(energetic music) >> Live from Orlando, Florida, it's theCUBE covering .conf 18, brought to you by Splunk. >> We're back in Orlando, Splunk .conf 2018, I'm Dave Vellante, Stu Miniman, and this is theCUBE, the leader in live tech coverage. Doug Merritt is here, the CEO of Splunk, long time CUBE guest, great to see you again. >> Thank you, Dave, great to be here. >> So, loved the keynote yesterday and today. You guys have a lot of fun, I was laughing my you-know-what off at the auditions. They basically said, Doug wasn't a shoo in for the keynote, so they had these outtake auditions. They were really hilarious, you guys are a lot of fun. You got the great T-shirts, how do you feel? >> It's been a, my favorite time of year is .conf, both because there's usually so much that we're funneling to our customers at this time, but being here is just infectious, it's, and one of the things that always amazes me is it's almost impossible to tell who are the customers and who are the employees. That just, I think Devonia this morning said it's a family affair, and it's not just a family affair, it's that there's a shared passion, a shared, almost culture and value set, and there's, it just is a very inspiring and naturally flowing type of event and I know I'm biased because I'm the CEO of Splunk, but I don't, I just don't know of events that feel like our, like .conf does. There's a lot of great shows out there, but this has got a very unique feel to it. >> Well, we do a lot of shows, as you know, and I've always said, .conf, I think ServiceNow, does a great job obviously, re-invent the tableau shows. That energy is there, and the other thing is, we do, when we go to these shows, a lot of times, you'll look at the keynotes and say, are there any products being announced? You guys, that wasn't a problem here. You guys announced this -- >> Not this year. >> Bevy of products, I mean, it's clear the R and D is translating into stuff that people can consume, and obviously that you can sell, so that's huge. >> I'm really excited about the product roadmap right now, and it's, that was, when I got the job, almost three years ago, one of the key areas I leaned forward and the board was excited about it was, what, where or how are we going to take this product beyond the amazing index and search technology that we have? And this show, it takes a while to progress the roadmap to the point that you can get the type of volume that we have here, but this show was the first time that I felt that we had laid enough of the tracks, so you could see a much, much broader landscape of capabilities, and now it's a challenge of packaging and making sure our customers are successful with it, with the product that we just have, the products we've announced. >> Cloud caught a lot of companies and a lot of end user companies, flatfooted. You guys have embraced the cloud, not only with the AWS partnership, which we're going to talk about, but also the business model. You're successfully transitioning from a company with perpetual license model, to a ratable model, which is never easy. Wall Street is killing companies who try to do that. Why have you been successful doing that? You know, give us an update. >> Yeah, so five years ago, less than 20% of our contracts were, had any type of subscription orientation to it, whether it's a multi-year term or a cloud. We'd just launched our cloud four years ago. And we moved from there to we had told the street there would be 65% term in subscription by the end of this year and updated guidance at the end of the second quarter, which is just a month and change ago, that we've already hit the 75% mark that we were set in for next year, so it's been a pretty rapid progression and I think there're two elements that have helped us with that. One: cloud continues to catch fire and so the people's orientation on "Do I do something in the cloud?" four years ago they were much more nervous, so less nervous today. But data is growing at such a huge rate and people are still wrapping their heads around, "How do I take advantage of this data, how do I even begin to collect this data and then how do I take advantage of it?" And the elasticity that comes in the cloud and that comes with term contracts, we can flex out and flex back in, I think it's just a much more natural contracting motion than you bought this big, perpetual thing and pay maintenance on it, especially when someone is growing as fast as data is growing. >> Well and it requires you to communicate differently to the financial analysts. >> It does. >> Obviously, billings, you know, was an important metric. You've come up with some new metrics to help people understand the real health of the business. And one of the other metrics that strikes me, and you see this with some of the successful companies, I actually think Aneel Bhusri was sort of the modern version of this, is the number of seven figure deals. You're startin' to hit that, and it's not, the way he's phrased it was pretty good. It's not something you're trying to engineer, it's the outcome -- >> Yes. >> of having great, loyal customers, it's not something you try to micromanage. >> Right, and that's, just recently we dropped six figure deals, which, when I joined, you got this wonderful dynamic forecasting system that sits on top of sales for us, and so as head of sales, where I started, you're really paying attention to deals. I'd go down to a hundred thousand dollar deals that would track throughout the quarter. And now it's hard to get it down to the six figures 'cause we've got a big enough envelope of seven figure deals. So the business has changed pretty dramatically from where it was, but it is an outgrowth of our number one customer priority, which is, or number one corporate priority, which is customer success. 