(fast-paced instrumental music) >> Hello everyone, welcome to the special CUBE conversation, here at theCUBE Studio in Palo Alto. I'm John Furrier, Co-founder of SiliconANGLE Media and host of theCUBE for our special CMO signal series we're launching. Really talkin' to the top thought leaders in marketing, in the industry, really pushing the envelope on a lot of experimentation. And Robson Grieve, Chief Marketing Officer of New Relic, is here. Welcome to this CUBE conversation. >> Thank you, excited to be with you. >> So, New Relic is a very progressive company. You have a founder who's very dynamic, writes code, takes sabbaticals, creates product, he's a musician, is prolific. That kind of sets the tone for your company, and you guys are also state of the art DevOps company. >> Robson: Yes. >> So, pressure's on to be a progressive marketer, you guys are doing that. >> Yeah, I think some of the great things about that DevOps culture are process wise it allows us to experiment with different ways of working. And we've obviously talked a little bit about Agile and the way a different way of thinking about how you actually do the work can change the way you output the kind of things you're willing to make, the way the teams work together. And the degree to which you can integrate marketing and sales, really, around shorter time frames, faster cycle times. And so, we have a great culture around that. We also have a really great culture around experimentation. I think that's one of the biggest things that Lou talks a lot about is, let's try things, let's look for experiments, let's see where we can find something unexpected that could be a big success, and let's not be afraid for something to go wrong. If you can do that, then you have way higher odds of finding the Geo TenX. >> And you guys are also in the analytics, you also look at the signal, so you're very data driven, and I'll give you a prop for that, give you a plug. (Robson laughing) New Relic, a very data driven company. But today we're seeing a Seed Changer, a revolution in the tech industry. Seeing signals like cryptocurrency, blockchain, everyone's goin' crazy for this. They see disruption in that. You've got AI and a bunch of other things, so, and you got the Cloud computing revolution, so all of this is causing a lot of horizontally, scalable change, which is breaking down the silos of existing systems. >> Yeah. >> But, you can't just throw systems away. You have systems in marketing. So, how are you dealing with that dynamic, because we're seeing people going, hey, I just can't throw away my systems, but I got to really be innovative and agile to the real-time nature of the internet now, while having all those analytics available. >> Yeah. >> How do you tackle that, that issue? >> Yeah, there's a couple ways to think about analytics. Number one is, what do you need to know in real-time to make sure things are working and that your systems are up and running and operating effectively? And that runs through everything from upfront in web experiences and trial experiences, that kind of thing. Through to how our leads and customers progressing through a funnel, as they get passed around the various parts of a company. But then the second approach we take to data is, after all that's happened, how can we look backwards on it and what patterns emerge when you look at it over the scale of longer period of time. And so, that's the approach today. You're right, you can't just everything and throw it out and start over again, 'cause some startups stop by with a really cool idea. But, you have to be aggressive about experimentation. I think that's the, back to that big idea that we talked about experimentation. We are trying out a lot of different things all the time. Looking for things that could be really successful. Of course, Intercom is one that we started to experiment with a little bit for in product communications and we've expanded over time as we found it more and more useful. And, so that's not, we haven't taken and just ripped something else out of it, made some giant bet on something brand new. We've tried it, we've gotten to know it, and then we found ways to apply that. We're doing that with a number of different technologies right now. >> Yeah, you're in a very powerful position, you're Chief Marketing Officer, which has to look over a lot of things now, and certainly with IT and Cloud. You're essentially in the middle of the fabric of the organization. Plus, people are knockin' on your door to sell you stuff. >> Yeah. (laughing) >> So, what is-- >> That's happened. (laughing) >> It happens all the time, he's got the big budget. >> What are they saying to you? Who's knockin' on your door, right now? Who's peppering you. Who's tryin' to get on your calendar? Who's bombarding you? Where are you saying, Hey, I'm done with that, or Hey, I'm lookin' for more of that. How do you deal with that tension, 'cause I'm sure it must be heavy. >> Yeah, I think there is definitely a lot of optionality in the market, for sure. I think there's a new wave of martech vendors. Many of whom are sitting right in between sales ops and marketing ops. That's a layer we're really interested in. Systems that can help us better understand the behavior of sale's reps, and how they're using things that we're making, and then systems that you can better understand, indications of prospect intent. >> So, funnel and pipeline, or those kinds of things? >> Yeah, we think about it more from the context of authentic engagement. And so, we don't want to apply too much of a-- >> Structure to it. >> Structure, a sales structure to it. We want to try to follow the customer's intent through the process, 'cause the best prospect is someone who is authentically engaged in trying to find a solution to their problem. And so, if we can avail ourselves to people in a thoughtful, and creative, and authentic way, when they need us, when they're trying to solve that problem, then I think that they can become much more successful prospects. >> I love your angle on agile marketing. I think that's table steaks, not that you got to behave that way, and I'd love to get your thoughts, I'll get your thoughts later on the management style and how you make that happen. But, you mentioned engagement, this is now the new Holy Grail. There's a lot of data behind it, and it could be hidden data, it could be data decentralized all over the place. This is the hottest topic. How do you view engagement as a CMO, and the impact to the organization? What are you lookin' for, what's the key premise for your thesis of getting engagement? >> It's really the number one, two, and three topic we're talking about right now, and we think about it on the content side. How do we get ourselves really producing a constant stream of content that has value to people? That either helps them solve a problem right now, or helps them think about an architectural issue in a different way. We're trying to invest more and more technical resources in people who can produce things that are relevant to all the different kinds of users that we have. DevOps people, SREs, our traditional developer customers. We want to go deep and be super relevant at a content level for them. But then once they start to spend time with us, we want to then have a progressive way to pull them deeper and deeper into our community. And so, the things that we can do, something's in digital for that, but then often there's a pop off line, and we do a lot of workshops, a lot of education. >> Face-to-face? >> Face-to-face, where we're in communities, we look at a map at the start of the year and say, where do we have big user communities, and then we drop events into those places where we take our educators and our product experts and get customers to share with each other. And that becomes a really great platform to put them together and have them help each other, as well as learn more about what our product does. >> So, it sounds like you're blending digital with face-to-face? >> Robson: Yeah, absolutely. >> That's a key part of your strategy? >> Key part is to make sure that we're getting time and attention from the people who are making decisions, and what technologies they're going to buy, but also that we're really investing time in the people who are using it in their everyday lives to do their job better. That's a really-- >> Give some examples of outcomes that you've seen successful from that force. That's a really unique, well unique is pretty obvious if you think about it, but some people think digital is the Holy Grail, let's go digital, let's lower cost. But, face-to-face can be expensive, but you're blending it. What's the formula and what are some of the successes that you've seen as a result. >> Yeah, we tend to try to create events that are good for a very specific audience. So, if you think about a targeting formula that you would use in digital that will make digital really efficient, that same idea works really well for an event. So, if you got a user community that's really good at doing one thing with your product and you feel like if they knew a few more things that they could get better. Then we help them really advance to the next level, and so we run certification programs, where we'll pull together a group of confident users and help them get to the next level. And things like that allow us to make a really targeted event that allows us to reach out to a group and move them to a higher level of competency. To have competency focus is a big deal. Can we help you get better at your job? But then communities, is the other big one. Can we help you connect with people who are doing the same things? Solving the same kinds of problems and are interested in the same topics as you are. >> It sounds like the discovery path of the user, the journey, your potential. >> Yeah, it's important to us for sure. >> And content sounds like it's important too. >> It helps with your engagement. How you dealing with the content? Is that all on your properties? How about off property measurement? How do you get engagement for off property? >> Yeah, we're experimenting a lot in that area, of off property. I think we've had tons of success inside our own website and our blogs, and those kinds of-- >> You guys do pop out a lot of content, so it's content rich. >> Yes, we definitely have a lot, we hopefully, our attitude is, we want to turn our company inside out, so we want to take all of our experts-- >> Explain that, that's important topic, so, you guys are opening up what? >> We have got customer support people, we have technical sales, and technical support engineers, we've got marketing people who are thought leaders in Cloud and other architecture topics. We really want to take all the expertise that they've got and we want to share it with our community. >> John: How do you do that, through forums, through their Twitter handles? >> Through all of the above, really. Through their Twitter handles, through content that they write and produce through videos, through a podcast series that we run. We're really trying to expand as much as possible, but then inside our user help community, anytime somebody solves a problem for one customer, we want to add it to that-- >> Sounds like open-source, software. (laughing) >> From a knowledge perspective, that's really an important idea for us. >> Yeah, that's awesome. You worry about the risk. I like the idea of just opening it up. You're creating building blocks of knowledge, like code. It's almost like an open-source software, but no, it's open knowledge. >> We think if we can help people get really successful at the work they're trying to do, that it's going to do great things for us as a brand. >> What's the rules of the road, because obviously you might have some hay makers out there. Some employee goes rogue, or you guys just trusting everyone, just go out and just do it. >> Well, it's constant effort to distribute publishing rights and allow people to take more and more ownership of it, and to maintain some editorial controls, because I think quality is a big thing. It's probably a bigger concern for us then somebody going rogue. At some level, if that happens to you, you can't stop it. >> So, is this a new initiative or is it progression? >> It's been ongoing for awhile. It's progression of an effort we started probably 18 months ago, and it's a wonderful way for an engineering team, and a product management team, and a marketing team to get together around a really unified mission as well. So our content project is just one of those things that I think really pulls us together inside the company in a really fun way as well. >> It's interesting, you seeing more and more what social peers want to talk to each other and not the marketing guy, and say, Hey, get the Kool-Aid, I like the product, I want to talk to someone to solve my problem. >> Want to have a real conversation about it, and I think that's our job, is to not think of it as marketing, but to think of it as just facilitating a real conversation about how our product works for somebody. >> I'd love to talk about leadership as the Chief Marketer for New Relic in the culture that you're in, which is very cool to be in on the front-end, in the front lines doing cool things. What do you do? How do you manage yourself, how do you manage your time? What do you do, how do you organize the troops, how do you motivate them? What's your management style for this marketing in the modern era? >> I think, number one, we're trying to create an organization that is full of opportunities for people, so it's something that we've done. I've been there for about two and a half years, and we've really looked hard for people who have tons of potential and finding great things to work on. On new projects, and then let them try out ideas that they've got. So, if they can own an idea, give it a shot, and even if it doesn't work, they'll learn a bunch from the process of trying. >> What are the craziest ideas you've heard from some of your staff? (laughing) >> Oh boy, you know a lot of them involve video. There's always a great idea for a video that's risky. And we've made-- >> So the Burger King one with Net Neutrality going around the web is the funniest video I've seen all week. >> Robson: Yeah, yeah. >> Could be risky, could be also a double-edged sword, right? >> Yeah, video is one of those places where you have to check yourself a little bit, 'cause it could be a great idea, and so sometimes you have to actually make it and look at it, and say, would we publish this or not? And, yeah, so that's definitely the place to be. >> So common sense is kind of like your. >> Yeah, you start with common sense, for sure. And, I think we want to be a part of it being culturally responsible in Silicon Valley right now, is really making sure that we're attentive to making sure that we're putting in the right kind of workplace environment for people. And so, our content and the way we go to market has to reflect that as well, so there's a bunch of filters that you put on it, but you have to take risks and try to make things, and if they work great, and if they don't then the cost of that is less than. The cost of failure is so low in some of these things, so you just have to try. >> Well, you know, we're into video here at theCUBE. I have to ask you, do you see video more and more in the marketing mix and if so, how does that compare to old methods? We've seen the media business change and journalism, certainly on the analyst community. Who reads white papers? Maybe the do, maybe they don't. Or, how do they engage? What content formally do you see as state of the art engagement? Is is video, is it a mix, how do you view that? >> It's a mix, really. I think video's really powerful. And it can be great to tree topics and short form in a really powerful way. I think we can stretch it out a little bit in terms of how to and teaching and education also. But, there are times when other things like a white paper are still relevant. >> Yeah, they got to do their homework and get ready for the big test. >> Yes. >> How to install. (laughing) >> Exactly, yeah. >> Okay, big surprises for you in the industry, if you could look back and talk to yourself a few years ago and say, Wow, I didn't know that was going to happen, or I kind of knew this was going to be a trend we would be on. Where is the tailwinds, where's the headwinds in the industry as a marketer to be innovated, to be on the cutting edge, to deliver the value you need to do for your customers and for the company? >> Yeah, I think there's a bunch of great tailwinds organizationally and in the approach to work. And you talked about Agile. I think it's been a great thing to see people jump in and try to work in a different way. That's created tons of scale for a department like ours, where we're tryin' to go to more countries, and more places constantly. Having a better way to work, where we waste less effort, where we find problems and fix things way faster, has given us the chance to build leverage. And I think that's just that integration of engineering, attitudes, with marketing processes has been a, is an awesome thing. Everybody in our marketing department, or at least a lot of people have read the DevOps handbook, and we've got a lot of readers, so the devotes of that thought process that don't suit an engineering jobs. >> DevOps, Ethos, I think is going to be looked at as one of those things, that's a moment in history that has changed so much. I was just at Sundance Film Festival, and DevOps, Ethos is going to filmmaking. >> Robson: Yeah. >> And artistry with a craft and how that waterfall for the Elite Studios is opening up an amateur market in the Indy, so their Agile filmmakers and artists now doing cool stuff. So, it's going to happen. And of course, we love the infrastructures code. We'll talk about that all day long We love DevOps. (Robson laughing) So I got to ask you the marketing question. It will be a theme of my program of the CMO is, if I say marketing is code, infrastructure is code, enabled a lot of automation, some abstracted a way horizontally scaled, and new opportunities, created a lot of leverage, a lot of value, infrastructures code, created the Cloud. Is there a marketing as code Ethos, and what would that look like? If I would say, apply DevOps to marketing. If you could look at that, and you could say, magic wand. Give me some DevOps marketing, marketing as code. What would you have automated in a way that would be available to you? What would the APIs look like? What's your vision for that? >> What about the APIs, that's a good question. >> John: I don't think they exist yet, but we're fantasizing about it. (laughing) >> Yeah, I think the things that tend to slow marketing departments down really are old school, things like approvals. And how hard it is to get humans to agree on things that should be really easy. So, if the first thing you-- >> Provisioning an order. (laughing) >> The first thing you could do is just automate that system of agreeing that something's ready to go and send it out that I think you'd create so much efficiency in side marketing departments all over the world. Now that involves having a really great, and API's a great thought in that, because the expectations have to get matched up of what's being communicated on both sides, so we can have a channel on which to agree on something. That to me is-- >> Analytics are probably huge too. You want to have instant analytics. I don't care which database it came from. >> Yes, exactly. And that's the sense of DevOps and can use. But then you got some feedback on, did it work, was it the right thing to do, should we do more of it, should we fix it in some specific way? Yeah, I think that's-- >> I think that's an interesting angle, and the face-to-face thing that I find really interesting, because what you're doing is creating that face-to-face resource, that value is so intimate, and it's the best engagement data you can get is face-to-face. >> Yeah, I think it also allows us to build relationships to the point where we are getting invited into slack channels to help companies in real-time sometimes. I think there's a real-- >> So humanizing the company and the employees is critical. >> Yeah. >> You can't just be digital. >> Yes, it's a big deal. >> Awesome. Robson, thank so much for coming on theCUBE. The special CMO series. Is there a DevOps, can we automate away, what's going to automate, where's the value going to be in marketing? Super exciting, again, martech. Some are sayin' it's changing rapidly with the Cloud, AI, and all these awesome new technologies. What's going to change, that's what we're going to be exploring here on the CMO CUBE conversation. I'm John Furrier, thanks for watching. (upbeat instrumental music)

(upbeat music) >> Full stack observability is all the rage today. As businesses lean into digital, customer experience becomes ever more important. Why? Well, it's obvious, fickle consumers can switch brands in the blink of an eye or the click of a mouse. Technology companies have sprung into action and the observability space is getting pretty crowded in an effort to simplify the process of figuring out the root cause of application performance problems without an army of PhDs and lab coats, also known as endlessly digging through logs, for example. We see decades old software companies that have traditionally done monitoring or log analytics and or application performance management stepping up their game. These established players, you know, they typically have deep feature sets and sometimes purpose-built tools that attack one particular segment of the marketplace. And now they're pivoting through M&A and some organic development trying to fill gaps in their portfolio. And then, you got all these new entrants coming to the market, claiming end to end visibility across the so-called modern cloud and now edge native stacks. Meanwhile, cloud players are gaining traction and participating through a combination of native tooling combined with strong ecosystems to address this problem. But, you know, recent survey research from ETR confirms our thesis that no one company has it all. Here's the thing. Customers just want to figure out the root cause as quickly and as efficiently as possible. It's one thing to observe the stack end to end, but the question is who is automating the observers? And that's why we're here today. Hello, my name is Dave Vellante and welcome to this special Cube presentation where we dig into root cause analysis, and specifically, how one company, Zebrium, is using unsupervised machine learning to detect anomalies and pinpoint root causes and delivering it as an automated service. And in this session, we have two deep dives. First, we're going to dig into this exciting new field of RCaaS, Root Cause As A Service with two of the founders and technical experts behind Zebrium. And then we bring in two technical experts from Cisco, an early Zebrium customer who ran a POC with Zebrium's service, automating and identifying root cause problems within four very well established and well known Cisco product lines, including WebEx Client and UCS. I was pretty amazed at the results and I think you'll be impressed as well. So thanks for being here. Let's get started. With me right now is Larry Lancaster, who's a founder and CTO of Zebrium. And he's joined by Rod Bagg, who's the founder and vice president of engineering at the company. Gents, welcome. Thanks for coming on. >> Thanks. >> Okay. >> It's good to be here. >> It's good to be here >> All right Rod, talk to me. Talk to me about software downtime, what root cause means, all the buzzwords in your domain, MTTR and SLO. What do we need to know? >> Yeah, I mean, it's like you said. I mean, it's extremely important to our customers and to most businesses out there to drive uptime and avoid as much downtime as possible. So, you know, when you think about it, all of these businesses, most companies nowadays, either their product is software and it's running, you know, running on the web and that's how you get a point click. Or the business depends on, you know, internal systems to drive their business and to run it. When that is down, that is hugely impacting to them. So if you take a look, you know, way back, you know, 20, 30 years ago, software was simple. You know, there wasn't much to it. It was pretty monolithic and maybe it took a couple of people to maintain it and keep it running. There wasn't really anything complicated about it. It was a single tenant piece of software. Today's software is so complicated, often running, you know, maybe hundreds of services to keep that or to actually implement what that software is doing. So as you point out, you know, enter the sort of observability space and the tools that are now in use to help monitor that software and make sure when something goes wrong, they know about it But there's kind of an interesting stat around the observability space. So when you look at observability in the context or through the lens of the cost of downtime, it's really interesting. So observability tools are about a $20 billion market, okay? But the cost of downtime, even with that in place, is still hundreds of billions of dollars. So you're not taking much of a bite out of what the real problem is. You have to solve root cause and get to that fast. So it's all great to know that something went wrong but you got to know why. And it's our contention here that, you know, really, when you take a look at the observability space, you have metrics, that's a great tool. I mean, there's lots of great tools out there, you know, around metrics monitoring that's going to tell you when something went wrong. It's very rarely it's going to tell you why. Similarly for tracing, it's going to point you to where the issue is. It's going to take you through that stack and probably pinpoint where you're being, you know where it's happening or where something is running slow, potentially. So that's great. But again, the root cause of why it's happening is going to be buried in log files. And I can expand on that a little bit more but you know, when you're a software developer and you're writing your software, those log files are a wealth of information. It's just a set of breadcrumbs that are littered with facts about how the software is behaving and why it's doing what it's doing, or why it went wrong. And it's that that really gets you to the root cause very fast. And that's our contention, is that these software systems are so complex nowadays and that the root cause is lying in those logs. So how do you get there fast? You know, we would contend that you better automate that or you are just doomed for failure. And that's where we come in. >> Great. >> Getting to that root cause. >> Thank you, Rod. You know, it's interesting you talk about the $20 billion market. There's an analogy with security, right? We spend 80, $100 billion a year on securing our infrastructure, and yet we lose probably closer to a trillion dollars a year in breaches. And there's a similar analogy here. 20 billion could be 5X in downtime impacts or more. Okay, let's go to Larry. Tell us a little bit more about Zebrium. I'm interested always to ask a founder why you started the company. Rod touched on that a little bit. You guys have invented this concept of RCaaS. What does it mean? What problems does it solve, and how does it solve the problem? Let's get into it. >> Yeah. Hey, thanks, Dave. So I think when you said, you know, who's automating the observer, that that's a great way to think about it because what observability really means is it's a property of a system that means you can see into it. You can observe the internal state and that makes it easier to troubleshoot, right? But the problem is if it's too complicated, you just push the bottleneck up to your eyeball. There's only so much a person can filter through manually, right? And I love the way you put that. So that's a great way to think about it is automating the observer. Now, of course, it means that, you know, you reduce your MTTR, you meet your service level objectives, all that stuff, you improve customer experience. That's all true, but it's important to step back and realize like we have cracked a real nut here. People have been trying to figure out how to automate this part of sort of the troubleshooting experience, this human part of finding the root cause indicators for a long time. And until Zebrium came along, I would argue, no one's really done it right. So, you know, I think it's also important you know, as we step back, we can probably look forward five to 10 years and say, everyone's going to look back and say how did we do all this manually? You're going to see this sort of last mile of observability and troubleshooting is going to be automated everywhere because otherwise, you know, people are just... They're not going to be able to scale their business. So, you know, I think one more thing that's important to point out is, you know, I think Zebrium, you know, it's one thing to have the technology but we've learned we need to deliver it right where people are today. You can't just expect people to dive into a new tool. So, you know, we're looking at, you know, if you look at Zebrium, you'll put us on your dashboard and we don't care what kind of a dashboard it is. It could be, you know Datadog, New Relic, Elastic, Dynatrace, Grafana AppDynamics, ScienceLogic, we don't care. You know, they're all our friends. So we're more interested in getting to that root cause than trying to fight, you know, these incumbents and all that stuff. Yep. >> Yeah. So, interesting. Again, another analogy I think about. You know, you talked about automation. If we're to look back and say this is what... We're never going to do this again, it's like provisioning loans. Nobody provisions loans anymore, it's all automated. >> Larry: (chuckling) That's right. >> So Larry, I'll stay with you, then the skeptic in me says, this sounds amazing, but if I, you know... It might be too good to be true. Tell us how it works. >> Larry: (chuckling) Yeah. So that's interesting. So Cisco came along and they were equally skeptical. So what they did was they took a couple of months and they did a very detailed study. And they got together 192 incidents across four product lines, where they knew that the root cause was in the logs. And they knew what that root cause was because they had had their best engineers, you know work on those cases and take detailed notes of the incidents that had taken place. And so they ran that data through the Zebrium software. And what they found was that in more than 95% of those incidents, Zebrium reflected the correct root cause indicators at the correct time. Like that blew us away. When we saw that kind of evidence, Dave, I have to tell you, everyone was just jumping up and down. It was like, you know, it was like the Apollo command center, you know when they finally, you know, touchdown on the moon kind of thing. So, you know, it's really an exciting point in time to be at the company, like just seeing everything finally being proven out according to this vision. I'm going to tell you one more story which is actually one of my favorites, because we got a chance to work with Seagate Lyve Cloud. So they're, you know, a hyper modern, you know, SaaS business, they're an S3 competitor. Zoom has their files stored on Lyve Cloud, you know, to let you know who they are. So essentially, what happened was they were in alpha, their early access, and they had an outage, and it was pretty bad. I mean, it went on for longer than a day, actually, before they were completely restored. And it was, you know, fortunately for them, it was early access. So no one was expecting, you know, uptime, you know, service level objectives and so on. But they were scared, because they realized, if something like this happens in production, you know, they're screwed. So what they did was they saw Zebrium. They went and did some research, they saw Zebrium. They went in a staging environment, recreated the exact (indistinct) that they had had. And what they saw was immediately, Zebrium pops up a root cause report that tells them exactly the root cause that they took over a day to find. These are the kind of stories that let us know we're onto something transformational. >> Dave: Yeah. That's great. I mean, you guys are jumping up and down, I'm sure. We're going to hear from Cisco later. I bet you, they were jumping up and down too because they didn't have to do all that heavy lifting anymore. So Rod, Larry's just sort of implying that, or actually, you guys both talked about that your tool is agnostic. So how does one actually use the service? How do I deploy it? >> Yeah. So let me step back. So when we talk about logs right? Like, you know, all these bread crumbs being in logs and everything else? So, you know, they are a great wealth of you know, information, but people hate dealing with them. I mean, they hate having to go in and figure out what log to look at. In fact, you know, we had one of our... Or we've heard from several of our customers now prior to using Zebrium, when they, you know, have some issue, and they know there's something wrong, something on their dashboard has told them that something's wrong, maybe a metric has, you know, taken a blip or something's happened that they know there's a problem. We've heard from them that it can take like a number of hours just to get to the right set of logs, like figuring out over these hundreds of services where the logs are, to get to them, maybe searching in a log manager. Just to get into the right context, even, can take hours. So, you know, that's obviously the problem we solve but, you know, we don't want them just looking at logs. I mean, you know, we don't want to put them back in the thing they don't like doing because people don't do that. They don't like doing it. So we put it up on the dashboard. So if something is going wrong with your metrics and that's the indicator, or maybe it's something with tracing that you're sort of digging through that you know something's wrong, we will be right on that same dashboard. So we're deployed as a SaaS service. You send us your logs, you click on one of our integrations and we integrate with all these tools that Larry's talked about. And when we detect anything that is a root cause report, it will show up on your dashboard in the same timeline as those blips in your metrics. So when you see something going wrong and you know there's an issue, take a look at the portion of your dashboard that is us, and we're going to tell you why. We're going to get you to the why that went wrong. No other work could be... You can, you know, also click down and click through to us so that you land up in our portal, if you want to do some more digging around, if you need to or whatever, maybe to get some context what have you, but it's fair that if you ever need to do that, the answer should be right there on your dashboard. And that that's how we expect people to use it. We don't want them digging in logs and going through things, we want it to be right in their workflow. >> Great. Thank you, Larry. So Rod, we talked about Cisco. We're going to hear more from them in a moment in Seagate. I would think this is like a perfect solution for a SaaS provider, anybody doing AI ops. Do you have some examples of those types of firms leaning into this? >> Rod: Yeah, a couple of great ones. Well, I mean, we've got many of them, but a couple that I'll touch on. We have an actual AI ops company that was looking for, you know, sort of some complimentary technology and so on. And so they decided to just put us through our paces by having one of their own SREs sign up for our service in our SaaS environment, and send the logs from their system to us, you know, and just see how we did. So it turned out we ended up talking back to this SRE like a week after he had installed the product, you know signed up and then, you know, started sending us logs. And, you know, he was hewing and hawing, saying that he was busy, like every SRE is, and that he didn't have a chance to really do much with us yet. And, you know, we were just, you know, having this conversation on the phone, and he comes to tell us that, yeah I've been busy because we had this, you know, terrible outage, like, you know, five days ago. And we said like, "Okay did you actually look on the Zebrium dashboard?" (chuckles) And he goes, "You know what? I didn't even think to do it yet. I mean, I'd just been so busy and frazzled." So we have an integration with that company, he hadn't put that integration in, so it wasn't in his dashboard yet, but it was certainly on ours. So he went there, and he looks and he looks on the day, you know, on the time range of when he had had this incident. And right at the very top of the page on our portal was that incident with that root cause. And he was flabbergasted. It literally would've saved him hours and hours and hours. They had this issue going on for over 24 hours. And we had the answer right there in five minutes, and it was crazy. And we get that kind of stories. It's just like the Seagate one. If you use us and you have a problem, we're going to detect it. And you're going to hear from Cisco how successful we are at detecting things. I mean, it'll be there when you have a problem. In SaaS companies, you know, one of our customers is Alchera. They do cost optimizations for cloud properties, you know, for AWS optimization, Google, Google cloud, and so on. But they use our software, and they have a lot of interaction, obviously with these cloud vendors and the APIs of those cloud vendors. So, you know, in order to figure out your costing at AWS, they're using all those APIs. So it turned out, you know, they had some issue where their services were breaking. And we had that root cause report right on the screen, again within five minutes, that was pointing to an API problem with Google. And they had changed one of their APIs and Alchera was not aware of it. So their stuff was breaking because of a change downstream that we had caught. And I'll just tell you one last one because it's somewhat related to one of these cloud vendors. You know, it was a big cloud vendor who had an outage a couple of months ago. And it's interesting because, you know, a lot of our customers will set up shared Slack channels with us, where we're monitoring or seeing their incidents as well as they are. So we get a little Slack representation of the incident that we detected for them or the root cause that we detected for them, and that's in a shared community channel. So we could see this happening when that AWS outage happened. We could see our customers getting impacted by that AWS outage, and the root cause of what was going on there in AWS that was impacting our customers that was showing up in our incidents. Now we didn't obviously, you know, have the very root cause of what was going on in AWS, per se but we were getting to the root cause of why our customer's applications were failing. And that was because of issues going on at AWS. >> Very interesting. I mean, I think one of your biggest challenges is going to be getting people's attention because these SREs are so busy, their hair's on fire. >> Rod: That's it. Right. (chuckling). You know, when you say, hey, (indistinct). >> I tell you, if you get their attention, they love it. I mean, this AI ops company, I didn't even tell you the punchline there, but, you know, they had this incident that occurred that we found. And quite literally, the next week, they ended up signing up as a paid customer. So... >> Dave: that's great. And Larry, to give you the last word. I mean, you know, Rod was talking about, you know, changes in APIs and you know, there's still a lot of scripts out there. You guys, if I understand it correctly, run both as a service in the cloud and you can run on-prem, which is important because there's a lot of sensitive information in logs that people are trying not to leave. >> Larry: That's right. Absolutely. >> Dave: But close it out here. >> Yeah. I mean, that's right, you can run it on-prem. Just like we run it in our cloud, you can run it in your cloud or on your own infrastructure. Now that's all true. You know, I think the one hurdle now that we have left as a company is getting the word out and getting people to believe that this is actually possible and try it for themselves. You don't believe it, do a POC, try it yourself. And you know, people have become so jaded by the lack of, you know, real, sort of, innovation in the software industry for the last 10 years that it's hard to get people to... But guys, you got to give it a shot, I'm telling you. I'm telling you right now, it works. And you'll hear more about that from one of our customers in a minute. >> All right guys, thanks so much. Great story. Really appreciate you sharing. >> Thank you. >> Yeah. Thanks Dave. Appreciate the time. >> Okay. In a moment, we're going to hear from Cisco who is the customer in this case example and a company that has... Look, they have quite an impressive suite of observability tooling, and they've done a pretty compelling proof of concept with Zebrium using real data on some Cisco products that you've heard of, like WebEx. So stay tuned and learn about how you can really take advantage of this new technology called Root Cause As A Service. You're watching theCube, the leader in enterprise and emerging tech coverage. (upbeat music)

