application that gives you a better idea of how your body works. We've got application that basically do the same thing for enterprises, right? So let me give you an example. We've got a major SI that actually has built an audit and compliance application for HR, right? So I can actually tell you, within your organizations what's your diversity ratio, what's your compliance ratio, how are people being paid, gender equality and gender pay, equal pay is a big topic that many CIOs are looking at. It kind of helps on those kinds of areas, right? Then we've got apps or solutions in there that basically deal with helping customers do better sales, right? We have apps in there that basically help provide you tools that can better monitor your platforms, right? Tools that help you migrate. All these things are available on the App Center. >> I'm curious from a differentiation standpoint, SAP has been very vocal about wanting, challenging the old legacy CRM. >> Yes. >> And wanting to be number one. Against their, you know, the (mumbles) competitors. How does the App Center and how you've enabled it so quickly and with such diversity of apps, how does this differentiate SAP? >> Absolutely, so we've owned the back office for a very long time now, right? So now it's time for us to basically get in front of the end users and get into the daily work that they do. It's very important for us to also own different offers. That's a whole big initiative, you heard with C4, right? To enable that, we've got cloud platform, right? And that's the other biggest piece of the puzzle, right? Now when you add these two things up, you don't basically, when you look at customers, the biggest thing for them is time to value, right? The whole concept of the bill versus buy is kind of starting to fade and the customer like, "Here's my problem, is there a solution out of the box "that can actually solve my problem?" If he gets a 100%, great, if he gets 90%, okay. If he gets 80%, I'll take it and then I'll improvise on it. And that's exactly what the App Center does. It gives you an out of the box solution from our ecosystem. So you can get started with it, and then you can collaborate with the ecosystem, to either improvise on it or take a step back and say, "Okay, now we've plugged the hole, now let's find "a more detailed solution to actually build "a more scalable outcome out of it." >> So let's talk about licensing flexibility from apps and App Center. One how do customers pay for. >> Yes. >> Their apps in the App Center? And then two, what are the licensing options for both partners and customers, for those individual apps? >> So the beauty of the apps and then the way we started up is the transaction is directly happening between the partners and the customers. So the partners can actually price their applications the way they wanted, right? So some partners that are basically doing content services are doing it by based on utilization, right? So you actually use this many number of API calls, that's how it's priced. Some of the others are doing SAS applications and they are pricing it by users. So the partners have complete flexibility of pricing and packaging the way they want. Also because we're actually using the App Center to sell to enterprises, it's very unlikely that somebody's gonna go ahead and say, "Oh, he has a gold, bronze, and silver package, "I'm just gonna pick one of them." On the App Center you can actually go ahead and custom package or create custom packages with tailored customs and conditions that are specific to that customer. And the customer can then buy it, right? So we've kind of thought of this from an enterprise standpoint. And that's the beauty, right? When you work with partners like NetApp, that is important for them, right? NetApp is a partner that basically goes ahead and works with some of the largest businesses, right? It's important for them to have the flexibility to go ahead and do the business with them digitally. >> So I'm curious. At every event we talk about digital transformation, right? It's table stakes these days. But at SAPPHIRE 2018 there's been a lot of discussion around the intelligent enterprise. >> Yes. >> I'm curious how this one year old App Center that SAP has built and that you're managing, how are you using the data that you're getting about the types of apps that are being developed and consumed, how are you utilizing that data to transform SAP? >> Absolutely, if you think of the intelligent enterprise, we're doing everything that we can from the platform side. But what's the point of being intelligent if you don't apply your intelligence somewhere, right? And that's exactly. >> You're like my mother. >> (laughs) And that's what we're trying to do with their apps, right? So while the platform is intelligent. It can do a lot of stuff. The apps are the one that will help you derive the value from the platform. And that's where the App Center is super important and the apps that are on the App Center support the product. That's the role within the apps in the place for the intelligent enterprise. >> So Bill McDermott also talked about trust and the trust is the new currency. When you