[Music] from the cube studios in palo alto in boston bringing you data-driven insights from the cube and etr this is breaking analysis with dave vellante top security pros indicate that the solar winds hack on top of the pandemic have further heightened a change in how they think about security not only musciso secure an increasingly distributed workforce and network infrastructure but they now must be wary of software code coming from reputable vendors including the very patches designed to protect them against cyber attacks hello everyone and welcome to this week's wikibon cube insights powered by etr in this breaking analysis we'll summarize cso sentiments from a recent etr venn session and provide our quarterly update of the cyber security sector now in an upcoming episode we'll be inviting eric bradley of etr to provide deeper analysis and insights on these trends but we wanted to give you a preliminary preview of what's happening in the sector as we start off 2021. now the solar winds attack was like nothing we've ever seen before it's been covered quite widely in the press but in case you don't know the details solarwinds is a company that provides software to monitor many aspects of largely on-prem infrastructure including things like network performance log files configuration data storage servers and the like now as with all software companies solarwinds sends out regular updates and patches hackers were able to infiltrate the update and trojanize the software meaning when customers installed the updates the malware just went along for the ride now the reason this is so insidious is that often hackers they're going to target installations that haven't installed patches or updates and identified vulnerabilities in the infrastructure that haven't been addressed doors that are open that haven't been closed if you will now here the very code designed to protect against the breach actually facilitated that breach now according to experts this was quite a sophisticated attack that most believe was perpetrated by the russian hacker group cozy bear an advanced persistent threat or apt as classified by the u.s government now it's suspected that somehow they fished their way into a github repo and stole username and password access to allow them to penetrate the supply chain of software that's delivered over the internet but public information on this attack it's still spotty people are still learning now what is known is that the attackers have been lurking since march of last year and they exfiltrated lots of information from the u.s government and many other high-profile companies now here's what the csos and the etr van had to say about it let me just read some of the quotes the impact of this breach is profound it really turned a lot of heads and conventions about cyber security i don't think this threat has been exaggerated in the media we're now in a situation where we have to monitor the monitors this attack didn't have any signatures of a previous attack so you got down to the code level 80 to 90 of that code is being downloaded from the internet it's bringing devops security processes and making us rethink how to reinvent security and i'll add my business friend val berkovici said to me on twitter last year that he thinks the government hack is going to have permanent implications on how organizations approach cyber security it seems these cisos agree now the one question is what can be done about this and when you talk to security pros they'll definitely tell you they're rethinking security practices but look there's only so much you can do here's a tag cloud summarizing some of what we hear in the cube community and in the venn from etr practitioners you hear a lot about xero trust many csos are really leaning into identity access management and pam and mandates around two-factor authentication we've talked a lot about firms like octa sale point cyber arc software and microsoft is coming up more and more in this conversation especially as octa is seen as setting a price umbrella there's definitely some frustration amongst csos about octa's pricing strategies and auth 0 which does authentication as a service that's hitting our radar as well now of course endpoint security is something we've talked a lot about as the work from home trend hit during the pandemic it's become much much more important and you can see in the growth of crowdstrike and as you see in a moment we're getting some traction with vmware and carbon black in the survey data and of course titanium is another company that we've talked about csos look they're not just going to rip out what they have so companies like cisco especially with umbrella and duo they come up in the conversation as does palo alto networks we've said many times palo alto is seen as a thought leader csos like them they also like fortinet especially those that may be more cost cost conscious we see that a lot in mid-market and so on with analytics micro-segmentation cloud security with z-scaler and even rpa to automate certain tasks uipath has come up in the conversation more and more in a security context so you look at this tag cloud and there's no one answer as is often the case case with cyber security lots of tools lots of disciplines and a very capable adversary who has learned to as they say live off the land using your own infrastructure and tooling against you now the common narrative is that security is a top priority with cios and csos and budgets are going to be up so let's take a look at that well kind of here's a chart that shows the net scores or spending momentum for various sectors of the etr tech taxonomy and we've highlighted the information security segment yes it's up relative to the october survey but it really doesn't stand out i mean everything's up as we've reported coming off a down year in tech spending minus four percent last year and we're forecasting a plus six to seven percent increase this year really depending on on the pace of their recovery but the point is cyber is one of many budget organizations and organizations they're simply not going to open up a blank check to the cso now part of the reason is they're heavily invested in cyber this graphic shows several sectors in context and we've highlighted security in the red box the vertical axis that shows spending velocity and the horizontal axis is market share or presence in the data set and you can see the security it's got a big presence it's pervasive of course but it lags some of the top sectors in terms of spending velocity because look organizations they've got lots of priorities and as you'll see in a moment this space like most mature markets has some companies with off the charts spending patterns and others that lag so let's dig into that a little bit here you see that same xy graphic and we've plotted a number of security players so there's a couple of points here that we want to make first microsoft as usual is off the charts to the right and amazingly has a net score of 48 percent so highly elevated octa continues to lead this pack in net score as it has the last several surveys it's got a net score of 61.5 percent up from last quarter survey octa crowdstrike cyberark fortinet proof point and splunk are all up nicely from last quarter's survey we also really want to highlight carbon black the company's net score last quarter was 23.9 percent with 134 mentions in this quarter its net score shot up to nearly 38 so a very meaningful and noticeable move for vmware's 2.1 billion dollar acquisition that it made in the summer of 2019. so a number of companies that have momentum which stems from a rebound in tech spending but also a shift in security spend that we've highlighted and you can see a couple of legacy security firms that are also there in the chart losing momentum we've highlighted fireeye and rsa okay so now let's dig deeper into the data and the vendor performance here's a view of the data that we first showed you in 2019 it shows the net score and the shared n which identifies the number of mentions within the sector and it's an indicator of presence in the marketplace the leftmost chart is sorted by netscore and the right-hand chart is sorted by shared n so to make this chart you had to have at least an n of 50 in the survey again you can see octa sale and sale point lead in net score and microsoft has the biggest presence in the right hand side along with cisco and palo alto and something we started two years ago was if a vendor shows up in the top 10 for both net score and shared n we anointed them with four stars so these are the four star companies microsoft palo alto octa and crowdstrike which crouch by the way it fell off but it's back on and i think that was probably a survey anomaly because based on the company's financials there has been no loss of momentum for crowdstrike and we give two stars to those companies that make the top 20 in both categories so cisco because of umbrella and duo splunk proofpoint fortinet z z-scaler cyborg and carbon black vmware carbon black is new to the two-star list due to its rapid rise in net score that we just talked about now just a quick aside on carbon black at vmworld 2019 pat gelsinger told john furrier and me that he felt like he got a great deal picking up carbon black for 2.1 billion dollars now his logic was in part based on the valuation of crowdstrike at the time which is of course carbon black competitor crowdstrike as you can see on this chart had a valuation that was at nine times higher than that of carbon black and you can see from the trailing 12-month revenue that crowdstrike was a significantly larger company by more than 100 million dollars in revenue so the real story though was the company's growth crowdstrike at the time was growing much much faster than carbon black at more than a hundred percent compared to carbon blacks 22 roughly now in vmware's recent earnings call they said that carbon black had good bookings performance so who knows exactly what that means but if it were more than 22 my guess is that vmware vmware would have been more effusive in its commentary so let's assume that since the acquisition carbon black growth has been flattish you know maybe down maybe up but probably flat so vmware they're figuring out how to integrate the company and we think that as it does that it's going to use its channel of distribution and global presence to really drive carbon black sales now nonetheless we would still peg carbon black's valuation of having increased pretty substantially since the time of the acquisition perhaps in the three to five billion range we don't know for sure so but a nice pickup in our view for vmware and it'll likely grow from here based on the etr data then that's very encouraging for carbon black now let's look at how the valuations in this sector have changed since before covid here's an updated view of our valuation matrix since just before the pandemic hit in the u.s as you can see the s p is up 16 from that time frame the nas composite up 43 percent wow now look at the others only splunk really hasn't seen a huge uptick in valuation but the others have either risen noticeably like proof point cyber arc sail point they bounced up like palo alto or fortinet or exploded like crowd chat octa and z scalar you combine all these and you're talking about 114 billion dollar increase in market cap for these so one would think carbon black as a vmware asset has done pretty well along with these names and we would expect that the tech spending rebound this year combined with the heightened concerns over the solar winds hack and the tectonic shifts from the accelerated work from home and digital business transformations will continue to bode well for many of these names for quite some time all right let's wrap it up with some of the things we're watching in this space as we exit the pandemic and experience a new digital reality cyber threats have never been greater look each january if you look back on the prior year you'd be able to say the same thing for the last couple of decades and the reality is the budgets and spending on cyber they're asymmetric to the economic risks we just don't spend enough and probably can't spend enough to solve this problem csos they have to balance their legacy legacy install base security infrastructure with the shift to zero trust accelerated endpoint new access management challenges the ever expanding cloud and dot dot dot lack of talent remains the single biggest challenge for organizations which are stretch thin making investments in automation a trend that is not going to abate anytime soon in cyber all the cliches apply there is no silver bullet there is no rest for the weary the adversary they are well funded and extremely capable and they only have to succeed once to create a business disaster for an organization that has to succeed every day 24 hours a day so expect more of the same with no end in sight in terms of complexity fragmentation and whack-a-mole approaches to fighting cyber crime i hate to say this but it just means the fundamentals for the sector just keep getting better and better sorry okay that's it for this week remember all these episodes are available as podcasts wherever you listen so please subscribe i publish weekly on wikibon.com and siliconangle.com and don't forget to check out etr.plus for all the survey data and the analytics i appreciate the comments on my linkedin post you can dm me at [Music] you

from the cube studios in palo alto in boston bringing you data driven insights from the cube and etr this is breaking analysis with dave vellante as we watch an historic election unfold before our eyes we look back at the early days of the millennium with the memorable presidential race of 2000 that decade of course was defined by 911 which permanently reshaped our thinking and we exited that decade at the tail end of a massive financial crisis only to enter the 2010s with the hope and the momentum of fiscal stimulus a flat globe job growth and very importantly the ascendancy of the cloud cloud computing unquestionably powered the innovation engine over the last 10 years and the pandemic marks a new era where adoption of cloud data and ai have been accelerated by at least two to three years and that's what's going to shape the future of the technology industry and frankly all businesses and organizations hello everyone and welcome to this week's episode of thecube insights powered by etr in this breaking analysis we're going to update you on our latest cloud market share and dig in to some fresh october survey data from our partners over at etr let me start just with a brief summary of the latest action that's going on in cloud now quite interestingly each of the big three cloud players they showed nearly identical year-on-year growth rates in q3 as they did in q2 now we're going to dig into that in a moment but our data suggests that these three companies combined will account for more than 75 billion dollars in infrastructure as a service and platform as a service revenue in 2020 and they're potentially on track to hit 100 billion in 2021. customer survey data indicates that cio's top two infrastructure priorities remain security and cloud migration now that said as we previously reported the cloud it's not immune to the pandemic the remote worker pivot well it's a positive for cloud hasn't completely eradicated certain headwinds now what i mean here is that because the cloud vendors are now so large they're somewhat exposed to the softness in the overall i.t spending climate and also industries that have been hit hardest by the pandemic now would the cloud growth have been better if the pandemic didn't hit we'll never know for sure but our data suggests no covet has definitely been a benefactor to cloud in our view cloud will remain at the center of technological innovation for the foreseeable future the economics of cloud are becoming so compelling that we think the power of the big cloud companies will only increase this decade now importantly we're talking about the costs of running hyper-distributed systems we're not commenting here on what they charge customers that's a different story we believe the cost structure for the hyperscalers is superior to alternative approaches and we believe this advantage will only accelerate over the next several years we also believe that competition is going to continue to drive competitive pricing and innovation all right let's look at our latest market share numbers for the big three this chart shows our estimates of aws azure and the google cloud platform now viewers of this program know that these are is and pass figures and you also know that aws is the only company that provides clean numbers on that sector whereas azure and gcp are estimates that we make based on tidbits of guidance that the companies give us and survey data that we capture and other modeling that we do now as we've said we'll end this year it's about 75 billion in revenue or maybe even a little bit more note that for these three note that we've we've slightly restated some of our earlier estimates for azure to reconcile some differences that we had between constant currency and actual growth we try to keep things in constant currency where possible sorry for that but sometimes that happens azure according to our estimates as we reported last week is now 18 of microsoft's overall revenue number we had it at 19 that last week but when i dug in we made some adjustments so we toned it down a bit aws represents a much smaller percentage of course of amazon's revenues at about 12 percent but it represents 56 percent of amazon's profits gcp on the other hand accounts for less than five percent of google's overall revenue which as we've stated a few weeks ago needs more attention from google but look at the growth rates for these three platforms and the respective size of their is and pass businesses hear all this talk about repatriation i.e that what i mean by that is people go to the cloud but they're unhappy or the bill is too high it's too expensive so then they come back on prem well you just don't see that in the numbers so you gotta be careful when vendor a vendor tries to sell you on that trend i don't buy it except for selective situations now let's bring in some of the etr data and compare the spending momentum for each of the big three you've seen these wheel graphs before they show the breakdown of net score for aws microsoft and google now one note these figures represent these three companies overall within the etr technology taxonomy so for example they don't include amazon's retail business of course but they do include for example microsoft's entire tech portfolio not just the cloud the green portion of the wheel represents increases in spending via new adoptions and increased spending whereas the red sections show decreases via lower spending and defections net score which i've highlighted in the orange is calculated by subtracting the two reds from the two true greens in other words adoptions and increase minus decrease and replacements the takeaway here is these are all pretty strong with aws leading the pack microsoft is exceptionally strong as we pointed out last last week because they're so huge and they still have net scores comparable to aws which is a pure play gcp is a laggard and is showing softness in the data despite a sanguine outlook that we had back in 2019 based on survey data i don't know perhaps google's smaller presence muted their customers ability to take advantage of the platform the thinking there is the customers maybe needed to pivot to the cloud so quickly and aws and azure were the incumbents and that was maybe the most expedient path hence the higher increases in the spend more category but you do see gcp um they had 13 new adoptions which is pretty good so we'll keep looking at that regardless again these are not pure play cloud comparisons but they give a good indication of spending momentum i'd also note that all three show very low defections well each is showing solid increases in new adoptions especially google as i mentioned so that's kind of interesting to see but again google much much smaller you would expect that now i want to turn our attention to one of the hottest areas in cloud which is serverless and this is a pure play comparison so serverless let me start there it's a strange term because it's not really accurate but it's stuck serverless computing is a model where the cloud platform dynamically delivers services as the application requires so so you don't have to configure the compute and the containers for example rather when an application needs resources it goes and gets them and you only pay for when the services are actually invoked and in use so it's really good for workloads that spin up and spin down very frequently it kind of reminds me in concept anyway of the component tree that we saw in the days of soa if you remember that services oriented architecture but now this is cloud it's cloud native it's a whole new world and it's increasingly a popular model and as we'll show in a moment there's a lot of spending momentum in this area but before we do that i want to share some comments made by andy jassy a while back about serverless take a listen it's a good question and you know i really the comment i made was really about um directionally what amazon would do you know in this in the very earliest days of aws jeff used to say a lot if i were starting amazon today i'd have built it on top of aws we didn't have all the capability and all the functionality at that very moment but he knew what was coming and he saw what people were still able to accomplish even with where the services were at that point i think the same thing is true here with lambda which is i think if amazon were starting today it's a given they would build it on the cloud and i think with a lot of the applications that comprise amazon's consumer business we would build those on on our serverless capabilities now now lambda of course jesse referring to lambda that's amazon's serverless offering and if you think about amazon's retail business and take for example the frequent spin up and spin down of resources for something like black monday serverless would be a much more cost effective approach same for a managed data warehouse service for example where you know you don't want to pay for the compute if it's idle the app just calls for the compute when it's needed so it's a very popular model and it's got increased momentum today and you see that in this slide it shows the net score breakdown for serverless for azure aws is lambda which is again is their serverless offering and google cloud functions again you're shipping functions to the application that's why it's called functions look at the net scores azure functions nearly 70 aws at 65 google again lagging and that's a bit of a concern because this is a really really hot space all right let's move on and look at the competitive landscape as we like to do often and update you on that this xy graph is one of our favorites and it shows net score or spending momentum on the vertical axis and market share on the horizontal market share is a measure of pervasiveness in the data set in the upper right you also see a table that ranks each vendor my net score and it includes the shared n in other words the number of mentions in this sector for each vendor now you can you can see up top in the middle i've selected on the cloud computing category so this represents only the cloud businesses for each of these players there's a little bit of nuance here and that we've selected on microsoft azure there's a category in the etr taxonomy for that and we're comparing that with aws overall so there's there are things in the aws overall number that fit into the other parts of the taxonomy like maybe ai collaboration etc whereas azures and gcp are just the cloud segments so i i know it's a bit strange because aws is all cloud but don't get caught up in the taxonomical nuance the point is it's good to be azure in aws it's shown there when you look at the upper right of the chart here they stand out and they stand alone in cloud leadership google cloud is they have nice elevated levels but they're much much smaller they don't have the presence in the market now look at that hybrid cloud zone emerging we've talked about this sometimes in the past and and i want to call it vmware cloud on aws red hat open shift and vmware cloud itself like vmware cloud foundation and their other cloud services all of these appear to be gaining traction and you can see in the number of occurrences in the upper right that shared end that i talked about we're starting to see real numbers that are meaningful in this space vmware cloud on aws for example has a net score of 53 percent with 116 accounts within that total respondent sample that you see there in the middle left of 1438 that's how many cios and technology buyers responded to the etr survey in october you look at open shift at 45 net score and that's with 82 accounts now openshift is in beta with what looked to be some really strong offerings on aws and you can see for context i've added dell emc's cloud offerings hpe's cloud offerings and the oracle cloud and ibm cloud and also rackspace dell actually pretty strong with a net score of 20 and 185 shared accounts much much higher than dell overall which is kind of in the red zone oracle ibm you see those rackspace you know organizing not killing it rackspace is kind of in the big negative so that's a concern but anyway we'd like for these guys we'd like to see the data match the marketing rhetoric for the the guys that are in the red and look alibaba is starting to to show up in the server there's only 26 shared ends but we thought we'd we'd put it in there those three key points again aws and microsoft keep on trucking google needs to do better hybrid is becoming real and that bodes well for multi-cloud and the legacy on-prem guys they got a lot of work to do they're under a lot of pressure the pivot to cloud has not been easy for them uh and it's still a case where they're i've talked about this a lot they're they're declines in their on-premises offerings they're not being offset by the new stuff the cloud momentum all right i want to close out by sharing some of the conversations and thoughts that we've had in the community around sas and its impact on cloud we really have been focusing on ias and pass of the sas layer obviously up the stack so let me first share that there's a lot of talk around and has been for years about aws they're slowing growth rates and whether or not they'll have to enter the sas market to expand their total available market and i've said consistently while i never say never about aws i don't think so at least not yet this chart plots the big three cloud players note aws is a bigger piece of this pie now that i've turned off the cloud computing filter and i know more nuances but the data wonks will will find you know see this and they'll ask me about it this is all of aws portfolio and again it's only the microsoft azure portfolio so you see it aws now overtakes azure on the x-axis i.e market share now we've plotted some of the major sas vendors and you can see servicenow and salesforce both very large and they have really strong spending momentum and servicenow's you know pushing 100 billion dollars in market value they've surpassed workday quite some time ago workday's got less presence but they've got really really solid net score and i got to say i'm impressed with sap despite some of the earnings challenges that they've been having they're right up there with splunk and tableau splunk has softened in recent surveys and i've i've also plotted in there netsuite and oracle fusion which are just okay and that is i think for now anyway aws is going to position as the best place and the most friendly and highest quality cloud in which to run your sas for example workday runs on aws aws is salesforce's preferred infrastructure platform so my premise here is just like retail companies might want not want to run on aws a number of sas companies that compete with microsoft they might think twice about running on azure so aws would be better off for now trying to attract those sas players and drive their services and sticking to infrastructure and the pass layer snowflake is actually kind of interesting and i've added them for context because their netscore is always kind of a bellwether it's really off the charts and they're an isv running on the cloud they're different from some of the other sas players and the snowflake is a database okay and most of snowflake's business runs on aws and aws competes with snowflake with redshift but aws has the best cloud and drives a lot of business for snowflake and vice versa so it's kind of interesting snow snowflake to redshift and a much smaller example is kind of like netflix to amazon prime video to compete they both thrive so i think aws is going to continue to grow by attracting sas players as the preferred platform and they'll also attract developers and try to disrupt sas players like servicenow which runs on its own cloud i remember years ago david floyer and i said that servicenow was it was awesome but at some point its infrastructure cost structure its infrastructure cost structure is going to be less competitive than those companies that are running on hyperscale clouds certainly the hyperscale clouds themselves and servicenow they have this multi-instance architecture which just can't easily port over to the cloud but it can charge a lot which it does now at some point some sharp developers are going to look at all this and say whoa see that service now i can build this for less and they'll attack servicenow and their seat base license model maybe with the consumption pricing model and a platform that's perhaps or a set of services that are perhaps less expensive you're seeing this to a you know a certain degree with like elastic inside the application performance management space so there's some some things to watch there but there are those who firmly believe that aws will and must enter the sas space directly we talked last week about how beneficial microsoft's application business is for azure and what a flywheel that is but for me i think we're not there yet let's give it some time i think maybe four to five years before aws may even start to think about filling some of the space up the stack now maybe they'll find some unique opportunities to do that for instance at the edge but i think that's way off okay so bottom line it's good to be in tech these days it's even better to be in the cloud and it's best if you're aws and microsoft and i don't see that changing for a while now remember these episodes are all available as podcasts wherever you listen i publish each week on wikibon.com and siliconangle.com you can get in touch with me through email it's david at siliconangle.com feel free to dm me on twitter at d vallante i post on linkedin love your comments there thank you and don't forget to check out etr plus for all the survey action thanks for watching this episode of thecube insights powered by etr this is dave vellante stay safe stay sane and we'll see you next time you