(bright intro music) >> Full stack observability is all the rage today. As businesses lean in to digital, customer experience becomes ever more important, why? Well, it's obvious. Fickle consumers can switch brands in the blink of an eye or the click of a mouse. Technology companies have sprung into action, and the observability space is getting pretty crowded in an effort to simplify the process of figuring out the root cause of application performance problems without an army of PhDs and lab coats, also known as endlessly digging through logs, for example. We see decades-old software companies that have traditionally done monitoring or log analytics and/or application performance management stepping up their game. These established players, you know, they typically have deep feature sets and sometimes purpose built tools that attack one particular segment of the marketplace, and now, they're pivoting through M&A and some organic development trying to fill gaps in their portfolio, and then you got all these new entrants coming to the market claiming end to end visibility across the so-called modern cloud and now edge-native stacks. Meanwhile, cloud players are gaining traction and participating through a combination of native tooling combined with strong ecosystems to address this problem, but, you know, recent survey research from ETR confirms our thesis that no one company has at all. Here's the thing. Customers just want to figure out the root cause as quickly and efficiently as possible. It's one thing to observe the stack end to end, but the question is who is automating the observers? And that's why we're here today. Hello, my name is Dave Vellante, and welcome to this special "CUBE" presentation where we dig into root cause analysis and, specifically, how one company, Zebrium, is using unsupervised machine learning to detect anomalies and pinpoint root causes and delivering it as an automated service. In this session, we have two deep dives. First, we're going to dig into this exciting new field of RCA, root cause as a service, with two of the founders and technical experts behind Zebrium, and then we bring in two technical experts from Cisco, an early Zebrium customer who ran a POC with Zebrium's service, automating and identifying root cause problems within four very well established and well-known Cisco product lines including Webex client and UCS. I was pretty amazed at the results, and I think you'll be impressed as well. So thanks for being here. Let's get started with me right now is Larry Lancaster who's a founder and CTO of Zebrium, and he's joined by Rod Bagg who's a founder and Vice-President of Engineering at the company. Gents, welcome, thanks for coming on. >> Thanks. >> (indistinct). >> To be here. >> Great to be here. >> All right, Rod, talk to me. Talk to me about software downtime, what root cause means, all the buzzwords in your domain, MTTR and SLO, what do we need to know? >> Yeah, I mean, it's like you said. I mean, it's extremely important to our customers and to most businesses out there to drive up time and avoid as much downtime as possible. So, you know, when you think about it, all of these businesses, most companies nowadays, either their product is software and it's running, you know, running on the web, and that that's how you get a point click or their business depends on it and, you know, internal systems to drive their business and to run it. Now, when that is down, that is hugely impacting to them. So if you take a look, you know, way back, you know, 20, 30 years ago, software was simple. You know, there wasn't much to it. It was pretty monolithic, and maybe it took a couple of people to maintain it and keep it running. It wasn't really anything complicated about it. It was a single tenant piece of software. Today's software is so complicated, often running, you know, maybe hundreds of services to keep that or to actually implement what that software is doing. So as you point out, you know, enter the sort of observability space and the tools that are now in use to help monitor that software and make sure when something goes wrong, they know about it, but there's kind of an interesting stat around the observability space. So when you look at observability in the context or through the lens of the cost of downtime, it's really interesting. So observability tools are about a $20 billion market, okay? But the cost of downtime, even with that in place, is still hundreds of billions of dollars. So you're not taking much of a bite out of what the real problem is. You have to solve root cause and get to that fast. So it's all great to know that something went wrong, but you got to know why, and it it's our contention here that, you know, really, when you take a look at the observability space, you have metrics. That's a great tool. I mean, there's lots of great tools out there, you know, around metrics monitoring that's going to tell you when something went wrong. It's very rarely it's going to tell you why. Similarly for tracing, it's going to point you to where the issue is. It's going to take you through that stack and probably pinpoint where you're being, you know, where it's happening or where something is running slow potentially. So that's great, but again, the root cause of why it's happening is going to be buried in log files, and I can expand on that a little bit more, but, you know, when you're a software developer, and you're writing your software, those log files are a wealth of information. It's just a set of breadcrumbs that are littered with facts about how the software is behaving and why it's doing what it's doing or why it went wrong, and it's that that really gets you to the root cause very fast, and that's, our contention is that these software systems are so complex nowadays, and that the root cause is lying in those logs. So how do you get there fast? You know, we would contend that you better automate that or you're just doomed for failure, and that's where we come in. >> Great. >> Getting to that request. >> Thank you, Rod. You know, it's interesting. You talk about the $20 billion market. There's an analogy with security, right? We spend 80, $100 billion a year on securing our infrastructure, and yet we lose, probably, closer to a trillion dollars a year in breaches, and there's a similar analogy here. 20 billion could be 5x in downtime impacts or more. Okay, let's go to Larry. Tell us a little bit more about Zebrium. I'm interested always to ask a founder why you started the company. Rod touched on that a little bit. You guys have invented this concept of RCAs. What does it mean? What problems does it solve? And how does it solve the problem? Let's get into it. >> Yeah, hey, thanks, Dave. So I think when you said, you know, who's automating the observer? That's a great way to think about it because what observability really means is it's a property of a system that means you can see into it. You can observe the internal state, and that makes it easier to troubleshoot, right? But the problem is if it's too complicated, you just push the bottleneck up to your eyeball. There's only so much a person can filter through manually, right? And I love the way you put that. So that's a great way to think about it is automating the observer. Now, of course, it means that, you know, you reduce your MTTR, you meet your service level objectives, all that stuff, you improve customer experience, that's all true, but it's important to step back and realize like we have cracked a real nut here. People have been trying to figure out how to automate this part of sort of the troubleshooting experience, this human part of finding the root cause indicators for a long time, and until Zebrium came along, I would argue no one's really done it right. So, you know, I think it's also important, you know, as we step back, we can probably look forward five to 10 years and say, "Everyone's going to look back and say, 'How did we do all this manually?'" You're going to see this sort of last mile of observability and troubleshooting is going to be automated everywhere because otherwise, you know, people are just, they're not going to be able to scale their business. So, you know, I think one more thing that's important to point out is, you know, I think Zebrium, you know, it's one thing to have the technology, but we've learned we need to deliver it right where people are today. You can't just expect people to dive into a new tool. So, you know, we're looking at, you know, if you look at Zebrium, you'll put us on your dashboard, and we don't care what kind of a dashboard it is. It could be, you know, Datadog, New Relic, Elastic, Dynatrace, Grafana, AppDynamics, ScienceLogic, we don't care. You know, they're all our friends. So we're more interested in getting to that root cause than trying to fight, you know, these incumbents and all that stuff, yeah. >> Yeah, so interesting. Again, another analogy I think about, you know, you talked about automation, where to look back, and say, "This is what- We're never going to do this again." It's like provisioning LANs. Nobody provisioned LANs anymore. It's all automated. >> That's correct. >> So, Larry, stay with you. The skeptic in me says, "This sounds amazing," but if, you know, it probably too good to be true. Tell us how it works. >> Yeah, so that's interesting. So Cisco came along and they were equally skeptical. So what they did was they took a couple of months, and they did a very detailed study, and they got together 192 incidents across four product lines where they knew that the root cause was in the logs, and they knew what that root cause was because they'd had their best engineers, you know, work on those cases and take detailed notes of the incidents that had taken place, and so they ran that data through the Zebrium software, and what they found was that in more than 95% of those incidents, Zebrium reflected the correct root cause indicators at the correct time. Like that blew us away. When we saw that kind of evidence, Dave, I have to tell you, everyone was just jumping up and down. It was like, you know, it was like the Apollo Command Center, you know, when they finally, (Dave laughs) you know, touchdown on the moon kind of thing. So, you know, it's really exciting at a point in time to be at the company, like just seeing everything finally being proven out according to this vision. I'm going to tell you one more story, which is actually one of my favorites, because we got a chance to work with Seagate Lyve Cloud. So they're, you know, a hyper modern, you know, SaaS business. They're an S3 competitor. Zoom has their files stored on Lyve Cloud to give, you know, to let you know who they are. So, essentially, what happened was they were in alpha, in their early access, and they had an outage, and it was pretty bad. I mean, it went on for longer than a day, actually, before they were completely restored, and it was, you know, fortunately, for them, it was early access. So no one was expecting, you know, uptime, you know, service level objectives and so on, but they were scared because they realized if something like this happens in production, you know, they're screwed. So what they did was they saw Zebrium, they did some research, they saw Zebrium. They went in a staging environment, recreated the exact (indistinct) that they'd had, and what they saw was, immediately, Zebrium pops up a root cause report that tells them exactly the root cause that they took over a day to find. These are the kind of stories that let us know we're onto something transformational. >> Yeah, that's great. I mean, you guys are jumping up and down. I'm sure, we're going to hear from Cisco later. I bet you, they were jumping up and down, too, 'cause they didn't have to do all that heavy lifting anymore. So Rod, Larry's just sort of implying that or, actually, you guys both talked about that your tool's agnostic. So how does one actually use the service? How do I deploy it? >> Yeah, so let me step back. So when we talk about logs, right? Like, you know, all these red crumbs being in logs and everything else. So, you know, they are a great wealth of, you know, information, but people hate dealing with them. I mean, they hate having to go in and figure out what log to look at. In fact, you know, we had one of our, or we've heard from several of our customers now prior to using Zebrium, but when they're, you know, have some issue, and they know there's something wrong, something on their dashboard has told them that something's wrong, maybe a metrics is, you know, taken a blip or something's happened that they know there's a problem, we've heard from them that it can take like a number of hours just to get to the right set of logs, like figuring out over these hundreds of services where the logs are to get to them, maybe searching in a log manager, just to get into the right context even can take hours. So, you know, that's obviously the problem we solve, but, you know, we don't want them just looking at logs. I mean, you know, we don't want to put 'em back in the thing they don't like doing 'cause people don't do what they don't like doing. So we put it up on the dashboard. So if something is going wrong with your metrics, and that's the indicator or maybe it's something with tracing that you're sort of digging through now that you know something's wrong, we will be right on that same dashboard. So we're deployed as a SaaS service. You send us your logs. You click on one of our integrations, and we integrate with all these tools that Larry's talked about, and when we detect anything that is a root cause report, it will show up on your dashboard in the same timeline as those blips in your metrics. So when you see something going wrong, and you know there's an issue, take a look at the portion of your dashboard that is us, and we're going to tell you why. We're going to get you to the why that went wrong. Not no other work could be- You can, you know, also click down and click through to us so that you land up in our portal if you want to do some more digging around if you need to or whatever, maybe to get some context, what have you, but it's fair that you ever need to do that. The answer should be right there on your dashboard, and that's how we expect people to use it. We don't want them digging in logs and going through things. We want it to be right in their workflow. >> Great, thank you, Larry. So Rod, we talked about Cisco. We're going to hear more from them in a moment and Seagate. I would think this is like a perfect solution for a SaaS provider, anybody doing AIOps, do you have some examples of those types of firms leaning into this? >> Yeah, a couple of great, well, I mean, we got many of them, but couple that I'll touch on. We have an actual AIOps company that was looking for, you know, sort of some complimentary technology and so on, and so they decided to just put us through our paces by having one of their own SREs sign up for our service in our SaaS environment and send the logs from their system to us, you know, and just see how we did. So it turned out we ended up talking back to this SRE like a week after he had installed the product, you know, signed up, and then, you know, started sending us logs, and, you know, he was hemming and hawing saying that he was busy like, you know, like every SRE is, and that he didn't have a chance to really do much with us yet, and, you know, we just, you know, having this conversation on the phone, and he comes to tell us that, "Yeah, I've been busy because we had this, you know, terrible outage like, you know, five days ago," and we said like, "Okay, did you actually look on the Zebrium dashboard?" (laughs) And he goes, "You know what? I didn't even think to do it yet. I mean, I'd just been so busy and frazzled." So we have an integration with that company. He hadn't put that integration in so it wasn't in his dashboard yet, but it was certainly on ours. So he went there and he looks on the day like, you know, on the time range of when he had this incident, and right at the very top of the page on our portal was the incident with the root cause, and he was flabbergasted. It literally would've saved him hours and hours and hours. They had this issue going on for over 24 hours, and we had the answer right there in five minutes, and it was crazy, and we get that kind of story. It's just like the Seagate one. If you use us and you have a problem, we're going to detect it, and you're going to hear from Cisco how successful we are at detecting things. I mean, it'll be there when you have a problem. In SaaS companies, you know, one of our customers is Archera. They do cost optimizations for cloud properties, you know, for AWS optimization, Google cloud, and so on, but they use our software, and they have a lot of interaction, obviously, with these cloud vendors and the APIs of those cloud vendors. So, you know, in order to figure out you're costing at AWS, they're using all those APIs. So it turned out, you know, they had some issue where their services were breaking and we had that root cause report right on the screen, again, within five minutes that was pointing to an API problem with Google, and they had changed one of their APIs, and Archera was not aware of it. So their stuff was breaking because of a change downstream that we had caught, and I'll just tell you one last one because it's somewhat related to one of these cloud vendors of, you know, big cloud vendor who had an outage couple of months ago, and it's interesting because, you know, lot of our customers will set up shared Slack channels with us where we're monitoring or seeing their incidents as well as they are. So we get a little Slack representation of the incident that we detected for them or the root cause that we've detected for them, and that's in a shared community channel. So we could see this happening when that AWS outage happened. We could see our customers getting impacted by that AWS outage and the root cause of what was going on there in AWS that was impacting our customers, that was showing up in our incidents. Now, we didn't obviously, you know, have the very root cause of what was going on in AWS per se, but we were getting to the root cause of why our customer's applications were failing, and that was because of issues going on at AWS. >> Very interesting. I mean, I think one of your biggest challenge is going to be getting people's attention because these SREs is so busy, their hair's on fire. (all laughs) You know, he's like, "Hey, chap, I'm going to show you, look at this." >> I tell you. You get their attention, they love it. I mean, this AIOps company, I didn't even tell you the punchline there, but, you know, they had this incident that occurred that we found and, quite literally, the next week, they ended up signing up as a paid customer, so. >> That's great, and Larry, give you the last word. I mean, you know, Rod was talking about, you know, changes in APIs, and, you know, there's still a lot of scripts out there. You guys, if I understand it correctly, run both as a service in the cloud and you can run on-prem, which is important because there's a lot of sensitive information in logs and people don't want to leave. >> That's right, absolutely. >> But, yeah, close it out here. >> Yeah, I mean, you can, that's right, you can run it on-prem, just like we run it in our cloud. You can run it in your cloud or on your own infrastructure. Now, that's all true. You know, I think the one hurdle now that we have left as a company is getting the word out and getting people to believe that this is actually possible and try it for themselves. You don't believe it? Do a POC, try it yourself. And, you know, people have become so jaded by the lack of, you know, real sort of innovation in the software industry for the last 10 years that it's hard to get people to... But guys, you got to give it a shot. I'm telling you. I'm telling you right now, it works, and you'll hear more about that from one of our customers in a minute. >> Alright guys, thanks so much. Great story, really appreciate you sharing. >> Thank you. >> Yeah, thanks, Dave. Appreciate the time. >> Okay, in a moment, we're going to hear from Cisco who is the customer in this case example, and a company that is... Look, they have quite an impressive suite of observability tooling, and they've done a pretty compelling proof of concept with Zebrium using real data on some Cisco products that you've heard of like Webex. So stay tuned and learn about how you can really take advantage of this new technology called root cause as a service. You're watching "theCUBE", the leader in enterprise and emerging tech coverage. (bright outro music)

(upbeat music) >> Hello, and welcome back to AWS Startup Showcase, I'm John Furrier, your host. This is the Hero panel, the AWS Heroes. These are folks that have a lot of experience in Open Source, having fun building great projects and commercializing the value and best practices of Open Source innovation. We've got some great guests here. Liz Rice, Chief Open Source Officer, Isovalent. CUBE alumni, great to see you. Brian LeRoux, who is the Co-founder and CTO of begin.com. Erica Windisch who's an Architect for Developer Experience. AWS Hero, also CUBE alumni. Casey Lee, CTO Gaggle. Doing some great stuff in ed tech. Great collection of experts and experienced folks doing some fun stuff, welcome to this conversation this CUBE panel. >> Hi. >> Thanks for having us. >> Hello. >> Let's go down the line. >> I don't normally do this, but since we're remote and we have such great guests, go down the line and talk about why Open Source is important to you guys. What projects are you currently working on? And what's the coolest thing going on there? Liz we'll start with you. >> Okay, so I am very involved in the world of Cloud Native. I'm the chair of the technical oversight committee for the Cloud Native Computing Foundation. So that means I get to see a lot of what's going on across a very broad range of Cloud Native projects. More specifically, Isovalent. I focus on Cilium, which is it's based on a technology called EBPF. That is to me, probably the most exciting technology right now. And then finally, I'm also involved in an organization called OpenUK, which is really pushing for more use of open technologies here in the United Kingdom. So spread around lots of different projects. And I'm in a really fortunate position, I think, to see what's happening with lots of projects and also the commercialization of lots of projects. >> Awesome, Brian what project are you working on? >> Working project these days called Architect. It's a Open Source project built on top of AWSM. It adds a lot of sugar and terseness to the SM experience and just makes it a lot easier to work with and get started. AWS can be a little bit intimidating to people at times. And the Open Source community is stepping up to make some of that bond ramp a little bit easier. And I'm also an Apache member. And so I keep a hairy eyeball on what's going on in that reality all the time. And I've been doing this open-source thing for quite a while, and yeah, I love it. It's a great thing. It's real science. We get to verify each other's work and we get to expand and build on human knowledge. So that's a huge honor to just even be able to do that and I feel stoked to be here so thanks for having me. >> Awesome, yeah, and totally great. Erica, what's your current situation going on here? What's happening? >> Sure, so I am currently working on developer experience of a number of Open Source STKS and CLI components from my current employer. And previously, recently I left New Relic where I was working on integrating with OpenTelemetry, as well as a number of other things. Before that I was a maintainer of Docker and of OpenStack. So I've been in this game for a while as well. And I tend to just put my fingers in a lot of little pies anywhere from DVD players 20 years ago to a lot of this open telemetry and monitoring and various STKs and developer tools is where like Docker and OpenStack and the STKs that I work on now, all very much focusing on developer as the user. >> Yeah, you're always on the wave, Erica great stuff. Casey, what's going on? Do you got some great ed techs happening? What's happening with you? >> Yeah, sure. The primary Open Source project that I'm contributing to right now is ACT. This is a tool I created a couple of years back when GitHub Actions first came out, and my motivation there was I'm just impatient. And that whole commit, push, wait time where you're testing out your pipelines is painful. And so I wanted to build a tool that allowed developers to test out their GitHub Actions workflows locally. And so this tool uses Docker containers to emulate, to get up action environment and gives you fast feedback on those workflows that you're building. Lot of innovation happening at GitHub. And so we're just trying to keep up and continue to replicate those new features functionalities in the local runner. And the biggest challenge I've had with this project is just keeping up with the community. We just passed 20,000 stars, and it'd be it's a normal week to get like 10 PRs. So super excited to announce just yesterday, actually I invited four of the most active contributors to help me with maintaining the project. And so this is like a big deal for me, letting the project go and bringing other people in to help lead it. So, yeah, huge shout out to those folks that have been helping with driving that project. So looking forward to what's next for it. >> Great, we'll make sure the SiliconANGLE riders catch that quote there. Great call out. Let's start, Brian, you made me realize when you mentioned Apache and then you've been watching all the stuff going on, it brings up the question of the evolution of Open Source, and the commercialization trends have been very interesting these days. You're seeing CloudScale really impact also with the growth of code. And Liz, if you remember, the Linux Foundation keeps making projections and they keep blowing past them every year on more and more code and more and more entrance coming in, not just individuals, corporations. So you starting to see Netflix donates something, you got Lyft donate some stuff, becomes a project company forms around it. There's a lot of entrepreneurial activity that's creating this new abstraction layers, new platforms, not just tools. So you start to see a new kickup trajectory with Open Source. You guys want to comment on this because this is going to impact how fast the enterprise will see value here. >> I think a really great example of that is a project called Backstage that's just come out of Spotify. And it's going through the incubation process at the CNCF. And that's why it's front of mind for me right now, 'cause I've been working on the due diligence for that. And the reason why I thought it was interesting in relation to your question is it's spun out of Spotify. It's fully Open Source. They have a ton of different enterprises using it as this developer portal, but they're starting to see some startups emerging offering like a hosted managed version of Backstage or offering services around Backstage or offering commercial plugins into Backstage. And I think it's really fascinating to see those ecosystems building up around a project and different ways that people can. I'm a big believer. You cannot sell the Open Source code, but you can sell other things that create value around Open Source projects. So that's really exciting to see. >> Great point. Anyone else want to weigh in and react to that? Because it's the new model. It's not the old way. I mean, I remember when I was in college, we had the Pirate software. Open Source wasn't around. So you had to deal under the table. Now it's free. But I mean the old way was you had to convince the enterprise, like you've got a hard knit, it builds the community and the community manage the quality of the code. And then you had to build the company to make sure they could support it. Now the companies are actually involved in it, right? And then new startups are forming faster. And the proof points are shorter and highly accelerated for that. I mean, it's a whole new- >> It's a Cambrian explosion, and it's great. It's one of those things that it's challenging for the new developers because they come in and they're like, "Whoa, what is all this stuff that I'm supposed to figure out?" And there's no right answer and there's no wrong answer. There's just tons of it. And I think that there's a desire for us to have one sort of well-known trot and happy path, that audience we're a lot better with a more diverse community, with lots of options, with lots of ways to approach these problems. And I think it's just great. A challenge that we have with all these options and all these Cambrian explosion of projects and all these competing ideas, right now, the sustainability, it's a bit of a tricky question to answer. We know that there's a commercialization aspect that helps us fund these projects, but how we compose the open versus the commercial source is still a bit of a tricky question and a tough one for a lot of folks. >> Erica, would you chime in on that for a second. I want to get your angle on that, this experience and all this code, and I'm a new person, I'm an existing person. Do I get like a blue check mark and verify? I mean, these are questions like, well, how do you navigate? >> Yeah, I think this has been something happening for a while. I mean, back in the early OpenStack days, 2010, for instance, Rackspace Open Sourcing, OpenStack and ANSU Labs and so forth, and then trying, having all these companies forming in creating startups around this. I started at a company called Cloudccaling back in late 2010, and we had some competitors such as Piston and so forth where a lot of the ANSUL Labs people went. But then, the real winners, I think from OpenStack ended up being the enterprises that jumped in. We had Red Hat in particular, as well as HP and IBM jumping in and investing in OpenStack, and really proving out a lot of... not that it was the first time, but this is when we started seeing billions of dollars pouring into Open Source projects and Open Source Foundations, such as the OpenStack Foundation, which proceeded a lot of the things that we now see with the Linux Foundation, which was then created a little bit later. And at the same time, I'm also reflecting a little bit what Brian said because there are projects that don't get funded, that don't get the same attention, but they're also getting used quite significantly. Things like Log4j really bringing this to the spotlight in terms of projects that are used everywhere by everything with significant outsized impacts on the industry that are not getting funded, that aren't flashy enough, that aren't exciting enough because it's just logging, but a vulnerability in it brings every everything and everybody down and has possibly billions of dollars of impact to our industry because nobody wanted to fund this project. >> I