put forth something like the SAP App Center, you're kind of co-signing that, you know what, these apps, these are partners, and this is a partner exchange. Can you talk to the value to the enterprise of wanting to something like a App Center to purchase applications? >> Oh, trust is a big thing, right? These days, I mean, you. Enterprises come to SAP because they know SAP is such a trusted brand. So when we did the App Center we also made sure that every app that goes on the App Center is actually totally validated by an integration and certification center team, right? So you don't find anything on the App Center that has not gone through a vetting process. The second thing you don't know show that on the app center you find apps that are relevant to your SAP landscape and that's not a Shopify, right? You're not going and selling something that has no relevance to the enterprise. The third thing that we've done, and very important for customers is we've actually built workflows that allows them to still have the same comfort of procuring a software but only doing it digitally. So, for example, a customer may say, "Look, not every user "in my company is allowed to buy apps." But if a user is interested in buying an app, he should be able to request purchase, and then somebody who's entitled in the company to go through contracts and negotiate on behalf of the company can actually negotiate it, and then the purchase happens. So we will employ trust at every level of the App Center. >> Security is such a hot topic these days, right? I mean, there's been so many public breaches of corporate data, there's just one again the other day with, I think it was MyDNA or MyHeritage. >> Yes. >> And that kind of opportunity for people to submit a cheek sample and get their DNA is so popular. That's a lot of personal information. So the security woven into the fabric of that is all key. >> Absolutely. >> So you mentioned the number of partners and the number of apps. I think you said thousand partners. >> A thousand partners and 1500 apps. >> 1500 apps in the first year. >> In the first year. >> What are you excited about for the next year? What do you think we're gonna be talking about next SAPPHIRE? >> I think the growth in the number of apps and partners that are gonna come over, it's gonna be a hockey stick event we're completely looking forward to that. But what's gonna be interesting is, as these apps come by, and you've pointed it out, security is one topic, but GDPR compliance is another big one. So one of the things that we've been working with a lot of these partners is to basically become more and more GDPR compliant. Because some of these apps are dealing with HR data. Some of these apps are gonna start dealing with customer data and they have to be GDPR compliant. So that's what we're working on with them and we'll see more and more of those kind of things happen. But the second big thing that we're looking forward is going beyond the apps, right? We call it the App Center, we could call it Solution Center, we could call it anything. But the idea is you gonna have apps, but you're also gonna have vendors like NetApp being able to digitally sell the products to our end customers, right? Somebody bought HANA, they need a HANA appliance, with an adapt storage, that's possible on the App Center. Or some other tools, somebody's existing NetApp customer managing really large SAP landscapes. And they can buy tools that will basically help them manage the NetApp landscape, right? Or SAP landscape running a NetApp gear. So those are kinds of things that I'm looking forward to actually coming into the App Center. The third thing is sensors. People are building IoT Scenarios and we are having tons of partners basically certify sensors against our IoT technology. How about we bring those into the App Center, right? So it's gonna be a huge and beautiful portfolio of solutions. >> Practical question before we let you go is. Simple concept 'cause my mind is working and I come from a traditional SAP shop. So I'm thinking, what interesting things have you seen customers do with SRM and the App Center. I mean, it seems like, App Center, another supplier for SRM should be some integrations? Am I making an assumption? What are some of, as we look at, or even App Center and someone that has SAP core products, what are some of the integration for them? >> Oh, you hit the nail, right? What some of the customers are coming back to us and asking is, can you actually do an App Center specifically for my enterprise, right? Where I as a user can basically go, curate a whole bunch of apps that I've kind of looked at the terms and conditions or have met certain standards, etcetera. And accept the terms of conditions for those products right? Accept those products, negotiate the price, or whatever they do. And then make that open to all of my users of their ecosystem, right? So that way, anybody in that scenario can actually go purchase an app and start using it in production. >> And then I have all of my work full from SRM to approve the purchase of the app. >> Exactly, so it kind of ties in very neatly into that. >> So your 18th