>>Hi, everyone. Good afternoon. Thank you for joining this session. I feel honored to be invited to speak here today. And I also appreciate entity research Summit members for organ organizing and giving this great opportunity. Please let me give a quick introduction. First, I'm a Takashi from Marvin American population, and I'm leading technology scouting and global ation with digital health companies such as Business Alliance and Strategically Investment in North America. And since we started to focus on this space in 2016 our team is growing. And in order to bring more new technologies and services to Japan market Thesis year, we founded the new service theories for digital health business, especially, uh, in medical diagnosis space in Japan. And today I would like to talk how health care has been transformed for my micro perspective, and I hope you enjoy reasoning it. So what's happened since the US identify the first case in the middle of January, As everyone knows, unfortunately, is the damaged by this pandemic was unequal amongst the people in us. It had more determined tal impact on those who are socially and economically vulnerable because of the long, long lasting structural program off the U. S. Society and the Light Charity about daily case rating elevator country shows. Even in the community, the infection rate off the low income were 4.5 times higher than, uh, those of the high income and due to czar straight off the Corvette, about 14 million people are unemployed. The unique point off the U. S. Is that more than 60% of insurance is tied with employment, so losing a job can mean losing access to health care. And the point point here is that the Corvette did not create healthcare disparity but, uh nearly highlighted the underlying program and necessity off affordable care for all. And when the country had a need to increase the testing capacity and geographic out, treat the pharmacies and retails joined forces with existing stakeholders more than 90% off the U. S Corporation live within five miles off a community pharmacy such as CVS and Walgreen, so they can technically provide the test to everyone in all the community. And they also have a huge workforce memory pharmacist who are eligible to perform the testing scale, and this very made their potential in community based health care. Stand out and about your health has provided on alternative way for people to access to health care. At affordable applies under the unusual setting where social distancing, which required required mhm and people have a fear of infection. So they are afraid to take a public transportacion and visit >>the doctor the same thing supplied to doctor and the chart. Here is a number of total visit cranes by service type after stay at home order was issued across the U. S. By Ali April patient physical visits to doctor's offices or clinics declined by ALAN 70%. On the other hand, that share, or telehealth, accounted for 25% of the total total. Doctor's visit in April, while many states studied to re opening face to face visit is gradually recovering. And overall Tele Health Service did not offset the crime. Physician Physical doctor's visit and telehealth John never fully replace in person care. However, Telehealth has established a new way to provide affordable care, especially to vulnerable people, and I don't explain each player's today. But as an example, the chart shows the significant growth of the tell a dog who is one of the largest badger care and tell his provider, I believe there are three factors off paradox. Success under the pandemic. First, obviously tell Doc could reach >>the job between those patients and doctors. Majority of the patients who needed to see doctors who are those who have underlying health conditions and are high risk for Kelowna, Bilis and Secondary. They showed their business model is highly scalable. In the first quarter of this year, they moved quickly to expand their physical physicians network to increase their capacity and catch up growing demand. To some extent, they also contributed to create flexible job for the doctors who suffered from Lydia's appointment and surgery. They utilized. There are legalism to maximize the efficiency for doctors and doing so, uh, they have university maintained high quality care at affordable applies Yeah, and at the same time, the government recognize the body of about your care and de regulated traditional rules to sum up she m s temporary automated to pay a wide range of tell Her services, including hospital visit and HHS temporarily waived hip hop minorities for telehealth cases and they're changed allowed provider to use communication tools such as facetime and the messenger. During their appointment on August start, the government issued a new executive order to expand tell his services beyond the pandemic. So the government is also moving to support about your health care. So it was a quick review of the health care challenges and somewhat advancement in the pandemic. But as you understand, since those challenges are not caused by the pandemic, problems will stay remain and events off this year will continuously catalyze the transformation. So how was his cherished reshaped and where will we go? The topic from here can be also applied to Japan market. Okay, I believe democratization and decentralization healthcare more important than ever. So what does A. The traditional healthcare was defined in a framework over patient and a doctor. But in the new normal, the range of beneficiaries will be expanded from patient to all citizens, including the country uninsured people. Thanks to the technology evolution, as you can download health management off for free on iTunes stores while the range of the digital health services unable everyone to participate in new health system system. And in this slide, I put three essential element to fully realize democratization and decentralization off health care, health, literacy, data sharing and security, privacy and safety in addition, taken. In addition, technology is put at the bottom as a foundation off three point first. Health stimulus is obviously important because if people don't understand how the system works, what options are available to them or what are the pros and cons of each options? They can not navigate themselves and utilize the service. It can even cause a different disparity. Issue and secondary data must be technically flee to transfer. While it keeps interoperability ease. More options are becoming available to patient. But if data cannot be shared among stakeholders, including patient hospitals in strollers and budget your providers, patient data will be fragmented and people cannot yet continue to care which they benefited under current centralized care system. And this is most challenging part. But the last one is that the security aspect more players will involving decentralized health care outside of conventional healthcare system. So obviously, both the number of healthcare channels and our frequency of data sharing will increase more. It's create ah, higher data about no beauty, and so, under the new health care framework, we needed to ensure patient privacy and safety and also re examine a Scott write lines for sharing patient data and off course. Corbett Wasa Stone Catalyst off this you saved. But what folly. Our drivers in Macro and Micro Perspective from Mark Lowe. The challenges in healthcare system have been widely recognized for decades, and now he's a big pain. The pandemic reminded us all the key values. Misha, our current pain point as I left the church shores. Those are increasing the population, health sustainability for doctors and other social system and value based care for better and more affordable care. And all the elements are co dependent on each other. The light chart explained that providing preventive care and Alan Dimension is the best way threes to meet the key values here. Similarly, the direction of community based care and about your care is in line with thes three values, and they are acting to maximize the number of beneficiaries form. A micro uh, initiative by nonconventional players is a big driver, and both CBS and Walmart are being actively engaged in healthcare healthcare businesses for many years. And CBS has the largest walking clinic called MinuteClinic, Ottawa 1100 locations, and Walmart also has 20 primary clinics. I didn't talk to them. But the most interesting things off their recent innovation, I believe, is that they are adjusted and expanded their focus, from primary care to community health Center to out less to every every customer's needs. And CBS Front to provide affordable preventive health and chronic health monitoring services at 1500 CBS Health have, which they are now setting up and along a similar line would Mark is deploying Walmart Health Center, where, utilizing tech driven solutions, they provide affordable one stop service for core healthcare. They got less, uh, insurance status. For example, more than 40% of the people in U. S visit will not every big, so liberating the huge customer base and physical locations. Both companies being reading decentralization off health care and consumer device company such as Apple and Fitbit also have helped in transform forming healthcare in two ways. First, they are growing the boundaries between traditional healthcare and consumer product after their long development airport available, getting healthcare device and secondary. They acted as the best healthcare educators to consumers and increase people's healthcare awareness because they're taking an important role in the enhancement, health, literacy and healthcare democratization. And based on the story so far, I'd like to touch to business concept which can be applied to both Japan and the US and one expected change. It will be the emergence of data integration plot home while the telehealth. While the healthcare data data volume has increased 15 times for the last seven years and will continuously increase, we have a chance to improve the health care by harnessing the data. So meaning the new system, which unify the each patient data from multiple data sources and create 360 degrees longitudinal view each individual and then it sensitized the unified data to gain additional insights seen from structure data and unable to provide personal lives care. Finally, it's aggregate each individual data and reanalyzed to provide inside for population health. This is one specific model I envision. And, uh, health care will be provided slew online or offline and at the hospital or detail store. In order to amplify the impact of health care. The law off the mediator between health care between hospital and citizen will become more important. They can be a pharmacy toe health stand out about your care providers. They provide wide range of fundamental care and medication instruction and management. They also help individuals to manage their health care data. I will not explain the details today, but Japan has similar challenges in health care, such as increasing healthcare expenditure and lack of doctors and care givers. For example, they people in Japan have physical physician visit more than 20 times a year on average, while those in the U. S. On >>the do full times it sounds a joke, but people say because the artery are healthy, say visit hospitals to see friends. So we need to utilize thes mediators to reduce cost while they maintained social place for citizens in Japan, the government has promoted, uh, usual family, pharmacist and primary doctors and views the community based medical system as a policy. There was division of dispensing fees in Japan this year to ship the core load or pharmacist to the new role as a health management service providers. And so >>I believe we will see the change in those spaces not only in the U. S, but also in Japan, and we went through so unprecedented times. But I believe it's been resulting accelerating our healthcare transformation and creating a new business innovation. And this brings me to the end of my presentation. Thank you for your attention and hope you could find something somehow useful for your business. And if you have any questions >>or comments, please for you feel free to contact me.

>>Hi, everyone. Good afternoon. Thank you for joining this session. I feel honored to be invited to speak here today. And I also appreciate entity research Summit members for organ organizing and giving this great opportunity. Please let me give a quick introduction. First, I'm a Takashi from Marvin American population, and I'm leading technology scouting and global ation with digital health companies such as Business Alliance and Strategically Investment in North America. And since we started to focus on this space in 2016 our team is growing. And in order to bring more new technologies and services to Japan market Thesis year, we founded the new service theories for digital health business, especially, uh, in medical diagnosis space in Japan. And today I would like to talk how health care has been transformed for my micro perspective, and I hope you enjoy reasoning it. So what's happened since the US identify the first case in the middle of January, As everyone knows, unfortunately, is the damaged by this pandemic was unequal amongst the people in us. It had more determined tal impact on those who are socially and economically vulnerable because of the long, long lasting structural program off the U. S. Society and the Light Charity about daily case rating elevator country shows. Even in the community, the infection rate off the low income were 4.5 times higher than, uh, those of the high income and due to czar straight off the Corvette, about 14 million people are unemployed. The unique point off the U. S. Is that more than 60% of insurance is tied with employment, so losing a job can mean losing access to health care. And the point point here is that the Corvette did not create healthcare disparity but, uh nearly highlighted the underlying program and necessity off affordable care for all. And when the country had a need to increase the testing capacity and geographic out, treat the pharmacies and retails joined forces with existing stakeholders more than 90% off the U. S Corporation live within five miles off a community pharmacy such as CVS and Walgreen, so they can technically provide the test to everyone in all the community. And they also have a huge workforce memory pharmacist who are eligible to perform the testing scale, and this very made their potential in community based health care. Stand out and about your health has provided on alternative way for people to access to health care. At affordable applies under the unusual setting where social distancing, which required required mhm and people have a fear of infection. So they are afraid to take a public transportacion and visit >>the doctor the same thing supplied to doctor and the chart. Here is a number of total visit cranes by service type after stay at home order was issued across the U. S. By Ali April patient physical visits to doctor's offices or clinics declined by ALAN 70%. On the other hand, that share, or telehealth, accounted for 25% of the total total. Doctor's >>visit in April, while many states studied to re opening face to face visit is gradually recovering. And overall Tele Health Service did not offset the crime. Physician Physical doctor's visit and telehealth John never fully replace in person care. However, Telehealth has established a new way to provide affordable care, especially to vulnerable people, and I don't explain each player's today. But as an example, the chart shows the significant growth of >>the tell a dog who is one of the largest badger care and tell his provider, I believe there are three factors off paradox. Success under the pandemic. First, obviously tell Doc could reach >>the job between those patients and doctors. Majority of the patients who needed to see doctors who are those who have underlying health conditions and are high risk for Kelowna, Bilis and Secondary. They showed their business model is highly scalable. In the first quarter of this year, they moved quickly to expand their physical physicians network to increase their capacity and catch up growing demand. To some extent, they also contributed to create flexible job for the doctors who suffered from Lydia's appointment and surgery. They utilized. There are legalism to maximize the efficiency for doctors and doing so, uh, they have university maintained high quality care at affordable applies Yeah, and at the same time, the government recognize the body of about your care and de regulated traditional rules to sum up she m s temporary automated to pay a wide range of tell Her services, including hospital visit and HHS temporarily waived hip hop minorities for telehealth cases and they're changed allowed provider to use communication tools such as facetime and the messenger. During their appointment on August start, the government issued a new executive order to expand tell his services beyond the pandemic. So the government is also moving to support about your health care. So it was a quick review of the health care challenges and somewhat advancement in the pandemic. But as you understand, since those challenges are not caused by the pandemic, problems will stay remain and events off this year will continuously catalyze the transformation. So how was his cherished reshaped and where will we go? The topic from here can be also applied to Japan market. Okay, I believe democratization and decentralization healthcare more important than ever. So what does A. The traditional healthcare was defined in a framework over patient and a doctor. But in the new normal, the range of beneficiaries will be expanded from patient to all citizens, including the country uninsured people. Thanks to the technology evolution, as you can download health management off for free on iTunes stores while the range of the digital health services unable everyone to participate in new health system system. And in this slide, I put three essential element to fully realize democratization and decentralization off health care, health, literacy, data sharing and security, privacy and safety in addition, taken. In addition, technology is put at the bottom as a foundation off three point first. Health stimulus is obviously important because if people don't understand how the system works, what options are available to them or what are the pros and cons of each options? They can not navigate themselves and utilize the service. It can even cause a different disparity. Issue and secondary data must be technically flee to transfer. While it keeps interoperability ease. More options are becoming available to patient. But if data cannot be shared among stakeholders, including patient hospitals in strollers and budget your providers, patient data will be fragmented and people cannot yet continue to care which they benefited under current centralized care system. And this is most challenging part. But the last one is that the security aspect more players will involving decentralized health care outside of conventional healthcare system. So obviously, both the number of healthcare channels and our frequency of data sharing will increase more. It's create ah, higher data about no beauty, and so, under the new health care framework, we needed to ensure patient privacy and safety and also re examine a Scott write lines for sharing patient data and off course. Corbett Wasa Stone Catalyst off this you saved. But what folly. Our drivers in Macro and Micro Perspective from Mark Lowe. The challenges in healthcare system have been widely recognized for decades, and now he's a big pain. The pandemic reminded us all the key values. Misha, our current pain point as I left the church shores. Those are increasing the population, health sustainability for doctors and other social system and value based care for better and more affordable care. And all the elements are co dependent on each other. The light chart explained that providing preventive care and Alan Dimension is the best way threes to meet the key values here. Similarly, the direction of community based care and about your care is in line with thes three values, and they are acting to maximize the number of beneficiaries form. A micro uh, initiative by nonconventional players is a big driver, and both CBS and Walmart are being actively engaged in healthcare healthcare businesses for many years. And CBS has the largest walking clinic called MinuteClinic, Ottawa 1100 locations, and Walmart also has 20 primary clinics. I didn't talk to them. But the most interesting things off their recent innovation, I believe, is that they are adjusted and expanded their focus, from primary care to community health Center to out less to every every customer's needs. And CBS Front to provide affordable preventive health and chronic health monitoring services at 1500 CBS Health have, which they are now setting up and along a similar line would Mark is deploying Walmart Health Center, where, utilizing tech driven solutions, they provide affordable one stop service for core healthcare. They got less, uh, insurance status. For example, more than 40% of the people in U. S visit will not every big, so liberating the huge customer base and physical locations. Both companies being reading decentralization off health care and consumer device company such as Apple and Fitbit also have helped in transform forming healthcare in two ways. First, they are growing the boundaries between traditional healthcare and consumer product after their long development airport available, getting healthcare device and secondary. They acted as the best healthcare educators to consumers and increase people's healthcare awareness because they're taking an important role in the enhancement, health, literacy and healthcare democratization. And based on the story so far, I'd like to touch to business concept which can be applied to both Japan and the US and one expected change. It will be the emergence of data integration plot home while the telehealth. While the healthcare data data volume has increased 15 times for the last seven years and will continuously increase, we have a chance to improve the health care by harnessing the data. So meaning the new system, which unify the each patient data from multiple data sources and create 360 degrees longitudinal view each individual and then it sensitized the unified data to gain additional insights seen from structure data and unable to provide personal lives care. Finally, it's aggregate each individual data and reanalyzed to provide inside for population health. This is one specific model I envision. And, uh, health care will be provided slew online or offline and at the hospital or detail store. In order to amplify the impact of health care. The law off the mediator between health care between hospital and citizen will become more important. They can be a pharmacy toe health stand out about your care providers. They provide wide range of fundamental care and medication instruction and management. They also help individuals to manage their health care data. I will not explain the details today, but Japan has similar challenges in health care, such as increasing healthcare expenditure and lack of doctors and care givers. For example, they people in Japan have physical physician visit more than 20 times a year on average, while those in the U. S. On the do full times it sounds a joke, but people say because the artery are healthy, say visit hospitals to see friends. So we need to utilize thes mediators to reduce cost while they maintained social place for citizens in Japan, the government has promoted, uh, usual family, pharmacist and primary doctors and views the community based medical system as a policy. There was division of dispensing fees in Japan this year to ship the core load or pharmacist to the new role as a health management service providers. And so I believe we will see the change in those spaces not only in the U. S, but also in Japan, and we went through so unprecedented times. But I believe it's been resulting accelerating our healthcare transformation and creating a new business innovation. And this brings me to the end of my presentation. Thank you for your attention and hope you could find something somehow useful for your business. And if you have any questions >>or comments, please for you feel free to contact me. Thank you.