think that brings up the commercialization point about maybe bringing a venture capital model in saying, "Hey, that boring little logging thing could be a key ingredient for say solving some observability problems so I think let's put some cash." Again then we'd never seen that before. Now you're starting to see that kind of a real smart investment thesis going into Open Source projects. I mean, Promethease, Crafter, these are projects that turned off companies. This is turning up companies. >> A decade ago, there was no money in Dev tools that I think that's been fully debunked now. They used to be a concept that the venture community believed, but there's just too much evidence to the contrary, the companies like Cash Court, Datadog, the list goes on and on. I think the challenge for the Open Source (indistinct) comes back to foundations and working (indistinct) these developers make this code safe and secure. >> Casey, what's your reaction to all of this? You've got, so a project has gained some traction, got some momentum. There's a lot of mission critical. I won't say white spaces, but the opportunities in the big cloud game happening. And there's a lot of, I won't say too many entrepreneurial, but there's a lot of community action happening that's precommercialization that's getting traction. How does this all develop naturally and then vector in quickly when it hits? >> Yeah, I want to go back to the Log4j topic real quick. I think that it's a great example of an area that we need to do better at. And there was a cool article that Rob Pike wrote describing how to quantify the criticality. I think that's sort of quantifying criticality was the article he wrote on how to use metrics, to determine how valuable, how important a piece of Open Source is to the community. And we really need to highlight that more. We need a way to make it more clear how important this software is, how many people depend on it and how many people are contributing to it. And because right now we all do that. Like if I'm going to evaluate an Open Source software, sure, I'll look at how many stars it has and how many contributors it has. But I got to go through and do all that work myself and come up with. It would be really great if we had an agreed upon method for ranking the criticality of software, but then also the risk, hey, that this is used by a ton of people, but nobody's contributing to it anymore. That's a concern. And that would be great to potential users of that to signal whether or not it makes sense. The Open Source Security Foundation, just getting off the ground, they're doing some work in this space, and I'm really excited to see where they go with that looking at ways to stop score critically. >> Well, this brings up a good point while we've got everyone here, let's take a plug and plug a project you think that's not getting the visibility it needs. Let's go through each of you, point out a project that you think people should be looking at and talking about that might get some free visibility here. Anyone want to highlight projects they think should be focused more on, or that needs a little bit of love? >> I think, I mean, particularly if we're talking about these sort of vulnerability issues, there's a ton of work going on, like in the Secure Software Foundation, other foundations, I think there's work going on in Apache somewhere as well around the bill of material, the software bill of materials, the Secure Software supply chain security, even enumerating your dependencies is not trivial today. So I think there's going to be a ton of people doing really good work on that, as well as the criticality aspect. It's all like that. There's a really great xkcd cartoon with your software project and some really big monolithic lumps. And then, this tiny little piece in a very important point that's maintained by somebody in his bedroom in Montana or something and if you called it out. >> Yeah, you just opened where the next lightening and a bottle comes from. And this is I think the beauty of Open Source is that you get a little collaboration, you get three feet in a cloud of dust going and you get some momentum, and if it's relevant, it rises to the top. I think that's the collective intelligence of Open Source. The question I want to ask that the panel here is when you go into an enterprise, and now that the game is changing with a much more collaborative and involved, what's the story if they say, hey, what's in it for me, how do I manage the Open Source? What's the current best practice? Because there's no doubt I can't ignore it. It's in everything we do. How do I organize around it? How do I build around it to be more efficient and more productive and reduce the risk on vulnerabilities to managing staff, making sure the right teams in place, the right agility and all those things? >> You called it, they got to get skin in the game. They need to be active and involved and donating to a sustainable Open Source project is a great way to start. But if you really want to be active, then you should be committing. You should have a goal for your organization to be contributing back to that project. Maybe not committing code, it could be committing resources into the darks or in the tests, or even tweeting about an Open Source project is contributing to it. And I think a lot of these enterprises could benefit a lot from getting more active with the Open Source Foundations that are out there. >> Liz, you've been actively involved. I know we've talked personally when the CNCF started, which had a great commercial uptake from companies. What do you think the current state-of-the-art kind of equation is has it changed a little bit? Or is it the game still the same? >> Yeah, and in the early days of the CNCF, it was very much dominated by vendors behind the project. And now we're seeing more and more membership from end-user companies, the kind of enterprises that are building their businesses on Cloud Native, but their business is not in itself. That's not there. The infrastructure is not their business. And I think seeing those companies, putting money in, putting time in, as Brian says contributing resources quite often, there's enough money, but finding the talent to do the work and finding people who are prepared to actually chop the wood and carry the water, >> Exactly. >> that it's hard. >> And if enterprises can find peoples to spend time on Open Source projects, help with those chores, it's hugely valuable. And it's one of those the rising tide floats all the boats. We can raise security, we can reduce the amount of dependency on maintain projects collectively. >> I think the business models there, I think one of the things I'll react to and then get your guys' comments is remember which CubeCon it was, it was one of the early ones. And I remember seeing Apple having a booth, but nobody was manning. It was just an Apple booth. They weren't doing anything, but they were recruiting. And I think you saw the transition of a business model where the worry about a big vendor taking over a project and having undue influence over it goes away because I think this idea of participation is also talent, but also committing that talent back into the communities as a model, as a business model, like, okay, hire some great people, but listen, don't screw up the Open Source piece of it 'cause that's a critical. >> Also hire a channel, right? They can use those contributions to source that talent and build the reputation in the communities that they depend on. And so there's really a lot of benefit to the larger organizations that can do this. They'll have a huge pipeline of really qualified engineers right out the gate without having to resort to cheesy whiteboard interviews, which is pretty great. >> Yeah, I agree with a lot of this. One of my concerns is that a lot of these corporations tend to focus very narrowly on certain projects, which they feel that they depend greatly, they'll invest in OpenStack, they'll invest in Docker, they'll invest in some of the CNCF projects. And then these other projects get ignored. Something that I've been a proponent of for a little bit for a while is observability of your dependencies. And I don't think there's quite enough projects and solutions to this. And it sounds maybe from lists, there are some projects that I don't know about, but I also know that there's some startups like Snyk and so forth that help with a little bit of this problem, but I think we need more focus on some of these edges. And I think companies need to do better, both in providing, having some sort of solution for observability of the dependencies, as well as understanding those dependencies and managing them. I've seen companies for instance, depending on software that they actively don't want to use based on a certain criteria that they already set projects, like they'll set a requirement that any project that they use has a code of conduct, but they'll then use projects that don't have codes of conduct. And if they don't have a code of conduct, then employees are prohibited from working on those projects. So you've locked yourself into a place where you're depending on software that you have instructed, your employees are not allowed to contribute to, for certain legal and other reasons. So you need to draw a line in the sand and then recognize that those projects are ones that you don't want to consume, and then not use them, and have observability around these things. >> That's a great point. I think we have 10 minutes left. I want to just shift to a topic that I think is relevant. And that is as Open Source software, software, people develop software, you see under the hood kind of software, SREs developing very quickly in the CloudScale, but also you've got your classic software developers who were writing code. So you have supply chain, software supply chain challenges. You mentioned developer experience around how to code. You have now automation in place. So you've got the development of all these things that are happening. Like I just want to write software. Some people want to get and do infrastructure as code so DevSecOps is here. So how does that look like going forward? How has the future of Open Source going to make the developers just want to code quickly? And the folks who want to tweak the infrastructure a bit more efficient, any views on that? >> At Gaggle, we're using AWS' CDK, exclusively for our infrastructure as code. And it's a great transition for developers instead of writing Yammel or Jason, or even HCL for their infrastructure code, now they're writing code in the language that they're used to Python or JavaScript, and what that's providing is an easier transition for developers into that Infrastructure as code at Gaggle here, but it's also providing an opportunity to provide reusable constructs that some Devs can build on. So if we've got a very opinionated way to deploy a serverless app in a database and do auto-scaling behind and all stuff, we can present that to a developer as a library, and they can just consume it as it is. Maybe that's as deep as they want to go and they're happy with that. But then they want to go deeper into it, they can either use some of the lower level constructs or create PRs to the platform team to have those constructs changed to fit their needs. So it provides a nice on-ramp developers to use the tools and languages they're used to, and then also go deeper as they need. >> That's awesome. Does that mean they're not full stack developers anymore that they're half stack developers they're taking care of for them? >> I don't know either. >> We'll in. >> No, only kidding. Anyway, any other reactions to this whole? I just want to code, make it easy for me, and some people want to get down and dirty under the hood. >> So I think that for me, Docker was always a key part of this. I don't know when DevSecOps was coined exactly, but I was talking with people about it back in 2012. And when I joined Docker, it was a part of that vision for me, was that Docker was applying these security principles by default for your application. It wasn't, I mean, yes, everybody adopted because of the portability and the acceleration of development, but it was for me, the fact that it was limiting what you could do from a security angle by default, and then giving you these tuna balls that you can control it further. You asked about a project that may not get enough recognition is something called DockerSlim, which is designed to optimize your containers and will make them smaller, but it also constraints the security footprint, and we'll remove capabilities from the container. It will help you build security profiles for app armor and the Red Hat one. SELinux. >> SELinux. >> Yeah, and this is something that I think a lot of developers, it's kind of outside of the realm of things that they're really thinking about. So the more that we can automate those processes and make it easier out of the box for users or for... when I say users, I mean, developers, so that it's straightforward and automatic and also giving them the capability of refining it and tuning it as needed, or simply choosing platforms like serverless offerings, which have these security constraints built in out of the box and sometimes maybe less tuneable, but very strong by default. And I think that's a good place for us to be is where we just enforced these things and make you do things in a secure way. >> Yeah, I'm a huge fan of Kubernetes, but it's not the right hammer for every nail. And there are absolutely tons of applications that are better served by something like Lambda where a lot more of that security surface is taken care of for the developer. And I think we will see better tooling around security profiling and making it easier to shrink wrap your applications that there are plenty of products out there that can help you with this in a cloud native environment. But I think for the smaller developer let's say, or an earlier stage company, yeah, it needs to be so much more straightforward. Really does. >> Really an interesting time, 10 years ago, when I was working at Adobe, we used to requisition all these analysts to tell us how many developers there were for the market. And we thought there was about 20 million developers. If GitHub's to be believed, we think there is now around 80 million developers. So both these groups are probably wrong in their numbers, but the takeaway here for me is that we've got a lot of new developers and a lot of these new developers are really struck by a paradox of choice. And they're typically starting on the front end. And so there's a lot of movement in the stack moved towards the front end. We saw that at re:Invent when Amazon was really pushing Amplify 'cause they're seeing this too. It's interesting because this is where folks start. And so a lot of the obstructions are moving in that direction, but maybe not always necessarily totally appropriate. And so finding the right balance for folks is still a work in progress. Like Lambda is a great example. It lets me focus totally on just business logic. I don't have to think about infrastructure pretty much at all. And if I'm newer to the industry, that makes a lot of sense to me. As use cases expand, all of a sudden, reality intervenes, and it might not be appropriate for everything. And so figuring out what those edges are, is still the challenge, I think. >> All right, thank you very much for coming on the CUBE here panel. AWS Heroes, thanks everyone for coming. I really appreciate it, thank you. >> Thank you. >> Thank you. >> Okay. >> Thanks for having me. >> Okay, that's a wrap here back to the program and the awesome startups. Thanks for watching. (upbeat 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. >> The pandemic has changed the way we think about and predict the future. As we enter the third year of a global pandemic, we see the significant impact that it's had on technology strategy, spending patterns, and company fortunes Much has changed. And while many of these changes were forced reactions to a new abnormal, the trends that we've seen over the past 24 months have become more entrenched, and point to the way that's coming ahead in the technology business. Hello and welcome to this week's Wikibon CUBE Insights powered by ETR. In this Breaking Analysis, we welcome our partner and colleague and business friend, Erik Porter Bradley, as we deliver what's becoming an annual tradition for Erik and me, our predictions for Enterprise Technology in 2022 and beyond Erik, welcome. Thanks for taking some time out. >> Thank you, Dave. Luckily we did pretty well last year, so we were able to do this again. So hopefully we can keep that momentum going. >> Yeah, you know, I want to mention that, you know, we get a lot of inbound predictions from companies and PR firms that help shape our thinking. But one of the main objectives that we have is we try to make predictions that can be measured. That's why we use a lot of data. Now not all will necessarily fit that parameter, but if you've seen the grading of our 2021 predictions that Erik and I did, you'll see we do a pretty good job of trying to put forth prognostications that can be declared correct or not, you know, as black and white as possible. Now let's get right into it. Our first prediction, we're going to go run into spending, something that ETR surveys for quarterly. And we've reported extensively on this. We're calling for tech spending to increase somewhere around 8% in 2022, we can see there on the slide, Erik, we predicted spending last year would increase by 4% IDC. Last check was came in at five and a half percent. Gardner was somewhat higher, but in general, you know, not too bad, but looking ahead, we're seeing an acceleration from the ETR September surveys, as you can see in the yellow versus the blue bar in this chart, many of the SMBs that were hard hit by the pandemic are picking up spending again. And the ETR data is showing acceleration above the mean for industries like energy, utilities, retail, and services, and also, notably, in the Forbes largest 225 private companies. These are companies like Mars or Koch industries. They're predicting well above average spending for 2022. So Erik, please weigh in here. >> Yeah, a lot to bring up on this one, I'm going to be quick. So 1200 respondents on this, over a third of which were at the C-suite level. So really good data that we brought in, the usual bucket of, you know, fortune 500, global 2000 make up the meat of that median, but it's 8.3% and rising with momentum as we see. What's really interesting right now is that energy and utilities. This is usually like, you know, an orphan stock dividend type of play. You don't see them at the highest point of tech spending. And the reason why right now is really because this state of tech infrastructure in our energy infrastructure needs help. And it's obvious, remember the Florida municipality break reach last year? When they took over the water systems or they had the ability to? And this is a real issue, you know, there's bad nation state actors out there, and I'm no alarmist, but the energy and utility has to spend this money to keep up. It's really important. And then you also hit on the retail consumer. Obviously what's happened, the work from home shift created a shop from home shift, and the trends that are happening right now in retail. If you don't spend and keep up, you're not going to be around much longer. So I think the really two interesting things here to call out are energy utilities, usually a laggard in IT spend and it's leading, and also retail consumer, a lot of changes happening. >> Yeah. Great stuff. I mean, I recall when we entered the pandemic, really ETR was the first to emphasize the impact that work from home was going to have, so I really put a lot of weight on this data. Okay. Our next prediction is we're going to get into security, it's one of our favorite topics. And that is that the number one priority that needs to be addressed by organizations in 2022 is security and you can see, in this slide, the degree to which security is top of mind, relative to some other pretty important areas like cloud, productivity, data, and automation, and some others. Now people may say, "Oh, this is obvious." But I'm going to add some context here, Erik, and then bring you in. First, organizations, they don't have unlimited budgets. And there are a lot of competing priorities for dollars, especially with the digital transformation mandate. And depending on the size of the company, this data will vary. For example, while security is still number one at the largest public companies, and those are of course of the biggest spenders, it's not nearly as pronounced as it is on average, or in, for example, mid-sized companies and government agencies. And this is because midsized companies or smaller companies, they don't have the resources that larger companies do. Larger companies have done a better job of securing their infrastructure. So these mid-size firms are playing catch up and the data suggests cyber is even a bigger priority there, gaps that they have to fill, you know, going forward. And that's why we think there's going to be more demand for MSSPs, managed security service providers. And we may even see some IPO action there. And then of course, Erik, you and I have talked about events like the SolarWinds Hack, there's more ransomware attacks, other vulnerabilities. Just recently, like Log4j in December. All of this has heightened concerns. Now I want to talk a little bit more about how we measure this, you know, relatively, okay, it's an obvious prediction, but let's stick our necks out a little bit. And so in addition to the rise of managed security services, we're calling for M&A and/or IPOs, we've specified some names here on this chart, and we're also pointing to the digital supply chain as an area of emphasis. Again, Log4j really shone that under a light. And this is going to help the likes of Auth0, which is now Okta, SailPoint, which is called out on this chart, and some others. We're calling some winners in end point security. Erik, you're going to talk about sort of that lifecycle, that transformation that we're seeing, that migration to new endpoint technologies that are going to benefit from this reset refresh cycle. So Erik, weigh in here, let's talk about some of the elements of this prediction and some of the names on that chart. >> Yeah, certainly. I'm going to start right with Log4j top of mind. And the reason why is because we're seeing a real paradigm shift here where things are no longer being attacked at the network layer, they're being attacked at the application layer, and in the application stack itself. And that is a huge shift left. And that's taking in DevSecOps now as a real priority in 2022. That's a real paradigm shift over the last 20 years. That's not where attacks used to come from. And this is going to have a lot of changes. You called out a bunch of names in there that are, they're either going to work. I would add to that list Wiz. I would add Orca Security. Two names in our emerging technology study, in addition to the ones you added that are involved in cloud security and container security. These names are either going to get gobbled up. So the traditional legacy names are going to have to start writing checks and, you know, legacy is not fair, but they're in the data center, right? They're, on-prem, they're not cloud native. So these are the names that money is going to be flowing to. So they're either going to get gobbled up, or we're going to see some IPO's. And on the other thing I want to talk about too, is what you mentioned. We have CrowdStrike on that list, We have SentinalOne on the list. Everyone knows them. Our data was so strong on Tanium that we actually went positive for the first time just today, just this morning, where that was released. The trifecta of these are so important because of what you mentioned, under resourcing. We can't have security just tell us when something happens, it has to automate, and it has to respond. So in this next generation of EDR and XDR, an automated response has to happen because people are under-resourced, salaries are really high, there's a skill shortage out there. Security has to become responsive. It can't just monitor anymore. >> Yeah. Great. And we should call out too. So we named some names, Snyk, Aqua, Arctic Wolf, Lacework, Netskope, Illumio. These are all sort of IPO, or possibly even M&A candidates. All right. Our next prediction goes right to the way we work. Again, something that ETR has been on for awhile. We're calling for a major rethink in remote work for 2022. We had predicted last year that by the end of 2021, there'd be a larger return to the office with the norm being around a third of workers permanently remote. And of course the variants changed that equation and, you know, gave more time for people to think about this idea of hybrid work and that's really come in to focus. So we're predicting that is going to overtake fully remote as the dominant work model with only about a third of the workers back in the office full-time. And Erik, we expect a somewhat lower percentage to be fully remote. It's now sort of dipped under 30%, at around 29%, but it's still significantly higher than the historical average of around 15 to 16%. So still a major change, but this idea of hybrid and getting hybrid right, has really come into focus. Hasn't it? >> Yeah. It's here to stay. There's no doubt about it. We started this in March of 2020, as soon as the virus hit. This is the 10th iteration of the survey. No one, no one ever thought we'd see a number where only 34% of people were going to be in office permanently. That's a permanent number. They're expecting only a third of the workers to ever come back fully in office. And against that, there's 63% that are saying their permanent workforce is going to be either fully remote or hybrid. And this, I can't really explain how big of a paradigm shift this is. Since the start of the industrial revolution, people leave their house and go to work. Now they're saying that's not going to happen. The economic impact here is so broad, on so many different areas And, you know, the reason is like, why not? Right? The productivity increase is real. We're seeing the productivity increase. Enterprises are spending on collaboration tools, productivity tools, We're seeing an increased perception in productivity of their workforce. And the CFOs can cut down an expense item. I just don't see a reason why this would end, you know, I think it's going to continue. And I also want to point out these results, as high as they are, were before the Omicron wave hit us. I can only imagine what these results would have been if we had sent the survey out just two or three weeks later. >> Yeah. That's a great point. Okay. Next prediction, we're going to look at the supply chain, specifically in how it's affecting some of the hardware spending and cloud strategies in the future. So in this chart, ETRS buyers, have you experienced problems procuring hardware as a result of supply chain issues? And, you know, despite the fact that some companies are, you know, I would call out Dell, for example, doing really well in terms of delivering, you can see that in the numbers, it's pretty clear, there's been an impact. And that's not not an across the board, you know, thing where vendors are able to deliver, especially acute in PCs, but also pronounced in networking, also in firewall servers and storage. And what's interesting is how companies are responding and reacting. So first, you know, I'm going to call the laptop and PC demand staying well above pre-COVID norms. It had peaked in 2012. Pre-pandemic it kept dropping and dropping and dropping, in terms of, you know, unit volume, where the market was contracting. And we think can continue to grow this year in double digits in 2022. But what's interesting, Erik, is when you survey customers, is despite the difficulty they're having in procuring network hardware, there's as much of a migration away from existing networks to the cloud. You could probably comment on that. Their networks are more fossilized, but when it comes to firewalls and servers and storage, there's a much higher propensity to move to the cloud. 30% of customers that ETR surveyed will replace security appliances with cloud services and 41% and 34% respectively will move to cloud compute and storage in 2022. So cloud's relentless march on traditional on-prem models continues. Erik, what do you make of this data? Please weigh in on this prediction. >> As if we needed another reason to go to the cloud. Right here, here it is yet again. So this was added to the survey by client demand. They were asking about the procurement difficulties, the supply chain issues, and how it was impacting our community. So this is the first time we ran it. And it really was interesting to see, you know, the move there. And storage particularly I found interesting because it correlated with a huge jump that we saw on one of our vendor names, which was Rubrik, had the highest net score that it's ever had. So clearly we're seeing some correlation with some of these names that are there, you know, really well positioned to take storage, to take data into the cloud. So again, you didn't need another reason to, you know, hasten this digital transformation, but here we are, we have it yet again, and I don't see it slowing down anytime soon. >> You know, that's a really good point. I mean, it's not necessarily bad news for the... I mean, obviously you wish that it had no change, would be great, but things, you know, always going to change. So we'll talk about this a little bit later when we get into the Supercloud conversation, but this is an opportunity for people who embrace the cloud. So we'll come back to that. And I want to hang on cloud a bit and share some recent projections that we've made. The next prediction is the big four cloud players are going to surpass 167 billion, an IaaS and PaaS revenue in 2022. We track this. Observers of this program know that we try to create an apples to apples comparison between AWS, Azure, GCP and Alibaba in IaaS and PaaS. So we're calling for 38% revenue growth in 2022, which is astounding for such a massive market. You know, AWS is probably not going to hit a hundred billion dollar run rate, but they're going to be close this year. And we're going to get there by 2023, you know they're going to surpass that. Azure continues to close the gap. Now they're about two thirds of the size of AWS and Google, we think is going to surpass Alibaba and take the number three spot. Erik, anything you'd like to add here? >> Yeah, first of all, just on a sector level, we saw our sector, new survey net score on cloud jumped another 10%. It was already really high at 48. Went up to 53. This train is not slowing down anytime soon. And we even added an edge compute type of player, like CloudFlare into our cloud bucket this year. And it debuted with a net score of almost 60. So this is really an area that's expanding, not just the big three, but everywhere. We even saw Oracle and IBM jump up. So even they're having success, taking some of their on-prem customers and then selling them to their cloud services. This is a massive opportunity and it's not changing anytime soon, it's going to continue. >> And I think the operative word there is opportunity. So, you know, the next prediction is something that we've been having fun with and that's this Supercloud becomes a thing. Now, the reason I say we've been having fun is we put this concept of Supercloud out and it's become a bit of a controversy. First, you know, what the heck's the Supercloud right? It's sort of a buzz-wordy term, but there really is, we believe, a thing here. We think there needs to be a rethinking or at least an evolution of the term multi-cloud. And what we mean is that in our view, you know, multicloud from a vendor perspective was really cloud compatibility. It wasn't marketed that way, but that's what it was. Either a vendor would containerize its legacy stack, shove it into the cloud, or a company, you know, they'd do the work, they'd build a cloud native service on one of the big clouds and they did do it for AWS, and then Azure, and then Google. But there really wasn't much, if any, leverage across clouds. Now from a buyer perspective, we've always said multicloud was a symptom of multi-vendor, meaning I got different workloads, running in different clouds, or I bought a company and they run on Azure, and I do a lot of work on AWS, but generally it wasn't necessarily a prescribed strategy to build value on top of hyperscale infrastructure. There certainly was somewhat of a, you know, reducing lock-in and hedging the risk. But we're talking about something more here. We're talking about building value on top of the hyperscale gift of hundreds of billions of dollars in CapEx. So in addition, we're not just talking about transforming IT, which is what the last 10 years of cloud have been like. And, you know, doing work in the cloud because it's cheaper or simpler or more agile, all of those things. So that's beginning to change. And this chart shows some of the technology vendors that are leaning toward this Supercloud vision, in our view, building on top of the hyperscalers that are highlighted in red. Now, Jerry Chan at Greylock, they wrote a piece called Castles in the Cloud. It got our thinking going, and he and the team at Greylock, they're building out a database of all the cloud services and all the sub-markets in cloud. And that got us thinking that there's a higher level of abstraction coalescing in the market, where there's tight integration of services across clouds, but the underlying complexity is hidden, and there's an identical experience across clouds, and even, in my dreams, on-prem for some platforms, so what's new or new-ish and evolving are things like location independence, you've got to include the edge on that, metadata services to optimize locality of reference and data source awareness, governance, privacy, you know, application independent and dependent, actually, recovery across clouds. So we're seeing this evolve. And in our view, the two biggest things that are new are the technology is evolving, where you're seeing services truly integrate cross-cloud. And the other big change is digital transformation, where there's this new innovation curve developing, and it's not just about making your IT better. It's about SaaS-ifying and automating your entire company workflows. So Supercloud, it's not just a vendor thing to us. It's the evolution of, you know, the, the Marc Andreessen quote, "Every company will be a SaaS company." Every company will deliver capabilities that can be consumed as cloud services. So Erik, the chart shows spending momentum on the y-axis and net score, or presence in the ETR data center, or market share on the x-axis. We've talked about snowflake as the poster child for this concept where the vision is you're in their cloud and sharing data in that safe place. Maybe you could make some comments, you know, what do you think of this Supercloud concept and this change that we're sensing in the market? >> Well, I think you did a great job describing the concept. So maybe I'll support it a little bit on the vendor level and then kind of give examples of the ones that are doing it. You stole the lead there with Snowflake, right? There is no better example than what we've seen with what Snowflake can do. Cross-portability in the cloud, the ability to be able to be, you know, completely agnostic, but then build those services on top. They're better than anything they could offer. And it's not just there. I mean, you mentioned edge compute, that's a whole nother layer where this is coming in. And CloudFlare, the momentum there is out of control. I mean, this is a company that started off just doing CDN and trying to compete with Okta Mite. And now they're giving you a full soup to nuts with security and actual edge compute layer, but it's a fantastic company. What they're doing, it's another great example of what you're seeing here. I'm going to call out HashiCorp as well. They're more of an infrastructure services, a little