'Cause that investment by companies, when you get to a million dollars plus, in most cases that's a million annually, you better believe in and trust that vendor, 'cause that's no longer an easy, small departmental sale. You're usually at the CIO, CFO type level. So it's something that we're very honored by, that people trust us enough to get that footprint of Splunk to be that size and to feel like they're getting a value from Splunk to justify that purchase. >> Alright we'll get off the income statement, Stu, and you can read about all that stuff, and we're going to get into, we've got a lot of ground to cover with you, Doug. Jump in here, Stu. >> Yeah, so Doug, I've really enjoyed talking to some of your customers that, you know, most of them started on premises with you and now many of them, they're using Splunk cloud, it's really kind of a hybrid model, and it's been really interesting to watch the maturation of your partnership with Amazon, and being the leader in the cloud space. Give us a little bit of color as to what you're hearing from the customers, you said three, four years ago, you know, they were obviously a little bit more cautious around it, and bring us inside a little bit that partnership. >> Sure, so the first piece that, as part of Splunk, that I think is a little bit different than other vendors is because we are both a lower level infrastructural technology, right, data is, the way I frame what we do is there's these raw materials, which are all these different renditions of data around, and companies increasingly have to figure out how to gather together these different raw materials, put them together different ways, for the output that is driving their business. And we are the manufacturing parts provider that makes it easy for them to go and pick up any of these different compounds and then actually do what they want to do, which is make things happen with data. And that middle layer is really important and we have never taken a super strong stance either, we started on prem, but as we moved to cloud, we never took a strong stance saying everything should be in the cloud or everything should be on prem because data has gravity, there is physics to data. And it doesn't always make sense to move data around and it doesn't always make sense to keep data stagnant, so having that flexibility, being able to deploy your collection capability, whether it's ours or third party, your storage capability, and then your process and your search, what are you going to do with the data, anywhere that makes sense for a customer, I think, is important. And that's part of that hybrid story, is as people increasingly trust and interview us and other cloud vendors to build core apps and then house a lot of their data, we absolutely need to be there. And I think that momentum of the cloud is certainly as secure and, in many cases, more secure than my on prem footprint, and the velocity of invention that some like ABDS is driving allows me to be much more agile and effectively drive application development and leading edge capability, I think just has people continuing to trust the cloud service providers a little bit more. >> Yeah well, we're here in the pavilion, and seeing your ecosystem grow, we've been at re:Invent for about five years, that ecosystem is just so >> It's been amazing. >> massive and full, give us a little bit about the relationship with Amazon and how you look at that, how Amazon looks at a company like yours. >> Yeah, it's been, so one, whenever you're playing with a highly inventive and hugely successful company like Amazon, my orientation and what I convey back to the company is our job is to be more inventive, more agile, and continue to find value with our maniacal focus every day being the data landscape. Data is a service and outcomes is a service, so our job is run faster than Amazon. And I think that this show and our announcements help illustrate that our invention cycle is in high tilt gear and for what we do, we are leaning in in a really aggressive way to add that value. With that backdrop, Andy and I formed this partnership four years ago. He felt there's enough value in Splunk and we were a good enough partner and the way we consume their services that he would commission and quota their sales reps whenever a Splunk sale was done in the ADBS landscape, which I think has been really helpful for us, but we obviously are a huge customer of ADBS's and they become an increasingly large customer of ours and finally gave us approval with their three year renewal a quarter ago to publicly reference them as a sizeable customer for us. >> Oh, okay, congratulations on that. And something I've really, it's really crystallized for me: so many administrators out there, you look at their jobs, you know, what are they? It's like okay, I'm the security expert, I'm the network certified person. You're really, your users here, you know, they are the beacons of knowledge, they are the center of data, is really what they are. You know, Splunk's a tool, they're super excited about the product, but it's data at the center of what Splunk does and therefore, you're helping them in just such a critical aspect of what is happening in the industry today. >> Yeah, the key aspects of the keynote, of my keynote, were we are moving to a world where data is the product that people care about so the whole object is how do you make things happen with data and the people that can get that done increasingly are becoming the most valuable players on the field, so what infrastructure, what tooling, what capability exists that allows people from all departments, you know, we're very heavy within IT and security, but increasingly HR departments, finance departments, marketing departments, sales departments, manufacturing departments will not be successful without a really competent group of folks that understand how to make things happen with data and our job is to lower