(thoughtful electronic music) >> From theCUBE studios in Palo Alto and Boston, bringing you data-driven insights from theCUBE and ETR, this is Breaking Analysis with Dave Vellante. >> Enterprise applications are an enormous market, and they're enormously important to organizations globally. Essentially, the world's businesses are running on enterprise applications. Companies' processes are wired into these systems, and the investments that they make in people, process, and technology are vital to these companies' success. But it's complicated because many of these systems are decades old. Markets have changed, but the ERP system for example fundamentally hasn't. Hello everyone, and welcome to this week's Wikibon CUBE Insights, powered by ETR. This week, we're going to do a data download on the enterprise software space, and put forth some themes in our thesis around this very important segment. I'd like to do a shout-out to my friend Sarbjeet Johal, who helped me frame this segment, and he's a strategic thinker and he shared some excellent insights for this episode. What I'd first like to do is let's lay out the scope of what we're going to talk about today. So we're going to focus on the core enterprise apps that companies rely on to run their businesses. Talkin' about the systems of record here, the ERP, the financial systems, HR, CRMs, service management we'll put in there. We may touch on some of the other areas, but this is core that we're going to drill into. This is a big, big market. Customers spend many hundreds of billions of dollars in this area, you could argue about a half a trillion. And it's a mature market, as you'll see from the data. Look, it's good to be in the technology business today. This business is doing better than most, and within the technology business, it's better to be in software because of the economics and scale. And if you have a SaaS cloud model, it's even better. But the market, it is fragmented, not nearly as much as it used to be, but there are many specialized areas where leaders have emerged. ServiceNow and ITSM or Workday and HCM are good examples of companies that've specialized and then exploded, first as we saw ServiceNow blow past Workday's valuation. It was nearly 2x at one point. Now, that was before Workday crushed its earnings this week. It's up 15% today. ServiceNow took a slight breather earlier this month, but it's up on Workday sympathy today. Salesforce also beat earnings, and of course replaced Exxon Mobile on the DOW Industrials, can you imagine that? But let's bring it back to this digital transformation that you hear about. This is the big cliche from all the tech companies and especially software players. Now a lot of this DX, I sometimes call it, is related to old systems. It's especially true for the mega-caps like Oracle, SAP, PeopleSoft, JD Edwards, and even Microsoft. Take ERP and some of the mature products for example, like Oracle R12, or SAP R3 or R4. Many of these systems were put in place 15 years ago, and yeah, they're going to need to transform. They are burnt in. They were installed in what, 2005? It was before the iPhone, before social media, before machine learning and AI made its big comeback, and before cloud. These systems were built on the 1.0 of cloud. The businesses have changed but the software really hasn't. It happens every 10 to 15 years, companies have to upgrade or re-implement their systems, and optimize for the way business now runs, because they had to be more competitive and more agile. They can't do it on their old software. And God help you if you made a bunch of custom modifications. Good lucking tryin' to rip those out. And this is why pure play companies in the cloud like ServiceNow and Workday have done so well. They're best-of-breed and they're cloud, and it sets up this age-old battle that we always talk about, best-of-breed versus integrated suites. So let's bring in some of the other themes and feedback that we get from the community. Now we've definitely seen this schism play out between on-prem and cloud plays. And that's created some challenges for the legacy players. People working remotely has meant less data center, less on-prem action for the legacy companies. Now, they have gone out and acquired to get to the cloud and/or they've had to rearchitect their software like Oracle has done with Fusion. But think about something like Oracle Financials. Oracle is tryna migrate them to Fusion, or think about SAP R3, with R4, SAP pushing HANA. All this is going to cloud-based SaaS. So the companies that've been pure play SaaS are doing better, and I say quasi-modern on this slide because Salesforce, ServiceNow, Workday, even Coupa, NetSuite which is now Oracle, SuccessFactors which SAP purchased, et cetera, these are actually pretty old companies, the earlier part of the 2000s or in the case of Salesforce, 1999. And you're seeing some really different pricing models in the market. Things are moving quickly to an OPEX model. You have the legacy perpetual pricing, and it's giving way to subscriptions, and now we even see companies like Datadog and Snowflake with so-called consumption-based pricing models, priced as a true cloud. And we think that that's going to eventually spill into the core SaaS applications. Now one of the concerns that we've heard from the community is that some of the traditional players that were able to hide from COVID earlier this year might not have enough deferred revenue dry powder to continue to power through the pandemic, but so far the picture continues to look pretty strong for the software companies. We'll get into some of that. Now, finally, this is a premise that I talked to Sarbjeet about, the disruption perhaps comes from cloud and developer ecosystems. Y'know I remember John Furrier and I had a conversation awhile back with Jerry Chen from Greylock. It was on theCUBE, and it was kind of like, went like this. People were talking about whether AWS was going to enter the applications market, and the thesis here is no, or not in the near future. Rather, the disruptive play, and this is really Sarbjeet's premise, is to provide infrastructure for innovation, and a PaaS layer for differentiation, and developers will build modern cloud-native apps to compete with the SaaS players on top of this. This is intriguing to me, and is likely going to play out over the next decade, but it's going to take a while, because these SaaS players are, they're very large, and they continue to pour money into their platforms. Now let's talk about the shift from CAPEX to OPEX and bring in some ETR data. Of course, this was well in play pre-COVID, but the trend has been accelerating. This chart shows data from the August ETR survey, and it was asking people to express their split between CAPEX and OPEX spend, and as you can see, the trend is clear. Goes from 48% last year, 55% today, and moving to over 62% OPEX a year from now. It's no surprise, but I think it could happen even faster depending on the technical debt that organizations have to shed. And hence, the attractiveness again of the SaaS cloud players. So now let's visualize some of the major players in this space, and do some comparisons. Here we show one of our favorite views, and what we're doing here is we juxtapose net score on the vertical axis with market share on the horizontal plane. Remember, net score is a measure of spending momentum. Each quarter, ETR asks buyers, are you planning to spend more or less, and they essentially subtract the lesses from the mores to derive net score. Market share on the other hand is a measure of pervasiveness in the dataset, and it's derived from the number of mentions in the sector divided by the total mentions in the survey, and you can see each metric in that embedded table that we put in there. So I said earlier, this was a pretty mature market and you can see that in the table. Eh, kind of middle-of-the-road net scores with pretty large shared ends, i.e. responses in the dataset, but a lot of red. There are some standouts, however, as you see in the upper right, namely, ServiceNow and Salesforce. These are two pretty remarkable companies. ServiceNow entered the market as a help desk or service management player, and has dramatically expanded its TAM, really to the point where they're aiming at $5 billion in revenue. Salesforce was the first in cloud CRM, and is pushing 20 billion in revenue. I've said many times, these companies are on a collision course, and I stand by that, as any of the next great software companies, and these are two, are going to compete with all the mega-caps, including Oracle, SAP, and Microsoft, and they'll bump into each other. Which brings us to those super-cap companies. You see Microsoft with Dynamics, they show up like they always do. I'm like a broken record on Microsoft. I mean they're everywhere in the survey data. Now Oracle and SAP, they've been extremely acquisitive over the years, and you can see some of their acquisitions on this chart. I've said many times in theCUBE that Larry Olsen used to denigrate his competitors for writing checks instead of code, but he saw the consolidation trend happening in the ERT, ERP space before anyone else did, and with the $10 billion PeopleSoft acquisition in 2005, set off a trend in enterprise software that did a few things. First, it solidified Oracle's position further up the stack. It also set Dave Duffield and Aneel Bhusri off to create a next-generation cloud software company, Workday, which you can see in the chart has a net score up there with ServiceNow, Salesforce, and Coupa, and it also led to Oracle Fusion Middleware, which is designed as an integration point for all these software components, and this is really important because Oracle is moving everything into its cloud. And you can see that its on-prem net score, which puts it deep into negative territory. Now SAP, take a look at them, they have much higher net scores than Oracle, and you can see it's acquired SaaS properties like Ariba, Concur, and SuccessFactors, which have decent momentum. But you know, SAP, and we've talked about this before, is not without its challenges. With SAP, HANA is the answer to all of its problems. The problem is that it's not necessarily the answer to all of SAP's customers' problems. Most of SAP's legacy customers run SAP on Oracle or other databases. HANA is used for the in-memory query workload, but most customers are going to continue to use other databases for their systems of record. So this adds complexity. But HANA is very good at the query piece. However, SAP never did what Oracle did with Fusion, which as you might recall, took more than a decade to get right. HANA is SAP's architectural attempt to unify the SAP portfolio and get, (laughs) really get off of Oracle, but it's many years away, and it's unclear when or if they'll ever get there. All right, let's move on. Here's a look at a similar set of companies, but I wanted to show you this view because it gives you a detailed look at ETR's net score approach, and it tells us a few things more. And remember, this is a survey of almost 1,200 technology buyers. That's the N, that's the respondent rate. So this chart shows the net score granularity for the enterprise players that we were just discussing. Let me explain this. Net score is actually more detailed than what I said before. It comprises responses in four categories. The lime green is new adoptions. The forest green is growth in spending of 6% or more, the gray is flat spend, the pink is a budget shrink of 6% or greater, and the red is retiring the platform. So what this tells us is that there's a big fat middle of stay the same. The lime green is pretty small, but you can see, NetSuite jumps out for new adoptions because they've been very aggressive going after smaller and mid-sized companies, and Coupa, the spend management specialist, shows reasonably strong new adoptions. Now ServiceNow is interesting to me. Not a ton of new adoptions. They've landed the ship and really penetrated larger organizations. And while new adoptions are not off the charts, look at the spending more categories, it's very very strong at 46%. And the other really positive thing for ServiceNow is there's very little red. This company is a beast. Now Salesforce similarly, not tons of new adoptions, but 40% spend more. For a company that size, that's pretty impressive. Workday similarly has a very strong spending profile. At the bottom of the chart, you see a fair amount of red, as we saw on the XY graph. But now, let's take another view of net score. Think of this as a zoom in, which takes those bar charts but shows it in a pie format for individual companies. So we're showing this here for ServiceNow, Workday, and Salesforce, and we've superimposed the net score for these three in green, so you can see ServiceNow at 48%, very good for a company headed toward five billion. Same with Workday, 40% for a company of similar size, and Salesforce has a comparable net score, and is significantly larger than those two revenue-wise. Now this is the same view, this next chart's the same view for SAP and Oracle, and you can see substantially lower than the momentum leaders in terms of net score. But these are much larger companies. SAP's about 33 billion, Oracle's closer to 40 billion. But Oracle especially has seen some headwinds from organizations spending less which drags its net score down. But you're not seeing a lot of replacement in Oracle's base because as I said at the top, these systems are fossilized and many are running on Oracle. And the vast majority of mission-critical workloads are especially running on Oracle. Now remember, this isn't a revenue-weighted view. Oracle charges a steep premium based on the number of cores, and it has a big maintenance stream. So while its net score is kind of sucky, its cashflow is not. All right, let's wrap it up here. We have a very large and mature market. But the semi-modern SaaS players like Salesforce and ServiceNow and Workday, they've gone well beyond escape velocity and solidified their positions as great software companies. Others are trying to follow that suit and compete with the biggest of the bigs, i.e. SAP and Oracle. Now I didn't talk much about Microsoft, but as always they show up prominently. They're huge and they're everywhere in this dataset. What I think is interesting is the competitive dynamics that we talked about earlier. These kind of newer SaaS leaders, they're disrupting Oracle and SAP, but they're also increasingly bumping into each other. You know, ServiceNow has HR for example, and they say that they don't compete with Workday, and that's true. But y'know, these two companies, they eye each other and they angle for account control. Same thing with Salesforce. It's that software mindset. The bigger a software company gets, the more they think they can own the world, because it's software, and if you're good at writing code and you see an opportunity that can add value for your customers, you tend to go after it. Now, we didn't talk much about M&A, but that's going to continue here, especially as these companies look for TAM expansion and opportunities to bring in new capabilities, particularly around data, analytics, machine learning, AI and the like, and don't forget industry specialization. You've seen Oracle pick up a number of industry plays and as digital transformation continues, you'll see more crossing of the industry streams because it's data. Now, the disruption isn't blatantly obvious in this market right now, other than SaaS clouds going after SAP and Oracle, and it's because these companies are deeply entrenched in their customer organizations and change is risky. But the cloud developer, the open source API trend, it could lead to disruptions, but I wouldn't expect that until the second half of this decade as cloud ecosystems really begin to evolve and take hold. Okay, well that's it for today. Remember, these Breaking Analysis episodes, they're all available as podcasts wherever you listen so please subscribe. I publish weekly on Wikibon.com and SiliconANGLE.com, so check that out, and please do comment on my LinkedIn posts. Don't forget, check out ETR.plus for all the survey action. Get in touch on Twitter, I'm @dvellante, or email me at David.Vellante@siliconangle.com. This is Dave Vellante for theCUBE Insights, powered by ETR. Thanks for watching everybody. Be well, and we'll see you next time. (thoughtful electronic music)

from the cube studios in palo alto in boston bringing you data-driven insights from the cube and etr this is breaking analysis with dave vellante while cloud computing is generally seen as a bright spot in tech spending the sector is not immune from the effects of covid19 look it's better to be cloud than not cloud no question but recent survey data shows that the v-shaped recovery in the stock market looks much more like a square root sign for it spending in 2020 and even the cloud is going to be negatively impacted albeit much less so than many other sectors hello everyone and welcome to this week's wikibon cube insights powered by etr i'm dave vellante and in this breaking analysis we want to update you on our latest data and thinking around the cloud computing market with an emphasis on infrastructure as a service we'll also update our latest quarterly estimates of the big three show you our typical trailing 12-month view of revenue let's start with the macro picture the reality is that the latest etr survey of nearly 1200 respondents shows that the vast majority of companies is the covet is hitting i.t budgets notably 59 of respondents have frozen hiring that's up from 26 in the last survey which was taken in march and april at the height of the u.s lockdown 24 percent have laid off employees that's up from four percent 41 percent froze new i.t deployments that's nearly double the percentage from the last survey now on the plus side there are some shops 23 percent that are accelerating i t deployments and that's up significantly from last quarter now as we've reported that's coming from the work from home and coveted tailwind segments and cloud computing is obviously one of those but these spending shifts are not enough to offset the overall outlook for 2020 and likely that's going to continue into 2021. because the big cloud players especially aws and azure are so large they're exposed to industries that have been hard hit by the pandemic as such we see pockets of spending deceleration even at these companies now the other piece of data that has our attention is the hybrid and multi-cloud market it's beginning to show some spending momentum this is particularly notable within vmware and red hat accounts and we've even seen a bit of momentum for oracle that we'll talk about in a moment now before we dig into the numbers let's hear the sentiment from some of the customers what we're showing here are some of the verbatim comments from etr customers one of the things i love about this survey is it includes quantitative and qualitative data that i can sort by industry so i've just pulled up a few examples that underscore some of the broad-based pain that companies are facing education minimum 15 cut across the organization engine energy and utilities we cut projects 10 15 across the board financials we've been asked to cut 20 out of our budget government hiring freeze larger constraints on spending health care and farmer much more scrutiny from upper management industrials materials and manufacturing slowing down is not all projects can be done remotely i.t telco head count and projects on hold and pushed into 2021 retail consumer budget cuts we lost three months of cash flow services and consulting all discretionary projects are frozen now these comments predominantly come from large companies that are big spenders now in fairness there are plenty of positives in the anecdotes but i have to say in squinting through the hundreds and hundreds of comments this pretty much sums up the sentiment now this is especially true in the all-important u.s market where we heard in cisco's earnings call this week the theme is uncertainty related to the pandemic and this is hitting i.t budgets now cloud spending remains at elevated levels but there's definitely pressure what we're showing here is the net score for the big three cloud players microsoft amazon and google in the three surveys of 2020 net scores etr's measure of spending momentum in each quarter etr asks buyers are you spending more or less on a particular platform and net score essentially subtracts the lesses from the mores it's a bit more complicated that but but that is really the essence and you can see the deceleration in all three big cloud platforms now it's important to point out that these are at elevated levels and they represent strength but there's clear pressure and headwinds on spending even in the cloud no sector is immune now there are pockets like video conferencing and security that are winning but even in these sectors it's bifurcated it's often a story of a firm that is well positioned to gain share like say a zoom or we've talked a lot about an octa or a crowdstrike or z scale or a sail point that we've highlighted in previous breaking analysis segments now this slide shows data from the etr survey the pies compare the spring survey to the summer asking buyers will covert impact your i.t budgets in 2020. in the latest covent survey 78 say yes now that's up from 63 percent see the bar chart below that answers your next obvious question which is how will your budget be impacted and can you see the distribution of the growth yes there it is you could see the decline 22 percent say no change but the red bars that decline are much bigger than the green bars and that's why we continue to forecast i.t spending declines of five to eight percent in 2020. we think this is even going to spill into the first half of 2020 who knows we'll see if it goes beyond now let's put the cloud in context despite my dire outlook we have to remember that it's all relative this chart shows you know one of our favorite views it plots net score or spending momentum on the vertical axis against the market share on the horizontal axis market share is a measure of pervasiveness in the survey and calculates the penetration of the sector as a percent of the overall survey so what this view tells us is the degree of spending momentum on the vertical axis cloud is elevated relative to other sectors that we're showing here and it shows the penetration of cloud in the data set on the horizontal axis so cloud shows spending momentum and high penetration relative to other priorities in i.t note there are dozens of other sectors but we've cherry picked a few here for context to wit other than containers ai and rpa cloud is outpacing all sectors shown for the net score and only analytics bi and big data is more pervasive so cloud very strong no doubt cloud is the place to be but the pandemic has created spending friction even in cloud and what we showed earlier the decline of the the net scores for the big three now again we're still holding here at elevated levels what this chart shows is the sectors of infrastructure as a service that show increasing next net scores relative to the last survey and you can see there are only five areas that show positive increase in net score this is out of dozens and dozens reading the bars left to right you see vmware cloud on aws with a very impressive net score of 66 percent that's up 700 basis points since the last survey next you see red hat open shift with a 44 net score that's up 600 basis points and then vmware cloud which comprises vmware cloud foundation and other hybrid and multi-cloud services from vmware it shows a net score of 42 which is up 400 basis points now after that is red hat openstack yes openstack with a 40 net score up 1200 basis points since the last survey red hat sells and supports its openstack distro now prior to the ibm acquisition red hat would frequently cite openstack as a growth business on its earnings calls and this data confirms that there's actually some momentum there as an example red hat is selling into the telco sector to service providers that want to