bit more of an open-source freemium model, but what they're doing as well is completely cloud agnostic. It's dynamic. It doesn't care if you're in a container, it doesn't matter where you are. They recently IPO'd and they're down 25%, but their data looks so good across both of our emerging technology and TISA survey. It's certainly another name that's playing on this. And another one that we mentioned as well is Rubrik. If you need storage, compute, and in the cloud layer and you need to be agnostic to it, they're another one that's really playing in this space. So I think it's a great concept you're bringing up. I think it's one that's here to stay and there's certainly a lot of vendors that fit into what you're describing. >> Excellent. Thank you. All right, let's shift to data. The next prediction, it might be a little tough to measure. Before I said we're trying to be a little black and white here, but it relates to Data Mesh, which is, the ideas behind that term were created by Zhamak Dehghani of ThoughtWorks. And we see Data Mesh is really gaining momentum in 2022, but it's largely going to be, we think, confined to a more narrow scope. Now, the impetus for change in data architecture in many companies really stems from the fact that their Hadoop infrastructure really didn't solve their data problems and they struggle to get more value out of their data investments. Data Mesh prescribes a shift to a decentralized architecture in domain ownership of data and a shift to data product thinking, beyond data for analytics, but data products and services that can be monetized. Now this a very powerful in our view, but they're difficult for organizations to get their heads around and further decentralization creates the need for a self-service platform and federated data governance that can be automated. And not a lot of standards around this. So it's going to take some time. At our power panel a couple of weeks ago on data management, Tony Baer predicted a backlash on Data Mesh. And I don't think it's going to be so much of a backlash, but rather the adoption will be more limited. Most implementations we think are going to use a starting point of AWS and they'll enable domains to access and control their own data lakes. And while that is a very small slice of the Data Mesh vision, I think it's going to be a starting point. And the last thing I'll say is, this is going to take a decade to evolve, but I think it's the right direction. And whether it's a data lake or a data warehouse or a data hub or an S3 bucket, these are really, the concept is, they'll eventually just become nodes on the data mesh that are discoverable and access is governed. And so the idea is that the stranglehold that the data pipeline and process and hyper-specialized roles that they have on data agility is going to evolve. And decentralized architectures and the democratization of data will eventually become a norm for a lot of different use cases. And Erik, I wonder if you'd add anything to this. >> Yeah. There's a lot to add there. The first thing that jumped out to me was that that mention of the word backlash you said, and you said it's not really a backlash, but what it could be is these are new words trying to solve an old problem. And I do think sometimes the industry will notice that right away and maybe that'll be a little pushback. And the problems are what you already mentioned, right? We're trying to get to an area where we can have more assets in our data site, more deliverable, and more usable and relevant to the business. And you mentioned that as self-service with governance laid on top. And that's really what we're trying to get to. Now, there's a lot of ways you can get there. Data fabric is really the technical aspect and data mesh is really more about the people, the process, and the governance, but the two of those need to meet, in order to make that happen. And as far as tools, you know, there's even cataloging names like Informatica that play in this, right? Istio plays in this, Snowflake plays in this. So there's a lot of different tools that will support it. But I think you're right in calling out AWS, right? They have AWS Lake, they have AWS Glue. They have so much that's trying to drive this. But I think the really important thing to keep here is what you said. It's going to be a decade long journey. And by the way, we're on the shoulders of giants a decade ago that have even gotten us to this point to talk about these new words because this has been an ongoing type of issue, but ultimately, no matter which vendors you use, this is going to come down to your data governance plan and the data literacy in your business. This is really about workflows and people as much as it is tools. So, you know, the new term of data mesh is wonderful, but you still have to have the people and the governance and the processes in place to get there. >> Great, thank you for that, Erik. Some great points. All right, for the next prediction, we're going to shine the spotlight on two of our favorite topics, Snowflake and Databricks, and the prediction here is that, of course, Databricks is going to IPO this year, as expected. Everybody sort of expects that. And while, but the prediction really is, well, while these two companies are facing off already in the market, they're also going to compete with each other for M&A, especially as Databricks, you know, after the IPO, you're going to have, you know, more prominence and a war chest. So first, these companies, they're both looking pretty good, the same XY graph with spending velocity and presence and market share on the horizontal axis. And both Snowflake and Databricks are well above that magic 40% red dotted line, the elevated line, to us. And for context, we've included a few other firms. So you can see kind of what a good position these two companies are really in, especially, I mean, Snowflake, wow, it just keeps moving to the right on this horizontal picture, but maintaining the next net score in the Y axis. Amazing. So, but here's the thing, Databricks is using the term Lakehouse implying that it has the best of data lakes and data warehouses. And Snowflake has the vision of the data cloud and data sharing. And Snowflake, they've nailed analytics, and now they're moving into data science in the domain of Databricks. Databricks, on the other hand, has nailed data science and is moving into the domain of Snowflake, in the data warehouse and analytics space. But to really make this seamless, there has to be a semantic layer between these two worlds and they're either going to build it or buy it or both. And there are other areas like data clean rooms and privacy and data prep and governance and machine learning tooling and AI, all that stuff. So the prediction is they'll not only compete in the market, but they'll step up and in their competition for M&A, especially after the Databricks IPO. We've listed some target names here, like Atscale, you know, Iguazio, Infosum, Habu, Immuta, and I'm sure there are many, many others. Erik, you care to comment? >> Yeah. I remember a year ago when we were talking Snowflake when they first came out and you, and I said, "I'm shocked if they don't use this war chest of money" "and start going after more" "because we know Slootman, we have so much respect for him." "We've seen his playbook." And I'm actually a little bit surprised that here we are, at 12 months later, and he hasn't spent that money yet. So I think this prediction's just spot on. To talk a little bit about the data side, Snowflake is in rarefied air. It's all by itself. It is the number one net score in our entire TISA universe. It is absolutely incredible. There's almost no negative intentions. Global 2000 organizations are increasing their spend on it. We maintain our positive outlook. It's really just, you know, stands alone. Databricks, however, also has one of the highest overall net sentiments in the entire universe, not just its area. And this is the first time we're coming up positive on this name as well. It looks like it's not slowing down. Really interesting comment you made though that we normally hear from our end-user commentary in our panels and our interviews. Databricks is really more used for the data science side. The MLAI is where it's best positioned in our survey. So it might still have some catching up to do to really have that caliber of usability that you know Snowflake is seeing right now. That's snowflake having its own marketplace. There's just a lot more to Snowflake right now than there is Databricks. But I do think you're right. These two massive vendors are sort of heading towards a collision course, and it'll be very interesting to see how they deploy their cash. I think Snowflake, with their incredible management and leadership, probably will make the first move. >> Well, I think you're right on that. And by the way, I'll just add, you know, Databricks has basically said, hey, it's going to be easier for us to come from data lakes into data warehouse. I'm not sure I buy that. I think, again, that semantic layer is a missing ingredient. So it's going to be really interesting to see how this plays out. And to your point, you know, Snowflake's got the war chest, they got the momentum, they've got the public presence now since November, 2020. And so, you know, they're probably going to start making some aggressive moves. Anyway, next prediction is something, Erik, that you and I have talked about many, many times, and that is observability. I know it's one of your favorite topics. And we see this world screaming for more consolidation it's going all in on cloud native. These legacy stacks, they're fighting to stay relevant, but the direction is pretty clear. And the same XY graph lays out the players in the field, with some of the new entrants that we've also highlighted, like Observe and Honeycomb and ChaosSearch that we've talked about. Erik, we put a big red target around Splunk because everyone wants their gold. So please give us your thoughts. >> Oh man, I feel like I've been saying negative things about Splunk for too long. I've got a bad rap on this name. The Splunk shareholders come after me all the time. Listen, it really comes down to this. They're a fantastic company that was designed to do logging and monitoring and had some great tool sets around what you could do with it. But they were designed for the data center. They were designed for prem. The world we're in now is so dynamic. Everything I hear from our end user community is that all net new workloads will be going to cloud native players. It's that simple. So Splunk has entrenched. It's going to continue doing what it's doing and it does it really, really well. But if you're doing something new, the new workloads are going to be in a dynamic environment and that's going to go to the cloud native players. And in our data, it is extremely clear that that means Datadog and Elastic. They are by far number one and two in net score, increase rates, adoption rates. It's not even close. Even New Relic actually is starting to, you know, entrench itself really well. We saw New Relic's adoption's going up, which is super important because they went to that freemium model, you know, to try to get their little bit of an entrenched customer base and that's working as well. And then you made a great list here, of all the new entrants, but it goes beyond this. There's so many more. In our emerging technology survey, we're seeing Century, Catchpoint, Securonix, Lucid Works. There are so many options in this space. And let's not forget, the biggest data that we're seeing is with Grafana. And Grafana labs as yet to turn on their enterprise. Elastic did it, why can't Grafana labs do it? They have an enterprise stack. So when you look at how crowded this space is, there has to be consolidation. I recently hosted a panel and every single guy on that panel said, "Please give me a consolidation." Because they're the end users trying to actually deploy these and it's getting a little bit confusing. >> Great. Thank you for that. Okay. Last prediction. Erik, might be a little out of your wheelhouse, but you know, you might have some thoughts on it. And that's a hybrid events become the new digital model and a new category in 2022. You got these pure play digital or virtual events. They're going to take a back seat to in-person hybrids. The virtual experience will eventually give way to metaverse experiences and that's going to take some time, but the physical hybrid is going to drive it. And metaverse is ultimately going to define the virtual experience because the virtual experience today is not great. Nobody likes virtual. And hybrid is going to become the business model. Today's pure virtual experience has to evolve, you know, theCUBE first delivered hybrid mid last decade, but nobody really wanted it. We did Mobile World Congress last summer in Barcelona in an amazing hybrid model, which we're showing in some of the pictures here. Alex, if you don't mind bringing that back up. And every physical event that we're we're doing now has a hybrid and virtual component, including the pre-records. You can see in our studios, you see that the green screen. I don't know. Erik, what do you think about, you know, the Zoom fatigue and all this. I know you host regular events with your round tables, but what are your thoughts? >> Well, first of all, I think you and your company here have just done an amazing job on this. So that's really your expertise. I spent 20 years of my career hosting intimate wall street idea dinners. So I'm better at navigating a wine list than I am navigating a conference floor. But I will say that, you know, the trend just goes along with what we saw. If 35% are going to be fully remote. If 70% are going to be hybrid, then our events are going to be as well. I used to host round table dinners on, you know, one or two nights a week. Now those have gone virtual. They're now panels. They're now one-on-one interviews. You know, we do chats. We do submitted questions. We do what we can, but there's no reason that this is going to change anytime soon. I think you're spot on here. >> Yeah. Great. All right. So there you have it, Erik and I, Listen, we always love the feedback. Love to know what you think. Thank you, Erik, for your partnership, your collaboration, and love doing these predictions with you. >> Yeah. I always enjoy them too. And I'm actually happy. Last year you made us do a baker's dozen, so thanks for keeping it to 10 this year. >> (laughs) We've got a lot to say. I know, you know, we cut out. We didn't do much on crypto. We didn't really talk about SaaS. I mean, I got some thoughts there. We didn't really do much on containers and AI. >> You want to keep going? I've got another 10 for you. >> RPA...All right, we'll have you back and then let's do that. All right. All right. Don't forget, these episodes are all available as podcasts, wherever you listen, all you can do is search Breaking Analysis podcast. Check out ETR's website at etr.plus, they've got a new website out. It's the best data in the industry, and we publish a full report every week on wikibon.com and siliconangle.com. You can always reach out on email, David.Vellante@siliconangle.com I'm @DVellante on Twitter. Comment on our LinkedIn posts. This is Dave Vellante for the Cube Insights powered by ETR. Have a great week, stay safe, be well. And we'll see you next time. (mellow music)

(upbeat music) >> Welcome back to theCUBE's continuous coverage of AWS re:Invent 2021 I'm Lisa Martin. This is our third day here on set We've got two live sets, two remote studios, over a hundred guests on the program and a lot going on with AWS and its ecosystem of partners am pleased to welcome back one of our Cube alumni, Buddy Brewer, the GVP & GM of product partnerships at New Relic. Welcome back, Buddy. Good to have you. >> Thanks it's great to be here >> Great to be in an in-person event isn't? >> No kidding it's really amazing to see everybody out here and after spending so much time on zoom calls, we had a lot of really great moments among the team and the booth playing the game of seeing if people's height matched up with >> (laughs) >> What your expectation was because so many of the people we work with >> Never mind. >> We've only known over zoom. >> Yes ,and zoom has been a savior for all of us we've been doing so much recording on zoom at the same time it's great to be here in person and seeing what a safe job AWS has done with getting I from hearing upwards of 30,000 people in here that are here in person. So talk to me about you lead the technology partnerships at New Relic. Talk to me about your role, and then we'll get into the partnership with AWS. >> Yeah, absolutely. Well, you know, the point about zoom, it's fascinating. Like you said, that just having the ability to communicate with people has been such a key enabler of being able to make progress and to continue to lead our personal and our professional lives despite the pandemic I mean, imagine what it would have been like if this had happened 10 years ago, even, but certainly 50 years ago >> Right. or something like that, right? Like everything would have ground to a halt and technology took on such an amazing, you know, critical role in allowing us to do all of these things and so at New Relic, we're all about helping people make sure that all of this software works correctly. And so observability helps people understand the detail level about everything from the front end, the end user experience to every single piece that happens along the path of delivering that experience all the way down to the infrastructure into the network. But my role at New Relic is also to help all of the other tools that software developers use every day to create those experiences that they connect into their observability platform so that they can understand all of those details and make sure that people are able to continue doing things that have become really so basic to life like ordering groceries or getting food, or, you know, communicating with a loved one over something like zoom. >> Yeah the things that to your point, if this had happened, you know, five, 10 years ago, it would have been a completely different story. We've been able to function really well and one of the things too, that, you know, I noticed yesterday and today, you probably did as well with the plethora, typical AWS the plethora of announcements, the amount of innovation that's going on, the customer flywheel that we've just seen this acceleration of technology and what it's enabling, but the observability portion is really key you talk about, you know, the developers need to the whole SDLC they need to be able to understand exactly what's going on because at the end of the day, whether it's a consumer or an enterprise of the other end of the spectrum, we need to know exactly what's going on because people's patience is far thinner these days the pandemic showed is that there is really no having access to real-time data. Isn't a luxury anymore it's really a necessity. >> Right, yeah, absolutely. >> Talk to me about some of these so a lot of announcements coming up from AWS, you guys talk to me about the partnership, what you guys are doing there. And some of the things that are exciting on that front. >> Yeah, AWS is a really key partner for us. We're big users of AWS ourselves for our observability platform and all of our infrastructure and, you know, we've had our own journey as a 13 year old business that started out pre cloud and moving our own infrastructure to the cloud. And then along that journey, we've worked closely with AWS and we've built a lot of joint solutions to help people who are moving to the cloud themselves or who are cloud native to understand all of the details about what's happening in that software so we have over 60 different integrations to all of the different tools with Amazon that you can use on the cloud from data storage, to EKS on Fargate and all of that stuff. And then we recently announced a five-year strategic agreement with Amazon to make it even easier for customers to adopt New Relic if they're building in Amazon AWS and so you know, we're in their marketplace, we have an offering for startups, for people who are just getting started that, you know, provides really simple and fast on-ramps with discounts and things like that. That's all designed to help people, software developers in particular, focus on what matters most to them, which is building great experiences for their customers. You know, you mentioned that the SDLC and this is one of the things that, you know, our mission at New Relic is to make observability a daily data-driven habit for developers across all phases of the software delivery life cycle. The problem with observability and how it's used today is that it's only used in the run phase by most people they use it when the software is on fire to put the fire out we believe that, that telemetry has tremendous strategic value in the plan, build and deploy phases of software development as well. And so partnerships like AWS allow us to unlock the accessibility of that data across all of those different phases for people who software developers are as a result in many ways that the things that we were talking about earlier with the expectations that the pandemic has placed on how software has to work, it's not an option they're busier, they're under more pressure than they've ever been before and so we want to help them relieve that pressure with tools that help them do their jobs better. >> Relieving that pressure is key there is so much pressure on developers I mean, these days from observability to security and that sort of thing, but it sounds like one of the things that you're also fundamentally doing is really shifting that observability left and helping them from a cultural perspective, it seems like almost a shift, but you're trying to make things easier for them giving them more tools and to unlock what they're not seeing right now. >> That's right and you know, the interesting thing about it is everyone realizes that observability is critical to, you know, successful software businesses so for example, we did a survey recently of 1300 software developers and IT decision makers and executives, and found that among the C-level executives that were surveyed 80% of them expected to increase their observability budget and 20% of those expected to increase it significantly. However, that same survey found that a very small percentage of those who we actually surveyed feel that they have a mature observability practice today. And when we unpack the reasons why in the survey, we found that most of them reduce down to basically this issue of they just don't have enough time to instrument all of the software, especially in a world where the shift to the cloud has driven a change in architecture where monoliths have been torn down and replaced by hundreds, or may be even thousands of microservices. >> Right. >> And we're in an era now where if observability isn't really, really easy and incredibly fast and simple to execute on then software developers can no longer instrument fast enough to keep up with the pace of the software that they're delivering and so what that leads to is visibility gaps, visibility gaps lead to poor customer experiences. And so what we're trying to do, and we've been on this massive simplification of our own platform to make it, you know, incredibly cost-effective at just 25 cents a gigabyte for ingestion and really simple licensing seat based licensing, where you get access to all of our tools to make it really simple and to take simply minutes to get observability on all those different pieces. >> If simplicity is a word that we throw around a lot, but it's really critical element and it's interesting to understand how do you actually facilitate that? You talked about, you know, kind of the 80 20 rule there. >> Yeah. >> A lot of the organization's not on that maturity curve with observability, how does New Relic and its ecosystem of partners like AWS how do you help have those conversations within organizations in any industry tell them, understand how you can actually simplify that and unlock that visibility, knowing that it's not only a matter of software development, but it's a competitive differentiator. It's also something that can damage a brand if they're not top of it. >> Yeah, we launched a re-imagined version of our partner ecosystem really our entire integration ecosystem about six weeks ago on October 13th called New Relic Instant Observability. And one of the central goals of New Relic IO, which we call it for short is to make it take just like five minutes for people to instrument something. So in the old way, what people had to do is if they wanted observability, they had to go learn about an observability vendor then they had to go install it, figure out how all that works and then they could get to solving their problem, which might've just been simply instrumenting a Kafka you know and so what we want to do is just keep people in that mode if all you wanted to do is instrument Kafka, then go find the Kafka instrumentation tile on New Relic and observability and then there's a guided install process that takes you through that and at the end you've instrumented Kafka and if you want to add something else like EKS Fargate from Amazon, or if you want to add something else like a Java service, you can simply click more of those guidance installs and add within minutes in an incremental way without having to stop and do a whole vendor evaluation to do so in fact, one of the other things that we launched recently is a free tier that's free forever. So there's no trial process or anything you don't have to put in a credit card if all you want to do is instrument this one thing right now, you can go through this process provision a free account you get access to all of our functionality for one user and ingest up to a hundred gigabytes of telemetry data for free within minutes. And so what we're trying to do is take all of that adoption friction out so that people aren't fighting with their instrumentation so much, and again, they can get back to doing what they really want to do in the first place, which has built great experiences for their end users. >> Great experiences for the end users but that translates to employee experience that translates to an end user customer experience, which translates back to brand reputation. I'm just wondering, you know, you're focused on the developers and we've been hearing a lot about the last two and a half days, a big focus on developers has observability kind of escalated up and its evolution up the stack within organizations is this a C-suite concern? Is this a board level concern? where does this fit now? and what's the vision of New Relic to deliver on that? >> With observability? >> Yes. >> Yeah, 90% of those in the survey that I was talking about felt that observability was not just a tool that they needed to use, but strategically critical to their business and, you know, this goes back to, as we know, and especially as a result of the intensity on the importance of software coming out of the pandemic, your digital business is your business these days. And so if you don't understand what's happening in that software and you can't move quickly, then you know you're really in trouble in terms of trying to succeed in a highly competitive environment and that goes back to again, one of our core beliefs is that all of this telemetry data that people have been collecting about how their software operates is so useful in contexts outside of just when there's a problem in production. Imagine if you could take that information and you could actually put it inside the IDE, which is something that we did with a recent acquisition of a company called CodeStream. We can take this telemetry data and put it inside the IDE so that as developers are writing the software, they know where those issues are. You can click straight from a stack frame, for example, inside of our, where we show all of our errors in a capability called Error's inbox and shoot right into your IDE and go see where the line of code is that caused that error, shortening that feedback loop and unlocking this really big investment that a lot of companies make in telemetry data earlier in the software life cycle, we believe is the future of observability and we want to help people get there. >> Well, the observability is really key for organizations these days because we've been hearing every company these days has to be a data company. >> Yeah. >> And it's one thing to say that it's a whole other thing to be able to implement it and observability is absolutely critical to that as being able to take that data and apply it in different contexts to really enable that business to be digital which is absolutely table-stakes these days to be successful and to deliver that customer experience ultimately. >> Yeah. >> That's what it all do. >> Yeah, absolutely. And you know, the other thing is really hard about this problem when I talk with our customers and we found this in the survey as well, is that, you know, software developers, don't just use one tool to create software they use a lot of tools in fact, 13% of those that we surveyed use 10 or more tools. >> Whoa. >> Just for the observability piece. And so, you know, obviously we're always trying to expand organically what we do inside of our platform to cover more and more use cases, but an equally important part of our strategy, if we really want to make observability a data-driven daily habit for people is to find all of those other, you know, really well-built amazing tools that those developers use and find valuable ways to integrate with them. And so that's the other part of our ecosystem that we've built out is this ability to take all of the other tools that you use and wire them into New Relic so that, for example, if you're using, let's say Lacework for security then you can, you know, if someone's installed a Bitcoin miner on your infrastructure somewhere, you can quickly navigate because of that integration from a poor customer experience through the infrastructure that's suffering may be with, you know, a lot of memory pressure, and a lot of CPU being used for this Bitcoin miner and then find out that, you know, through the integration where the miner was installed, how it got installed so that you can remediate those types of issues and connecting those pieces together, making software truly interoperable is another thing that's really critical to our mission at New Relic. >> It is critical to not only to the developers, but to the organizations and their success as businesses these days Buddy thank you for joining me, talking about what's going on at New Relic What's new, how you're really empowering those developers and all of the downstream positive effects that, that leads to we appreciate your time. >> Thank you ,thanks for having me. >> All right, you are Buddy Brewer I'm Lisa Martin you're watching theCUBE, the global leader in live tech coverage. 