SAPPHIRE. >> Yes. >> What are some of the key takeaways that you're gonna go back to the Bay Area with? >> You know, the beauty is every SAPPHIRE keeps growing bigger and bigger and the questions every three, four year we've done a new transformation, right? Last year when I come to this conference, people were still kind of unaware and not really ready to embrace the cloud in an enterprise base. This year, I didn't hear one customer say, "Should we go to the cloud?" Everybody like, "We are on the cloud, how can you help us?" How can SAP and customers and partners like NetApp actually help us get there? And that's a refreshing feel, right? Because now we can talk to them about all the grand plans that we have for them. Prior we were basically still selling them on the concept. Now we're actually walking them and talking to them about how they embrace the cool stuff that we're doing. >> Awesome. >> So it's refreshing. >> It is cool stuff. >> It is. >> Uddhav, thanks so much for stopping by theCUBE. >> Thank you so much for having me. >> Talking with Keith and me about what you guys are doing with the App Center and happy first birthday again. >> Thank you, thank you. >> Thank you for watching theCUBE. Lisa Martin with Keith Townsend at SAP SAPPHIRE 2018. Thanks for watching.

>> From Orlando, Florida it's theCUBE! Covering SAP SAPPHIRE NOW 2018, brought to you by NetApp. >> Welcome to theCUBE I'm Lisa Martin with Keith Townsend and we are in Orlando at SAP SAPPHIRE NOW 2018, where we're in the NetApp booth and talking with lots of partners and we're excited to welcome back to theCUBE, distinguished alumni Jim McHugh from NVIDIA, you are the VP and GM of Deep Learnings and "other stuff" as you said in the keynote. (all laugh) >> Yeah, and other stuff. That's a lot of responsibility! That other stuff, that, you know, that can really pile up! >> That can kill ya. Yeah, exactly. >> So here we are at SAPPHIRE you've been working with SAP in various forms for a long time, this event is enormous, lots of momentum at NVIDIA, what is NVIDIA doing with SAP? >> We're really helping SAP figure out and drive the development of their SAP Leonardo machine learning services so, machine learning, as we saw in the keynote today, with Haaso as a key component of it, and really what it's doing is it's automating a lot of the standard processes that people did, in the interactions, so whether it's closing your invoices at the end of the quarter, and that can take weeks to go through it manually, you can actually do machine learning and deep learning and do that instantaneously, so you can get a continuous close. Things like service ticketing, so when a service ticket comes in, you know, we all know, you pick up the phone, you call 'em and they collect your information, and then they pass you on to someone else that wants to confirm the information, all that can be handled just in a email, because now I know a lot about you when you send me an email I know who you are, know what company you're with, I know your problem 'cause you stated it, and I can route it, using machine learning, to the appropriate person. I can not only route it to the appropriate person I can look up in a knowledge database and say hey, have we seen this answer a question before feed that to the customer service representative, and when they start interacting with the customer they already have a lot of information about them and it's already well underway. >> So from a practical technology perspective we hear a lot about AI, machine learning, NVIDIA obviously leading the way with GPUs and enabling development frameworks to take advantage of machine learning and that compute power. But the enterprise, we'll at that and we're like you know that, we see obvious value, but I need a data scientist, I need a programmer, I need all this capability, from a technical staff perspective, to take advantage of it. How is NVIDIA, SAP, making that easier to consume? >> So most enterprises, if you're just jumpin' in and tryin' to figure it out, you would need all these people, you'd need a data scientist and someone to go through the process. 'Cause AIs, it's a new way of writing software, and you're using data to train the software, so we don't have, we don't put programmers in a room anymore and let 'em code for nine months and out pops software, you know, eventually. We give 'em more and more data, and the data scientist is training it. Well the good news is we're working with SAP and they have the data scientists, they know how SAP apps work, they know how the integration works, they know the workflows of their customers, so they're building the models and then making it available as a service, right? So when you go to the SAP cloud, you're saying I wanna actually take advantage of the SAP service for service ticketing or, you know, I wanna figure out how I can do my invoice processing better, or I'm an HR representative, and I don't wanna spend 60% of my time reading resumes, I wanna actually have an AI do it for me, and then it's a service that you can consume. There, that we do make it possible, like if you have a developer in your enterprise and you say you know what, I'm a