stand up a private cloud why well the big cloud players may not have a local presence and there may be a data sovereignty requirement in that country you know that's just one example and then finally on the chart we have oracle now for sure there's some sas in there and you know oracle's net score is really not inspiring at 12 percent but it's up from the last survey so these are the only five areas showing net score expansion from the last survey we're talk which talks to the impacts of covid that we discussed earlier now let's take a look at a more granular set of data that cloud services and how they stack up what we show here are the top ten cloud services measured by net score or spending momentum this is for the july survey of respondents the first point is these are solid net scores so while i'm a bit of a davey downer today these are very strong relative to most other parts of the technology stack most companies would kill to have this type of momentum you see azure functions and azure platform they lead the pack but look at vmware cloud on aws we've seen this popping up showing strong in recent surveys and it's gaining presence and momentum in the data set then there's aws lambda you know functions or serverless this remains strong as you can see it does google functions and there's aws that's the aws overall and even though it's a bit off in net score terms from previous quarters as we'll talk about in a moment this is a 40 billion dollar business with net scores that remain elevated remember the net scores they can't grow to the moon they're going to fluctuate and the larger the base the harder it is to maintain high net score so this is very very impressive for aws google cloud platform is next and you know frankly i'd like to see stronger net scores from google gcp is around an eighth of the size of aws yet aws still maintains a notably higher net score in each survey google continues to struggle with selling into the enterprise now look at the last three in the chart you know cloud purists like aws might say that these hybrid or multi-cloud services aren't in a real cloud you know but to me this is a customer survey if the customer says their cloud i'm gonna go with that now forgetting about the semantics here the point is we've been talking about hybrid and multi-cloud for a while and we see vmware and red hat with openshift two companies that we've predicted are in a strong position to compete for hybrid and multi and they're showing up on customers spending radar i should also mention that microsoft is also a leader if not the leader in hybrid multi-cloud because it has a massive public cloud presence and numerous relevant services particularly in the hybrid space but they don't show up necessarily as discrete services in the etr taxonomy but they are in the numbers for sure probably just peanut butter spread over a number of categories now let's put this into context here's our old friend the xy graph it's one of our favorites this time we show specific named vendors in cloud on the x and the y axis axis is net score or spending velocity and the x axis is market share or pervasiveness so as usual we see aws and azure separating from the pac this is such a huge market it's really not a winner takes all space you know maybe not even a winner takes most and as you can see in the players that we've highlighted in the hybrid multi-zone you got you know google's kind of on that bubble but any player here with a net score above 40 percent in the green as you can see in the upper right hand corner is doing well red hat vmware cloud google and and look at vmware cloud on aws this service is getting a lot of traction and it better given the effort that both companies have put behind this aws has created a special bare metal instance to run this service on its cloud vmware talks about aws as its preferred partner this has been a winner for both companies aws gets access to a half a million vmware customers and vmware gets a really solid cloud play look where this goes in the future it's going to be interesting to watch when this service was announced several years ago it didn't take long for aws to also announce its vmware migration services but for now it's a win-win for the companies and a win for the customers now for context we've included both oracle and ibm cloud services and you can see where they stand relative to the rest they're not setting the world on fire but hey as i've said many times they at least are in the cloud game and importantly both companies are in a good position to migrate their customers mission critical workloads to their own respective clouds all right i want to wrap by looking at the big three performance this quarter as has been our custom we like to share our estimates of how the big three u.s cloud players stack up from a revenue standpoint this chart shows our is and pas revenue estimates for aws azure and google cloud platform the data shows 2018 19 2019 growth and the first two quarters of 2020 with a trailing 12-month view and here are the key points now as always remember aws reports clean numbers the others we have to squint through 10ks and 10qs and triangulate with survey data to come up with the reasonable apples to apple's estimate in comparison first point aws is now 40 billion wow combined the big three now account for nearly 70 billion dollars in is and pass revenue you know that's more than a sizable chunk of the data center business which is not all this hasn't been necessarily incremental growth to the it market there's been a share shift going on in other words that share shift is going from on-prem into the cloud now the third point is growth is strong but not surprisingly the bigger you get the slower the growth rate rate in 2018 aws revenue was 2.7 times greater than that of microsoft for the first time however aws revenue has dropped below 2x that of microsoft said another way microsoft's is revenue is now about 57 of aws's revenue google's growth rate at its size appears to be lagging where aws and azure's growth was at earlier points in their respective journeys for example when aws put up nearly 8 billion in 2015 in revenue it grew over 70 percent that year azure as you can see at 16 billion in 2019 grew at 65 percent now google grew 72 last quarter and 59 this quarter so you know it's no slouch but it's size with its but it's at its size with its resources we'd like to see google pick up the pace and you may have to wait until post covid but despite the coveted headwinds in the overall it market there's no question that this is a cloud world and we just happen to live in it [Music]

>> Announcer: From theCUBE studios in Palo Alto in Boston, connecting with thought leaders all around the world, this is a CUBE conversation. >> As you may recall, coming into the second part of 2019 we reported, based on ETR Survey data, that there was a narrowing of spending on emerging tech and an unplugging of a lot of legacy systems. This was really because people were going from experimentation into operationalizing their digital initiatives. When COVID hit, conventional wisdom suggested that there would be a flight to safety. Now, interestingly, we reported with Eric Bradley, based on one of the Venns, that a lot of CIOs were still experimenting with emerging vendors. But this was very anecdotal. Today, we have more data, fresh data, from the ETR Emerging Technology Study on private companies, which really does suggest that there's a notable decline in experimentation, and that's affecting emerging technology vendors. Hi, everybody, this is Dave Vellante, and welcome to this week's Wikibon Cube Insights, powered by ETR. Once again, Sagar Kadakia is joining us. Sagar is the Director of Research at ETR. Sagar, good to see you. Thanks for coming on. >> Good to see you again. Thanks for having me, Dave. >> So, it's really important to point out, this Emerging Tech Study that you guys do, it's different from your quarterly Technology Spending Intention Survey. Take us through the methodology. Guys, maybe you could bring up the first chart. And, Sagar, walk us through how you guys approach this. >> No problem. So, a lot of the viewers are used to seeing a lot of the results from the Technology Spending Intention Survey, or the TSIS, as we call it. That study, as the title says, it really tracks spending intentions on more pervasive vendors, right, Microsoft, AWS, as an example. What we're going to look at today is our Emerging Technology Study, which we conduct biannually, in May and November. This study is a little bit different. We ask CIOs around evaluations, awareness, planned evaluations, so think of this as pre-spend, right. So that's a major differentiator from the TSIS. That, and this study, really focuses on private emerging providers. We're really only focused on those really emerging private companies, say, like your Series B to Series G or H, whatever it may be, so, two big differences within those studies. And then today what we're really going to look at is the results from the Emerging Technology Study. Just a couple of quick things here. We had 811 CIOs participate, which represents about 380 billion in annual IT spend, so the results from this study matter. We had almost 75 Fortune 100s take it. So, again, we're really measuring how private emerging providers are doing in the largest organizations. And so today we're going to be reviewing notable sectors, but largely this survey tracks roughly 356 private technologies and frameworks. >> All right, guys, bring up the pie chart, the next slide. Now, Sagar, this is sort of a snapshot here, and it basically says that 44% of CIOs agree that COVID has decreased the organization's evaluation and utilization of emerging tech, despite what I mentioned, Eric Bradley's Venn, which suggested one CIO in particular said, "Hey, I always pick somebody in the lower left "of the magic quadrant." But, again, this is a static view. I know we have some other data, but take us through this, and how this compares to other surveys that you've done. >> No problem. So let's start with the high level takeaways. And I'll actually kind of get into to the point that Eric was debating, 'cause that point is true. It's just really how you kind of slice and dice the data to get to that. So, what you're looking at here, and what the overall takeaway from the Emerging Technology Study was, is, you know, you are going to see notable declines in POCs, of proof-of-concepts, any valuations because of COVID-19. Even though we had been communicating for quite some time, you know, the last few months, that there's increasing pressure for companies to further digitize with COVID-19, there are IT budget constraints. There is a huge pivot in IT resources towards supporting remote employees, a decrease in risk tolerance, and so that's why what you're seeing here is a rather notable number of CIOs, 44%, that said that they are decreasing their organization's evaluation and utilization of private emerging providers. So that is notable. >> Now, as you pointed out, you guys run this survey a couple of times a year. So now let's look at the time series. Guys, if you bring up the next chart. We can see how the sentiment has changed since last year. And, of course, we're isolating here on some of larger companies. So, take us through what this data means. >> No problem. So, how do we quantify what we just saw in the prior slide? We saw 44% of CIOs indicating that they are going to be decreasing their evaluations. But what exactly does that mean? We can pretty much determine that by looking at a lot of the data that we captured through our Emerging Technology Study. There's a lot going on in this slide, but I'll walk you through it. What you're looking at here is Fortune 1000 organizations, so we've really isolated the data to those organizations that matter. So, let's start with the teal, kind of green line first, because I think it's a little bit easier to understand. What you're looking at, Fortune 1000 evaluations, both planned and current, okay? And you're looking at a time series, one year ago and six months ago. So, two of the answer options that we provide CIOs in this survey, right, think about the survey as a grid, where you have seven answer options going horizontally, and then 300-plus vendors and technologies going vertically. For any given vendor, they can essentially indicate one of these options, two of them being on currently evaluating them or I plan to evaluate them in six months. So what you're looking at here is effectively the aggregate number, or the average number of Fortune 1000 evaluations. So if you look into May 2019, all the way on the left of that chart, that 24% roughly means that a quarter of selections made by Fortune 1000 of the survey, they selected plan to evaluate or currently evaluating. If you fast-forward six months, to the middle of the chart, November '19, it's roughly the same, one in four technologies that are Fortune 1000 selected, they indicated that I plan or am currently evaluating them. But now look at that big drop off going into May 2020, the 17%, right? So now one out of every six technologies, or one out of every selections that they made was an evaluation. So a very notable drop. And then if you look at the blue line, this is another answer option that we provided CIOs: I'm aware of the technology but I have no plans to evaluate. So this answer option essentially tracks awareness levels. If you look at the last six months, look at that big uptick from 44% to over 50%, right? So now, essentially one out of every two technologies, or private technologies that a CIO is aware of, they have no plans to evaluate. So this is going to have an impact on the general landscape, when we think about those private emerging providers. But there is one caveat, and, Dave, this is what you mentioned earlier, this is what Eric was talking about. The providers that are doing well are the ones that are work-from-home aligned. And so, just like a few years ago, we were really analyzing results based on are you cloud-native or are you Cloud-aligned, because those technologies are going to do the best, what we're seeing in the emerging space is now the same thing. Those emerging providers that enable organizations to maintain productivity for their employees, essentially allowing their employees to work remotely, those emerging providers are still doing well. And that is probably the second biggest takeaway from this study. >> So now what we're seeing here is this flight to perceive safety, which, to your point, Sagar, doesn't necessarily mean good news for all enterprise tech vendors, but certainly for those that are positioned for the work-from-home pivot. So now let's take a look at a couple of sectors. We'll start with information security. We've reported for years about how the perimeter's been broken down, and that more spend was going to shift from inside the moat to a distributed network, and that's clearly what's happened as a result of COVID. Guys, if you bring up the next chart. Sagar, you take us through this. >> No problem. And as you imagine, I think that the big theme here is zero trust. So, a couple of things here. And let me just explain this chart a little bit, because we're going to be going through a couple of these. What you're seeing on the X-axis here, is this is effectively what we're classifying as near term growth opportunity from all customers. The way we measure that effectively is we look at all the evaluations, current evaluations, planned evaluations, we look at people who are evaluated and plan to utilize these vendors. The more indications you get on that the more to the top right you're going to be. The more indications you get around I'm aware of but I don't plan to evaluate, or I'm replacing this early-stage vendor, the further down and on the left you're going to be. So, on the X-axis you have near term growth opportunity from all customers, and on the Y-axis you have near term growth opportunity from, really, the biggest shops in the world, your Global 2000, your Forbes Private 225, like Cargill, as an example, and then, of course, your federal agencies. So you really want to be positioned up and to the right here. So, the big takeaway here is zero trust. So, just a couple of things on this slide when we think about zero trust. As organizations accelerate their Cloud and Saas spend because of COVID-19, and, you know, what we were talking about earlier, Dave, remote work becomes the new normal, that perimeter security approach is losing appeal, because the perimeter's less defined, right? Apps and data are increasingly being stored in the Cloud. That, and employees are working remotely from everywhere, and they're accessing all of these items. And so what we're seeing now is a big move into zero trust. So, if we look at that chart again, what you're going to see in that upper right quadrant are a lot of identity and access management players. And look at the bifurcation in general. This is what we were talking about earlier in terms of the landscape not doing well. Most security vendors are in that red area, you know, in the middle to the bottom. But if you look at the top right, what are you seeing here? Unify ID, Auth0, WSO2, right, all identity and access management players. These are critical in your zero trust approach, and this is one of the few area where we are seeing upticks. You also see here BitSight, Lucideus. So that's going to be security assessment. You're seeing VECTRA and Netskope and Darktrace, and a few others here. And Cloud Security and IDPS, Intrusion Detection and Prevention System. So, very few sectors are seeing an uptick, very few security sectors actually look pretty good, based on opportunities that are coming. But, essentially, all of them are in that work-from-home aligned security stack, so to speak. >> Right, and of course, as we know, as we've been reporting, buyers have options, from both established companies and these emerging companies that are public, Okta, CrowdStrike, Zscaler. We've seen the work-from-home pivot benefit those guys, but even Palo Alto Networks, even CISCO, I asked (other speaker drowns out speech) last week, I said, "Hey, what about this pivot to work from home? "What about this zero trust?" And he said, "Look, the reality is, yes, "a big part of our portfolio is exposed "to that traditional infrastructure, "but we have options for zero trust as well." So, from a buyer's standpoint, that perceived flight to safety, you have a lot of established vendors, and that clearly is showing up in your data. Now, the other sector that we want to talk about is database. We've been reporting a lot on database, data warehouse. So, why don't you take us through the next graphic here, if you would. >> Sagar: No problem. So, our theme here is that Snowflake is really separating itself from the pack, and, again, you can see that here. Private database and data warehousing vendors really continue to impact a lot of their public peers, and Snowflake is leading the way. We expect Snowflake to gain momentum in the next few years. And, look, there's some rumors that IPOing soon. And so when we think about that set-up, we like it, because as organizations transition away from hybrid Cloud architectures to 100% or near-100% public Cloud, Snowflake is really going to benefit. So they look good, their data stacks look pretty good, right, that's resiliency, redundancy across data centers. So we kind of like them as well. Redis Labs bring a DB and they look pretty good here on the opportunity side, but we are seeing a little bit of churn, so I think probably Snowflake and DataStax are probably our two favorites here. And again, when you think about Snowflake, we continue to think more pervasive vendors, like Paradata and Cloudera, and some of the other larger database firms, they're going to continue seeing wallet and market share losses due to some of these emerging providers. >> Yeah. If you could just keep that slide up for a second, I would point out, in many ways Snowflake is kind of a safer bet, you know, we talk about flight to safety, because they're well-funded, they're established. You can go from zero to Snowflake very quickly, that's sort of their mantra, if you will. But I want to point out and recognize that it is somewhat oranges and tangerines here, Snowflake being an analytical database. You take MariaDB, for instance, I look at that, anyway, as relational and operational. And then you mentioned DataStax. I would say Couchbase, Redis Labs, Aerospike. Cockroach is really a... EValue Store. You've got some non-relational databases in there. But we're looking at the entire sector of databases, which has become a really interesting market. But again, some of those established players are going to do very well, and I would put Snowflake on that cusp. As you pointed out, Bloomberg broke the story, I think last week, that they were contemplating an IPO, which we've known for a while. >> Yeah. And just one last thing on that. We do like some of the more pervasive players, right. Obviously, AWS, all their products, Redshift and DynamoDB. Microsoft looks really good. It's just really some of the other legacy ones, like the Teradatas, the Oracles, the Hadoops, right, that we are going to be impacted. And so the claw providers look really good. >> So, the last decade has really brought forth this whole notion of DevOps, infrastructure as code, the whole API economy. And that's the piece we want to jump into now. And there are some real stand-outs here, you know, despite the early data that we showed you, where CIOs are less prone to look at emerging vendors. There are some, for instance, if you bring up the next chart, guys, like Hashi, that really are standing out, aren't they? >> That's right, Dave. So, again, what you're seeing here is you're seeing that bifurcation that we were talking about earlier. There are a lot of infrastructure software vendors that are not positioned well, but if you look at the ones at the top right that are positioned well... We have two kind of things on here, starting with infrastructure automation. We think a winner here is emerging with Terraform. Look all the way up to the right, how well-positioned they are, how many opportunities they're getting. And for the second straight survey now, Terraform is leading along their peers, Chef, Puppet, SaltStack. And they're leading their peers in so many different categories, notably on allocating more spend, which is obviously very important. For Chef, Puppet and SaltStack, which you can see a little bit below, probably a little bit higher than the middle, we are seeing some elevator churn levels. And so, really, Terraform looks like they're kind of separating themselves. And we've got this great quote from the CIO just a few months ago, on why Terraform is likely pulling away, and I'll read it out here quickly. "The Terraform tool creates "an entire infrastructure in a box. "Unlike vendors that use procedural languages, "like Ants, Bull and Chef, "it will show you the infrastructure "in the way you want it to be. "You don't have to worry about "the things that happen underneath." I know some companies where you can put your entire Amazon infrastructure through Terraform. If Amazon disappears, if your availability drops, load balancers, RDS, everything, you just run Terraform and everything will be created in 10 to 15 minutes. So that shows you the power of Terraform and why we think it's ranked better than some of the other vendors. >> Yeah, I think that really does sum it up. And, actually, guys, if you don't mind bringing that chart back up again. So, a point out, so, Mitchell Hashimoto, Hashi, really, I believe I'm correct, talking to Stu about this a little bit, he sort of led the Terraform project, which is an Open Source project, and, to your point, very easy to deploy. Chef, Puppet, Salt, they were largely disrupted by Cloud, because they're designed to automate deployment largely on-prem and DevOps, and now Terraform sort of packages everything up into a platform. So, Hashi actually makes money, and you'll see it on this slide, and things, Vault, which is kind of their security play. You see GitLab