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>> From theCUBE studios in Palo Alto and Boston, bringing you data-driven insights from theCUBE in ETR. This is Breaking Analysis with Dave Vellante. >> Every CEO is figuring out the right balance for new hybrid business models. Now, regardless of the chosen approach, which is going to vary, technology executives, they understand they have to accelerate their digital and build resilience as well as optionality into their platforms. Now, this is driving a dramatic shift in IT investments. And at the macro level, we expect total spending to increase at as much as 8% or even more in 2021, compared to last year's contraction. Investments in cybersecurity, cloud collaboration that are enabling hybrid work as well as data, including analytics, AI, and automation are at the top of the spending priorities for CXOs. Hello everyone. And welcome to this week's Wiki Bond Cube insights, powered by ETR. In this Breaking Analysis, we're pleased to welcome back Erik Bradley, who is the chief engagement strategist at our partner, ETR. Now in this segment, we're going to share some of the latest findings from ETR's surveys and provide our commentary on what it means for the markets, for sellers, and for buyers. Erik, great to see you, my friend. Welcome back to Breaking Analysis. >> Thank you for having me, always enjoy it. We've got some fresh data to talk about on this beautiful summer Friday, so I'm ready to go. >> All right. I'm excited too. Okay, last year we saw a contraction in IT spending by at least 5%. And now we're seeing a snapback to, as I said, at least 8% growth relative to last year. You got to go back to 2007 just before the financial crisis to see this type of top line growth. The shift to hybrid work, it's exposed us to new insidious security threats. And we're going to discuss that in a lot more detail. Cloud migration of course picked up dramatically last year, and based on the recent earnings results of the big cloud players, for now we got two quarters of data, that trend continues as organizations are accelerating their digital platform build-outs, and this is bringing a lot of complexity and a greater need for so-called observability solutions, which Erik is going to talk about extensively later on in this segment. Data, we think is entering a new era of de-centralization. We see organizations not only focused on analytics and insights, but actually creating data products. Leading technology organizations like JP Morgan, they're heavily leaning into this trend toward packaging and monetizing data products. And finally, as part of the digital transformation trend, we see no slow down in spending momentum for AI and automation, generally in RPA specifically. Erik, anything you want to add to that top level narrative? >> Yeah, there's a lot to take on the macro takeaways. The first thing I want to state is that that 8, 8.5% number that started off at just 3 to 4% beginning of the year. So as the year has continued, we are just seeing this trend in budgets continue to accelerate, and we don't have any reason to believe that's going to stop. So I think we're going to just keep moving on heading into 2021. And we're going to see a banner year of spend this year and probably next as well. >> All right, now we're going to bring up a chart that shows kind of that progression here of spending momentum. So Erik, I'm going to let you comment on this chart that tracks those projections over time. >> Erik: Yeah. Great. So thank you very much for pulling this up. As you can see in the beginning part of the year, when we asked people, "What do you plan to spend throughout 2021?" They were saying it would be about a 4% increase. Which we were happy with because as you said last year, it was all negative. That continues to accelerate and is only hyper accelerating now as we head into the back half of the year. In addition, after we do this data, I always host a panel of IT end users to kind of get their feedback on what we collected, to a man, every one of them expects continued increase throughout next year. There are some concerns and uncertainty about what we're seeing right now with COVID, but even with that, they're planning their budgets now for 2022 and they're planning for even further increases going forward. >> Dave: Great, thank you. So we circled that 8%. That's really kind of where we thought it was going to land. And so we're happy with that number, but let's take a look at where the action is by technology sector. This chart that we're showing you here, it tracks spending priorities back to last September. When I believe that was the point, Erik, that cyber became the top priority in the survey, ahead of cloud collaboration, analytics, and data, and the other sectors that you see there. Now, Erik, we should explain. These areas, they're the top seven, and they outrank all the other sectors. ETR tracks many, many other sectors, but please weigh in here and share your thoughts on this data. >> Erik: Yeah. Security, security, security. It hasn't changed. It had really hasn't. The hybrid work. The fact that you're behind the firewall one day and then you're outside working from home the next, switching in and out of networks. This is just a field day for bad actors. And we have no choice right now, but to continue to spend, because as you're going to talk about in a minute, hybrid's here to stay. So we have to figure out a way to secure behind the firewall on-prem. We also have to secure our employees and our assets that are not in the office. So it is a main priority. One of the things that point out on this chart, I had a couple of ITN users talk to me about customer experience and automation really need to move from the right part of that chart to the left. So they're seeing more in what you were talking about in RPA and automation, starting to creep up heading into next year. As cloud migration matures, as you know, cybersecurity spending has been ramping up. People are going to see a little bit more on the analytics and a little bit more on the automation side going forward. >> Dave: Great. Now, this next data view- well, first of all, one of the great things about the ETR dataset is that you can ask key questions and get a time series. And I will tell you again, I go back to last March, ETR hit it. They were the first on the work from home trend. And so if you were on that trend, you were able to anticipate it. And a lot of investors I think took advantage of that. Now, but we've shown this before, but there's new data points that we want to introduce. So the data tracks how CIOs and IT buyers have responded to the pandemic since last March. Still 70% of the organizations have employees working remotely, but 39% now have employees fully returning to the office and Erik, the rest of the metrics all point toward positives for IT spending, although accelerating IT deployments there at the right peaked last year, as people realized they had to invest in the future. Your thoughts? >> Erik: Yeah, this is the slide for optimism, without a doubt. Of the entire macro survey we did, this is the most optimistic slide. It's great for overall business. It's great for business travel. This is well beyond just IT. Hiring is up. I've had some people tell me that they possibly can't hire enough people right now. They had to furlough employees, they had to stop projects, and they want to re accelerate those now. But talent is very hard to find. Another point to you about your automation and RPA, another underlying trend for there. The one thing I did want to talk about here is the hybrid workplace, but I believe there's another slide on it. So just to recap on this extremely optimistic, we're seeing a lot of hiring. We're seeing increased spending, and I do believe that that's going to continue. >> Yeah I'm glad you brought that up because a session that you and I did a while ago, we pointed out, it was earlier this year, that the skill shortage is one potential risk to our positive scenario. We'll keep an eye on that, but so I want to show another set of data that we've showed previously, but ETR again, has added some new questions in here. So note here that 60% of employees still work remotely with 33% in a hybrid model currently, and the CIO's expect that to land on about 42% hybrid workforce with around 30% working remotely, which is around, it's been consistent by the way on your surveys, but that's about double the historic norm, Eric. >> Erik: Yeah, and even further to your point Dave, recently I did a panel asking people to give me some feedback on this. And three of those four experts basically said to me, if we had greed run this survey right now, that even more people would be saying remote. That they believe that that number, that's saying they're expecting that number of people to be back in office, is actually too optimistic. They're actually saying that maybe if we had- cause as a survey launched about six, seven weeks ago before this little blip on the radar, before the little COVID hiccup we're seeing now, and they're telling me that they believe if we reran this now that it would be even more remote work, even more hybrid and less returned to the office. So that's just an update I wanted to offer on this slide. >> Dave: Yeah. Thank you for that. I mean, we're still in this kind of day to day, week to week, month to month mode, but I want to do a little double click on this. We're not going to share this data, but there was so much ETR data. We got to be selective. But if you double click on the hybrid models, you'll see that 50% of organizations plan to have time roughly equally split between onsite and remote with again around 30 or 31% mostly remote, with onsite space available if they need it. And Erik, very few don't plan to have some type of hybrid model, at least. >> Yeah, I think it was less than 10% that said it was going to be exclusively onsite. And again, that was a more optimistic scenario six, seven weeks ago than we're seeing right now throughout the country. So I agree with you, hybrid is here to stay. There really is no doubt about it. from everyone I speak to when, you know, I basically make a living talking to IT end users. Hybrid is here to stay. They're planning for it. And that's really the drive behind the spending because you have to support both. You have to give people the option. You have to, from an IT perspective, you also have to support both, right? So if somebody is in office, I need the support staff to be in office. Plus I need them to be able to remote in and fix something from home. So they're spending on both fronts right now. >> Okay. Let's get into some of the vendor performance data. And I want to start with the cloud hyperscalers. It's something that we followed pretty closely. I got some Wiki bond data, that we just had earnings released. So here's data that shows the Q2 revenue shares on the left-hand side in the pie and the growth rates for the big four cloud players on the right hand side. It goes back to Q1 2019. Now the first thing I want to say is these players generated just under $39 billion in the quarter with AWS capturing 50% of that number. I said 39, it was 29 billion, sorry, with AWS capturing 50% of that in the quarter. As you're still tracking around a third in Alibaba and GCP in the, you know, eight or 9% range. But what's most interesting to me, Erik, is that AWS, which generated almost 15 billion in the quarter, was the only player to grow its revenue, both sequentially and year over year. And Erik, I think the street is missing the real story here on Amazon. Amazon announced earnings on Thursday night. The company had a 2% miss on the top line revenues and a meaningful 22% beat on earnings per share. So the retail side of the business missed its revenue targets, so that's why everybody's freaked out. But AWS, the cloud side, saw a 4% revenue beat. So the stock was off more than 70% after hours and into Friday. Now to me, a mix shift toward AWS, that's great news for investors. Now, tepid guidance is a negative, but the shift to a more profitable cloud business is a huge positive. >> Yeah, there's a lot that goes into stock price, right? I remember I was a director of research back in the day. One of my analysts said to me, "Am I crazy for putting a $1,000 target on Amazon?" And I laughed and I said, "No, you're crazy if you don't make it $2,000." (both chuckling) So, you know, at that time it was basically the mix shift towards AWS. You're a thousand percent right. I think the tough year over year comps had something to do with that reaction. That, you know, it's just getting really hard. What's that? The law of large numbers, right? It's really hard to grow at that percentage rate when you're getting this big. But from our data perspective, we're seeing no slowdown in AWS, in cloud, none whatsoever. The only slowdown we're seeing in cloud is GCP. But to, you know, to focus on AWS, extremely strong across the board and not only just in cloud, but in all their data products as well, data and analytics. >> Yeah and I think that the AWS, don't forget folks, that funds Amazon's TAM expansion into so many different places. Okay. As we said at the top, the world of digital and hybrid work, and multi-cloud, it's more complicated than it used to be. And that means if you need to resolve issues, which everybody does, like poor application performance, et cetera, what's happening at the user level, you have to have a better way to sort of see what's going on. And that's what the emergence of the observability space is all about. So Erik, let me set this up and you have a lot of comments here because you've recently had some, and you always have had a lot of round table discussions with CXOs on this topic. So this chart plots net score or spending momentum on the vertical axis, and market share or pervasiveness in the dataset on the horizontal axis. And we inserted a table that shows the data points in detail. Now that red dotted line is just sort of Dave Vellante's subjective mark in the sand for elevated spending levels. And there are three other points here. One is Splunk as well off is two-year peak, as highlighted in the red, but Signal FX, which Splunk acquired, has made a big move northward this last quarter. As has Datadog. So Erik, what can you share with us on this hot, but increasingly crowded space? >> Yeah. I could talk about the space for a long time. As you know, I've gotten some flack over the last year and a half about, you know, kind of pointing out this trend, this negative trend in Splunk. So I do want to be the first one to say that this data set is rebounding. Splunk has been horrific in our data for going back almost two years now, straight downward trend. This is the first time we're seeing any increase, any positivity there. So I do want to be fair and state that because I've been accused of being a little too negative on Splunk in the past. But I would basically say for observability right now, it's a rising tide lifts all boats, if I can use a New England phrase. The data across the board in analytics for these observability players is up, is accelerating. None more so than Datadog. And it's exactly your point, David. The complexity, the increased cloud migration is a perfect setup for Datadog, which is a cloud native. It focuses on microservices. It focuses on cloud observability. Old Splunk was just application monitoring. Don't get me wrong, they're changing, but they were on-prem application monitoring, first and foremost. Datadog came out as cloud native. They, you know, do microservices. This is just a perfect setup for them. And not only is Datadog leading the observability, it's leading the entire analytics sector, all of it. Not just the observability niche. So without a doubt, that is the strongest that we're seeing. It's leading Dynatrace new Relic. The only one that really isn't rebounding is Cisco App Dynamics. That's getting the dreaded legacy word really attached to it. But this space is really on fire, elastic as well, really doing well in this space. New Relic has shown a little bit of improvement as well. And what I heard when I asked my panelists about this, is that because of the maturity of cloud migration, that this observability has to grow. Spending on this has to happen. So they all say the chart looks right. And it's really just about the digital transformation maturity. So that's largely what they think is happening here. And they don't really see it getting, you know, changing anytime soon. >> Yeah, and I would add, and you see that it's getting crowded. You saw a service now acquired LightStep, and they want to get into the game. You mentioned, you know, last deck of the elk stack is, you know, the open source alternative, but then we see a company who's raised a fair amount of money, startup, chaos search, coming in, going after kind of the complexity of the elk stack. You've got honeycomb, which has got a really innovative approach, Jeremy Burton's company observes. So you have venture capital coming in. So we'll see if those guys could be disruptive enough or are they, you know, candidates to get acquired? We'll see how that all- you know that well. The M and A space. You think this space is ripe for M and A? >> I think it's ripe for consolidation, M and A. Something has to shake out. There's no doubt. I do believe that all of these can be standalone. So we shall see what's happened to, you mentioned the Splunk acquisition of Signal FX, just a house cleaning point. That was really nice acceleration by Signal FX, but it was only 20 citations. We'd looked into this a little bit deeper. Our data scientists did. It appears as if the majority of people are just signaling spunk and not FX separately. So moving forward for our data set, we're going to combine those two, so we don't have those anomalies going forward. But that type of acquisition does show what we should expect to see more of in this group going forward. >> Well that's I want to mention. That's one of the challenges that any data company has, and you guys do a great job of it. You're constantly having to reevaluate. There's so much M and A going on in the industry. You've got to pick the right spots in terms of when to consolidate. There's some big, you know, Dell and EMC, for example. You know, you've beautifully worked through that transition. You're seeing, you know, open shift and red hat with IBM. You just got to be flexible. And that's where it's valuable to be able to have a pipeline to guys like Erik, to sort of squint through that. So thank you for that clarification. >> Thank you too, because having a resource like you with industry knowledge really helps us navigate some of those as well for everyone out there. So that's a lot to do with you do Dave, >> Thank you. It's going to be interesting to watch Splunk. Doug Merritt's made some, you know, management changes, not the least of which is bringing in Teresa Carlson to run go to market. So if you know, I'd be interested if they are hitting, bouncing off the bottom and rising up again. They have a great customer base. Okay. Let's look at some of the same dimensions. Go ahead. You got a comment? >> A few of ETR's clients looked at our data and then put a billion dollar investment into it too. So obviously I agree. (Dave laughing) Splunk is looking like it's set for a rebound, and it's definitely something to watch, I agree. >> Not to rat hole in this, but I got to say. When I look back, cause theCUBE gives us kind of early visibility. So companies with momentum and you talk to the customers that all these shows that we go to. I will tell you that three companies stood out last decade. It was Splunk. It was Service Now and Tableau. And you could tell just from just discussions with their customers, the enthusiasm in that customer base. And so that's a real asset, and that helps them build them a moat. So we'll see. All right, let's take a look at the same dimensions now for cyber. This is cybersecurity net score in the vertical, and market share in the horizontal. And I filtered by in greater than a hundred shared in because just gets so crowded. Erik, the only things I would point out here is CrowdStrike and Zscaler continue to shine, CyberArk also showing momentum over that 40% line. Very impressively, Palo Alto networks, which has a big presence in the market. They've bounced back. We predicted that a while back. Your round table suggested people like working with Palo Alto. They're a gold standard. You know, we had reported earlier on that divergence with four to net in terms of valuation and some of the challenges they had in cloud, clearly, you know, back with the momentum. And of course, Microsoft in the upper, right. It's just, they're literally off the charts and obviously a major player here, but your thoughts on cyber? >> Erik: Yeah. Going back to the backdrop. Security, security, security. It has been the number one priority going back to last September. No one sees it changing. It has to happen. The threat vectors are actually expanding and we have no choice but to spend here. So it is not surprising to see. You did name our three favorite names. So as you know, we look at the dataset, we see which ones have the most positive inflections, and we put outlooks on those. And you did mention Zscaler, Okta and CrowdStrike, by far the three standouts that we're seeing. I just recently did a huge panel on Okta talking about their acquisition of Auth Zero. They're pushed into Sale Point space, trying to move just from single sign on and MFA to going to really privileged account management. There is some hurdles there. Really Okta's ability to do this on-prem is something that a little bit of the IT end users are concerned about. But what we're seeing right now, both Okta and Auth Zero are two of the main adopted names in security. They look incredibly well set up. Zscaler as well. With the ZTNA push more towards zero trust, Zscaler came out so hot in their IPO. And everyone was wondering if it was going to trail off just like Snowflake. It's not trailing off. This thing just keeps going up into the right, up into the right. The data supports a lot of tremendous growth for the three names that you just mentioned. >> Yeah. Yeah. I'm glad you brought up Auth Zero. We had reported on that earlier. I just feel like that was a great acquisition. You had Okta doing the belly to belly enterprise, you know, selling. And the one thing that they really lacked was that developer momentum. And that's what Auth Zero brings. Just a smart move by Todd McKinnon and company. And I mean, so this, you know, I want to, I want to pull up another chart show a quick snapshot of some of the players in the survey who show momentum and have you comment on this. We haven't mentioned Snowflake so far, but they remain again with like this gold standard of net score, they've consistently had those high marks with regard to spending velocity. But here's some other data. Erik, how should we interpret this? >> Erik: Yeah, just to harp on Snowflake for a second. Right, I mean the rich get richer. They came out- IPO was so hyped, so it was hard for us as a research company to say, "Oh, you know, well, you know, we agree." But we did. The data is incredible. You can't beat the management team. You can't beat what they're doing. They've got so much cash. I can't wait to see what they do with it. And meanwhile, you would expect something that debuted with that high of a net score, that high of spending velocity to trail off. It would be natural. It's not Dave, it's still accelerating. It's gone even higher. It's at all time highs. And we just don't see it stopping anytime soon. It's a really interesting space right now. Maybe another name to look at on here that I think is pretty interesting, kind of a play on return to business is Kupa. It's a great project expense management tool that got hit really hard. Listen, traveling stopped, business expense stopped, and I did a panel on it. And a lot of our guys basically said, "Yeah, it was the first thing I cut." But we're seeing a huge rebound in spending there in that space. So that's a name that I think might be worth being called out on a positive side. Negative, If you look down to the bottom right of that chart, unfortunately we're seeing some issues in RingCentral and Zoom. Anything that's sort of playing in this next, you know, video conferencing, IP telephony space, they seem to be having really decelerating spending. Also now with Zoom's acquisition of five nine. I'm not really sure how RingCentral's going to compete on that. But yeah, that's one where we debuted for the first time with a negative outlook on that name. And looking and asking to some of the people in our community, a lot of them say externally, you still need IP telepany, but internally you don't. Because the You Cast communication systems are getting so sophisticated, that if I have Teams, if I have Slack, I don't need phones anymore. (chuckling) That you and I can just do a Slack call. We can do a Teams call. And many of them are saying I'm truly ripping out my IP Telepany internally as soon as possible because we just don't need it. So this whole collaboration, productivity space is here to stay. And it's got wide ranging implications to some of these more legacy type of tools. >> You know, one of the other things I'd call out on this chart is Accenture. You and I had a session earlier this year, and we had predicted that that skill shortage was going to lead to an uptick in traditional services. We've certainly seen that. I mean, IBM beat its quarter on the strength of services largely. And seeing Accenture on that is I think confirmation. >> Yeah that was our New Year prediction show, right Dave? When we made top 10 predictions? >> That's right. That was part of our predictions show. Exactly, good memory. >> The data is really showing that continue. People want the projects, they need to do the projects, but hiring is very difficult. So obviously the number one beneficiary there are going to be the Accentures of the world. >> All right. So let's do a quick wrap. I'm going to make a few comments and then have you bring us home, Erik. So we laid out our scenario for the tech spending rebound. We definitely believe last year tracked downward, along with GDP contraction. It was interesting. Gardner doesn't believe, at least factions of Gardner don't believe there's a correlation between GDP and tech spending. But, you know, I personally think there generally is some kind of relatively proportional pattern there. And I think we saw contraction last year. People are concerned about inflation. Of course, that adds some uncertainty. And as well, as you mentioned around the Delta variant. But I feel as though that the boards of directors and CEOs, they've mandated that tech execs have to build out digital platforms for the future. They're data centric. They're highly automated, to your earlier points. They're intelligent with AI infused, and that's going to take investment. I feel like the tech community has said, "Look, we know what to do here. We're dealing with hybrid work. We can't just stop doing what we're doing. Let's move forward." You know, and as you say, we're flying again and so forth. You know, getting hybrid right is a major priority that directly impacts strategies. Technology strategies, particularly around security, cloud, the productivity of remote workers with collaboration. And as we've said many times, we are entering a new era of data that's going to focus on decentralized data, building data products, and Erik let's keep an eye on this observability space. Lot of interest there, and buyers have a number of choices. You know, do they go with a specialist, as we saw recently, we've seen in the past, or did they go with the generalist like Service Now with the acquisition of LightStep? You know, it's going to be interesting. A lot of people are going to get into this space, start bundling into larger platforms. And so as you said, there's probably not enough room for all the players. We're going to see some consolidation there. But anyway, let me give you the final word here. >> Yeah, no, I completely agree with all of it. And I think your earlier points are spot on, that analytics and automation are certainly going to be moving more and more to that left of that chart we had of priorities. I think as we continue that survey heading into 2022, we'll have some fresh data for you again in a few months, that's going to start looking at 2022 priorities and overall spend. And the one other area that I keep hearing about over and over and over again is customer experience. There's a transition from good old CRM to CXM. Right now, everything is digital. It is not going away. So you need an omni-channel support to not only track your customer experience, but improve it. Make sure there's a two way communication. And it's a really interesting space. Salesforce is going to migrate into it. We've got Qualtrics out there. You've got Medallia. You've got FreshWorks, you've got Sprinkler. You got some names out there. And everyone I keep talking to on the IT end user side keeps bringing up customer experience. So let's keep an eye on that as well. >> That's a great point. And again, it brings me back to Service Now. We wrote a piece last week that's sort of, Service Now and Salesforce are on a collision course. We've said that for many, many years. And you've got this platform of platforms. They're just kind of sucking in different functions saying, "Hey, we're friends with everybody." But as you know Erik, software companies, they want to own it all. (both chuckling) All right. Hey Erik, thank you so much. I want to thank you for coming back on. It's always a pleasure to have you on Breaking Analysis. Great to see you. >> Love the partnership. Love the collaboration. Let's go enjoy this summer Friday. >> All right. Let's do. Okay, remember everybody, these episodes, they're all available as podcasts, wherever you listen. All you got to do is search Breaking Analysis Podcast, click subscribe to the series. Check out ETR's website at etr.plus. They've just launched a new website. They've got a whole new pricing model. It's great to see that innovation going on. Now remember we also publish a full report every week on WikiBond.com and SiliconAngle.com. You can always email me, appreciate the back channel comments, the metadata insights. David.Vellante@SiliconAngle.com. DM me on Twitter @DVellante or comment on the LinkedIn posts. This is Dave Vellante for Erik Bradley and theCUBE insights powered by ETR. Have a great week, a good rest of summer, be well. And we'll see you next time. (inspiring music)

(upbeat music) >> From theCUBE studios in Palo Alto, in Boston bringing you data-driven insights from theCUBE and ETR. This is braking analysis with Dave Vellante. >> Database is the heart of enterprise computing. The market is both exploding and it's evolving. The major force is transforming the space include Cloud and data, of course, but also new workloads, advanced memory and IO capabilities, new processor types, a massive push towards simplicity, new data sharing and governance models, and a spate of venture investment. Snowflake stands out as the gold standard for operational excellence and go to market execution. The company has attracted the attention of customers, investors, and competitors and everyone from entrenched players to upstarts once in the act. Hello everyone and welcome to this week's Wikibon CUBE Insights powered by ETR. In this breaking analysis, we'll share our most current thinking on the database marketplace and dig into Snowflake's execution. Some of its challenges and we'll take a look at how others are making moves to solve customer problems and try to get a piece of the growing database pie. Let's look at some of the factors that are driving market momentum. First, customers want lower license costs. They want simplicity. They want to avoid database sprawl. They want to run anywhere and manage new data types. These needs often are divergent and they pull vendors and technologies in different direction. It's really hard for any one platform to accommodate every customer need. The market is large and it's growing. Gardner has it at around 60 to 65 billion with a CAGR of somewhere around 20% over the next five years. But the market, as we know it is being redefined. Traditionally, databases have served two broad use cases, OLTP or transactions and reporting like data warehouses. But a diversity of workloads and new architectures and innovations have given rise to a number of new types of databases to accommodate all these diverse customer needs. Many billions have been spent over the last several years in venture money and it continues to pour in. Let me just give you some examples. Snowflake prior to its IPO, raised around 1.4 billion. Redis Labs has raised more than 1/2 billion dollars so far, Cockroach Labs, more than 350 million, Couchbase, 250 million, SingleStore formerly MemSQL, 238 million, Yellowbrick Data, 173 million. And if you stretch the definition of database a little bit to including low-code or no-code, Airtable has raised more than 600 million. And that's by no means a complete list. Now, why is all this investment happening? Well, in a large part, it's due to the TAM. The TAM is huge and it's growing and it's being redefined. Just how big is this market? Let's take a look at a chart that we've shown previously. We use this chart to Snowflakes TAM, and it focuses mainly on the analytics piece, but we'll use it here to really underscore the market potential. So the actual database TAM is larger than this, we think. Cloud and Cloud-native technologies have changed the way we think about databases. Virtually 100% of the database players that they're are in the market have pivoted to a Cloud first strategy. And many like Snowflake, they're pretty dogmatic and have a Cloud only strategy. Databases has historically been very difficult to manage, they're really sensitive to latency. So that means they require a lot of tuning. Cloud allows you to throw virtually infinite resources on demand and attack performance problems and scale very quickly, minimizing the complexity and tuning nuances. This idea, this layer of data as a service we think of it as a staple of digital transformation. Is this layer that's forming to support things like data sharing across ecosystems and the ability to build data products or data services. It's a fundamental value proposition of Snowflake and one of the most important aspects of its offering. Snowflake tracks a metric called edges, which are external connections in its data Cloud. And it claims that 15% of its total shared connections are edges and that's growing at 33% quarter on quarter. This notion of data sharing is changing the way people think about data. We use terms like data as an asset. This is the language of the 2010s. We don't share our assets with others, do we? No, we protect them, we secure or them, we even hide them. But we absolutely don't want to share those assets but we do want to share our data. I had a conversation recently with Forrester analyst, Michelle Goetz. And we both agreed we're going to scrub data as an asset from our phrasiology. Increasingly, people are looking at sharing as a way to create, as I said, data products or data services, which can be monetized. This is an underpinning of Zhamak Dehghani's concept of a data mesh, make data discoverable, shareable and securely governed so that we can build data products and data services that can be monetized. This is where the TAM just explodes and the market is redefining. And we think is in the hundreds of billions of dollars. Let's talk a little bit about the diversity of offerings in the marketplace. Again, databases used to be either transactional or analytic. The bottom lines and top lines. And this chart here describe those two but the types of databases, you can see the middle of mushrooms, just looking at this list, blockchain is of course a specialized type of database and it's also finding its way into other database platforms. Oracle is notable here. Document databases that support JSON and graph data stores that assist in visualizing data, inference from multiple different sources. That's is one of the ways in which adtech has taken off and been so effective. Key Value stores, log databases that are purpose-built, machine learning to enhance insights, spatial databases to help build the next generation of products, the next automobile, streaming databases to manage real time data flows and time series databases. We might've missed a few, let us know if you think we have, but this is a kind of pretty comprehensive list that is somewhat mind boggling when you think about it. And these unique requirements, they've spawned tons of innovation and companies. Here's a small subset on this logo slide. And this is by no means an exhaustive list, but you have these companies here which have been around forever like Oracle and IBM and Teradata and Microsoft, these are the kind of the tier one relational databases that have matured over the years. And they've got properties like atomicity, consistency, isolation, durability, what's known as ACID properties, ACID compliance. Some others that you may or may not be familiar with, Yellowbrick Data, we talked about them earlier. It's going after the best price, performance and analytics and optimizing to take advantage of both hybrid installations and the latest hardware innovations. SingleStore, as I said, formerly known as MemSQL is a very high end analytics and transaction database, supports mixed workloads, extremely high speeds. We're talking about trillions of rows per second that could be ingested in query. Couchbase with hybrid transactions and analytics, Redis Labs, open source, no SQL doing very well, as is Cockroach with distributed SQL, MariaDB with its managed MySQL, Mongo and document database has a lot of momentum, EDB, which supports open source Postgres. And if you stretch the definition a bit, Splunk, for log database, why not? ChaosSearch, really interesting startup that leaves data in S-3 and is going after simplifying the ELK stack, New Relic, they have a purpose-built database for application performance management and we probably could have even put Workday in the mix as it developed a specialized database for its apps. Of course, we can't forget about SAP with how not trying to pry customers off of Oracle. And then the big three Cloud players, AWS, Microsoft and Google with extremely large portfolios of database offerings. The spectrum of products in this space is very wide, with you've got AWS, which I think we're up to like 16 database offerings, all the way to Oracle, which has like one database to do everything not withstanding MySQL because it owns MySQL got that through the Sun Acquisition. And it recently, it made some innovations there around the heat wave announcement. But essentially Oracle is investing to make its database, Oracle database run any workload. While AWS takes the approach of the right tool for the right job and really focuses on the primitives for each database. A lot of ways to skin a cat in this enormous and strategic market. So let's take a look at the spending data for the names that make it into the ETR survey. Not everybody we just mentioned will be represented because they may not have quite the market presence of the ends in the survey, but ETR that capture a pretty nice mix of players. So this chart here, it's one of the favorite views that we like to share quite often. It shows the database players across the 1500 respondents in the ETR survey this past quarter and it measures their net score. That's spending momentum and is shown on the vertical axis and market share, which is the pervasiveness in the data set is on the horizontal axis. The Snowflake is notable because it's been hovering around 80% net score since the survey started picking them up. Anything above 40%, that red line there, is considered by us to be elevated. Microsoft and AWS, they also stand out because they have both market presence and they have spending velocity with their platforms. Oracle is very large but it doesn't have the spending momentum in the survey because nearly 30% of Oracle installations are spending less, whereas only 22% are spending more. Now as a caution, this survey doesn't measure dollar spent and Oracle will be skewed toward the big customers with big budgets. So you got to consider that caveat when evaluating this data. IBM is in a similar position although its market share is not keeping up with Oracle's. Google, they've got great tech especially with BigQuery and it has elevated momentum. So not a bad spot to be in although I'm sure it would like to be closer to AWS and Microsoft on the horizontal axis, so it's got some work to do there. And some of the others we mentioned earlier, like MemSQL, Couchbase. As shown MemSQL here, they're now SingleStore. Couchbase, Reddis, Mongo, MariaDB, all very solid scores on the vertical axis. Cloudera just announced that it was selling to private equity and that will hopefully give it some time to invest in this platform and get off the quarterly shot clock. MapR was acquired by HPE and it's part of HPE's Ezmeral platform, their data platform which doesn't yet have the market presence in the survey. Now, something that is interesting in looking at in Snowflakes earnings last quarter, is this laser focused on large customers. This is a hallmark of Frank Slootman and Mike Scarpelli who I know they don't have a playbook but they certainly know how to go whale hunting. So this chart isolates the data that we just showed you to the global 1000. Note that both AWS and Snowflake go up higher on the X-axis meaning large customers are spending at a faster rate for these two companies. The previous chart had an end of 161 for Snowflake, and a 77% net score. This chart shows the global 1000, in the end there for Snowflake is 48 accounts and the net score jumps to 85%. We're not going to show it here but when you isolate the ETR data, nice you can just cut it, when you isolate it on the fortune 1000, the end for Snowflake goes to 59 accounts in the data set and Snowflake jumps another 100 basis points in net score. When you cut the data by the fortune 500, the Snowflake N goes to 40 accounts and the net score jumps another 200 basis points to 88%. And when you isolate on the fortune 100 accounts is only 18 there but it's still 18, their net score jumps to 89%, almost 90%. So it's very strong confirmation that there's a proportional relationship between larger accounts and spending momentum in the ETR data set. So Snowflakes large account strategy appears to be working. And because we think Snowflake is sticky, this probably is a good sign for the future. Now we've been talking about net score, it's a key measure in the ETR data set, so we'd like to just quickly remind you what that is and use Snowflake as an example. This wheel chart shows the components of net score, that lime green is new adoptions. 