that bar so you don't have to go to Carnegie Mellon for four years and get a Masters in Computer Science and Data Science to be able to be that most valuable person on the field. >> I want to take a moment, I want to explain why I'm so bullish on Splunk. We had a conversation with Susan St. Ledger yesterday. Digital transformation is all about data. >> Yup. >> And you guys are all about data, there's the cliche which is "data is the new oil" and we've observed, well not really. I could put oil in my car, I can put oil in my house, I can't put it in both places, but data? I can use that same data in a lot of different use cases and that's exactly what you guys are doing now as you expand into line of business -- >> Yup. >> With Splunk Next. >> Yup. >> So you've announced that, you showed some cool demos today. I'd like you to talk about how you're going from your core peeps, the IT ops guys and the sec ops guys, and how, what your plan is to go to lines of business. More than just putting the data out there, you've come up with some new products that make it simpler, like business work flows, but what else are you doing from a go to market standpoint and a partnership standpoint, how do you see that playing out? >> Yeah, I think that the innovation on product, there are three key pillars that we're focusing on. Access data, any type of data, anywhere it lives. Make sure that we're driving actionable outcomes with that data, and acquisitions like Phantom and VictorOps have been a key pillar of that, but there's other things we're doing. And then, expand the capability of finding those outcomes to a much broader audience by lowering the bar. So the three key themes across the portfolio. But all of those are in service of the developers at a customer site, the developers in the ecosystem, to make it easier for them to actually craft a set of solutions that help a retailer, help a discrete manufacturer, help a hospital actually make things happen with data. 'Cause you could certainly start with a platform and build something specific for yourself but it's much easier if you start with a solution. And a lot of the emphasis we've been putting over the past two to three years is how do we up that platform game. And the many, many, 20 different product announcements that we rolled at this .conf and one of them that I'm also very excited about is our developer cloud where we've really enhanced the API layer that interacts with the different services that the entire Splunk portfolio represents. Not just the search and index pieces that people are familiar with but everything from orchestration to role based access to different types of visualization so a very broad API layer that's a well-mannered, restful set of APIs that allows third parties to much more crisply develop, excuse me, applications to compliment the 1800 apps that are already part of our Splunk base and right behind me is a developer pavilion where we've got the first hand full of early adopter OEM partners that are building their first sets of apps on top of that API framework. >> Dozens of them, it's actually worth walking around to see. Now, so that developer cloud is a lever, those developers are a lever for you to get into lines of business and build those relationships through the software, really, and through the apps. Same thing for IOT. >> Yup. >> Industrial IOT. Now, we've observed, and a lot of the IT companies that we see are trying to take a top down approach into IOT and we don't think it's going to work. It's, we talk about process engineers, it's operations technology people, they speak a different language. It's not going to be a top down, here, IT. >> A very different audience. >> It's going to be a bottoms up set of standards coming from the OT world. The brilliance of what you guys have, it's the data, you know, it's data coming off machines, data, you don't care. And so, you're in a good position to do a bottoms up in IOT and we heard some of that today. Now, there are some challenges. A lot of that data is still analog, okay, you can't really control that. A lot of the devices aren't instrumented, they're not connected, you can't control that. But once they become instrumented and connected and that analog data gets digitized, you're in a really good position, but then you got to build out the ecosystem as well. >> Yup. >> So talk about how you're addressing some of those challenges in industrial IOT. >> Yup, man, it's a great subject 'cause I think that the trying to rely on standards is the wrong approach. The velocity across this digital landscape is so high and my view over the past 30 years, I think it's only accelerated now, is there's going to be more and more varieties of data with different formats than there's ever been, and we've seen it in the past five years. Just look at the variety of services on top of AWS, which didn't even exist ten years ago, but and they now have hundreds of services and there is no organizing principle across those services as far as data definition. So it's a very chaotic data landscape and I don't think there's any way to manage it other than to embrace the chaos and work a little bit more bottoms up, you know, grab this data, don't worry about cleansing it, don't worry about structuring it, just make sure you have access to it and then make sure that you've got tools like Splunk that allow you to play with the data and try and find the patterns and the value inside of that data, which is where I think we're very uniquely suited as a technology set. Helping the ecosystem come to that realization is a key aspect of what we're doing. We're trying to attack it the same way we attacked the IT security piece which is pick a handful of verticals and really focus on the players, both the marquis anchor tenants, the BMWs, the Siemens', the Deutsche Bahn railroads of the world, as customers. And