on here. That's really application tooling to deploy code. You see Docker containers, you know, Docker, really all about open source, and they've had great adoption, Docker's challenge has always been monetization. You see Turbonomic on here, which is application resource management. You can't go too deep on these things, but it's pretty deep within this sector. But we are comparing different types of companies, but just to give you a sense as to where the momentum is. All right, let's wrap here. So maybe some final thoughts, Sagar, on the Emerging Technology Study, and then what we can expect in the coming month here, on the update in the Technology Spending Intention Study, please. >> Yeah, no problem. One last thing on the zero trust side that has been a big issue that we didn't get to cover, is VPN spend. Our data is pointing that, yes, even though VPN spend did increase the last few months because of remote work, we actually think that people are going to move away from that as they move onto zero trust. So just one last point on that, just in terms of overall thoughts, you know, again, as we cover it, you can see how bifurcated all these spaces are. Really, if we were to go sector by sector by sector, right, storage and block chain and MLAI and all that stuff, you would see there's a few or maybe one or two vendors doing well, and the majority of vendors are not seeing as many opportunities. And so, again, are you work-from-home aligned? Are you the best vendor of all the other emerging providers? And if you fit those two criteria then you will continue seeing POCs and evaluations. And if you don't fit that criteria, unfortunately, you're going to see less opportunities. So think that's really the big takeaway on that. And then, just in terms of next steps, we're already transitioning now to our next Technology Spending Intention Survey. That launched last week. And so, again, we're going to start getting a feel for how CIOs are spending in 2H-20, right, so, for the back half of the year. And our question changes a little bit. We ask them, "How do you plan on spending in the back half year "versus how you actually spent "in the first half of the year, or 1H-20?" So, we're kind of, tighten the screw, so to speak, and really getting an idea of what's spend going to look like in the back half, and we're also going to get some updates as it relates to budget impacts from COVID-19, as well as how vendor-relationships have changed, as well as business impacts, like layoffs and furloughs, and all that stuff. So we have a tremendous amount of data that's going to be coming in the next few weeks, and it should really prepare us for what to see over the summer and into the fall. >> Yeah, very excited, Sagar, to see that. I just wanted to double down on what you said about changes in networking. We've reported with you guys on NPLS networks, shifting to SD-WAN. But even VPN and SD-WAN are being called into question as the internet becomes the new private network. And so lots of changes there. And again, very excited to see updated data, return of post-COVID, as we exit this isolation economy. Really want to point out to folks that this is not a snapshot survey, right? This is an ongoing exercise that ETR runs, and grateful for our partnership with you guys. Check out ETR.plus, that's the ETR website. I publish weekly on Wikibon.com and SiliconANGLE.com. Sagar, thanks so much for coming on. Once again, great to have you. >> Thank you so much, for having me, Dave. I really appreciate it, as always. >> And thank you for watching this episode of theCube Insights, powered by ETR. This Dave Vellante. We'll see you next time. (gentle music)

from the cube studios in Palo Alto in Boston connecting with thought leaders all around the world this is a cube conversation as we've been reporting the Koba 19 pandemic has created a bifurcated IT spending picture and over the last several weeks we've reported both on the macro and even some come at it from from a vendor and a sector view I mean for example we've reported on some of the companies that have really continued to thrive we look at the NASDAQ and its you know near at all-time highs companies like oh and in CrowdStrike we've reported on snowflake uipath the sectors are PA some of the analytic databases around AI maybe even to a lesser extent cloud but still has a lot of tailwind relative to some of those on-prem infrastructure plays even companies like Cisco bifurcated in and of themselves where you see this Meraki side of the house you know doing quite well the work from home stuff but maybe some of the traditional networking not as much well now what if you flip that to really try to understand what's going on with the shape of the recovery which is the main narrative right now is it a v-shape does it a u-shape what is what's that what do people expect and now you understand that you really have to look at different industries because different industries are going to come back at a different pace with me again is Sagar khadiyah who's the director of research at EGR Sagar you guys are all over this as usual timely information it's great to see you again hope all is well in New York City thanks so much David it's a pleasure to be back on again yeah so where are we in the cycle we give dividend a great job and very timely ETR was the first to really put out data on the koban impact with the survey that ran from mid-march to to mid-april and now everybody's attention sagar is focused on okay we're starting to come back stores are starting to open people are beginning to to go out again and everybody wants to know what the shape of the recovery looks like so where are we actually in that research cycle for you guys yeah no problem so like you said you know in that kind of march/april timeframe we really want to go out there and get an idea of what we're doing the budget impacts you know as it relates to IT because of kovat 19 right so we kind of ended off there around a decline of 5% and coming into the year the consensus was of growth of 4 or 5% right so we saw about a 900,000 basis points wing you know to the negative side and the public covered in March and April were you know which sectors and vendors were going to benefit as a result of work from home and so now as we kind of fast forward to the research cycle as we kind of go more into May and into the summer rather than asking those exact same question to get again because it's just been you know maybe 40 or 50 days we really want Singh on the recovery type as well as kind of more emerging private vendors right we want to understand what's gonna be the impact on on these vendors that typically rely on you know larger conferences more in-person meetings because these are younger technologies there's not a lot of information about them and so last Thursday we launched our biannual emerging technology study it covers roughly 300 private emerging technologies across maybe 60 sectors of technology and in tandem we've launched a co-ed flash poll right what we wanted to do was kind of twofold one really understand from CIOs the recovery type they had in mind as well as if they were seeing any any kind of permanent changes in their IT stacks IT spend because of koban 19 and so if we kind of look at the first chart here and kind of get more into that first question around recovery type what we asked CIOs and this kind of COBIT flash poll again we did it last Thursday was what type of recovery are you expecting is it v-shaped so kind of a brief decline you know maybe one quarter and then you're gonna start seeing growth in 2 to H 20 is it you shaped so two to three quarters of a decline or deceleration revenue and you're kind of forecasting that growth in revenue as an organization to come back in 2021 is it l-shaped right so maybe three four five quarters of a decline or deceleration and then you know very minimal to moderate growth or none of the above you know your organization is actually benefiting from from from koban 19 as you know we've seen some many reports so those are kind of the options that we gave CIOs and you kind of see it on that first chart here interesting and this is a survey a flash service 700 CIOs or approximately and the interesting thing I really want to point out here is this you know the koban pandemic was it didn't suppress you know all companies you know and in the return it's not going to be a rising tide lifts all ships you really got to do your research you have to understand the different sectors really try to peel back the onion skin and understand why there's certain momentum how certain organizations are accommodating the work from home we heard you know several weeks ago how there's a major change in in networking mindsets we're talking about how security is changing we're going to talk about some of the permanence but it's really really important to try to understand these different trends by different industries which you're going to talk about in a minute but if you take a look at this slide I mean obviously most people expect this u-shaped decline I mean a you know a u-shaped recovery rather so it's two or three quarters followed by some growth next year but as we'll see some of these industries are gonna really go deeper with an l-shape recovery and then it's really interesting that a pretty large and substantial portion see this as a tailwind presumably those with you know strong SAS models some annual recurring revenue models your thoughts if we kind of star on this kind of aggregate chart you know you're looking at about forty four percent of CIOs anticipated u-shaped recovery right that's the largest bucket and then you can see another 15 percent and to say an l-shape recovery 14 on the v-shaped and then 16 percent to your point that are kind of seeing this this tailwind but if we kind of focus on that largest bucket that you shaped you know one of the thing to remember and again when we asked is two CIOs within the within this kind of coded flash poll we also asked can you give us some commentary and so one of the things that or one of the themes that are kind of coming along with this u-shaped recovery is you know CIOs are cautiously optimistic about this u-shaped recovery you know they believe that they can get back on to a growth cycle into 2021 as long as there's a vaccine available we don't go into a second wave of lockdowns economic activity picks up a lot of the government actions you know become effective so there are some kind of let's call it qualifiers with this bucket of CIOs that are anticipating a u-shape recovery what they're saying is that look we are expecting these things to happen we're not expecting that our lock down we are expecting a vaccine and if that takes place then we do expect an uptick in growth or going back to kind of pre coded levels in in 2021 but you know I think it's fair to assume that if one or more of these are apps and and things do get worse as all these states are opening up maybe the recovery cycle gets pushed along so kind of at the aggregate this is where we are right now yeah so as I was saying and you really have to understand the different not only different sectors and all the different vendors but you got to look into the industries and then even within industries so if we pull up the next chart we have the industry to the breakdown and sort of the responses by the industries v-shape you shape or shape I had a conversation with a CIO of a major resort just the other day and even he was saying what was actually I'll tell you it was Windham Resorts public company I mean and obviously that business got a good crush they had their earnings call the other day they talked about how they cut their capex in half but the stock sagar since the March lows is more than doubled yeah and you know that's amazing and now but even there within that sector they're peeling that on you're saying well certain parts are going to come back sooner or certain parts are going to longer depending on you know what type of resort what type of hotel so it really is a complicated situation so take us through what you're seeing by industry sure so let's start with kind of the IT telco retail consumer space Dave to your point there's gonna be a tremendous amount of bifurcation within both of those verticals look if we start on the IT telco side you know you're seeing a very large bucket of individuals right over twenty percent that indicated they're seeing a tail with our additional revenue because of covin 19 and you know Dave we spoke about this all the way back in March right all these work from home vendors you know CIOs were doubling down on cloud and SAS and we've seen how some of these events have reported in April you know with this very good reports all the major cloud vendors right select security vendors and so that's why you're seeing on the kind of telco side definitely more positivity right as it relates to recovery type right some of them are not even going through recovery they're they're seeing an acceleration same thing on the retail consumer side you're seeing another large bucket of people who are indicating what we've benefited and again there's going to be a lot of bifurcation here there's been a lot of retail consumers you just mentioned with the hotel lines that are definitely hurting but you know if you have a good online presence as a retailer and you know you had essential goods or groceries you benefited and and those are the organizations that we're seeing you know really indicate that they saw an acceleration due to Koga 19 so I thought those two those two verticals between kind of the IT and retail side there was a big bucket or you know of people who indicated positivity so I thought that was kind of the first kind of you know I was talking about kind of peeling this onion back you know that was really interesting you know tech continues to power on and I think you know a lot of people try I think that somebody was saying that the record of the time in which we've developed a fit of vaccine previously was like mumps or something and it was I mean it was just like years but now today 2020 we've got a I we've got all this data you've got these great companies all working on this and so you know wow if we can compress that that's going to change the equation a couple other things sagar that jump out at me here in this chart I want to ask you about I mean the education you know colleges are really you know kind of freaking out right now some are coming back I know like for instance my daughter University Arizona they're coming back in the fall evidently others are saying and no you can clearly see the airlines and transportation as the biggest sort of l-shape which is the most negative I'm sure restaurants and hospitality are kind of similar and then you see energy you know which got crushed we had you know oil you know negative people paying it big barrels of oil but now look at that you know expectation of a pretty strong you know you shape recovery as people start driving again and the economy picks up so maybe you could give us some thoughts on on some of those sort of outliers yeah so I kind of bucket you know the the next two outliers as from an l-shaped in a u-shaped so on the l-shaped side like like you said education airlines transportation and probably to a little bit lesser extent industrials materials manufacturing services consulting these verticals are indicating the highest percentages from an l-shaped recovery right so three plus orders of revenue declines and deceleration followed by kind of you know minimal to moderate growth and look there's no surprise here those are the verticals that have been impacted the most by less demand from consumers and and businesses and then as you mentioned on the energy utility side and then I would probably bucket maybe healthcare Pharma those have some of the largest percentages of u-shaped recovery and it's funny like I read a lot of commentary from some of the energy in the healthcare CIOs and they were said they were very optimistic about a u-shaped type of recovery and so it kind of you know maybe with those two issues then you could even kind of lump them into you know probably to a lesser extent but you could probably open into the prior one with the airlines and the education and services consulting and IMM where you know these are definitely the verticals that are going to see the longest longest recoveries it's probably a little bit more uniform versus what we've kind of talked about a few minutes ago with you know IT and and retail consumer where it's definitely very bifurcated you know there's definitely winners and losers there yeah and again it's a very complicated situation a lot of people that I've talked to are saying look you know we really don't have a clear picture that's why all these companies have are not giving guidance many people however are optimistic not only for a vet a vaccine but but but also they're thinking as young people with disposable income they're gonna kind of say dorm damn the torpedoes I'm not really going to be exposed and you know they can come back much stronger you know there seems to be pent up demand for some of the things like elective surgery or even the weather is sort of more important health care needs so that obviously could be a snap back so you know obviously we're really closely looking at this one thing though is is certain is that people are expecting a permanent change and you've got data that really shows that on the on the next chart that's right so one of the one of the last questions that we asked on this you know quick coded flash poll was do you anticipate permanent changes to your kind of IT stack IT spend based on the last few months you know as everyone has been working remotely and you know rarely do you see results point this much in one direction but 92% of CIOs and and kind of IT you know high level ITN users indicated yes there are going to be permanent changes and you know one of the things we talked about in March and look we were really the first ones you know you know in our discussion where we were talking about work from home spend kind of negating or balancing out all these declines right we were saying look yes we are seeing a lot of budgets come down but surprisingly we're seeing 2030 percent of organizations accelerate spent and even the ones that are spending less they even then you know some of their some of their budgets are kind of being negated by this work from home spend right when you think about collaboration tool is an additional VPN and networking bandwidth in laptops and then security all that stuff CIOs now continue to spend on because what what CIO is now understand as productivity has remained at very high levels right in March CIOs were very with the catastrophe and productivity that has not come true so on the margin CIOs and organizations are probably much more positive on that front and so now because there is no vaccine where you know CIOs and just in general the population we don't know when one is coming and so remote work seems to be the new norm moving forward especially that productivity you know levels are are pretty good with people working from home so from that perspective everything that looked like it was maybe going to be temporary just for the next few months as people work from home that's how organizations are now moving forward well and we saw Twitter basically said we're gonna make work from home permanent that's probably cuz their CEO wants to you know live in Africa Google I think is going to the end of the year I think many companies are going to look at a hybrid and give employees a choice say look if you want to work from home and you can be productive you get your stuff done you know we're cool with that I think the other point is you know everybody talks about these digital transformations you know leading into Kovan and I got to tell you I think a lot of companies were sort of complacent they talked the talk but they weren't walking the walk meaning they really weren't becoming digital businesses they really weren't putting data at the core and I think now it's really becoming an imperative there's no question that that what we've been talking about and forecasting has been pulled forward and you you're either going to have to step up your digital game or you're going to be in big trouble and the other thing that's I'm really interested in is will companies sub optimize profitability in the near term in order to put better business resiliency in place and better flexibility will they make those investments and I think if they do you know longer term they're going to be in better shape you know if they don't they could maybe be okay in the near term but I'm gonna put a caution sign a little longer term no look I think everything that's been done in the last few months you know in terms of having those continuation plans because you know do two pandemics all that stuff that is now it look you got to have that in your playbook right and so to your point you know this is where CIOs are going and if you're not transforming yourself or you didn't or you know lesson learned because now you're probably having to move twice as fast to support all your employees so I think you know this pandemic really kind of sped up you know digital transformation initiatives which is why you know you're seeing some companies desks and cloud related companies with very good earnings reports that are guiding well and then you're seeing other companies that are pulling their guidance because of uncertainty but it's it's likely more on the side of they're just not seeing the same levels of spend because if they haven't oriented themselves on that digital transformation side so I think you know events like this they typically you know Showcase winners and losers then you know when when things are going well and you know everything is kind of going up well I think that - there's a big you know discussion around is the ESPY overvalued right now I won't make that call but I will say this then there's a lot of data out there there's data and earnings reports there's data about this pandemic which change continues to change maybe not so much daily but you're getting new information multiple times a week so you got to look to that data you got to make your call pick your spot so you talk about a stock pickers market I think it's very much true here there are some some gonna be really strong companies emerging out of this you know don't gamble but do your research and I think you'll you'll find some you know some Dems out there you know maybe Warren Buffett can't find them okay but the guys at Main Street I think you know the I am I'm optimistic I wonder how you feel about about the recovery I I think we may be tainted by tech you know I'm very much concerned about certain industries but I think the tech industry which is our business is gonna come out of this pretty strong yeah we look at the one thing we we should we should have stated this earlier the majority of organizations are not expecting a v-shaped recovery and yet I still think there's part of the consensus is expecting a v-shaped recovery you can see as we demonstrate in some of the earlier charts the you know almost the majority of organizations are expecting a u-shaped recovery and even then as we mentioned right that you shape there is some cautious up around there and I have it you probably have it where yes if everything goes well it looks like 2021 we can really get back on track but there's so much unknown and so yes that does give I think everyone pause when it comes from an investment perspective and even just bringing on technologies and into your organization right which ones are gonna work which ones are it so I'm definitely on the boat of this is a more u-shaped in a v-shaped recovery I think the data backs that up I think you know when it comes to cloud and SAS players those areas and I think you've seen this on the investment side a lot of money has come out of all these other sectors that we mentioned that are having these l-shaped recoveries a lot of it has gone into the tech space I imagine that will continue and so that might be kind of you know it's tough to sometimes balance what's going on on the investor in the stock market side with you know how organizations are recovering I think people are really looking out in two to three quarters and saying look you know to your point where you set up earlier is there a lot of that pent up demand are things gonna get right back to normal because I think you know a lot of people are anticipating that and if we don't see that I think you know the next time we do some of these kind of coded flash bolts you know I'm interested to see whether or not you know maybe towards the end of the summer these recovery cycles are actually longer because maybe we didn't see some of that stuff so there's still a lot of unknowns but what we do know right now is it's not a v-shaped recovery agree especially on the unknowns there's monetary policy there's fiscal policy there's an election coming up there's a third there's escalating tensions with China there's your thoughts on the efficacy of the vaccine what about therapeutics you know do people who have this yet immunity how many people actually have it what about testing so the point I'm making here is it's very very important that you update your forecast regularly that's why it's so great that I have this partnership with you guys because we you know you're constantly updating the numbers it's not just a one-shot deal so suck it you know thanks so much for coming on looking forward to having you on in in the coming weeks really appreciate it absolutely yeah well I will really start kind of digging into how a lot of these emerging technologies are faring because of kovat 19 so that's I'm actually interested to start thinking through the data myself so yeah well we'll do some reporting in the coming weeks about that as well well thanks everybody for watching this episode of the cube insights powered by ETR I'm Dave Volante for sauger kuraki check out ETR dot plus that's where all the ETR data lives i published weekly on wiki bon calm and silicon angle calm and reach me at evil on Tay we'll see you next time [Music]