big SAP user but I actually wanna develop a custom app or other some things I might do, then SAP makes available the Leonardo machine learning foundation and you can take advantage of that and develop a custom app. And if you have a really big problem and you wanna take it off, NVIDIA's happy to work with you directly and figure out how to solve different problems. And most of our customers are in all three of those, Right? They're consuming the services 'cause they automate things today, they're figuring out, what are the custom apps they need to build around SAP and then they're, you know, they're figuring out some of the product building products or something else that's a much bigger machine learning, deep learning problem. >> So yesterday during Bill McDermott's keynote he talked about tech for good, now there's been a lot of news recently of tech for not-so-good and data privacy, GDPR, you know, compliance going into affect last week, NVIDIA really has been an integral part of this AI renaissance, you talked about, you know, you can help loads of different customers there's so much potential with AI, as Bill McDermott said yesterday, AI to augment humanity. I can imagine, you know, life and death situations like in healthcare, can you give us an example of what you guys are doing with SAP that, you know, maybe is transforming healthcare at a particular hospital? >> Yeah, so one of the great examples I was just talking about is, what Massachusetts General is doing. Massachusetts General is one of the largest research hospitals in the United States, and they're doing a lot of work in AI, to really automate processes that, you know, when you would take your child in to figure out the bone density scan, which basically tells you the bone age of your child, and they compare it to your biological age, and that can tell you a lot of things, is it just a, you know, a growth problem, or is there something more serious to be concerned about. Well, they would do these MRIs, and then you would have to wait for days while the, the technician and the doctor would flip through a textbook from the 1950's, to determine it. Well Massachusetts General automated all that where they actually trained a neural network on all these different scans and all these different components and now you find out in minutes. So it greatly reduces the stress, right? And there's plenty of other project going on and you can see it in determination if that's a cancer cell, or, you know, so many different aspects of it, your retina happens to be an incredible venue into whether you have hypertension, whether you have Malaria, Dengue fever, so things like, you know what, maybe you shouldn't be around anywhere where you're gonna get bit by a mosquito and it's gonna pass it to your family, all that can now be handled, and you don't need expensive healthcare, you can actually take it to a clinician out in the field. So, we love all that. But if you think about the world of SAP which is the, you know, controls the data records of most companies, right? Their supply chain information, their resource information about, you know, what they have available, all that's being automated. So if we think from the production of food where we're having tractors now that they have the ability to go over a plant and say you know what, that needs insecticide or that needs weeds to be removed 'cause it's just bad for the whole component, or that's a diseased plant and I'm gonna remove it, or it just needs water so it can grow, right? That is increasing the production of food in an organic way, then we improve the distribution centers so it doesn't sit as long, right, so that we can actually have drones flying through the warehouses and knowing what needs to be moved first, go from there, we're moving to autonomous driving vehicles and, where deliveries can happen at night when there's not so much traffic, and then we can get the food as fresh as possible and deliver it. So if you think that whole distribution center and just being in the pipeline as being automated, it's doing an incredible amount of good. And then, jumping into the world of autonomous driving vehicles, it's a 10 trillion dollar business that's being changed, radically. >> So as we think about these super complex systems that we're trying to improve, we start to break them down into small components, smaller components, you end up with these scenarios, these edge scenarios, use cases where, you know, whether it's data frequency, data value, or data latency, we have to push to compute out to the edge. Can you talk about use cases where NVIDIA has pushed the technology far out to the edge to take in massive amounts of data, that effectively can't be sent back to the core or to the data center for processing, what are some of these use cases solutions? >> So it's, the world of IOT is changing as well, right, the compute power has to be where it's needed, right, and in any form, so whether that's cloud based, data center based, or at the edge and we have a great customer that is actually doing inspection, oil refineries, bridges, you know, where they spot a crack or some sort of mark where they have to