29% of the customers in the ETR dataset that are new to Snowflake. That's pretty impressive. 50% of the customers are spending more, that's the forest green, 20% are flat, that's the gray, and only 1%, the pink, are spending less. And 0% zero or replacing Snowflake, no defections. What you do here to get net scores, you subtract the red from the green and you get a net score of 78%. Which is pretty sick and has been sick as in good sick and has been steady for many, many quarters. So that's how the net score methodology works. And remember, it typically takes Snowflake customers many months like six to nine months to start consuming it's services at the contracted rate. So those 29% new adoptions, they're not going to kick into high gear until next year, so that bodes well for future revenue. Now, it's worth taking a quick snapshot at Snowflakes most recent quarter, there's plenty of stuff out there that you can you can google and get a summary but let's just do a quick rundown. The company's product revenue run rate is now at 856 million they'll surpass $1 billion on a run rate basis this year. The growth is off the charts very high net revenue retention. We've explained that before with Snowflakes consumption pricing model, they have to account for retention differently than what a SaaS company. Snowflake added 27 net new $1 million accounts in the quarter and claims to have more than a hundred now. It also is just getting its act together overseas. Slootman says he's personally going to spend more time in Europe, given his belief, that the market is huge and they can disrupt it and of course he's from the continent. He was born there and lived there and gross margins expanded, do in a large part to renegotiation of its Cloud costs. Welcome back to that in a moment. Snowflake it's also moving from a product led growth company to one that's more focused on core industries. Interestingly media and entertainment is one of the largest along with financial services and it's several others. To me, this is really interesting because Disney's example that Snowflake often puts in front of its customers as a reference. And it seems to me to be a perfect example of using data and analytics to both target customers and also build so-called data products through data sharing. Snowflake has to grow its ecosystem to live up to its lofty expectations and indications are that large SIS are leaning in big time. Deloitte cross the $100 million in deal flow in the quarter. And the balance sheet's looking good. Thank you very much with $5 billion in cash. The snarks are going to focus on the losses, but this is all about growth. This is a growth story. It's about customer acquisition, it's about adoption, it's about loyalty and it's about lifetime value. Now, as I said at the IPO, and I always say this to young people, don't buy a stock at the IPO. There's probably almost always going to be better buying opportunities ahead. I'm not always right about that, but I often am. Here's a chart of Snowflake's performance since IPO. And I have to say, it's held up pretty well. It's trading above its first day close and as predicted there were better opportunities than day one but if you have to make a call from here. I mean, don't take my stock advice, do your research. Snowflake they're priced to perfection. So any disappointment is going to be met with selling. You saw that the day after they beat their earnings last quarter because their guidance in revenue growth,. Wasn't in the triple digits, it sort of moderated down to the 80% range. And they pointed, they pointed to a new storage compression feature that will lower customer costs and consequently, it's going to lower their revenue. I swear, I think that that before earnings calls, Scarpelli sits back he's okay, what kind of creative way can I introduce the dampen enthusiasm for the guidance. Now I'm not saying lower storage costs will translate into lower revenue for a period of time. But look at dropping storage prices, customers are always going to buy more, that's the way the storage market works. And stuff like did allude to that in all fairness. Let me introduce something that people in Silicon Valley are talking about, and that is the Cloud paradox for SaaS companies. And what is that? I was a clubhouse room with Martin Casado of Andreessen when I first heard about this. He wrote an article with Sarah Wang, calling it to question the merits of SaaS companies sticking with Cloud at scale. Now the basic premise is that for startups in early stages of growth, the Cloud is a no brainer for SaaS companies, but at scale, the cost of Cloud, the Cloud bill approaches 50% of the cost of revenue, it becomes an albatross that stifles operating leverage. Their conclusion ended up saying that as much as perhaps as much as the back of the napkin, they admitted that, but perhaps as much as 1/2 a trillion dollars in market cap is being vacuumed away by the hyperscalers that could go to the SaaS providers as cost savings from repatriation. And that Cloud repatriation is an inevitable path for large SaaS companies at scale. I was particularly interested in this as I had recently put on a post on the Cloud repatriation myth. I think in this instance, there's some merit to their conclusions. But I don't think it necessarily bleeds into traditional enterprise settings. But for SaaS companies, maybe service now has it right running their own data centers or maybe a hybrid approach to hedge bets and save money down the road is prudent. What caught my attention in reading through some of the Snowflake docs, like the S-1 in its most recent 10-K were comments regarding long-term purchase commitments and non-cancelable contracts with Cloud companies. And the companies S-1, for example, there was disclosure of $247 million in purchase commitments over a five plus year period. And the company's latest 10-K report, that same line item jumped to 1.8 billion. Now Snowflake is clearly managing these costs as it alluded to when its earnings call. But one has to wonder, at some point, will Snowflake follow the example of say Dropbox which Andreessen used in his blog and start managing its own IT? Or will it stick with the Cloud and negotiate hard? Snowflake certainly has the leverage. It has to be one of Amazon's best partners and customers even though it competes aggressively with Redshift but on the earnings call, CFO Scarpelli said, that Snowflake was working on a new chip technology to dramatically increase performance. What the heck does that mean? Is this Snowflake is not becoming a hardware company? So I going to have to dig into that a little bit and find out what that it means. I'm guessing, it means that it's taking advantage of ARM-based processes like graviton, which many ISVs ar allowing their software to run on that lower cost platform. Or maybe there's some deep dark in the weeds secret going on inside Snowflake, but I doubt it. We're going to leave all that for there for now and keep following this trend. So it's clear just in summary that Snowflake they're the pace setter in this new exciting world of data but there's plenty of room for others. And they still have a lot to prove. For instance, one customer in ETR, CTO round table express skepticism that Snowflake will live up to its hype because its success is going to lead to more competition from well-established established players. This is a common theme you hear it all the time. It's pretty easy to reach that conclusion. But my guess is this the exact type of narrative that fuels Slootman and sucked him back into this game of Thrones. That's it for now, everybody. Remember, these episodes they're all available as podcasts, wherever you listen. All you got to do is search braking analysis podcast and please subscribe to series. Check out ETR his website at etr.plus. We also publish a full report every week on wikinbon.com and siliconangle.com. You can get in touch with me, Email is David.vellante@siliconangle.com. You can DM me at DVelante on Twitter or comment on our LinkedIn posts. This is Dave Vellante for theCUBE Insights powered by ETR. Have a great week everybody, be well and we'll see you next time. (upbeat 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. >> Recent survey data from ETR shows that enterprise tech spending is tracking with projected US GDP growth at six to 7% this year. Many markers continue to point the way to a strong recovery, including hiring trends and the loosening of frozen IT Project budgets. However skills shortages are blocking progress at some companies which bodes well for an increased reliance on external IT services. Moreover, while there's much talk about the rotation out of work from home plays and stocks such as video conferencing, VDI, and other remote worker tech, we see organizations still trying to figure out the ideal balance between funding headquarter investments that have been neglected and getting hybrid work right. In particular, the talent gap combined with a digital mandate, means companies face some tough decisions as to how to fund the future while serving existing customers and transforming culturally. Hello everyone, and welcome to this week's Wikibon CUBE's Insights powered by ETR. In this "Breaking Analysis", we welcome back Erik Porter Bradley of ETR who will share fresh data, perspectives and insights from the latest survey data. Erik, great to see you. Welcome. >> Thank you very much, Dave. Always good to see you and happy to be on the show again. >> Okay, we're going to share some macro data and then we're going to dig into some highlights from ETR's most recent March COVID survey and also the latest April data. So Erik, the first chart that we want to show, it shows CIO and IT buyer responses to expected IT spend for each quarter of 2021 versus 2020, and you can see here a steady quarterly improvement. Erik, what are the key takeaways, from your perspective? >> Sure, well, first of all, for everyone out there, this particular survey had a record-setting number of participation. We had a 1,500 IT decision makers participate and we had over half of the Fortune 500 and over a fifth of the Global 1000. So it was a really good survey. This is seventh iteration of the COVID Impact Survey specifically, and this is going to transition to an overlarge macro survey going forward so we can continue it. And you're 100% right, what we've been tracking here since March of last year was, how is spending being impacted because of COVID? Where is it shifting? And what we're seeing now finally is that there is a real re-acceleration in spend. I know we've been a little bit more cautious than some of the other peers out there that just early on slapped an eight or a 9% number, but what we're seeing is right now, it's at a midpoint of over six, about 6.7% and that is accelerating. So, we are still hopeful that that will continue, and really, that spending is going to be in the second half of the year. As you can see on the left part of this chart that we're looking at, it was about 1.7% versus 3% for Q1 spending year-over-year. So that is starting to accelerate through the back half. >> I think it's prudent to be cautious (indistinct) 'cause normally you'd say, okay, tech is going to grow a couple of points higher than GDP, but it's really so hard to predict this year. Okay, the next chart here that we want to show you is we asked respondents to indicate what strategies they're employing in the short term as a result of coronavirus and you can see a few things that I'll call out and then I'll ask Erik to chime in. First, there's been no meaningful change of course, no surprise in tactics like remote work and holding travel, however, we're seeing very positive trends in other areas trending downward, like hiring freezes and freezing IT deployments, a downward trend in layoffs, and we also see an increase in the acceleration of new IT deployments and in hiring. Erik, what are your key takeaways? >> Well, first of all, I think it's important to point out here that we're also capturing that people believe remote work productivity is still increasing. Now, the trajectory might be coming down a little bit, but that is really key, I think, to the backdrop of what's happening here. So people have a perception that productivity of remote work is better than hybrid work and that's from the IT decision makers themselves, but what we're seeing here is that, most importantly, these organizations are citing plans to increase hiring, and that's something that I think is really important to point out. It's showing a real following, and to your point right in the beginning of the intro, we are seeing deployments stabilize versus prior survey levels, which means early on, they had no plans to launch new tech deployments, then they said, "Nope, we're going to start." and now that stalling, and I think it's exactly right, what you said, is there's an IT skills shortage. So people want to continue to do IT deployments 'cause they have to support work from home and a hybrid back return to the office, but they just don't have the skills to do so, and I think that's really probably the most important takeaway from this chart, is that stalling and to really ask why it's stalling. >> Yeah, so we're going to get into that for sure, and I think that's a really key point, is that accelerating IT deployments, it looks like it's hit a wall in the survey, but before we get deep into the skills, let's take a look at this next chart, and we're asking people here how our return to the new normal, if you will, and back to offices is going to change spending with on-prem architectures and applications. And so the first two bars, they're Cloud-friendly, if you add them up, it's 63% of the respondents, say that either they'll stay in the Cloud for the most part, or they're going to lower their on-prem spend when they go back to the office. The next three bars are on-prem friendly. If you add those up it's 29% of the respondents say their on-prem spend is going to bounce back to pre-COVID levels or actually increase, and of course, 12% of that number, by the way, say they've never altered their on-prem spend. So Erik, no surprise, but this bodes well for Cloud, but isn't it also a positive for on-prem? We've had this dual funding premise, meaning Cloud continues to grow, but neglected data center spend also gets a boost. What's your thoughts? >> Really, it's interesting. It's people are spending on all fronts. You and I were talking in the prep, it's like we're in battle and I've got naval, I've got air, I've got land, I've got to spend on Cloud and digital transformation, but I also have to spend for on-prem. The hybrid work is here and it needs to be supported. So this is spending is going to increase. When you look at this chart, you're going to see though, that roughly 36% of all respondents say that their spending is going to remain mostly on Cloud. So that is still the clear direction, digital transformation is still happening, COVID accelerated it greatly, you and I, as journalists and researchers already know this is where the puck is going, but spend has always lagged a little bit behind 'cause it just takes some time to get there. Inversely, 27% said that their on-prem spending will decrease. So when you look at those two, I still think that the trend is the friend for Cloud spending, even though, yes, they do have to continue spending on hybrid, some of it's been neglected, there are refresh cycles coming up, so, overall it just points to more and more spending right now. It really does seem to be a very strong backdrop for IT growth. >> So I want to talk a little bit about the ETR taxonomy before we bring up the next chart. We get a lot of questions about this, and of course, when you do a massive survey like you're doing, you have to have consistency for time series, so you have to really think through what the buckets look like, if you will. So this next chart takes a look at the ETR taxonomy and it breaks it down into simple-to-understand terms. So the green is the portion of spending on a vendor's tech within a category that is accelerating, and the red is the portion that is decelerating. So Erik, what are the key messages in this data? >> Well, first of all, Dave, thank you so much for pointing that out. We used to do, just what we call a Net score. It's a proprietary formula that we use to determine the overall velocity of spending. Some people found it confusing. Our data scientists decided to break this sector, break down into what you said, which is really more of a mode analysis. In that sector, how many of the vendors are increasing versus decreasing? So again, I just appreciate you bringing that up and allowing us to explain the reasoning behind our analysis there. But what we're seeing here goes back to something you and I did last year when we did our predictions, and that was that IT services and consulting was going to have a true rebound in 2021, and that's what this is showing right here. So in this chart, you're going to see that consulting and services are really continuing their recovery, 2020 had a lot of the clients and they have the biggest sector year-over-year acceleration sector wise. The other thing to point out on this, which we'll get to again later, is that the inverse analysis is true for video conferencing. We will get to that, so I'm going to leave a little bit of ammunition behind for that one, but what we're seeing here is IT consulting services being the real favorable and video conferencing having a little bit more trouble. >> Great, okay, and then let's take a look at that services piece, and this next chart really is a drill down into that space and emphasizes, Erik, what you were just talking about. And we saw this in IBM's earnings, where still more than 60% of IBM's business comes from services and the company beat earnings, in part, due to services outperforming expectations, I think it had a somewhat easier compare and some of this pent-up demand that we've been talking about bodes well for IBM and other services companies, it's not just IBM, right, Erik? >> No, it's not, but again, I'm going to point out that you and I did point out IBM in our predictions when we did in late December, so, it is nice to see. One of the reasons we don't have a more favorable rating on IBM at the moment is because they are in the process of spinning out this large unit, and so there's a little bit of a corporate action there that keeps us off on the sideline. But I would also want to point out here, Tata, Infosys and Cognizant 'cause they're seeing year-over-year acceleration in both IT consulting and outsourced IT services. So we break those down separately and those are the three names that are seeing acceleration in both of those. So again, at the Tata, Infosys and Cognizant are all looking pretty well positioned as well. >> So we've been talking a little bit about this skills shortage, and this is what's, I think, so hard for forecasters, is that in the one hand, There's a lot of pent up demand, Scott Gottlieb said it's like Woodstock coming out of the COVID, but on the other hand, if you have a talent gap, you've got to rely on external services. So there's a learning curve, there's a ramp up, it's an external company, and so it takes time to put those together. So this data that we're going to show you next, is really important in my view and ties what we were saying at the top. It asks respondents to comment on their staffing plans. The light blue is "We're increasing staff", the gray is "No change" and the magenta or whatever, whatever color that is that sort of purplish color, anyway, that color is decreasing, and the picture is very positive across the board. Full-time staff, offshoring, contract employees, outsourced professional services, all up trending upwards, and this Erik is more evidence of the services bounce back. >> Yeah, it's certainly, yes, David, and what happened is when we caught this trend, we decided to go one level deeper and say, all right, we're seeing this, but we need to know why, and that's what we always try to do here. Data will tell you what's happening, it doesn't always tell you why, and that's one of the things that ETR really tries to dig in with through the insights, interviews panels, and also going direct with these more custom survey questions. So in this instance, I think the real takeaway is that 30% of the respondents said that their outsourced and managed services are going to increase over the next three months. That's really powerful, that's a large portion of organizations in a very short time period. So we're capturing that this acceleration is happening right now and it will be happening in real time, and I don't see it slowing down. You and I are speaking about we have to increase Cloud spend, we have to increase hybrid spend, there are refresh cycles coming up, and there's just a real skills shortage. So this is a long-term setup that bodes very well for IT services and consulting. >> You know, Erik, when I came out of college, somebody told me, "Read, read, read, read as much as you can." And then they said, "Read the Wall Street Journal every day." and so I did it, and I would read the tech magazines and back then it was all paper, and what happens is you begin to connect the dots. And so the reason I bring that up is because I've now taken a bath in the ETR data for the better part of two years and I'm beginning to be able to connect the dots. The data is not always predictive, but many, many times it is. And so this next data gets into the fun stuff where we name names. A lot of times people don't like it because they're either marketing people at organizations, say, "Well, data's wrong." because that's the first thing they do, is attack the data. But you and I know, we've made some really great calls, work from home, for sure, you're talking about the services bounce back. We certainly saw the rise of CrowdStrike, Okta, Zscaler, well before people were talking about that, same thing with video conferencing. And so, anyway, this is the fun stuff and it looks at positive versus negative sentiment on companies. So first, how does ETR derive this data and how should we interpret it, and what are some of your takeaways? >> Sure, first of all, how we derive the data, are systematic survey responses that we do on a quarterly basis, and we standardize those responses to allow for time series analysis so we can do trend analysis as well. We do find that our data, because it's talking about forward-looking spending intentions, is really more predictive because we're talking about things that might be happening six months, three months in the future, not things that a lot of other competitors and research peers are looking at things that already happened, they're looking in the past, ETR really likes to look into the future and our surveys are set up to do so. So thank you for that question, It's a enjoyable lead in, but to get to the fun stuff, like you said, what we do here is we put ratings on the datasets. I do want to put the caveat out there that our spending intentions really only captures top-line revenue. It is not indicative of profit margin or any other line items, so this is only to be viewed as what we are rating the data set itself, not the company, that's not what we're in the game of doing. So I think that's very important for the marketing and the vendors out there themselves when they take a look at this. We're just talking about what we can control, which is our data. We're going to talk about a few of the names here on this highlighted vendors list. One, we're going to go back to that you and I spoke about, I guess, about six months ago, or maybe even earlier, which was the observability space. You and I were noticing that it was getting very crowded, a lot of new entrants, there was a lot of acquisition from more of the legacy or standard players in the space, and that is continuing. So I think in a minute, we're going to move into that observability space, but what we're seeing there is that it's becoming incredibly crowded and we're possibly seeing signs of them cannibalizing each other. We're also going to move on a little bit into video conferencing, where we're capturing some spend deceleration, and then ultimately, we're going to get into a little bit of a storage refresh cycle and talk about that. But yeah, these are the highlighted vendors for April, we usually do this once a quarter and they do change based on the data, but they're not usually whipsawed around, the data doesn't move that quickly. >> Yeah, so you can see some of the big names in the left-hand side, some of the SAS companies that have momentum. Obviously, ServiceNow has been doing very, very well. We've talked a lot about Snowflake, Okta, CrowdStrike, Zscaler, all very positive, as well as several others. I guess I'd add some things. I mean, I think if thinking about the next decade, it's Cloud, which is not going to be like the same Cloud as the last decade, a lot of machine learning and deep learning and AI and the Cloud is extending to the edge and the data center. Data, obviously, very important, data is decentralized and distributed, so data architectures are changing. A lot of opportunities to connect across Clouds and actually create abstraction layers, and then something that we've been covering a lot is processor performance is actually accelerating relative to Moore's law. It's probably instead of doubling every two years, it's quadrupling every two years, and so that is a huge factor, especially as it relates to powering AI and AI inferencing at the edge. This is a whole new territory, custom Silicon is really becoming in vogue and so something that we're watching very, very closely. >> Yeah, I completely, agree on that and I do think that the next version of Cloud will be very different. Another thing to point out on that too, is you can't do anything that you're talking about without collecting the data and organizations are extremely serious about that now. It seems it doesn't matter what industry they're in, every company is a data company, and that also bodes well for the storage goal. We do believe that there is going to just be a huge increase in the need for storage, and yes, hopefully that'll become portable across multi-Cloud and hybrid as well. >> Now, as Erik said, the ETR data, it's really focused on that top-line spend. So if you look on the right side of that chart, you saw NetApp was kind of negative, was very negative, right? But it is a company that's in transformation now, they've lowered expectations and they've recently beat expectations, that's why the stock has been doing better, but at the macro, from a spending standpoint, it's still stout challenged. So you have big footprint companies like NetApp and Oracle is another one. Oracle's stock is at an all time high, but the spending relative to sort of previous cycles are relative to, like for instance, Snowflake, much, much smaller, not as high growth, but they're managing expectations, they're managing their transition, they're managing profitability. Zoom is another one, Zoom looking negative, but Zoom's got to use its market cap now to transform and increase its TAM. And then Splunk is another one we're going to talk about. Splunk is in transition, it acquired SignalFX, It just brought on this week, Teresa Carlson, who was the head of AWS Public Sector. She's the president and head of sales, so they've got a go-to-market challenge and they brought in Teresa Carlson to really solve that, but Splunk has been trending downward, we called that several quarters ago, Erik, and so I want to bring up the data on Splunk, and this is Splunk, Erik, in analytics, and it's not trending in the right direction. The green is accelerating spend, the red is in the bars is decelerating spend, the top blue line is spending velocity or Net score, and the yellow line is market share or pervasiveness in the dataset. Your thoughts. >> Yeah, first I want to go back. There's a great point, Dave, about our data versus a disconnect from an equity analysis perspective. I used to be an equity analyst, that is not what we do here. And the main word you said is expectations, right? Stocks will trade on how they do compare to the expectations that are set, whether that's buy-side expectations, sell-side expectations or management's guidance themselves. We have no business in tracking any of that, what we are talking about is the top-line acceleration or deceleration. So, that was a great point to make, and I do think it's an important one for all of our listeners out there. Now, to move to Splunk, yes, I've been capturing a lot of negative commentary on Splunk even before the data turns. So this has been a about a year-long, our analysis and review on this name and I'm dating myself here, but I know you and I are both rock and roll fans, so I'm going to point out a Led Zeppelin song and movie, and say that the song remains the same for Splunk. We are just seeing recent spending attentions are taking yet another step down, both from prior survey levels, from year ago levels. This, we're looking at in the analytics sector and spending intentions are decelerating across every single group, and we went to one of our other slide analysis on the ETR+ platform, and you do by customer sub-sample, in analytics, it's dropping in every single vertical. It doesn't matter which one. it's really not looking good, unfortunately, and you had mentioned this is an analytics and I do believe the next slide is an information security. >> Yeah, let's bring that up. >> And unfortunately it's not doing much better. So this is specifically Fortune 500 accounts and information security. There's deep pockets in the Fortune 500, but from what we're hearing in all the insights and interviews and panels that I personally moderate for ETR, people are upset, that they didn't like the strong tactics that Splunk has used on them in the past, they didn't like the ingestion model pricing, the inflexibility, and when alternatives came along, people are willing to look at the alternatives, and that's what we're seeing in both analytics and big data and also for their SIM and security. >> Yeah, so I think again, I pointed Teresa Carlson. She's got a big job, but she's very capable. She's going to meet with a lot of customers, she's a go-to-market pro, she's going to to have to listen hard, and I think you're going to see some changes there. Okay, so sorry, there's more bad news on Splunk. So (indistinct) bring this up is Net score for Splunk and Elastic accounts. This is for analytics, so there's 106 Elastic accounts in the dataset that also have Splunk and it's trending downward for Splunk, that's why it's green for Elastic. And Erik, the important call out from ETR here is how Splunk's performance in Elastic accounts compares with its performance overall. The ELK stack, which obviously Elastic is a big part of that, is causing pain for Splunk, as is Datadog, and you mentioned the pricing issue, well, is it pricing in your assessment or is it more fundamental? >> It's multi-level based on the commentary we get from our ITDMs teams that take the survey. So yes, you did a great job with this analysis. What we're looking at is the spending within shared accounts. So if I have Splunk already, how am I spending? I'm sorry if I have Elastic already, how am I spending on Splunk? And what you're seeing here is it's down to about a 12% Net score, whereas Splunk overall, has a 32% Net score among all of its customers. So what you're seeing there is there is definitely a drain that's happening where Elastic is draining spend from Splunk and usage from them. The reason we used Elastic here is because all observabilities, the whole sector seems to be decelerating. Splunk is decelerating the most, but Elastic is the only one that's actually showing resiliency, so that's why we decided to choose these two, but you pointed out, yes, it's also Datadog. Datadog is Cloud native. They're more dev ops-oriented. They tend to be viewed as having technological lead as compared to Splunk. So a really good point. Dynatrace also is expanding their abilities and Splunk has been making a lot of acquisitions to push their Cloud services, they are also changing their pricing model, right? They're trying to make things a little bit more flexible, moving off ingestion and moving towards consumption. So they are trying, and the new hires, I'm not going to bet against them because the one thing that Splunk has going for them is their market share in our survey, they're still very well entrenched. So they do have a lot of accounts, they have their foothold. So if they can find a way to make these changes, then they will be able to change themselves, but the one thing I got to say across the whole sector is competition is increasing, and it does appear based on commentary and data that they're starting to cannibalize themselves. It really seems pretty hard to get away from that, and you know there are startups in the observability space too that are going to be even more disruptive. >> I think I want to key on the pricing for a moment, and I've been pretty vocal about this. I think the old SAS pricing model where you essentially lock in for a year or two years or three years, pay up front, or maybe pay quarterly if you're lucky, that's a one-way street and I think it's a flawed model. I like what Snowflake's doing, I like what Datadog's doing, look at what Stripe is doing, look at what Twilio is doing, you mentioned it, it's consumption-based pricing, and if you've got a great product, put it out there and damn, the torpedoes, and I think that is a game changer. I look at, for instance, HPE with GreenLake, I look at Dell with Apex, they're trying to mimic that model and apply it to infrastructure, it's much harder with infrastructure 'cause you've got to deploy physical infrastructure, but that is a model that I think is going to change, and I think all of the traditional SAS pricing is going to come under disruption over the next better part of the decades, but anyway, let's move on. We've been covering the APM space pretty extensively, application performance management, and this chart lines up some of the big players here. Comparing Net score or spending momentum from the April 20th survey, the gray is, sorry, the gray is the April 20th survey, the blue is Jan 21 and the yellow is April 21, and not only are Elastic and Datadog doing well relative to Splunk, Erik, but everything is down from last year. So this space, as you point out, is undergoing a transformation. >> Yeah, the pressures are real and it's sort of that perfect storm where it's not only the data that's telling