(upbeat music) >> From theCUBE Studios in Palo Alto in Boston, connecting with thought leaders all around the world, this is a Cube Conversation. >> As we've been reporting, the COVID-19 pandemic has created a bifurcated IT spending picture. And over the last several weeks, we've reported both in the macro and even some come at it from a vendor and a sector view. I mean, for example, we've reported on some of the companies that have really continued to thrive, we look at the NASDAQ and its near a toll-time hard. Companies like Okta and CrowdStrike, we've reported on Snowflake, UiPath. The sectors, RPA, some of the analytic databases around AI, maybe even to a lesser extent Cloud but still has a lot tailwinds relative to some of those on-prem infrastructure plays. Even companies like Cisco, bifurcated in and of themselves, where you see this more rocky side of the house doing quite well. The work-from-home stuff but maybe some of the traditional networking not as much. Well, now what if you flip that to really try to understand what's going on with the shape of the recovery which is the main narrative right now. Is it a V shape? Is it a U shape? What do people expect? And now to understand that, you really have to look at different industries because different industries are going to come back at a different pace. With me again is Sagar Kadakia, who's the Director of Research at ETR. Sagar, you guys are all over this, as usual timely information, it's great to see you again. Hope all is well in New York City. >> Thanks so much David, it's a pleasure to be back on again. >> Yeah, so where are we in the cycle? You've done a great job and very timely, ETR was the first to really put out data on the Covid impact with the server that ran from mid March to mid April. And now everybody's attention Sagar, is focused on, okay, we've started to come back, stores are starting to open, people are beginning to go out again and everybody wants to know what the shape of the recovery looks like. So, where are we actually in that research cycle for you guys? >> Yeah, no problem. So, like you said, in that kind of March, April timeframe, we really want to go out there and get an idea of what are going to be the budget impacts as it relates to IT because of COVID-19, right? So, we kind of ended off there around a decline of 5%. And coming into the year, the consensus was a growth of 4% or 5%, right? So, we saw about a 900 or 1000 base point swing, to the negative side. And then (murmurs) topic we covered in March and April were which sectors of vendors were going to benefit as a result of work-from-home. And so, now as we kind of fast forward to the research cycle as we kind of go more into May and into the summer, rather than asking those exact same question again, because it's just been maybe 40 or 50 days. We really want to (murmurs) on the recovery type as well as well as kind of more emerging private vendors, right? We want it to understand what's going to be the impact on these vendors that typically rely on larger conferences, more in person meetings, because these are younger technologies. There's not a lot of information about them. And so, last Thursday we launched our biannual emerging technology study. It covers roughly 300 private emerging technologies across maybe 60 sectors of technology. And in tandem, we've launched a COVID Flash Poll, right? What we want to do was kind of twofold. One really understand from CIOs the recovery type they had in mind, as well as if they were seeing any kind of permanent changes in their IT, stacks IT spend because of COVID-19. And so, if we kind of look at the first chart here, and kind of get more into that first question around recovery type, what we asked CIOs in this kind of COVID Flash Poll, again, we did it last Thursday was, what type of recovery are you expecting? Is it V-shaped so kind of of a brief decline, maybe 1/4, and then you're going to start seeing growth into 2 each 20. Is it U-shaped? So two to 3/4 of a decline or deceleration revenue, and you're kind of forecasting that growth in revenue as an organization to come back in 2021. Is it L-shaped, right? So, maybe three, four or 5/4 of a decline or deceleration. And very minimal to moderate growth or none of the above, your organization is actually benefiting from COVID-19, as we've seen some many reports. So, those are kind of the options that we gave CIOs and you kind of see them at first chart here. >> Well, interesting. And this is a survey, a flash of survey, 700 CIOs or approximately. And the interesting thing I really want to point out here is, the COVID pandemic, it didn't suppress all companies, and the return is it's not going to be a rising tide that lifts all ships. You really got to do your research. You have to understand the different sectors, really try to peel back the onion skin and understand why there are certain momentum, how certain organizations are accommodating the work from home. We heard several weeks ago, how there's a major change in networking mindsets we're talking about how security is changing. We're going to talk about some of the permanents, but it's really, really important to try to understand these different trends by different industries, which we're going to talk about in a minute. But if you take a look at this slide, I mean, obviously most people expect this U-shape decline. I mean, U-shape recovery rather. So it's two or 3/4 followed by some growth next year. But as we'll see, some of these industries are going to really go deeper with an L-shape recovery. And then it's really interesting that a pretty large and substantial portion see this as a tailwind, presumably those with strong SAS models, annual recurring revenue models, your thoughts? >> If we kind of start on this kind of aggregate chart, you're looking at about 44% of CEO's anticipate a U-shaped recovery, right? That's the largest bucket. Then you can see another 15% anticipate an L-shape recovery 14 on the V-shaped, and then 16% to your point that are kind of seeing this tailwind. But if we kind of focus on that largest bucket that U-shaped, one of the things to remember and again, when we asked this to CIOs within this kind of COVID Flash Poll, we also asked, can you give us some commentary? And so, one of the things that, or one of the themes that are kind of coming along with this U-shape recovery is CIOs are cautiously optimistic about this U-shape recovery. They believe that they can get back onto a growth cycle, into 2021, as long as there's a vaccine available. We don't go into a second wave of lockdowns. Economic activity picks up, a lot of the government actions become effective. So there are some kind of let's call it qualifiers, with this bucket of CIOs that are anticipating a U-shape recovery. What they're saying is that, "look, we are expecting these things to happen, "we're not expecting a lockdown, "we are expecting a vaccine. "And if that takes place, "then we do expect an uptake in growth, "or going back to kind of pre COVID levels in 2021." But I think it's fair to assume that if one or more of these are ups and things do get worse as all these States are opening up, maybe the recovery cycle gets pushed along. So kind of at the aggregate, this is where we are right now. >> Yeah. So as I was saying, you really have to understand the different, not only different sectors not only the different vendors, but you can really get to look into the industries, and then even within industries. So if we pull up the next chart, we have the industry sort of break down, and sort of the responses by the industry's V-shape, U-shape or L-shape. I had a conversation with a CIO of a major resort, just the other day. And even he was saying, well, it was actually, I'll tell you it was Wyndham Resorts, public company. I mean, and obviously that business got crushed. They had their earnings call the other day. They talked about how they cut their capex in half. But the stock, Sagar, since the March loss is more than doubled. >> Yeah. >> It was just amazing. And now, but even there, within that sector, they're appealing that on you are doing well, certain parts are going to come back sooner, certain parts are going to take longer, depending on, what type of resort, what type of hotel. So, it really is a complicated situation. So, take us through what you're seeing by industry. >> Yeah, sure. So let's start with kind of the IT-Telco, retail, consumer space. Dave to your point, there's going to be a tremendous amount of bifurcation within both of those verticals. Look, if we start on the IT-Telco side, you're seeing a very large bucket of individuals, right over 20%? That indicated they're seeing a tailwind or additional revenue because of COVID-19 and Dave, we spoke about this all the way back in March, right? All these work from home vendors. CIOs were doubling down on Cloud and SAS and we've seen how some of these vendors have reported in April, with very good reports, all the major Cloud vendors, right? Like Select Security vendors. And so, that's why you're seeing on the kind of Telco side, definitely more positivity, right? As you relates to recovery type, right? Some of them are not even going through recovery. They're seeing an acceleration, same thing on the retail consumer side. You're seeing another large bucket of people who are indicating, "look, we've benefited." And again, there's going to be a lot of bifurcation, there's been a lot of retail consumers. You just mentioned with the hotel lines, that are definitely hurting. But if you have a good online presence as a retailer, and you had essential goods or groceries, you benefited. And those are the organizations that we're seeing really indicate that they saw an acceleration due to COVID-19. So, I thought those two verticals between kind of the IT and retail side, there was a big bucket of people who indicated positivity. So I thought that was kind of the first kind of as we talked about kind of feeling this onion back. That was really interesting. >> Tech continues to power on, and I think a lot of people try, I think somebody was saying that the record time in which we've developed a vaccine previously was like mumps or something. I mean, it was just like years. But now today, 2020, we've got AI, we've got all this data, you've got these great companies all working on this. And so, wow, if we can compress that, that's going to change the equation. A couple of other things Sagar that jump out at me here in this chart that I want to ask you about. I mean, the education, the colleges, are really kind of freaking out right now, some are coming back. I know, like for instance, my daughter at University of Arizona, they're coming back in the fall indefinitely, others are saying, no. You can clearly see the airlines and transportation, has the biggest sort of L-shape, which is the most negative. I'm sure restaurants and hospitality are kind of similar. And then you see energy which got crushed. We had oil (laughs) negative people paying it, big barrels of oil. But now look at that, expectation of a pretty strong, U-shape recovery as people start driving again, and the economy picks up. So, maybe you could give us some thoughts on some of those sort of outliers. >> Yeah. So I kind of bucket the next two outliers as from an L-shaped and a U-shaped. So on the L-shaped side, like you said, education airlines, transportation, and probably to a little bit lesser extent, industrials materials, manufacturing services consulting. These verticals are indicating the highest percentages from an L-shaped recovery, right? So, three plus 1/4 of revenue declines in deceleration, followed by kind of minimal to moderate growth. And look, there's no surprise here. Those are the verticals that have been impacted the most, by less demand from consumers and businesses. And then as you mentioned on the energy utility side, and then I would probably bucket maybe healthcare, pharma, those have some of the largest, percentages of U-shaped recovery. And it's funny, like I read a lot of commentary from some of the energy and the healthcare CIOs, and they were saying they were very optimistic (laughs) about a U-shaped type of recovery. And so it kind of, maybe with those two issues that we could even kind of lump them into, probably to a lesser extent, but you could probably lump it into the prior one with the airlines and the education and services consulting, and IMM, where these are definitely the verticals that are going to see the longest, longest recoveries. And it's probably a little bit more uniform, versus what we've kind of talked about a few minutes ago with IT and retail consumer where it's definitely very bifurcated. There's definitely winners and losers there. >> Yeah. And again, it's a very complicated situation. A lot of people that I've talked to are saying, "look, we really don't have a clear picture, "that's why all these companies are not giving guidance." Many people, however, are optimistic only for a vaccine, but also their thinking is young people with disposable income, they're going to kind of say,"Damn the torpedoes, "I'm not really going to be exposed." >> And they could come back much stronger, there seems to be pent up demand for some of the things like elective surgery, or even some other sort of more important, healthcare needs. So, that obviously could be a snapback. So, obviously we're really closely looking at this, one thing though is certain, is that people are expecting a permanent change, and you've got data that really shows that on the next chart. >> That's right. So, one of the last questions that we ask kind of this quick COVID Flash Poll was, do you anticipate permanent changes to your kind of IT stack, IT spend, based on the last few months? As everyone has been working remotely, and rarely do you see results point this much in one direction, but 92% of CIOs and kind of high level IT end users indicated yes, there are all going to be permanent changes. And one of the things we talked about in March, and look, we were really the first ones, in our discussion, where we were talking about work from home spend, kind of negating or bouncing out all these declines, right? We were saying, look, yes, we are seeing a lot of budgets come down, but surprisingly, we're seeing 20,30% of organizations accelerate spend. And even the ones that are spending less, even them, some of their budgets are kind of being negated by this work from home spend, right? When you think about collaboration tools and additional VPN and networking bandwidth, and laptops and then security, all that stuff. CIOs now continue to spend on, because what CIOs now understand is productivity has remained at very high levels, right? In March CIOs were very concerned with the catastrophe and productivity that has not come true. So on the margin CIOs and organizations are probably much more positive on that front. And so now, because there is no vaccine, where we know CIOs and just in general, the population, we don't know when one is coming. And so remote work seems to be the new norm moving forward, especially that productivity levels are pretty good with people working from home. So, from that perspective, everything that looked like it was maybe going to be temporary, just for the next few months, as people work from home, that's how organizations are now moving forward. >> Well, and we saw Twitter, basically said, "we're going to make work from home permanent." That's probably because their CEO wants to live in Africa. Google, I think, is going to the end of the year. >> I think many companies are going to look at a hybrid, and give employees a choice, say, "look, if you want to work from home "and you can be productive, you get your stuff done, we're cool with that." I think the other point is, everybody talks about these digital transformations leading into COVID. I got to tell you, I think a lot of companies were sort of complacent. They talk the talk, but they weren't walking the walk, meaning they really weren't becoming digital businesses. They really weren't putting data at the core. And I think now it's really becoming an imperative. And there's no question that what we've been talking about and forecasting has been pulled forward, and you're either going to have to step up your digital game or you're going to be in big trouble. And the other thing I'm really interested in is will companies sub-optimize profitability in the near term, in order to put better business resiliency in place, and better flexibility, will they make those investments? And I think if they do, longer term, they're going to be in better shape. If they don't, they could maybe be okay in the near term, but I'm going to put up a caution sign, although the longer term. >> Now look, I think everything that's been done in the last few months, in terms of having those continuation plans, due to pandemics and all that stuff, look, you got to have that in your playbook, right? And so to your point, this is where CIOs are going and if you're not transforming yourself or you didn't before, lesson learned, because now you're probably having to move twice as fast to support all your employees. So I think this pandemic really kind of sped up digital transformation initiatives, which is why, you're seeing some companies, SAS and Cloud related companies, with very good earnings reports that are guiding well. And then you're seeing other companies that are pulling their guidance because of uncertainty, but it's likely more on the side if they're just not seeing the same levels of spend, because if they haven't oriented themselves, on that digital transformation side. So I think events like this, they typically showcase winners and losers than when things are going well. and everything's kind of going up. >> Well, I think that too, there's a big discussion around is the S&P over valued right now. I won't make that call, but I will say this, that there's a lot of data out there. There's data in earnings reports, there's data about this pandemic, which it continues to change. Maybe not so much daily, but we're getting new information, multiple times a week. So you got to look to that data. You got to make your call, pick your spots, earlier you talk about a stock pickers market. I think it's very much true here. There are some going to be really strong companies. emerging out of this, don't gamble but do your research. And I think you'll find some gems out there, maybe Warren buffet can't find them okay. (laughs) But the guys at main street. I'm optimistic, I wonder how you feel about the recovery. I think I maybe tainted by tech. (laughs). I'm very much concerned about certain industries, but I think the tech industry, which is our business's, going to come out of this pretty strong? >> Yeah. Look, the one thing we should have stated this earlier, the majority of organizations are not expecting a V-shaped recovery. And yet I still think there's part of the consensus is expecting a V-shaped recovery. You can see as we demonstrate in some of the earlier charts, That U-shaped, there is some cautious optimism around there, almost the majority of organizations are expecting a U-shape recovery. And even then, as we mentioned, right? That U-shape, there is some cautious optimism around there, and I have it, you probably have it where. Yes, if everything goes well, it looks like 2021 we can really get back on track. But there's so much unknown. And so yes, that does give I think everyone pause when it comes from an investment perspective, and even just bringing on technologies. into your organization, right? Which ones are going to work, which ones aren't? So, I'm definitely on the boat of, this is a more U-shaped in a V-shape recovery. I think the data backs that up. I think when it comes to Cloud and SAS players, those areas, and I think you've seen this on the investment side, a lot of money has come out of all these other sectors that we mentioned that are having these L-shaped recoveries. A lot of it has gone into the text-based. I imagine that will continue. And so that might be kind of, it's tough to sometimes balance what's going on, on the investment that stock market side, with how organizations are recovering. I think people are really looking out into two, 3/4 and saying, look to your point where you said that earlier, is there a lot of that pent up demand, are things going to get right back to normal? Because I think a lot of people are anticipating that. And if we don't see that, I think the next time we do some of these kind of COVID Flash Polls I'm interested to see whether or not, maybe towards the end of the summer, these recovery cycles are actually longer because maybe we didn't see some of that stuff. So there's still a lot of unknowns. But what we do know right now is it's not a V-shaped recovery. >> I agree, especially on the unknowns, there's monetary policy, there's fiscal policy, there's an election coming up. >> That's fine. >> There's escalating tensions with China. There's your thoughts on the efficacy of the vaccine? what about therapeutics? Do people who've had this get immunity? How many people actually have it? What about testing? So the point I'm making here is it's very, very important that you update your forecast regularly That's why it's so great to have this partnership with you guys, because you're constantly updating the numbers. It's not just a one shot deal. So Sagar, thanks so much for coming on. I'm looking forward to having you on in the coming weeks. Really appreciate it. >> Absolutely. Yeah, we'll really start kind of digging into how a lot of these emerging technologies are fairing because of COVID-19. So, I'm actually interested to start digging through the data myself. So yeah, we'll do some reporting in the coming weeks about that as well. >> Well, thanks everybody for watching this episode of theCUBE Insights powered by ETR. I'm Dave Vellante for Sagar Kadakia, check out etr.plus, that's where all the ETR data lives, I publish weekly on wikibond.com and siliconangle.com. And you can reach me @dvellante. We'll see you next time. (gentle music).