go look at it, well traditionally what you do is you send out a whole team and they build up scaffolding, or they have people repel down to try to inspect it. Well now what we're doing is flying drones and sending wall crawlers up. So they find something, they get data, and then, instead of actually, like you said, putting it, you know, on a truck and taking it back to your data center or trying to figure out how to have enough bandwidth to get there, they're taking one of our products, which is a DGX station, it's basically the equivalent of a half a row of servers, but it's in a single box, water cooled, and they're putting it in vans sitting out in remote areas of Alaska, and retraining the model there on site. So, they get the latest model, they get more intelligence and they just collect it, and they can resend the drones up and then discover more about it. So it really, really is saving, and that saves a lot of money, so you have a group of really smart you know, technicians and people who understand it and a guy who can do the neural network capability instead of a whole team coming up and setting up scaffolding that would cost millions of dollars. >> That reminds me of that commercial that they showed yesterday during general session SAP commercial with Clive Owen the actor, talking about, you mentioned, you know, cracks in oil wells and things like that it just reminded me of that, and what they talked about in that video was really how invisible software, like SAP, is transforming industries, saving lives, I think I saw on their website an example of how they're leveraging AI and technology to reduce water scarcity in India or save the rhino conservation and what you just described with NVIDIA seems to be quite in alignment with the direction that SAP is going. >> Oh absolutely, yeah, I mean we believe in SAP's view of the intelligent enterprise and people gotta remember, enterprise isn't just like the corporate office whatever, enterprises are many different things, alright. Public safety, if you can think about that, that's a big thing we focus on. A really amazing thing that's going on, thinking about using drones for first responders they actually can know what's going on at the scene and when the other people are showing up they know what kind of area they're going into. Or for search and rescue, drones can cover a lot of territory and detect a human faster than a human can, right? And if you can actually find someone within the first 24 hours, chance of survival is so much higher. All of that is, you know, leveraging the exact same technology that we do for looking at our business processes, right, and it's not as, you know, dramatic, it's not gonna show up on the evening news, but honestly, streamlining our business processes, making it happen so much faster and more efficient makes businesses more efficient, you know, it's better for the company, it's better for the employees as well. >> So let's talk about, something that's, that's taboo, financial services, making money with data, or with analytics or machine learning from data, again we have to, John Furrier is here, and we have someone from NVIDIA here, and if we don't bring up blockchain in some type of way he's gonna throw something at his team, so, >> Let's give a shout out to John Furrier. (laughing) >> Give a shout out to John. But from a practical sense, let's subtract the digital currency part of machine, of blockchain, do you see applications for blockchain from a machine learning perspective? >> Yeah, I mean well, if you just boil blockchain down or for trusted networks, right? And you know you heard Bill McDermott say that on stage he called his marketplaces, or areas that he could do for an exchange, it makes total sense. If I can have a trusted way of doing things where I have a common ledger between companies and we know that it's valid, that we can each interchange with, yeah it makes complete sense, right, now we gotta get to the practical imitation of that and we have to build the trust of the companies to understand, okay this technology can take you there, and that's where I think, you know, where we come in with our technology capabilities, ensuring to people that it's reliable and work, SAP comes in with the customer relationships and trusted in what they've been doing in helping people run their business for years, and then it becomes cultural. Like all things, we can kid ourselves in technology that we'll just solve everything, it's a cultural change. I'm gonna share that common ledger, I'm gonna share that common network and feel confident in it, it's something that people have to do and, you know, my take on that always is when the accuracy is so much better, when the efficiency is so much better, when the return is so much better, we get a lot more comfortable. People used to be nervous about giving the grocery store their phone number, right, 'cause they would track their food, right? And today we're just like okay yeah here's my phone number. (Keith laughing) >> So. (laughs) >> Give you a 30 cent discount, here's my number. >> Exactly. We're so cheap. (laughing) >> So we're in the NetApp booth and you guys recently