through that, get access to the key influencers and consultants and advisors to those industries and start to get that virtuous circle of "I actually have more data than I think I have." Even though there's some analog machines, there's so many different ways to attach to the signal that those machines are emitting and it may not be bi-directionally addressable, but at least you can see what's happening within those machines without a full manufacturing floor rip and replace. And everyone is excited about doing that. The advisors to the industry are excited, the industry themselves are excited. We had BMW on stage who walked through how they're using Splunk to help on everything from product design all the way through to predictive maintenance and feedback on the quality of the cars that they're rolling out. We've all heard stories that there's more lines of code in the Ford F150 and these other vehicles than there is within Facebook right now, so we all are dealing with rolling and sitting in building's and house's data centers. How do you make sure that you're able to pay attention what's happened within that data center? So I think that that is as big or bigger of an opportunity than what we've done with IT and security, it just has its own pace of understanding and adoption. >> Carnival Cruise Line, another one, Stu. We had those guys on today and they basically look, they have a lot of industrial equipment on those ships, so they're excited. >> Yeah, absolutely. Alright, so Doug, we started the beginning talking about the last couple years, how we measure Splunk has changed. Going to more subscription models, talk about how many customers you have. I look at developers, I look at IOT, whole different set of metrics. So if you look at Splunk Next, how do we measure you, going forward? What is success for your team and your customers going forward? >> Yeah, and the whole orientation around Splunk Next, as I'm sure Susan covered, it's not a product, it's a messaging framework. People are so used to Splunk being all about the collection of data within the index and searching in said index, and we're increasingly moving, we're complementing the index, the index is a incredibly unique piece of IP for us. But there's a lot of other modalities that can complement what that index does and Splunk Next represents all of our investments in next generation technologies that are helping in with everything from stream processing to distributed compute capability, next generation visualizations, et cetera. The metric that I care about over time is customer adoption and customer success. How many use cases are being deployed at different customers? How many companies, both customers and partners, are incorporating Splunk in what they do every day? You're getting OEM Splunk, making Splunk a backbone of their overall health and success. And ultimately that needs to translate into revenue, so revenue and bookings will always be a metric that we care about, but I think the leading indicators within theses different markets of rate of adoption of technology and, more importantly, the outcomes that they're driving as they adopt this technology, are going to be increasingly important. >> Yeah, I just have to tell you, when you talk about your customers not only excited, but it's a deeper partnership when you talk to insurance company out of Toronto that, like, they're talking to the people that they insure about, should they be using Splunk and how do they do that. It just, a much deeper, and you know, deeper than a partnership model for your customers. >> It's one of the things I love about this conference, is it's, we were talking about earlier, it's hard to tell the customers from the employees, like, there's a, there's a, this whole belief and purpose that everybody shares, which I adore about being here. But when you look at a sea of data, we've thought traditionally looked at the data we manufacture, typically data that's historic and at rest from our ERP systems. This next wave is certainly all the data that's happening within our organizations but increasingly it's all the data that's available in the world at large. And whether it's insurance or automotive or oil and gas, the services that I'm going to have to deliver to customers require me to farm data outside of my walls, data inside my walls, combine those two, to come up with unique value added services for my customers. So it's great to hear that, that our customers are on that journey 'cause that's where we all need to go to be successful. >> And there's a definitely alignment there. Doug, I know you're super busy, we got to go. Thanks so much for coming on theCUBE. Give you the last word, .conf 18 takeaways. >> (laughs) Unbelievable excitement and enthusiasm. A huge array of products that, I think, broaden the aperture of what Splunk does so dramatically that people are really trying to digest, "What should, how should I be thinking about Splunk moving forward?" And I'm, we started a whole series of transformations three years ago, and I'm really excited that they're all starting to land and I can't wait for the slow realization of the impact that our customers are counting on us to provide and that we'll increasingly be known for across the data landscape. >> Well and the landscape is messy and, as you said, the messiest part of that landscape is the data landscape. You guys are helping organize that, curate it. And hopefully we're helping curate some of the, from some of the noise and distracting to the signal to you on theCUBE. Doug, thanks so much for coming on theCUBE, great to see you again. >> Thank you Dave, thank you Stu, you guys do a great job. >> Thanks, we appreciate that. >> Thanks for being here with us. >> Alright, keep it right there, buddy. We'll be back with our next guest from .conf 18 from Orlando, we'll be right back. (digital music)