us that, but also the direct feedback we get from the community. Pretty much all the interviews I do, I've done a few panels specifically on this topic, for anyone who wants to dive a little bit deeper. We've had some experts talk about this space and there really is no denying that there is a deceleration in spend and it's happening because that spend is getting spread out among different vendors. People are using a Datadog for certain aspects, they are using Elastic where they can 'cause it's cheaper. They're using Splunk because they have to, but because it's so expensive, they're cutting some of the things that they're putting into Splunk, which is dangerous, particularly on the security side. If I have to decide what to put in and whatnot, that's not really the right way to have security hygiene. So this space is just getting crowded, there's disruptive vendors coming from the emerging space as well, and what you're seeing here is the only bit of positivity is Elastic on a survey-over-survey basis with a slight, slight uptick. Everywhere else, year-over-year and survey-over-survey, it's showing declines, it's just hard to ignore. >> And then you've got Dynatrace who, based on the interviews you do in the (indistinct), one-on-one, or one-on-five, the private interviews that I've been invited to, Dynatrace gets very high scores for their roadmap. You've got New Relic, which has been struggling financially, but they've got a really good product and a purpose-built database just for this APM space, and then of course, you've got Cisco with AppD, which is a strong business for them, and then as you mentioned, you've got startups coming in, you got ChaosSearch, which Ed Walsh is now running, leave the data in place in AWS and really interesting model, Honeycomb is getting really disruptive, Jeremy Burton's company, Observed. So this space is it's becoming jumped ball. >> Yeah, there's a great line that came out of one of them, and that was that the lines are blurring. It used to be that you knew exactly that AppDynamics, what they were doing, it was APM only, or it was logging and monitoring only, and a lot of what I'm hearing from the ITDM experts is that the lines are blurring amongst all of these names. They all have functionality that kind of crosses over each other. And the other interesting thing is it used to be application versus infrastructure monitoring, but as you know, infrastructure is becoming code more and more and more, and as infrastructure becomes code, there's really no difference between application and infrastructure monitoring. So we're seeing a convergence and a blurring of the lines in this space, which really doesn't bode well, and a great point about New Relic, their tech gets good remarks. I just don't know if their enterprise level service and sales is up to snuff right now. As one of my experts said, a CTO of a very large public online hospitality company essentially said that he would be shocked that within 18 months if all of these players are still standalone, that there needs to be some M and A or convergence in this space. >> Okay, now we're going to call out some of the data that really has jumped out to ETR in the latest survey, and some of the names that are getting the most queries from ETR clients, many of which are investor clients. So let's start by having a look at one of the most important and prominent work from home names, Zoom. Let's look at this. Erik is the ride over for Zoom? >> Ah, I've been saying it for a little bit of a time now actually. I do believe it is, and we'll get into it, but again, pointing out, great, Dave, the reason we're presenting today Splunk, Elastic and Zoom, they are the most viewed on the ETR+ platform. Trailing behind that only slightly is F5, I decided not to bring F5 to the table today 'cause we don't have a rating on the data set. So then I went one deep, one below that and it's pure. So the reason we're presenting these to you today is that these are the ones that our clients and our community are most interested in, which is hopefully going to gain interest to your viewers as well. So to get to Zoom, yeah, I call Zoom the pandemic bull market baby. This was really just one that had a meteoric ride. You look back, January in 2020, the stock was at $60 and 10 months later, it was like 580, that's in 10 months. That's cooled down a little bit into the mid-300s, and I believe that cooling down should continue, and the reason why is because we are seeing huge deceleration in our spending intentions. They're hitting all-time lows, it's really just a very ugly dataset. More importantly than the spending intentions, for the first time, we're seeing customer growth in our survey flatten. In the past, we knew that the deceleration of spend was happening, but meanwhile, their new customer growth was accelerating, so it was kind of hard to really make any call based on that. This is the first time we're seeing flattening customer growth trajectory, and that in tandem with just dominance from Microsoft in every sector they're involved in, I don't care if it's IP telephony, productivity apps or the core video conferencing, Microsoft is just dominating. So there's really just no way to ignore this anymore. The data and the commentary state that Zoom is facing some headwinds. >> Well, plus you've pointed out to me that a lot of your private conversations with buyers says that, "Hey, we're, we're using the freebie version of Zoom, and we're not paying them." And that combined with Teams, I mean, it's... I think, look, Zoom, they've got to figure out how to use their elevated market cap to transform and expand their TAM, but let's move on. Here's the data on Pure Storage and we've highlighted a number of times this company is showing elevated spending intentions. Pure announced it's earnings in May, IBM just announced storage, it was way down actually. So still, Pure, more positive, but I'll on that comment in a moment, but what does this data tell you, Erik? >> Yeah, right now we started seeing this data last survey in January, and that was the first time we really went positive on the data set itself, and it's just really continuing. So we're seeing the strongest year-over-year acceleration in the entire survey, which is a really good spot to be. Pure is also a leading position among its sector peers, and the other thing that was pretty interesting from the data set is among all storage players, Pure has the highest positive public Cloud correlation. So what we can do is we can see which respondents are accelerating their public Cloud spend and then cross-reference that with their storage spend and Pure is best positioned. So as you and I both know, digital transformation Cloud spending is increasing, you need to be aligned with that. And among all storage sector peers, Pure is best positioned in all of those, in spending intentions and adoptions and also public Cloud correlation. So yet again, to start another really strong dataset, and I have an anecdote about why this might be happening, because when I saw the data, I started asking in my interviews, what's going on here? And there was one particular person, he was a director of Cloud operations for a very large public tech company. Now, they have hybrid, but their data center is in colo, So they don't own and build their own physical building. He pointed out that during COVID, his company wanted to increase storage, but he couldn't get into his colo center due to COVID restrictions. They weren't allowed. You had 250,000 square feet, right, but you're only allowed to have six people in there. So it's pretty hard to get to your rack and get work done. He said he would buy storage, but then the colo would say, "Hey, you got to get it out of here. It's not even allowed to sit here. We don't want it in our facility." So he has all this pent up demand. In tandem with pent up demand, we have a refresh cycle. The SSD depreciation cycle is ending. SSDs are moving on and we're starting to see a new technology in that space, NVMe sorry, technology increasing in that space. So we have pent up demand and we have new technology and that's really leading to a refresh cycle, and this particular ITDM that I spoke to and many of his peers think this has a long tailwind that storage could be a good sector for some time to come. >> That's really interesting, thank you for that extra metadata. And I want to do a little deeper dive on storage. So here's a look at storage in the industry in context and some of the competitive. I mean, it's been a tough market for the reasons that we've highlighted, Cloud has been eating away that flash headroom. It used to be you'd buy storage to get more spindles and more performance and we're sort of forced to buy more, flash, gave more headroom, but it's interesting what you're saying about the depreciation cycle. So that's good news. So ETR combines, just for people's benefit here, combines primary and secondary storage into a single category. So you have companies like Pure and NetApp, which are really pure play primary storage companies, largely in the sector, along with Veeam, Cohesity and Rubrik, which are kind of secondary data or data protection. So my quick thoughts here that Pure is elevated and remains what I call the one-eyed man in the land of the blind, but that's positive tailwinds there, so that's good news. Rubrik is very elevated but down, it's big competitor, Cohesity is way off its highs, and I have to say to me, Veeam is like the Steady Eddy consistent player here. They just really continue to do well in the data protection business, and the highs are steady, the lows are steady. Dell is also notable, they've been struggling in storage. Their ISG business, which comprises servers and storage, it's been softer in COVID, and during even this new product rollout, so it's notable with this new mid range they have in particular, the uptick in Dell, this survey, because Dell is so large, a small uptick can be very good for Dell. HPE has a big announcement next month in storage, so that might improve based on a product cycle. Of course, the Nimble brand continues to do well, IBM, as I said, just announced a very soft quarter, down double digits again, and they're in a product cycle shift. And NetApp, it looks bad in the ETR data from a spending momentum standpoint, but their management team is transforming the company into a Cloud play, which Erik is why it was interesting that Pure has the greatest momentum in Cloud accounts, so that is sort of striking to me. I would have thought it would be NetApp, so that's something that we want to pay attention to, but I do like a lot of what NetApp is doing, and other than Pure, they're the only big kind of pure play in primary storage. So long-winded, intro there, Erik, but anything you'd add? >> No, actually I appreciate it as long-winded. I'm going to be honest with you, storage is not my best sector as far as a researcher and analyst goes, but I actually think that a lot of what you said is spot on. We do capture a lot of large organizations spend, we don't capture much mid and small, so I think when you're talking about these large, large players like NetApp not looking so good, all I would state is that we are capturing really big organization spending attention, so these are names that should be doing better to be quite honest, in those accounts, and at least according to our data, we're not seeing it in. It's longterm depression, as you can see, NetApp now has a negative spending velocity in this analysis. So, I can go dig around a little bit more, but right now the names that I'm hearing are Pure, Cohesity. I'm hearing a little bit about Hitachi trying to reinvent themselves in the space, but I'll take a wait-and-see approach on that one, but pure Cohesity are the ones I'm hearing a lot from our community. >> So storage is transforming to Cloud as a service. You've seen things like Apex in GreenLake from Dell and HPE and container storage. A little, so not really a lot of people paying attention to it, but Pure bought a company called Portworx which really specializes in container storage, and there's many startups there, they're trying to really change the way. David Flynn, has a startup in that space, he's the guy who started Fusion-io. So a lot of transformations happening here. Okay, I know it's been a long segment, we have to summarize, and let me go through a summary and then I'll give you the last word, Erik. So tech spending appears to be tracking US GDP at 6 to 7%. This talent shortage could be a blocker to accelerating IT deployments, so that's kind of good news actually for services companies. Digital transformation, it remains a priority, and that bodes, well, not only for services, but automation. UiPath went public this week, we profiled that extensively, that went public last Wednesday. Organizations that sit at the top face some tough decisions on how to allocate resources. They're running the business, growing the business, transforming the business, and we're seeing a bifurcation of spending and some residual effects on vendors, and that remains a theme that we're watching. Erik, your final thoughts. >> Yeah, I'm going to go back quickly to just the overall macro spending, 'cause there's one thing I think is interesting to point out and we're seeing a real acceleration among mid and small. So it seems like early on in the COVID recovery or COVID spending, it was the deep pockets that moved first, right? Fortune 500 knew they had to support remote work, they started spending first. Around that in the Fortune 500, we're only seeing about 5% spend, but when you get into mid and small organizations, that's creeping up to eight, nine. So I just think it's important to point out that they're playing catch up right now. I also would point out that this is heavily skewed to North America spending. We're seeing laggards in EMEA, they just don't seem to be spending as much. They're in a very different place in their recovery, and I do think that it's important to point that out. Lastly, I also want to mention, I know you do such a great job on following a lot of the disruptive vendors that you just pointed out, with Pure doing container storage, we also have another bi-annual survey that we do called Emerging Technology, and that's for the private names. That's going to be launching in May, for everyone out there who's interested in not only the disruptive vendors, but also private equity players. Keep an eye out for that. We do that twice a year and that's growing in its respondents as well. And then lastly, one comment, because you mentioned the UiPath IPO, it was really hard for us to sit on the sidelines and not put some sort of rating on their dataset, but ultimately, the data was muted, unfortunately, and when you're seeing this kind of hype into an IPO like we saw with Snowflake, the data was resoundingly strong. We had no choice, but to listen to what the data said for Snowflake, despite the hype. We didn't see that for UiPath and we wanted to, and I'm not making a large call there, but I do think it's interesting to juxtapose the two, that when snowflake was heading to its IPO, the data was resoundingly positive, and for UiPath, we just didn't see that. >> Thank you for that, and Erik, thanks for coming on today. It's really a pleasure to have you, and so really appreciate the collaboration and look forward to doing more of these. >> Yeah, we enjoy the partnership greatly, Dave. We're very happy to have you on the ETR family and looking forward to doing a lot, lot more with you in the future. >> Ditto. Okay, that's it for today. Remember, these episodes are all available as podcasts wherever you listen. All you have to do is search "Breaking Analysis" podcast, and please subscribe to the series. Check out ETR website it's etr.plus. We also publish a full report every week on wikibon.com and siliconangle.com. You can email me, david.vellante@siliconangle.com, you can DM me on Twitter @dvellante or comment on our LinkedIn posts. I could see you in Clubhouse. This is Dave Vellante for Erik Porter Bradley for the CUBE Insights powered by ETR. Have a great week, stay safe, be well and we'll see you next time. (bright music)

>>from around the globe. It's the Cube with digital coverage of AWS reinvent 2020 sponsored by Intel, AWS and our community partners. >>Hello and welcome to the Cube virtual here with coverage of aws reinvent 2020. I'm your host, Justin Warren. And today I'm joined by J. Snyder, who is the chief chief customer officer at New Relic J. Welcome to the Cube. >>It is fantastic. Me back with the Cube. One of my favorite things to do has been for years. So I appreciate you having me. >>Yes, a bit of a cube veteran. Been on many times. So it's great to have you with us here again. Eso you've got some news about new relic and and Amazon away W s strategic collaboration agreement. I believe so. Maybe tell us a bit more about what that actually is and what it means. >>Yes. So we've been partners with AWS for years, but most recently in the last two weeks, we've just announced a five year strategic partnership that really expands on the relationship that we already had. We had a number of integrations and competencies already in place, but this is a big deal to us. and and we believe a big deal. Teoh A W s Aziz Well, so really takes all the work we've done to what I'll call the next level. It's joint technology development where were initially gonna be embedding new relic one right into the AWS management console for ease of use and really agility for anyone who's developing and implementing Ah cloud strategy, uh, big news as well from an adoption relative to purchase power so you can purchase straight through the AWS marketplace and leverage your existing AWS spend. And then we're gonna really be able to tap into the AWS premier partner ecosystem. So we get more skills, more scale as we look to drive consulting and skills development in any implementation for faster value realization and overall success in the cloud. So that's the high level. Happy to get into a more detailed level if you're interested around what I think it means to companies but just setting the stage, we're really excited about it as a company. In fact, I just left a call with a W S to join this call as we start to build out the execution plan for the next five years look like >>fantastic. So for those who might be new to new relic and aren't particularly across the sort of field of observe ability, could you just give us a quick overview of what new relic does? And and then maybe talk about what the strategic partnership means for for the nature of new relics business? >>Yes, so when I think about observe ability and what it means to us as opposed to the market at large, I would say our vision around observe ability is around one word, and that word is simplification. So, you know, I talked to a lot of customers. That's what I do all the time. And every time I do, I would say that there's three themes that come up over and over. It's the need to deliver a customer experience with improved up time and ever improving importance. It's the need to move more quickly to public cloud to embrace the scale and efficiency public cloud services have to offer. And then it's the need to improve the efficiency and speed of their own engineering teams so they can deliver innovation through software more quickly. And if you think about all those challenges And what observe ability is it's the one common thread that cuts across all those right. It's taking all of the operational data that your system admits it helps you measure improve the customer, experience your ability to move to public cloud and compare that experience before you start to after you get there. The effectiveness of your team before you deploy toe after you get there. And it's all the processes around that right, it helps you be almost able to be there before your there there. I mean, if that makes sense right, you'll be able to troubleshoot before the event actually happens or occurs. So our vision for this is like I talked about earlier is all about simply simplification. And we've broken this down into literally three piece parts, right? Three products. That's all we are. The first is about having a much data as you possibly can. I talked about admitting that transactional telemetry data, so we've created a telemetry data platform which rides on the world's most powerful database, and we believe that if we can take all of that data, all that infrastructure and application data and bring it into that database, including open source data and allow you to query it, analyze it and take action against it. Um, that's incredibly powerful, but that's only part one. Further, we have a really strong point of view that anybody who has the ability to break production should have the ability to fix production. And for us, that's giving them full stack observe ability. So it's the ability to action against all of that data that sits in the data platform. And then finally, we believe that you need to have applied intelligence because there's so many things that are happening in these complex environments. You wanna be able to cut through the noise and reduce it to find those insights and take action in a way that leverages machine learning. And that, for us, is a i ops. So really for us. Observe ability. When I talked about simplification, we've simplified what is a pretty large market with a whole bunch of products, just down to three simple things. A data platform, the ability to operationalize in action against that data and then layer on top in the third layer, that cake machine learning so it could be smarter than you can be so it sees problems before they occur. And that And that's what that's what I would say observe, ability is to us, and it's the ability to do that horizontally and vertically across your entire infrastructure in your entire stack. I hope that makes sense. >>Yeah, there's a lot of dig into there, So let's let's start with some of that operational side of things because I've long been a big believer in the idea of cloud is being a state of mind rather than a particular location on. A lot of people have been embracing Cloud Way Know that for we're about 10 or so years. And the and the size of reinvent is proven out how popular cloud could be. Eso some of those operational aspects that you were talking about there about the ability to react are particularly like that. You you were saying that anyone who could break production should be able to fix production. That's a very different way of working than what many organizations would be used to. So how is new relic helping customers to understand what they need to change about how they operate their business as they adopt some of these methods. >>Well, it's a great question. There's a couple of things we do. So we have an observe ability, maturity framework by which we employ deploy and that, and I don't want to bore the audience here. But needless to say, it's been built over the last year, year and a half by using hundreds of customers as a test case to determine effectively that there is a process that most companies go through to get to benefits realization. And we break those benefit categories into two different areas, one around operational efficiency and agility. The other is around innovation and digital experience. So you were talking about operational efficiency, and in there we have effectively three or four different ways and what I call boxes on how we would double, click and triple click into a set of actions that would lead you to an operational outcome. So we have learned over time and apply to methodology and approach to measure that. So depending on what you're trying to do, whether it's meantime to recover or meantime, to detect, or if you've got hundreds of developers and you're finding that they're ineffective or inefficient and you want to figure out how to deploy those resource is to different parts of the environment so you can get them to better use their time. It all depends on what your business outcome and business objective is. We have a way to measure that current state your effectiveness ply rigor to it and the design a process by using new relic one to fill in those gaps. And it can take on the burden of a lot of those people. E hate to say it because I'm not looking to replace any individual. It's really about freeing up their time to allow them to go do something in a more effective and more effective, efficient manner. So I don't know if that's answering the question perfectly, but >>e don't think there is a perfect answer to its. Every customer is a bit different. >>S So this is exactly why we developed the methodology because every customer is a little different. The rationale, though, is yeah, So the rationale there's a lot of common I was gonna say there's a lot of common themes, So what we've been able to develop over time with this framework is that we've built a catalog of use cases and experiences that we can apply against you. So depending on what your business objectives are and what you're trying to achieve, were able to determine and really auger in there and assess you. What is your maturity level of being able to deliver against these? Are you even using the platform to the level of maturity that would allow you to gain this benefit realization? And that's where we're adding a massive amount of value. And we see that every single day with our customers who are actually quite surprised by the power of the platform. I mean, if you think traditionally back not too far, two or even three years. People thought of new relic as an a P M. Company. And I think with the launch this summer, this past July with new relic one, we've really pivoted to a platform company. So while a lot of companies love new relic for a PM, they're now starting to see the power of the platform and what we can do for them by operationally operationalize ing. Those use cases around agility and effectiveness to drive cost and make people b'more useful and purposeful with their time so they can create better software. >>Yeah, I think that's something that people are realizing a lot more lately than they were previously. I think that there was a lot of TC analysis that was done on a replacement of FTE basis, but I think many organizations have realized that well, actually, that doesn't mean that those people go away. They get re tasked to do new things. So any of these efficiency, you start with efficiency. And it turns out actually being about business agility about doing new things with the same sort with the same people that you have who now don't have to do some of these more manual and fairly boring tasks. >>Yeah, just e Justin. If this if this cube interview thing doesn't work out for you were hiring some value engineers Right now it sounds like you've got the talk track down perfectly, because that's exactly what we're seeing in the market place. So I agree. >>So give us some examples, if you can, of maybe one or two off things that you've seen that customers have have used new relic where they've stripped out some of that make work or the things that they don't really need to be doing. And then they're turning that into new agility and have created something new, something more individual. Have you got an example you could share with us? >>You know, it's it's funny way were just I just finished doing our global customer advisory boards, which is, you know, rough and tough about 100 customers around the world. So we break it into the three theaters, and we just we were just talking with a particular customer. I don't want to give their name, but the session was called way broke the sessions into two different buckets, and I think every customer buys products like New Relic for two reasons. One is to either help them save money or to help them make money. So we actually split the sessions into those two areas and e think you're talking about how do we help them? How do we help them save money? And this particular company that was in the media industry talked at great length about the fact that they are a massive news conglomerate. They have a whole bunch of individual business units. They were decentralized and non standardized as it related to understanding how their software was getting created, how they were defining and, um, determining meantime to recover performance metrics. All these things were happening around them in a highly complex environment, just like we see with a lot of our customers, right? The complexity of the environments today are really driving the need for observe ability. So one of the things we did with them is we came in and we apply the same type of approach that we just discussed. We did a maturity assessment for them, and we find a found a variety of areas where they were very immature and using capabilities that existed within the platform. So we're able to light up a variety of things around. Insights were able to take more data in from a logging perspective. And again, I'm probably getting a little bit into the weeds for this particular session. But needless to say, way looked at the full gamut of metrics, events, logs and traces which was wasn't really being done in observe, ability, strategy, manner, and deploy that across the entire enterprise so created a standard platform for all the data in this particular environment. Across 5th, 14 different business units and as a byproduct, they were able to do a variety of things. One, the up time for a lot of their customer facing media applications improved greatly. We actually started to pivot from actually driving cost to showing how they could quote unquote make money, because the digital experience they were creating for a lot of their customers reduced the time to glass, if you will, for clicking the button and how quickly they could see the next page, the next page or whatever online app they were looking to get dramatically. So as a byproduct of this, they were about the repurpose to the point you made Justin. Dozens of resource is off of what was traditionally maintenance mode and fighting fires in a reactive capability towards building new code and driving new innovation in the marketplace. And they gave a couple of examples of new applications that they were able to bring to market without actually having to hire any net New resource is so again, I don't want to give away the name, the company, it maybe it was a little too high level, but it actually plays perfectly into exactly what what you're describing, Um, >>that is a good example of one of those that one of the it's always nice to have a specific concrete customer doing one of these kinds of things that you you describe in generic terms. Okay. No, this is this is being applied very specifically to one customer. So we're seeing those sorts of things more and more. >>Yeah, and I was gonna give you, you know, I thought about in advance of this session. You know, what is a really good example of what's happening in the world around us today? And I thought of particular company that we just recently worked with, which is check. I don't know if you're familiar with keg, if you've heard of them. But their education technology company based in California and they do digital and physical textbook rentals. They do online tutoring an online customer services. So, Justin, if you're like me or the rest of the world and you have kids who are learning at home right now, think about the amount of pressure and strain that's now being put on this poor company Check to keep their platform operational 24 77 days a week. So that students can learn at pace and keep up right. And it's an unbelievable success story for us and one that I love, because it touches me personally because I have three kids all doing online, learning in a variety of different manners right now. And, you know, we talked about it earlier. The complexity of some of the environments today, this is a company that you would never gas, but they run 500 micro services and highly complex, uh, technical architectural right. So we had to come in and help these folks, and we're able to produce their meantime to recover because they were having a lot of issues with their ability to provide a seamless performance experience. Because you could imagine the volume of folks hitting them these days on. Reduce that meantime to recover by five X. So it's just another example we're able to say, you know, it's a real world example. Were you able to actually reduce the time to recover, to provide a better experience and whether or not you want to say that saving money or making money? What I know for sure is is giving an incredible experience so that folks in the next generation of great minds aren't focused on learning instead of waiting to learn right, So very cool. >>That is very cool. And yes, and I have gone through the whole teaching kids >>about on >>which is, uh, which it was. It was disruptive, not necessarily in a good way, but we all we adapted and learned how to do it in a new way, which is, uh, it was a lot easier towards the end than it was at the beginning. >>I'd say we're still getting there at the Snyder household. Justin, we're still getting >>was practice makes perfect eso for organizations like check that who might be looking at JAG and thinking that that sounds like a bit of a success story. I want to learn more about how new relic might be able to help me. How should they start? >>Well, there's a lot of ways they can start. I mean, one of the most exciting things about our launch in July was that we have a new free tier. So for anybody who's interested in understanding the power of observe ability, you could go right to our website and you can sign up for free and you can start to play with new relic one. I think once you start playing for, we're gonna find the same thing that happens to most of the folks to do that. They're gonna play more and more and more, and they're gonna start Thio really embrace the power. And there's an incredible new relic university that has fantastic training online. So as you start to dabble in that free tier, start to see with the power and the potential is you'll probably sign up for some classes. Next thing you know, you're often running, so that is one of the easiest ways to get exposed to it. So certainly check us out at our website and you can find out all about that free tier. And what observe ability could potentially mean to you or your business. >>And as part of the AWS reinvent experience, are they able to engage with you in some way? >>It could definitely come by our booth, check us out, virtually see what we have to say. We'd love to talk to them, and we'd be happy to talk to you about all the powerful things we're doing with A. W. S. in the marketplace to help meet you wherever you are in your cloud journey, whether it's pre migration during migration, post migration or even optimization. We've got some incredible statistics on how we can help you maximize and leverage your investment in AWS. And we're really excited to be a strategic partner with them. And, you know, it's funny. It's, uh, for me to see how observe ability this platform can really touch every single facet of that cloud migration journey. And, you know, I was thinking originally, as I got exposed to this, it would be really useful for identity Met entity relationship management at the pre migration phase and then possibly at the post migration flays is you try to baseline and measure results. But what I've come to learn through our own process, of moving our own business to the AWS cloud, that there's tremendous value everywhere along that journey. That's incredibly exciting. So not only are we a great partner, but I'm excited that we will be what I call first and best customer of AWS ourselves new relic as we make our own journey to the cloud >>or fantastic and I'm I encourage any customers who might be interested in new relic Thio definitely gone and check you out as part of the show. Thank you. J. J. Snyder from New Relic. You've been watching the Cube virtual and our coverage of AWS reinvent 2020. Make sure that you check out all the rest of the cube coverage of AWS reinvent on your desktop laptop your phone wherever you are. I've been your host, Justin Warren, and I look forward to seeing you again soon.