from the cube studios in Palo Alto in Boston connecting with thought leaders all around the world this is a cube conversation we've been reporting that the Kovan pandemic has created a bifurcated IT spending outlook legacy on print on-prem infrastructure in traditional software licensing models they're giving away two approaches that enable more flexibility in business agility automation initiatives that reduce human labor labor that's not value add has really been gaining traction for the past 18 months the pandemic has only accelerated to focus on such efforts and robotic process automation or RPA along with machine intelligence have been the beneficiaries relative to other segments of the IT stack welcome to this week's wiki Vaughn cube insights powered by ETR my name is Dave Volante and in this breaking analysis we're gonna update you on the latest demand picture for the red-hot RP a sector will also focus on two main areas today first we're gonna review the basics of the RP a space for those that may not be as familiar with the market next we'll share with you the spending data and outlook in the RT ARPA space from ETR and we're really dig into the kovat impact on this market segment and take a look at the competitive outlook we're gonna pay particular attention to the leaders in this space and then we're gonna wrap up so let me start with kind of the RPI basics if you're not familiar with our PA here's what you really need to know happy hour PA gained traction by taking software robots and pointing them at existing applications to mimic human behavior and automate repeatable and well understood processes keyboard behavior that is now a challenge with early RPA implementations is that most customers chose to point these bots at legacy backend office systems now that the open emails and fill out forms and the like so that's great because it digitizes processes around legacy systems awesome ROI but the problem is that these bots will they interact with a user interface of that application and many of these apps they really don't have an API so any change in data or the interface breaks the automation down now more recently automations are interacting to apps through api's that makes them less brittle but of course you know the quality of api's as you well know will vary so enter your machine intelligence into the equation there's been a lot of discussion around the intersection of our PA and AI and that's allowed organizations to automate more processes that do so in a way that takes an augmentation approach using things like natural language processing or speech recognition and machine learning to iterate and improve automations and you know this trend holds a lot of promise and is a lot of talk about it in the marketplace particularly in the form of really trying to understand which processes to automate and where the best ROI can be achieved for organization but it's important to note it's really still early days with this AI intersection nonetheless investors you know they're ahead of the game they've they've poured money into this space as we've been reporting now for you know well over a year or two uipath an automation anywhere have raised close to two billion dollars and have been growing very very rapidly we're gonna talk more about that existing players like blue prism they've actually benefited from the automation tailwind and other you know process business process players take for example like Pegasus Toombs I mean they started in the early 80s they've added our PA to their platform as have many others by the way including Microsoft who has barely been trying to crack into this market for a while in fact Microsoft just bought a small company called soft emotive and to really try to shore up its RP a game but you know just a quick aside in our view Microsoft is their well behind the leaders it's gonna take years for them to get where the leaders are today yeah but it's Microsoft so you don't want to ignore them now the big buzzword here is hyper automation evidently it's a torrent a coin term coined by Gartner and uipath has picked up on this in a big way and so is automation anywhere now those both those companies are in hyper growth so it plays more established companies for example pega yeah they look at the term differently you know of course their vision is Rp a is a small portion of their their their vision these established firms they want to incorporate their business process automation z' that have been built over decades into a systems view of the organization using existing platforms the upstarts of course they want to build from new platforms what's really happening in the marketplace and like in many situations is this emergence of a hybrid you know quasi-equilibrium here we saw this in mainframes who certainly you know saw it in middleware enterprise data warehouses and we've seen it in the cloud you know where most companies don't just throw away the investments that they've made in legacy systems now they're stable they're operationalized and rather what they do is they overlay the more modern technologies and they kind of create an abstraction layer of their business that incorporates the old and the new but the growth is much much higher in the new as we know it and that leads me to the TAM the total available market let's look at the RPM you know we think the TAM expansion opportunity is pretty substantial we put this chart together awhile back that really underscores that the progression of our PA from you know simple BOTS automating back-office functions to really infusing automations in virtually all applications you know if you expand the definition beyond our PA software into the broader automation opportunities the other thing about it this this could be a much much larger than depicted here maybe well over a hundred billion dollar Tam as a I powered automation becomes fundamental to every organization in their operating model anyway it's a big opportunity and the data suggests that it's growing rapidly so let's turn to the data let's look at the spending and bring ETR into the equation so which technologies are showing new adoptions in tech on balance the tech sector has done pretty well despite this pandemic at the time of this video the Nasdaq Composite is up about a point and a half year to date and as we know from previous surveys that heading into 2020 there was a pullback in a narrowing of new technology adoptions as organizations began to operationalize their digital initiatives and place bets this chart shows new adoptions across three survey dates the gray is April last year the blue is January which is pre-pandemic really and the survey of more than 1,200 IT buyers is really the latest one which is the April so this survey took place at the height of the US lockdown and you can see look at all PA it's got 22% new adoptions what does that mean it means that 22% of the customers in the survey we're planning our PA spend there that are planning for our PA spend are planning new adoptions now that's a figure that says hi as machine learning and artificial intelligence and of course as we said these two technologies are increasingly playing a role together so our PA adoptions more than containers more than videoconferencing which has had this tailwind from work from home and more than cloud more than mobile device management so it's really one of the hottest sectors in terms of new adoptions now let's look at some of the players in our PA and try to really better understand their positions here's a chart that uses the two primary met work net metrics that we've been sharing over the past year net score or spending momentum is on the y-axis and market share which is a measure of pervasiveness in the data set is on the x-axis the chart plots are PA players in the et our data set and you can see uipath in automate anyway our the to market leaders they show both spending momentum and market awareness then you see blue prism and peg is in there and the rest of the pack and I'll say this about pegye systems I recently spoke to their CEO Alan trifler he's an amazing self-made billionaire he's got a great business you know peg that really doesn't see you know itself anyway as an RPA play and I don't either our PA is really a small part of their story but they're in the data set and certainly automation related so it's what's showing but it's a bit of an oranges and tangerines comparison now notice in the upper right of this chart you can see that the net scores are in the green shade and there's a little bit of red in there but remember net score is a simple metric sort of like Net Promoter Score in PS it subtracts customer spending less from those spending more and that's the difference and you can see very very strong net scores for both uipath in automation anywhere and I'm gonna discuss that more in a moment but there's lots of green in the chart and even pega or as I said it's really not an RPA specialist they've got a solid net score now let's look at a time series of this net score in the spending momentum what we do here is this chart takes the three leaders uipath automation anywhere and blue prism and it plots their net scores over time goes all the way back to the January 18 survey now let me make a couple of points here uipath in automation anywhere 70% plus net scores is very impressive and amongst the highest in the data set even though you see some of the Lawson momentum in the UI path line and the convergence with automation anywhere they're both very very strong and you can see in the upper right you can see the shared end which is an indicator of the presence of the company in the data set how many response is out of the 1200 plus so you might say well wait a minute you I passed the I had they had layoffs last fall and automation anywhere they more recently just recently had layoffs how can they show such strength well I make a few points first fast-growing companies like this that have raised you know nearly a billion dollars each they've got investors to serve and they're going to course-correct when they feel like there's some slack in the system yet to me it's not a sign of fundamental trouble second both of these companies are going to continue to invest heavily on research and development uipath has 60 openings on its website mostly in engineering automation anywhere they only have nine openings but I would expect both companies to up their engineering hiring especially given the Microsoft acquisition today third remember this is not an indicator of the amount of money spent in absolute dollars rather it looks at spending momentum of the doll in dollar terms as well if you were to cut the data by larger companies let's say the Fortune 1000 where the average contract values are higher you'd see that you I pass a net score jumps to 77% automation anywhere would drop into the 60s and blue prison would stay about the same where it is today today so let's look for example in the global 2000 so we'll expand that notion of a fortune 1000 let's go to the global 2000 where there's more of an end slice and you can see the picture changes from the overall data sample this chart shows the net scores in the global 2000 where the ends are more than 25 responses across all the three surveys gray as last April blue was January yellow is April 2020 and you can see the year-on-year decline and the modest step down during the the Colvin lockdown which again surveyed in April but still very elevated net scores for uipath and automation anywhere and respectable for the other so the point is Co vyd has not really crushed the RPA market I mean if anything is witnessed by the new adoptions it's maybe it's certainly better off than most IT sectors now let's dig into the net scores of the two leaders a little bit more uipath and automation anywhere remember net scores of very important metric and I want to spend the moment explaining how we use it you see this wheel chart this red green gray it really shows how the net score method is applied now we've taken the UI path example from the April survey net score works by asking buyers relative to last year are you adopting new that's the 28% are you increasing spend by 6 percent or greater that's 51 percent are you expecting flat spending that's 15 percent or a decrease in spend of 6 percent or more or finally are you replacing the vendor checking them out so look at this you can see for UI path added up 79 percent of respondents expect to increase spending in 2020 relative to 2019 and again remember this survey was taken at the height of the kovat lockdown let me show you the data for automation anywhere same exact methodology 72 percent of automation anywhere a customer's plan to spend more only 1 percent plan to spend less with zero replacements so very strong fundamentals as it relates to spending momentum for both UI path and automation anywhere now how is presents or what we call market share in the data set changing on a year-on-year basis well this is the last data point that I want to show and it relates to that metric of market share which again is the measure of pervasiveness it's calculated by dividing the number of mentions of a vendor in a sector by the total mentions of that sector in this case RP a and this chart shows the year-on-year change in customer growth comparing market share from the April 20 survey with that from the April 19 data and you can see the yellow line at 11% is the sector average uipath has the fastest growth automation anywhere is growing faster than the market average and blue prism is below the average now this looks back to last year and it'll be interesting to see how this picture changes with the next survey based on what we're seeing with the next net scores which is a forward-looking metric all right let's wrap so we're seeing that the bifurcated market is high that the automation trend generally is real and that the RP a drill down specifically shows us an example in action we think that kovat 919 not hit these numbers would actually be higher by maybe as much as 10% but in the near near to mid term we would expect a pretty fast return to normal patterns of demand if I put normal and air quotes for our PA in fact you know we don't expect a real v-shaped recovery across the board but our PA is you know one of those areas where we actually may see such a rebound the pandemic really underscores the need to accelerate digital transformations our PA we think is going to be a central player in that movie along with AI the cloud all right we have to leave it there for now so remember these episodes they're all available as podcasts just all you got to do is search breaking analysis podcasts please subscribe to the series would appreciate that and check out ETR dot plus for all the data I also publish a full report every week on wiki bound comm tons of data there as well and Silicon angle comm has all the news and I published there alright this is Dave Volante thanks for watching this episode of the cube insights powered by ETR we'll see you next time [Music]

>> From theCUBE studios in Palo Alto and Boston, connecting with thought leaders all around the world, this is a Cube Conversation. >> Analysis from company earnings reports and costumer survey data, continues to show that Microsoft Azure and GCP are closing the gap on AWS's cloud dominance. Now, while reporting definitions of the cloud remain fuzzy, it's very clear that clouds steady march into the stronghold of on-premises computing continues. The global Coronavirus pandemic has only strengthen the cloud's position in the overall market place. Now, as you might recall, we reported last week, the story of the haves and the have nots, and that's playing out in several sectors. And in this breaking analysis we're going to take a closer look at the big three cloud players, and we'll do a brief investigation of AWS specifically in a short drill down. Welcome everyone, to theCUBE insights powered by ETR. Today we're going to try to really accomplish three things. First, we want to quantify how the cloud is impacting the on-prem business. As we enter this decade, let's take a snapshot of some of the vendors that are well positioned, and maybe some of those that are facing greater head winds. The second thing we want to do, is we want to update you on the latest market share data for the big three cloud players. And then finally, I want to dig into the business of AWS in a little bit more depth to see where they're seeing the most strengthen, and where, perhaps, maybe there are some cracks in their substantial armor. Now, let's look at the IT landscape where we are in 2020. The first data point that we want to share, really tells a familiar story, and really drafts off the theme that we've set for the past several weeks, which is the bifurcation in the marketplace. Now, if you take a look at this chart what's really showing is ETR's version of the Gartner Magic Quadrant, but it uses survey data to plot the vendors. So in the y-axis is the metric of it, net score, which is a measurement of spending momentum. And just to review, each quarter ETR surveys more than 1,200 CIOS and IT professionals, and asks them, essentially are they spending more or less on a particular supplier. And what we do is we subtract the less from the more, and the remainder is the net score. So it's sort of like NPS, and I'll go into that a little bit later. But that's the vertical axis. Now the x-axis is called market share. You know, it's really not market share, like IDC measures, rather it's a measure of pervasiveness in the survey and it's calculated by dividing the mentions of a particular company by the total mentions in the overall survey. And you see that's plotted on the horizontal axis. So several points here that I want to note. First is remember, this is April survey data, so for more than 1200 buyers, and you can see we've plotted several companies, including the big three cloud players. You got Microsoft and AWS in the upper right and Google with much lower presence but decent spending momentum. And we've plotted a number of other enterprise players, including several on-prem leaders, like Dell EMC, IBM, Oracle, and Cisco. And we've also included some of the companies that are showing real promise from a momentum standpoint, and penetration. These are business models that we like, and they include Snowflake, the analytic database disruptor, UiPath, who's the RPA specialist, Okta and CrowdStrike who are really killing it in security and Datadog who provides cloud monitoring services. And as you can see, we've superimposed in the upper right a table showing the net scores and market shares for each of the companies. And the story here very clearly quantifies that cloud is winning, and we think it's likely to continue to grow fast and penetrate the enterprise. Now, as we've reported many times, downturns tend to be good for cloud. But the on-prem leaders, you know, as you can see by Cisco's position, for example, they're not going to just roll over. And we'll be covering winning strategies for legacy players in a later segment. But let me just say this, if you're a customer with a lot of on-prem infrastructure, and you're building out data centers, unless you're a big cloud provider, you're probably going to be in the wrong side of history here. Okay. Let's take a closer look at the big three. I want to update you on their IaaS and PaaS numbers as best we can. All recently reported earnings, and this chart shows the data for each of the companies. Now as you can see, each of them has substantial businesses with AWS by far the largest, GCP is growing the fastest. What's notable is that AWS in 2018 was 2.7 x larger than Azure, and today that delta is under two x based on our q1 estimates. And it's just about two X on a trailing 12 month basis. Now, I got to caution you that the AWS numbers are the cleanest AWS reports religiously an easy to understand revenue and operating profit number for its cloud business, every quarter. Microsoft and Google are much fuzzier. You know, for example, you read through Microsoft's 10-K reports and you'll see that their intelligent cloud revenue comprises public and private clouds, hybrid, SQL Server, Windows Server, System Center, GitHub, enterprise support and consulting services and, oh yeah, Azure. So we have to estimate how much of that hairball is actually comparable directly to AWS. Now, Google similarly just started breaking out its cloud revenue in bundles more than just IaaS and PaaS into its cloud numbers. Now, having said that, both Microsoft and Google, they do give little tidbits like Hansel and Gretel of guidance in the form of growth rates or commentary on growth rates in their respective IaaS and PaaS businesses, ie, Azure and GCP. So this is our best estimate, given all that is reported and what we know from survey data. Now, I also want to point out that these clouds are, they're really different in quality and they have different fits for different use cases. For example, Microsoft is building out a cloud really to support it's huge install base of customers, and really make it easy for them to tap into the Microsoft Cloud services, but it may not be the most robust cloud, as has been widely reported in analyzed in the press. You know, Microsoft is struggling to provide adequate capacity for its customers. It's kind of using the COVID-19 pandemic as a bit of a heat shield on this issue. Microsoft put out a blog post essentially saying that it'll, it'll prioritize first responders, health workers, and essential businesses during the COVID 19 pandemic, oh, and Teams customers. So okay, that's one of those caveat emptor situations, you know, if you're not one of these camps, you know, or frankly, maybe if you are. But it's unquestionable that Microsoft has strong momentum across its vast portfolio, including cloud. And really that's what I want to get into next. So let's take a look at some data, we've been reporting for quite some time based on the ETR surveys, that the big cloud players, you know, have very, very strong momentum as measured by net scores. So what this chart shows is the most recent survey results, again, more than 1,200, it buyers 1,269 to be exact. And you can see broadly that all the big three are well on green for net scores as we show in the upper right hand box, and well over 50% net scores for all three, and Microsoft Azure is in the 70% range. So a very, very strong demand across the board. Now remember, ETR is asking buyers to comment on the areas with which they are familiar. So a buyer might be interpreting cloud to include all those things in Microsoft and Google that may not be directly comparable to the AWS responses, but it doesn't matter. The point is, they all have momentum, and you can see, you know, even though there's a slight dip in the most recent survey, you know, which ran during the peak of the shutdown in the US. So even there's a small dip relative to other parts of the survey, cloud is very, very strong. Now, let's dig into the data a bit more, and take a look at the Fortune 500 drill down. So of course, this is an indicator of larger companies. And you can see AWS overtakes Azure in this segment by a small margin, you know, noting the same caveats that I mentioned earlier. But the strength of the net scores for all three is meaningful as they all increased within these larger buying basis. Now let's take a look at this next chart, if we extend that cut, to include the Fortune 1000, you can see here that all three companies again, continue to show strength. But you know, there's a convergence, which really says to me that this multi cloud picture that's emerged, and that CIOs are really now starting to see that whether it's through M and A, or maybe it was shadow IT or whatever, they're faced with a variety of choices that are increasingly viable. And despite my previously and sometimes snarky comments that multi cloud has been more of a symptom of multi vendor versus a clear CIO strategy, that maybe is perhaps beginning to change, especially as they're asked to clean up what I've often called as the crime scene. Now, I want to close by taking a little bit of a closer look at the AWS business specifically. And I want to come back to this notion of net score and explain it a little bit. So what we show here on this wheel chart is really a breakdown of responses across more than 600 AWS customers in the April survey, remember again, this survey ran at the height of the lockdown in the US. It's a global survey well over 100 responses outside of the United States. But really, what's relevant here is the strength of the AWS business overall. This chart shows how net score is essentially derived, ETR asked customers, are you adopting new? Are you increasing spend meaning, increasing by 6% or more? Are you keeping spending flat? Or are you decreasing spending by more than 6%? Or are you chucking the platform i.e. replacement? So look at this, we're talking about nearly 70% of customers spending more in 2020 on AWS than they spent last year, and only 4% are spending less. That's pretty impressive for a player with a $38 billion business. Now the next data point I want to share really shows where the action is across the AWS portfolio, so let's take a look at this. The chart here shows the responses from an end of more than 700 and the net score, or spending momentum, across the AWS portfolio with a comparison across three survey dates, last April, January 2020, and April 2020. And as you can see the very elevated spending momentum across most of the AWS key business lines, including cloud functions, data warehouse, which is EDW, etc, AI and machine learning, workspaces with the work from home pivot. And, you know, there are some areas that are maybe less robust, but nothing in the red zone, red zone, meaning, you know, net scores would be like below, let's say 25% net score. And as you can see, there's really nothing close to that in the AWS portfolio. So you're seeing a very strong momentum for AWS, you know, specifically, and of course, the cloud in general. Now, as I said, the pandemic has been been good for cloud, downturns generally are a tailwind. So if you're building data centers, it's probably not a good use of capital, you know, so server huggers, beware. There's an attractiveness more so than ever with this COVID-19 pandemic of that dial up, dial down service. Watch for software companies starting to use that model, whereas today, they often try to lock you into a, you know, one year or a two year or three year license. Increasingly, we're seeing companies investigate and actually go to market with a true cloud model. Okay, thanks for watching this episode of theCUBE Insights powered by ETR. Remember, these breaking analysis segments are all available as podcasts. You check out siliconangle.com, I publish there weekly, they have all the news, I also published on Wikibon. So don't forget to check out etr.plus, as well get in touch with me @dvellante. Or you can email me at david.vellante@siliconangle.com. Stay safe everybody, and we'll see you next time. (gentle 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