announced a reference, combined reference, AI reference architecture with NetApp, tell us a little bit more about that. >> Yeah, well the little secret behind all the things we just talked about, there's an incredible amount of data, right, and as you collect this data it's really important to store it in a way that it's accessible when you need it. And when you're doing trainings, I have a product that's called DGX-1, DGX-1 takes an incredible amount of data that helps us train these neural networks, and it's fast, and it has an insatiable desire for data. So what we've worked with NetApp is actually pool together reference architecture so that when a data scientist, who is a very valuable resource, is working on this, he's ensured that the infrastructures are gonna work together seamlessly and deliver that data to the training process. And then when you create that model, we use something that's called inference, you put it in production, and again same time, when you're having that inference running you wanna make sure that data can get to it and can interact with the data seamlessly and the reference architectures play out there as well. So our goal is, start knocking off one by one, what do the customers need to be successful? And we put a lot of effort into the GPUs, we put a lot of effort into the deep learning software that runs on top of that, we put a lot of effort into, you know, what's the models they need to use, etc. And now we have to spend a lot more time of what's their infrastructure? And make sure that's reliable because, you would hate to do all that work only to find that your infrastructure had a hiccup, and took your job down. So we're working really hard to make sure that never happens >> So I have this theory that, well I don't have the theory, David Curry came out with this theory of data has gravity, but I've come up with this additional theory, now that we look at AI, and the capability of AI and what people are and what the hyper scalers are doing in their data center is that individual companies think, have a challenge replicating in their own data center, this AI and compute now has gravity. You know, I can't well, at least before today I didn't think well I can take my data center, put it on the road, and do these massive pieces of injection on the edge, sounds like we're pushin' back on that a little bit and saying that you know what sure if it's, I don't know what the limits are, and I guess that's the question. What are the limits of what we can do on the edge when it comes to the amount of data, and portable AI to that edge? >> Well so, there's again the two aspects of it, the training takes an incredible amount of data that's why they would have to take a super computer and put it there so they could do the retraining, but, when you think about when you can have the pro-- something the size of a credit card, which is our Jetson solution, and you can install it in a drone or you can put in cameras for public safety, etc. Which is, has incredible, think about looking for a lost child or parents with Alzheimer's, you can scan through video real quick and find them, right? All because of a credit card sized processor, that's pretty impressive. But that's what's happening at the edge, we're now writing applications that are much more intelligent using AI, there are AI applications sitting at the edge that, instead of just processing the data in a way where I'm getting a average, average number of people who walked into my store, right, that's what we used to do five years ago, now we're actually using intelligent applications that are making calculated decisions, it's understanding who's coming in a store, understanding their buying/purchasing power, etc. That's extremely important in retail, because, if you wanna interact with someone and give them that, you know when they're doing self checkout, try to sell 'em one more thing, you know, did you forget the batteries that go with that, or whatever you want it to be, you only have a few seconds, right? And so you must be able to process that and have something really intelligent doing that instead of just trying to do the law of average and get a directionally correct-- and we've known this, anytime you've been on your webpage or whatever and someone recommends something you're like that doesn't have anything to do with me and then all of a sudden it started getting really good that's where they're getting more intelligent. >> When I walk into the store with my White Sox hat and then they recommend the matching jersey. I'm gonna look, gonna come lookin' for you guys at NVIDIA like wa-hey! I don't have money for a jersey, but things like that, yeah. >> We're just behind the scenes somewhere. >> Well, you title VP and GM of Deep Learning and stuff, there's a lot of stuff. (all laugh) Jim thanks so much for coming back on theCUBE sharing with us what's new at NVIDIA it sounds like the world of possibilities is endless, so exciting! >> Yeah, it is an exciting time, thank you. >> Thanks for your time, we wanna thank you for watching theCUBE, Lisa Martin with Keith Townsend from SAP SAPPHIRE 2018, thanks for watching. (bubbly music)