>> Narrator: From theCUBE Studios in Palo Alto in Boston, connecting with thought leaders all around the world, this is theCUBE conversation. >> Hi everybody, this is Dave Vellante and welcome to this week's CUBE insights powered by ETR. In this breaking analysis, we're going to bring in Sagar Kadakia who's the Director of Research at ETR. He's been away for the last couple of weeks, he's really digging into the latest data set, ETR of course it was in it's quiet period. And today, what we want to do is give you three of the macro takeaways from that last two-week analysis and drill into to some of the sectors. So Sagar, that's for coming on, great to see you again. Let's get right into it. >> Let's do it, thanks for having me. >> You've been crazy busy, we started the year at a plus 4%, consensus IT spend. We reported for several weeks and ended up at minus 4%. We're now at minus 5%, after you've gone through and done some additional analysis. So bring us up to date the IT spend projection. >> Yeah no problem, and that's our first macro takeaway, is we're seeing declines in IT budget, a decline of 5%. And remember, coming into the year as you mentioned, consensus assessments were right around that 4% number. And so we've seen this kind of 900 basis point shift downward so that's kind of where we are today, if we kind of look at that chart that we've been tracking for the last few weeks. And then for those that have seen this chart before, you've kind of seen where we've been kind of going the last two, three weeks. And for those that haven't seen the chart, I'll kind of go through it now. So, as many of you know, kind of launched its COVID-19 drill down survey to measure the impact that the virus was going to have on total spend this year and so we kind of launched that drill down on March 11th and so if you kind of look at that blue line there, what you're looking at, is we asked individuals, estimate what percentage impact you think the virus is going to have on your budget versus your original expectations. And since we launched this on March 11th, on that blue line that you're looking at, we got a lot of positivity in the beginning. And so if you look at the blue line all the way through, you follow that, you get about zero percent growth. Now the issue is, as I just mentioned is, we launched on the 11th, and there wasn't a tremendous amount of information available as to how severe the virus was, and so we kind of did this in Venn analysis and we talked about this last time, on the last breaking analysis, where it's probably more appropriate to look at a start date closer to 3/17 or 3/23 when the market really understood the severity of COVID-19. NYC became the epicenter. And if we look at just those customers who indicated a spend impact after that date, you can see it's coming out to about four or 5% decline. And so that's kind of one of our big macro takeaways, and the other thing on this chart, kind of focus on is, and even though we're not looking at, some of the vendors here, is when you think about declines, it's not across the full IT stack, and I think that's really important for the audience to understand. We're seeing focused declines among on-prem legacy pure plays. You're still seeing CIO spend on cloud and SaaS. In fact, they're doubling down there. And so when you kind of think about how things are going to shape up the next three, six, nine months, there's going to be a lot of bifurcation. And we think cloud and SaaS are going to be well positioned with a lot of legacy and on-prem. That's where you're going to see a majority of those declines that you're seeing here kind of play out. >> I've made the case, statement many times that cloud is good, or downturns have been to cloud. You saw this in 2008, 2009 with the shift from CapEx to OpEx. We came out of 2009 into the decade of cloud. And very clearly we're seeing some similar things here as people shift to that work-from-home. We had one CIO on the recent Venns that I want to just delete my data centers. Unfortunately, he's not going to be able to do that overnight, but I think, as Eric Bradley pointed out last week, a lot of customers who weren't even thinking about cloud, or really were sort of reticent to go all in, really have flipped and changed their tune. Let's talk about some of the industries that are impacted by this COVID-19 and the stay-at-home. This slide really kind of underscores that. Why don't you take us through it? >> Yeah, no problem. So on the last slide, you were looking at kind of our COVID-19 drill-down study. On this slide, what we're now going to focus on is a study that we did in tandem, which is called our Technology Spending Intentions Survey. And specifically we conducted this in April. What we did is we asked CIOs to update their 2020 spending intentions versus how they spent in '19. So this survey was originally posed in January and then we're essentially asking for a three-month update now. So we're trying to get an understanding of how much has changed in the last three months because of COVID-19. And when we asked these CIOs, we give them essentially a list of 400 vendors. And they're able to then indicate which ones they're flattening on, decreasing on, maybe accelerating on. And so what you're looking at here is we've aggregated that data by industry. And if you look at the X-axis here, you're going to look at spend intensity versus three months ago. And the Y-axis will be spend intensity versus a year ago. And so what you're seeing here is over the last three months, look at how much verticals, like retail/consumer, airlines, delivery services, financials/insurance, IT/TelCo, services/consulting. Those have really seen some of the largest pullbacks in spend versus three months ago. And those are also some of the industries that have indicated the largest pullback in demand from consumers and businesses. And so this is where we think a lot of the declines that we showed you earlier really kind of focus on some of these verticals. And that's how, when you kind of think about which organization are going to be hurt, which ones might see the most impact, three, six months from now, this is a really good chart to view. >> Yeah, a couple of points I would make on this data. Retail and consumer, again, even that's bifurcated. Obviously the physical stores getting crushed. You see Amazon now trading at all-time highs. Target announced today, I think they said a 200% increase in online shopping, which, of course, is fulfilled. 85% of Target's demand is fulfilled by their stores. So that's kind of mixed. You're going to see an accelerated move toward digital transformation there. Airlines, it's really unclear what's going to happen there. IT/TelCo, on one of the last Venns we talked about MPLS, people trying to get off of MPLS, really moving toward a SD-WAN. Healthcare, pharma, healthcare doesn't have time to do anything right now. No time to take a breather. Financials is interesting. I mean, they're down right now, but they still have a lot of cash. Liquidity is good. And then energy, I mean oil, I've just never seen anything like it. We're concerned obviously about credit risk there and oil companies being able to pay off their debts. So it's really not a pretty picture, is it? >> Yeah, and if focus on energy, even though you're not seeing a huge pullback versus three months ago in energy, it's really important to understand when we did this survey in January, energy was all the way on the left side of that chart. And so it already looked really bad coming into the year. So it got worse. But because of the severity versus last year, like they're just not seeing that much more of a negative impact now. This was before, this survey closed before everything happened the last few days with oil prices. So it is very possible that that data is going to get worse. And we'll know if it gets really-- >> We're not laughing a lot these days, but if you haven't filled up your car in a while, I mean it's, Anyway, let's go into the security piece. We talked about, you guys were really the first to report this work-from-home pivot. Others have sort of more recently coming to that conclusion. And it wasn't just Zoom and WebEx and video collaboration, Teams, et cetera. It really was all kinds of infrastructure, including security. So we can bring up the next chart, guys. Let's sort of get into this. We're going to talk about the sector and some of the vendors in here. Let's go. >> Yeah, no problem, so if we kind of step away from the macro and really start getting into the sectors and vendors in here. If we start with security, what we're really saying is that, look, a remote workforce is really kind of revealing best-in-breed. And we think it's going to lead to the permanent changes. So what you're looking at here is these are the net scores for each individual vendor currently versus three months ago as well as a year ago levels. The yellow bars will be what's currently. And the way to think about net score is just kind of spend intensity. And so the higher your net score, the more spend intensity, the more spend velocity you're seeing from enterprise customers. And what we're really seeing here, if you kind of look at the vendors on the left, you're seeing a lot of acceleration among secure web gateway end point, mobile security, cloud SaaS application security, identity, and these make sense. As we mentioned earlier, as you really accelerate your cloud and SaaS spend, you're going to want to use vendors that best protect those areas. And so if you look to the left here, Okta and Zscaler, Cloudflare, CrowdStrike, some of these really look best positioned moving forward. Palo Alto looks good longer term. Splunk at this point also looked good longer term. And then the other thing to kind of hit on here is the other side in terms of, we talked about the bifurcation that we expect. We're seeing significant declines in net scores among a lot of these legacy vendors. Check points come down quite a bit. Juniper, Trend Micro, Broadcom, Barracuda Networks, SonicWALL, and so you can see the disparity here. It's pretty clear on the image. But we think there's some pretty clear winners and losers here. And I think we may see permanent changes moving forward. >> Yeah, so Twistlock, of course, is now owned by Palo Alto. CrowdStrike, they're a hot company in the sector. Okta, I have the Chief Product Officer coming on shortly here for part of my CXO series. We've talked about Palo Alto and how they sort of fell behind a little bit in the cloud. But you talk to customers, they really see Palo Alto as in the mix. Zscaler came up in the Venn as, to your point, securing gateways and doing a really good job in that space. And so I think the fragmentation, the fragmentation probably continues, but there's also bifurcation, as you pointed out. Let's talk about cloud. As you've said and I said, downturns have been good to cloud. People are obviously looking more toward cloud, whether it's SaaS or cloud type of consumption. Let's bring up the next slide, which looks at the big three, Azure, AWS, and GCP. First of all, all three have very strong net scores. Up in the 60% plus range. But you have Azure pulling away. I'd love to hear your thoughts on that. >> Yeah, that's right, and we've kind of been using this analogy of kind of a horse race. Just kind of as context, coming into January you see really GCP accelerating. And so one of the things we said in January was it's becoming more of a three-horse race. Even though GCP doesn't have the same type of market share as the other two, you are seeing the spend intensity increase. And now what you're seeing is Azure pulling away a little bit because of, we think, COVID-19. When you look at Azure's data set, it really looks robust and healthy across all verticals, across most regions. And that is what you're seeing here where it's continuing to kind of accelerate. It looks good. AWS, GCP, it also looks good here, but you're not seeing the same uniform strength. There's a couple verticals for AWS where we're seeing a little bit of a pullback in spend, like retail and industrials. For GCP we're seeing a pullback in mid-size and small enterprises. So that's causing a couple of cracks here and there. Even though they look overall healthy, but we did want to kind of indicate here on cloud where, look one vendor looks like they're pulling away when it comes to spend velocity. >> It's going to be interesting to see. I mean, we reported on the sort of deltas between Azure and AWS and the cloud, the quality of the cloud. I think we're going to carefully watch the quarterly reports. You always have to kind of squint through the Azure numbers to see what's in there. But there's no question that Microsoft, across the board, is really very, very strong. All right, let's talk about collaboration, productivity, video conferencing. I mean, we've certainly seen upticks. But as shown on this slide, you guys, if you could bring the next slide up. You know, it's not all rosy. Talk about this a little bit. >> Yeah, I think, look, there's been a lot of coverage around which vendors look best. And so I kind of want to take the opposite view on this chart for the audience, and say hey look, which vendors are not benefiting? And this is kind of like a hodgepodge sector of productivity and collaboration, video conferencing. What we're saying is it's now of never, so to speak. And you're looking at replacement rates. So if you look at, if you see something on this chart that says 20% replacement, that means one out of five customers indicated for that vendor in our survey, indicated a replacement for them, which is not good. And so you're seeing vendors here like Dropbox, Box and Slack having elevated or accelerating replacement levels. And these vendors, pitch themselves as collaboration tools. And if they're not doing well now and they're seeing elevated replacements, especially as everyone is working from home, that doesn't bode well for the future. >> I think people who know me know I'm not a huge fan of Box and Slack. They drive me crazy. And so this is interesting to see. I mean, we're a Zoom shop, so obviously you Zoom, you like Zoom. I had my first experience very recently with Microsoft teams. I was quite impressed. I thought it was easy to use. Skype, hell was just terrible. And so, much, much improved. Very interesting cut on that one. So again, it's a bifurcated story. Let's drill into teams a little bit. Guys, have you bring up the next slide, Movements reporting. And you guys are really again, first on this, how strong Microsoft is across the board. But really going after it and collaboration. >> On that previous slide you saw that, Dropbox and Slack, we're all seeing replacements. So again, a lot of customers like where was all that spend going? Well, it's going to Microsoft Teams. It's going to One Drive. This is a Slack drilled out, or sorry, a Slack and teams drill down. That we did, earlier this year. And what we're trying to do is measure, how these products were going to do in the next 12 months. And so what you're looking at here is Fortune 500 organizations. What we did is we asked them how much of your organization, is using Microsoft Teams today. What percentage of your organization is going to be using Microsoft Teams 12 months from now? That's going to be in the yellow bars. And you can see the big upticks in 12 months. And we took some mid point averages. Look at how much Microsoft Teams is going to grow, within Fortune 500 accounts in the next 12 months. And if we look at Slack on the next slide, you're really now seeing the exact opposite. Same question, how many folks in your Fortune 500 organization are using Slack today? And what does that look like in 12 months? And the mid point average is actually coming down. And so, it's like Slack is a seat-based model. And so when you have less users that's going to generate less revenue. And so again, this is amongst the existing Fortune 500 customers. This doesn't include new Fortune 500, but this spells problems for Slack, when you kind of think about the next six to 12 months ahead. >> Well it's one thing if you're competing with Microsoft and your AWS. I've not really not worried about AWS, Microsoft, take a note AWS. If you're one of these collaboration platforms, Microsoft, we've seen over the years, first of all, they got great developer affinity. They know how to bundle different products together. Now they got the cloud working so they got their flywheel effect in the cloud. There's just not a ton of room. The thing is they have such a huge software estate, such a giant customer install base and it's just makes it easy for them. The products are good enough or in some cases really good. So that's going to be something to watch, because there's a lot of high valuations going on right now in their collaboration space. >> That's right. And I think, it really hits on the previous slide, or the previous slides on collaboration that we saw, was when you think again about the declines, a lot of that is impacting some of these pure plays. So in security you saw a lot of the legacy names getting in. On the collaboration side, you saw a lot of these pure plays your getting in. And so this is kind of, again when you think about where budgets are going and which vendors are being impacted, it's really concentrated into some specific areas. >> So now, one of the hardest hit areas, and you guys reported on this earlier, was the IT consulting and outsourcing IT. You guys have you bring up that the chart, it's pretty ugly. Maybe you can explain what you're seeing here and why you think that is. >> Yeah, no problem. So again, this is from our technology spending intention survey. We're measuring spend velocity here. Spend intensity, and you can see across, these are just a handful of IT consulting firms. If you look at the blue bars to the yellow bar. So the blue bar is, 2020 spending intent that we captured in January and now we're asking for updated 2020 spending intentions. You can see the deceleration in just the last three months. If you look at our COVID-19 drill down side that we conducted, one of the questions in there we asked was, are you freezing new IT projects or deployments? Almost, 1/4 percentage of customers said they are. And so, that is going to spell problems for this space. When you think about, look, if you're going into uncertain times an easy way to reduce your budget is by, spending less with consulting vendors since you know, you can just less than the number of deliverables, these individuals get paid based on. How many deliverables they can complete. So this is another area that when you kind of think about where the declines are coming from, this is certainly an area to look at. >> A lot of the customers we've talked to have said, we've basically shut down spending on some of the large projects. We're still focusing on some digital transformation, but that's maybe a longer term priority. And then the IBM piece of this chart, guys, if you could bring it back is interesting to me because look, they paid 34 billion for Red Hat. I've always said a key to the Red Hat acquisition was being able to point it at the large consulting base and modernize those applications. IBM actually had a pretty good quarter in services. Although they did mention that respect especially in software that in the month of the quarter software spending shutdown. I don't think we got visibility that this piece of the business, but this could be, somewhat of a concern going forward. I think that's going to be one of the areas that gets slow rolled coming back, Sagar. I don't think it's going to come back tomorrow. So please your thoughts. >> Just to kind of quickly wrap up IBM. So yeah, one of the things we kind of saw in the data was not only eroding spending intention data on a lot of their SaaS portfolio but also eroding market share. And we saw big down takes on Red Hat products and IT services. Even in cloud. And I know they indicated pretty healthy numbers on Red Hat and cloud. But again, we're asking about 2020, forward-looking spending intentions. And of course they pulled their guidance. So we don't know how that's going to look. But in our data, things are really coming down versus three months ago. And so I think just overall, that is a data set that we're quite negative one. >> I think IBM has that sense. Like I said, March was not good for software. That's when the big deals come through. You're right. Red Hat, I think route 20% in the quarter and is now accredited from a cashflow basis, which is one of their targets. I think they beat their target there. Still good cashflow. But I think there's just so much uncertainty, And IBM have to be prepared for that and I'm sure will. That we're at minus 5% now. We're seeing cloud SaaS, we're seeing a bifurcation. We talked about some of the areas that are in trouble. That's kind of part one. Next week we'll be talking about part two. What can we expect? >> Yeah, we'll start going through networking, CDN, ITSM, IT workflows, database, data warehousing, and we'll kind of go through that as well. But again, you're going to see a lot of what we talked about today. Just the bifurcation span where, vendors that are more next gen, more work-from-home friendly like all of the SaaS guys, they're doing really well. And on the on-prem and the legacy, you're just seeing elevated replacements, elevated decreased rates. This is the most bifurcated, I've seen this data set and I've been doing this at ETR for, almost seven, probably going on eight years now. So I think that kind of says something about the environment that we're in and what to kind of expect in the next three to six months. >> And it's kind of like the stock market is right now. You're actually seeing, some great momentum in certain stocks and terrible in others. Those were great balance sheets and maybe COVID is a tailwind for them. Others, tons of uncertainty, a lot of concern. I know in poking around the data set, like you said, some of the analytics, the data warehouses, you see Snowflake, UiPath, Automation Anywhere. A lot of the automation, RPA, momentum is there. Security, we talked about that. There's some real bright spots there but a lot of the on-prem stuff. We'll see product cycles affect that, in the second half of of 2020. We'll continue to report on this Sagar. Thank you so much for we're coming on and we'll definitely see you next week. >> Thanks for having me again, Dave. Looking forward. >> All right, and thank you for watching, this CUBE insights powered by ETR. We will see you next time. Don't forget, all these episodes are available as podcasts, wherever you listen. Go to etr.plus, checkout what's happening there. Siliconangle.com has all the news I publish in there weekly. I also publish on wikibond.com. Thanks for watching this breaking analysis. This is Dave Vellante and Sagar Kadakia, we'll see you next time. (upbeat music)