>> From theCUBE Studios in Palo Alto in Boston, bringing you data-driven insights from theCUBE and ETR, this is Breaking Analysis with Dave Vellante. >> Application performance management AKA APM, you know it's been around since the days of the mainframe. Now, as systems' architectures became more complex, the technology evolved to accommodate client-server, web-tier architectures, mobile and now of course, cloud-based systems. A spate of vendors have emerged to solve the sticky problems associated with ensuring consistent and predictable user experiences. The market has grown, I mean it's decent size, it's about $5 billion globally. It's growing at a consistent 10% CAGR. It's got a variety of established companies and new entrants that are attacking this space. Hi everyone, welcome to this week's Wikibon Cube Insights powered by ETR. My name is Dave Vellante and today, we welcome back ETR's Erik Bradley, who was the chief engagement strategist at Aptiviti which is the holding company of our data partner, ETR. Erik, my friend, great to see you. Thanks so much for coming on and spending some time with us. >> Oh, always enjoy it Dave. Great to see you too and I'm just glad I got some fresh material for ya. >> As always, you have fresh data. Now, Erik just recently hosted an ETR VENN session and on this particular topic, APM. Now VENNs are an open round table, they're exclusively available to ETR's clients and what we do is we sometimes come in theCUBE and we summarize those sessions in our Breaking Analysis. Now Erik, yo let's start with a summary slide here, guys, if you could bring that up, we just want to make a couple of points and... So as I said Erik, I mean this started back, you know in the System/390 days. Now, distributed systems and cloud of course create a lot more complexity, you got data that's really fragmented. You got user data, you got application data, you have infrastructure data and it gets complicated and you've got guys in lab coats having to come in and diagnose these stuff, lot of tribal knowledge. What are you seeing in the space? >> Well yeah, you know to start back, you know it's funny when the panel I hosted, one of the guys even brought up Tivoli, how long ago that was right? Then of course you get, you know you have the solar winds and you had people like that trying to just kind of monitor your network. You know what we've heard a lot about now is infrastructure has really become code-based. So when that happens, you really start wondering to yourself the lines are blurring between infrastructure and application because at the end of the day, what you're really monitoring is code. So it has gotten incredibly complex, you have OnPrem, you have hybrid, you have multi-cloud approach so it has gotten extremely complex and there's also now a third wave of next-gen vendors getting involved in the mix as well. As you're aware, New Relic and Datadog, obviously, Splunk has been in logging and monitoring for a long time. You also had some of the traditional players throw their hat in the ring through acquisition, that you know AppDynamics gobbled up by Cisco and obviously Splunk trying to continue to reinvent themselves a little bit by SignalFx. So it is a very crowded, complex space, it is a complicated problem but it's also a problem that needs to be solved. You know, we were looking at, you said in your intro about, it's only about a $5 billion market right now but there's been a lot of data out there from industry analysts saying that that's going to grow quite handsomely over the next five years and it could get up to 13, 14, 15 billion. And when I asked my panel about that, I had one gentleman say without a doubt, they see the next 10 years that spending in this space will continue. And when you pry and ask why, they simply state that digital transformation is not going to stop, it's marching forward, whether anyone likes it or not and as it does, monitoring is going to be critical, it's only going to increase and increase and increase. So right now, to your point, it's a small market but it's a growing market and there's a lot of entrance in there and their whole goal is to reduce this complexity that you're talking about. >> Now, one of the things we heard from the panel, guys if you bring up that same slide again, you know the third point on that slide was what's closely tied to digital transformation. You heard a number of individuals say, "Look, your digital business is critical, it's all about monitoring your applications and your data and your infrastructure. And we heard a lot that they wanted a, a single pane of glass and you made a number of points about the market. What are your thoughts on both the digital transformation, maybe the COVID acceleration of that mandate and that notion of a single pane of glass, is that aspirational or is it, in your view, something that is actually technically feasible? >> Not only is it technically feasible, it has to happen. It's going to be demanded by the large enterprise, they can't continue to monitor hundreds and hundreds of applications. They need something that not only can give them observability through their entire stack, but they need to be able to view it in one way, there's enough fatigue in monitoring and logging. And actually it goes even further than one pane of glass, they're demanding that these systems can now actually employ machine learning algorithms to be proactive. It's not enough to just say, "Okay, I observed this," you have to let me know that this may happen in the future and what to do about it. So not only is it feasible, it's something that is being demanded by the end-user market and the players that survive are the ones that already have that in their roadmap. >> Now, as we always like to do in these sessions, we're going to bring up some ETR data and we like to position the companies. So what we do is, we're going to bring up some of the pure players, pure-play companies and you can see them on this slide. But Erik, and when we talk about companies in this space, they are well over a dozen. It's just again for reference, you know it's Cisco with AppD, you mentioned that before Dynatrace is one of the leaders, New Relic has been around for awhile and is doing well, Splunk, Datadog. Now of course, and we're not showing them here, AWS, Microsoft and Google cause they just sort of, they pollute the chart. But so I want to start with the guys that are on this view and maybe talk about a few. Elastic came up a lot, certainly AppD came up a little, Dynatrace was obviously mentioned, especially in large organizations. Lot of conversations about New Relic. So let's go through them. Where do you want to start here? >> Yeah there's a lot to go through and we did spend the majority of the panel talking about the individual players, the differences between them and also what we thought their longer term prospects were but yeah, we'll go through each one. I think maybe to start with, let's go back in time a little bit, right? Cisco is a wonderful acquirer, they do a great job at M&A. A lot of companies will acquire something and let it die on the vine. Cisco has proven recently that they are reinventing themselves as a full platform play, whether that be through, you know, kind of, their networking reach or whether it be through the security. And AppDynamics is one of those that actually kind of gives you a little bit of both with being able to monitor. It is a great play for people that are already involved with Cisco. Now, I don't think you're going to see too many people that are non-Cisco customers run out and buy it. There you're going to see some of them, maybe the pure plays or one of my guests called the third wave of vendors. And that third wave is really about a Datadog and a New Relic. Let's talk about Datadog first. >> Yeah let's bring that back up guys, if you would. Now let me just, sorry to interrupt you Erik (indistinct) The vertical axis here is net score, that's the ETR's primary metric, and that's an indication of spending velocity, the higher, the better. And on the horizontal axis is market share. Now we're showing the July data, the October data is in the field, you know once ETR releases that to its clients, then we'll share that with you. But the first thing that jumps out at me is other than Elastic Erik, I mean, I'm not blown away by the spending momentum in this space but let's talk about that and then some of your thoughts on the specific vendors. >> Yeah, you know I'll go back because you asked a little bit about the digital transformation, I don't think I answered it fully. So to your comment about maybe not being impressed with the spend, I think this is one where the spend is going to come, kind of as a laggard because you're not going to rush out and go buy the software to monitor until you've built out the, what needs to be monitored. So as we're seeing this increase in the digital transformation, and I think you and I had a conversation in the past, but when COVID first hit and I did a series of panels, we had one person say that this virus is going to increase digital transformation by five to 10 years. Now that was an amazing statement. Basically, if you were on the fence, if you didn't, if you weren't already heading down to digital transformation, you needed to play catch up quickly. So now that you are doing that right, now that you're moving from OnPrem to a multicloud or a hybrid cloud environment, you have to get observability, you have to get monitoring into it. So now these players start to play catch up and this is where you're going to see the proof of concepts and you're going to see people trying to decide which direction they're going to take their company. Now back to the actual vendors. I believe that there is some differentiation, right? So we'll just take, for instance, Splunk. Splunk is obviously probably the biggest boy on the block when it comes to just straight up logging and monitoring. They've leveraged that big boy position to really, you know, add some costs, kind of intimidate their customers they've been compared in the past of the type of things that Oracle used to do from their cost perspective. And that's opened up some new competition, Datadog is one of those. According to my panel, Datadog is viewed more for logging and monitoring than it is truly full end-to-end observability throughout your entire network and application system. So that is one of the areas that's there. Now, to stay on those two names for a quick second, Splunk obviously has some holes in what they're trying to offer, they went out and tried to buy SignalFx to fill one of those holes. Now according to my panel again, did a great job filling that hole, problem is if you have a boat with three holes, you can't put your fingers everywhere. So they think, hey listen, Splunk scrape, they're going to keep the company they have and I know that we can talk a little bit more about valuations and the equity side later, but I think it's very clear that their sales and revenue are trending flat to down, whereas some of these other names still have great acceleration in their sales. So Splunk and Datadog both are really facing pressure from Elastic or generally just open-source. >> I was struck by the panel and how much emphasis they, how much complaining they did about Splunk pricing. Generally, I feel like hey, if your price is too high is the biggest objection, that's actually not a bad thing for a company but the way they kept hitting on it and said, "Hey, we're actively looking for alternatives" and Datadog was one of those and given the momentum that Datadog has, I don't think that that's necessarily a positive. But you know Splunk has a lot of loyal customers but you know to your point if you go back to the slide, Elastic came up very, very strong and they are head and shoulders from a spending momentum above the rest of the crowd here. >> Right. And you know, so you're right. If the only problem with a vendor or a technology is cost, usually you live with it because that means it's giving you what you need. So okay, it's expensive but it's also the best in breed and that's where Splunk has been for a very long time. And I think they're resting on their laurels knowing that. Enter Elastic and you say to these guys, the panel, I asked them, well okay, you can make Elastic work but is it truly a viable alternative from a technology standpoint? And the answer to that was not only is it viable, it's half the price. So if you can bring something in that can do the job the same and it's half the cost, it's really difficult not to at least try. And I had one of the other gentlemen who was a Datadog customer said, "Listen, we love Datadog, we were a huge customer and then I started getting enormous bills and I just switched over to open-source, I switched to Elastic, I switched to Kibana, I switched to Kafka and I can do this search myself. Now the difference is not every enterprise has the human skillset to do so and I'm not saying Splunk's going to turn around to disappear tomorrow, not even close. Because there is a difference in spending that money with the vendor or spending that money developing the human skillset to use open-source. But the bigger backdrop here is there are more alternatives than there used to be, there's more competition and the space is getting very crowded. >> Yeah, comment on open-source. I mean open-source is free like a puppy. But the thing about that, and we had one of the panelists was a very senior consultant, exclusively work with very large companies, he told a story about one of the companies years ago, he came in to solve a problem. The problem was they had 70% availability and then they had no visibility on their infrastructure and there's really no great, no good monitor, they get them up to whatever, five nines or two, three nines or wherever they got them to, but dramatic improvement. And so, but he said, "Look it, I work with companies with billions of dollars, $3 billion IT budgets so they don't rely on open-source for this stuff, they're happy to spend." But there's a huge market, particularly in the mid size where we heard that New Relic plays in a big way, it might be more receptive to open-source. >> Couple of great points there Dave, honestly. I'm going to jump over to the use case that was given by that person who was in a healthcare role. And essentially the part I didn't write into my summary was that his CEO was two days away from shutting down the entire business because he was so frustrated that he had no observability and Dynatrace was the one that was able to step in and fix that. And this gentleman did say that the majority of the companies that he does work with which are all in the Fortune 100, Dynatrace has a stranglehold in that spot. So that's really interesting to note. Now on the flip side, when pushed a little bit more later in the panel, he said, "Dynatrace is sort of resting on its laurels from a product roadmap standpoint and that's going to open up the possibility of a New Relic getting in," a transition to New Relic as you mentioned on their small to medium sized business. They recently launched a new pricing strategy which is basically a free version to get you involved to kind of get their hooks into you and see if you can work it out. And basically what they're trying to do there I think is, you know, make up for their lack of marketing. As you saw the panel that we spoke about said, "New Relic's technology is fantastic." They have the ability to provide a single pane of glass which is the Holy Grail in this space and they have the ability to provide machine learning and proactive type of ability which again are the two things that all of the end-users are asking for. The problem is that most people might not be aware of it because New Relic doesn't have as flashy a marketing department, they don't have the dollars as much as the others to go out there and compete with the Splunk and Dynatrace and Cisco. But from a roadmap perspective, it was almost unanimous that our panel agreed, New Relic is by far, one of the leaders from a functionality standpoint. >> Yeah, if you guys bring that slide up one more time, the X Y. I mean, I look at where New Relic is and I'm like wow, I'm surprised. I mean this company, I mean they were the hot company for awhile and I think still have the capability. You're talking about the technology. NRDB, New Relic database is like, it kicks ass. In fact, you know Erik, somebody brought up in the panel that they thought that snowflake could compete in this market because essentially Snowflake's positioning is this data cloud. But you know, here's New Relic, they have a purpose-built database specifically for monitoring an APM so you would think that with that technology, they could really make some moves. And then I just want to bring in two other companies to the mix here. Honeycomb who I think even their founder and former CEO now CTO, she coined the term I believe, observability. And there's another company that is run by Jeremy Burton, company's called Observe, okay (indistinct) and it's funded by the Silicon Valley Mafia. So that's going to be an interesting one to watch, they're coming out, well they're out of stealth but they're doing a launch on October 7th. So I think those are two companies that could disrupt this space and I would expect to see, as you said, it's a latent momentum in net score from a dataset standpoint because people are trying to plug the holes cause of COVID, you know security, work from home, that pivot and now it's really on to digital transformation and that's where APM really comes in. >> It really does and again, it comes back to that comment someone made a long time ago that everything's becoming code as software eats the world and everything becomes code, you need the ability to kind of monitor that code, enter Honeycomb. And as you know, we have two different studies at ETR, one of them is for emerging technology. Honeycomb is in our emerging technology study that's more of a private series B to series E round stage whereas our main study is for companies that are pre IPO or already public. But Honeycomb is a little bit different in my opinion, that they're focused very much so on the developers or the software engineers. They're a very microservices oriented type of product whereas some of the other ones may have started as an infrastructure monitoring and then kind of work their way backward into application. But Honeycomb certainly needs to be observed and it's funny when you talk about that, the one thing I think is, "Oh great, more players." The crowded space gets even more crowded. And I think well you know, kind of foreshadowing something you and I will be speaking about in a little bit but there's a lot of players in this space and there's a lot of other possible interest in there. You mentioned Snowflake. It actually wasn't brought up from our panelists, it was a question that came from one of my clients that said, "Hey, I'm curious, can snowflake play in this space?" And the panel thought about it for a second and said, "There's absolutely no reason why they can't, they most certainly can." And we all know the cash they have so I mean the easiest way to play in that would maybe be to buy some of the technology, integrate it in and yeah, they have that portability. And if I can real quickly, they've just, one of the things that came out that was so important about this, we haven't spoken about the vendors is, is the public cloud. The public cloud offers this. They offer monitoring, they'll give it to you for free. If I'm going to run Kubernetes at Google, I'm going to get the monitoring for free which is super nice, right? But if I have an enterprise that has multicloud or hybrid cloud, and I'm working outside of that public cloud silo, it doesn't work. This is the exact conversation you and I had about Snowflake. AWS Redshift's fantastic but it doesn't work outside of AWS. So if every one of our enterprises continues on the digital transformation, they need portability. They have to be able to go across any architecture structure and that's why these independent providers are really starting to gain steam when you would think they could never compete with the public cloud. >> Yeah man, that's a great point. And we've talked about this in the context of Snowflake that who are you going to trust with your multi-cloud strategy? Are you going to trust AWS? Are you going to trust Google? Yeah, okay, they got Anthos but we kind of know why they're taking that posture. Microsoft, look, I'm probably going to partner with somebody who can, who's maybe I have a relationship with them with my OnPrem and that is really sort of agnostic to the various clouds so I'm glad you brought that up. And you know the point you're making about Honeycomb is a good one and I'll add that, again, it gets more complex with microservices and containers, that's spinning them up, spinning them down. Sometimes these, first of all, these microservices, sometimes aren't that micro and second of all, you're sometimes talking about hundreds of thousands of containers so it's a really increasingly complex environment. All right. What I want to do is-- >> You didn't even touch on serverless, we'll do that some other day. >> Oh, yeah, I mean absolutely. A hundred percent, right. So, now let's take a look at some of the valuations, guys if you bring that up for me. So I put this little chart together and it's always instructive. Now I like to, simple guy Erik so I like to... So you see, the company, I take a trailing 12-month revenue and then the market cap as of 9/25. And then just a simple revenue multiple, just to get a sense, it's not a hardcore valuation model but it's interesting and there usually is a correlation to the growth rate, I just pulled that off the latest quarterly growth rate. I mean, look at Datadog. I mean that's like Snowflake pre IPO valuations. I mean you're really, right around there with smaller revenue, smaller growth rate, Snowflakes up in the whatever 120% range but well eye-popping. You know the same valuation as Splunk, I mean that's just amazing. What do you make of this data? >> Well, you know I was an equity analyst for almost 15 years on the Wall Street side. So the, my first caveat is a trailing revenue to the multiple is not always the same because people are looking at what the forward expected revenue will be but I actually do see the correlation here. And when you brought this up, my eyes popped open. I do not understand why Datadog has a 27 billion market cap on a trailing 350 million in revenue. I just don't know if their forward looking growth really warrants that and at the same time, then you look at a Splunk, right? I mean they have two and a half billion in revenue but their growth rate's down and truthfully, when I see a -5% growth rate, I don't know why you weren't at 12% sales either. I would argue that there's quite a few names on here that could be in for a reckoning, ETR actually as far back as a year ago caught this in our data and said, "Hey, there's some inflection points here and I think investors need to pay attention to them." And since we came out with the July report, a lot of these names we're talking about, despite insane valuations in the equity markets are flat to down. And, you know I do think that, hey if they stay stagnant and their technology is right but it's a crowded space, I think we're really leading to the point where as one of my panelists said, this industry is ripe for consolidation. These players are not all going to be here in 12 months, it's that simple. >> Yeah and by the way, thank you for mentioning that as a former equity analyst, you were right (indistinct) 12 months, it's kind of the rear-view mirror. But I'll tell you, two reasons why I do that. One is, I put the growth rate in there so you can pick your own growth rate and your own forward revenue. The other is it's really easy for me to get TTM off a Yahoo as opposed to >> Right exactly. >> And so truth be told. But, guys bring that back up one more time cause I want to make a point about New Relic. I mean I think they are potentially right for an M&A because they got great technology. Now remember Elliot Management is in there and when Elliot's is in there, stuff's going to happen. They're going to start cleaning house, they're going to really create changes, they don't just get in in a big way and sit back and watch, they are extremely active. And the New Relic, leader in this space, great technology, great heritage. So either they got to clean up and get that valuation back up maybe as you pointed out, little bit better marketing posture, et cetera or they get taken out. >> Yeah and let's think about the two things that coincide, right? You have one of the world's best activist funds get involved in Elliot Management. And as you said, they don't get involved to just sort of watch or observe as we're talking about here today, they are very active in trying to get some sort of a, you know, corporate action done. And at the same time, all of a sudden New Relic comes out with a new pricing model. They're trying to create a moat around the small to medium business, right? They're trying to grow their footprint. Now the great thing about getting involved in small to medium businesses, it starts off for free but you grow with them. So I don't think those two are a coincidence, let me just put it that way. I think that they're coming in, they're trying to entrench themselves in a new market and set themselves up for future growth and I truly believe that based on the product roadmap and the feedback we were getting from the end-users in my panel, New Relic has the ability to look across all architecture, it has the ability to provide a single pane of glass and it has the ability to incorporate machine learning for proactive response. Their roadmap is fantastic, they have an active manager inside as an investor, I don't think they're going to be around for much, much longer. And obviously that you look around and you wonder who the acquirers will be and it might be one of the major cloud players. >> Yeah that would be interesting. I mean it gives them a play in a multicloud world and either they're going to just use that for their own advantage or they will actually see that as an opportunity, we'll be itching to watch. Alright, anything we didn't cover that you want to touch on or give us your final thoughts, please Erik. >> You know I would also just sort of mention a little bit about Splunk. This is a company that has a tremendous amount of revenue, a tremendous installed customer base but many, many times we've seen it before and Oracle is the greatest example. They kind of forget about their customers and they don't treat them properly. And I can't tell you how many people I have mentioned to me said, "Hey when this all went down in the viral pandemic and I went to Splunk and I asked for a little bit of pricing flexibility, I asked for this, I asked for that and they just wouldn't give it to me." And I wrote an article once called (indistinct) never forget similar to an elephant. And when they come out the other side, they're going to find a way to replace them. And today I also wrote an article that it was our 200th interview and I entitled it, The Splunk Funk. And basically it's about all the alternatives that are now out there, not just open source, but other vendors, even the vulnerability management players like a Rapid7, like a Tenable are getting into this space now. Fortinet, which one guy called "Fortaeverything" is a company that's really expanding. So I would just really kind of caution some of those vendors out there that don't rest on your laurels, don't take your customers for granted because sooner or later, they're going to be in a position to bite the back. >> Well I'll say this about Splunk, I've been following the company since the early part of last decade and I've done a lot of Cube interviews at their shows. They do have a passionate, passionate customer base, they got the experts that run around with that crazy hat and I've seen Splunk killers emerge for the last decade and so... But I think your point is right. I mean they've, the SignalFx acquisition was something that, it was a hole to fill and it gets them into a subscription-based model, they're going through that transition now. But I think they have some real gravity with their customer base. So, all right, let me summarize. For years, the application monitoring and management, it's really relied on alerts, logs, traces and even what I call tribal knowledge. In that world of pre-distributed systems, that was fine, like I said a trace can tell you what was going on. But things have begotten much more complicated architecturally with cloud and mobile and they're really changing fast now. Erik mentioned serverless, we talked about containers. So, today it's much harder to understand the customer experience because it's difficult to get a full picture of the data. And what I mean by that is that the user data, the application data, the infrastructure data, they're all fragmented and the Holy Grail solution really takes all this disparate data, it ingests it, it transforms it. Connects the dots if you will, across clouds, Onprem and then it shapes it, brings in machine intelligence, really creating an organic systems view that can proactively tell you that there's a problem coming. And finally, nearly absolute Nirvana is doing this in a way that non-technical people are going to be able to understand the true user experience. You know in theory, this is going to allow organizations to remediate in 110th the time with much, much lower costs and that's going to be critical in this world of digital transformation. So thank you Erik, really appreciate you coming on today. >> Always enjoy it Dave, it's always great talking to you and hopefully we'll do it again soon. >> All right, I can't wait. And thank you everybody for watching this episode of theCUBE Insights powered by ETR. Remember these episodes, they're all available on podcasts. We publish weekly on wikibon.com and siliconangle.com so you got to check that out. And don't forget, go to etr.plus for all the survey action. Would appreciate if you kindly comment on my LinkedIn post or tweet me @dvellante or email at david.vellante@siliconangle.com This is Dave Vellante. Thanks so much to Erik Bradley, be well and we'll see you next time. (bouncy music)

>> Narrator: From theCUBE Studios in Palo Alto in Boston, connecting with thought leaders around the globe, these are Cloud Native Insights. >> Hi, I'm Stu Miniman the host of cloud native insights. And when we started this weekly program, we look at Cloud Native and you know, what does that mean? And of course, one of the most important topics in IT coming into 2020 was security. And once the global pandemic hit, security went from the top issue to oh my gosh, it's even more important. I've said a few times on the program while most people are working from home, it did not mean that the bad actors went home, we've actually seen an increase in the need for security. So really happy to be able to dig in and talk about what is Cloud Native security, and what should that mean to users? And to help me dig into this important topic, happy to welcome back to the program one of our CUBE alumni Dan Hubbard, he is the CEO of Lacework. Dan thanks so much for joining us. >> Thanks Stu. Happy to be here. >> Alright, so we don't want to argue too much on the Cloud Native term, I agree with you and your team. It's a term that like cloud before, it doesn't necessarily have a lot of meaning. But when we talk about modernization, we talked about customers leveraging the opportunity in innovation and cloud security of course is super important. You know most of us probably remember back, you go back a few years and it's like, "Oh well I adopt cloud. "It's secure, right? "I mean, it should just be built into my platform. "And I should have to think about that." Well, I don't think there's anybody out there at least hopefully there's not anybody out there that thinks that anything that I go to will just be inherently fully secure. So give us a little bit if you would, you know where you see us here in 2020 security's a complex landscape. What are you seeing? >> Yeah, so you know a lot of people as you said, used to talk about what's called the shared responsibility model, which was the cloud provider is responsible for a bunch of things. Like the physical access to the data center, the network, the hypervisor and you know that the core file system and operating system and then you're responsible for everything else that you could configure. But there's something that's not talked about as much. And that's kind of the shared irresponsibility model that's happening within companies where developers are saying they're not responsible for security saying that they're moving too fast. And so what we are seeing is that you know, as people migrate to the cloud or of course are born in the cloud, this notion of DevSecOps, or you know SecDevOps whatever you want to call it, is really about the architecture and the organization. It's not just about technology, and it's not just about people. And it's more about layer seven and eight, than it is about layer one to three. And so there's a bunch of trends that we're seeing in successful companies and customers and prospects will be seeing the market around how do they get to that level of cooperation between the security and the developers in the operation teams? >> Yeah Dan, first of all fully agree with what you're saying. I know when I go to like serverless.com they've got everybody chanting that security is everyone's responsibility. You know I think back to DevOps as a trend, when I read the Phoenix project it was, oh hey, the security is not something that you do bolt on, we're looking at after it's something that you need to shift into everyone thinking about it. Security is just going to be baked in along the process all the way. So the DevOps fail us when it comes to security, why do we need DevSecOps? You know why are you know as you say seven and eight the you know, political and organizational challenges still so much of an issue you know, decades into this discussion? >> Yeah. You know I think there's a few moving parts here and kind of post COVID is even more interesting is that companies have incredibly strategic initiatives to build applications that are core to their business. And in post COVID it's almost existential to their business. If you think of you know, markets like retail and hospitality and restaurants you know, they have to figure out how to digitize and how to deliver their business without potentially physical you know, access to two locations. So as that speed has happened, some of the safety has been left behind. And it's easy to say you have to kind of you know, one of our mantras is to run with speed and safety. But it's kind of hard to run with scissors you know, and be safe at the same time. So some of it is just speed. And the other is that unfortunately, the security people in many ways and the security products and a lot of the security solutions that are out there, the incumbents if you will, are trying to deliver their current solution in a cloud way. So they're doing sometimes it's called Cloud built or you know what I call Cloud washing and they're delivering a system that's not applicable to the modern infrastructure in the modern way that developers are building. So then you have a clash between the teams of like, "Hey I want to do this." And then I'd be like, "No you can't do that get out of our way. "This is strategic to the business." So a lot of it has just been you know, kind of combination of all those factors. >> Alright so Dan, we'll go back to Cloud Native security, you talked about sometimes people are Cloud washing, or they're just taking what they had putting it in the cloud. Sometimes it's just, oh hey we've got a SaaS model on this. Other times I hear cloud native security, and it just means hey I've got some hooks into Containers or Kubernetes. What does modern security look like? Help us understand a little bit. You mentioned some of the you know, legacy vendors what they're doing. I see lots of new security startups, some in you know specifically in that, you know, Kubernetes space. There's already been some acquisitions there. So you know, what do you see out there? You know what's good, what's bad in the trends that you're seeing? >> Yeah so I think the one thing that we really believe is that this is such a large problem that you have to be 100% focused on it. You know if you're doing this, you know, securing your infrastructure and securing your modern applications, and doing other parts of the business whether it's you know securing the endpoints of the laptops of the company and the firewall and authentication and all kinds of other things you have competing interests. So focus is pretty key. And it's obviously a very large addressable problem. What the market is telling us is a few things. The first one is that automation is critical. They may not have as many people to solve the problem. And the problem set is moving at such a scale that it's very, very hard to keep up. So a lot of people ask me you know, what do I worry about? You know, how do I stay awake at night? Or how do I get to sleep? And really the things I'm worried most about in the way where I spend most of my time on the product side is about how fast are builders building? Not necessarily about the bad guys. Now the bad guys are coming and they're doing all kinds of innovative and interesting things. But usually it starts off with the good guys and how they're deploying and how they're building. And you know, the cloud providers literally are releasing API's and new acronyms almost weekly it seems. So like new technology is being created such a scale. So automation the ability to adapt to that is one key message that we hear from the customers. The other is that it has to solve or go across multiple categories. So although things like Kubernetes and Containers are very popular today. The cloud security tackle and challenges is much more complex than that. You've got infrastructure as code, you've got server lists, you've got kind of fragmented workloads, whether some are Containers, some are VMs, maybe some are armies and then some are Kubernetes. So you've got a very fragmented world out there, and all of it needs to be secured. And then the last one is probably the most consistent theme we're hearing is that as DevOps becomes involved, because they know the application and the stack much better than security, it has to fit into your modern workflow of DevOps. So that means you know, deep integrations into Jira and Slack and PagerDuty and New Relic and Datadog are a lot more important in integrating to your you know, Palo Alto firewall and your Cisco IDs system and your endpoint you know antivirus. So those are the real key trends that we're seeing from the customers. >> Yeah Dan, you bring up a really important point, leveraging automation. I'm wondering what you're hearing from customers, because there definitely is a little bit of concern, especially if you take something like security and say, okay well, automation. Is that something that I'm just going to let the system do it? Or is it giving me to getting me to a certain point that then a human makes the final decision and enacts what's going to happen there? Where are we along that journey? >> Yeah, so I think of automation in two lenses. The first lens is efficacy, which is you know do I have to write rules? And do I have to tune train and alter the system over time? Or can it do that on my behalf? Or is there a combination of both? So the notion of people writing rules and building rules is very, very hard in this world because things are moving so quickly. You know, what is the KMS you know threat surface? The threat attacks are just changing. And typically what happens when you write rules is they're either too narrow and you messed up or they're too broad you just get way too much noise. So there's automating the efficacy of the system. That's one that's really critical. The other one that is becoming more important is in the past it was called enforcement. And this is how do I automate a response to your efficacy. And in this scenario it were very, very early days. Some vendors have come out and said you know, we can do full remediation and blocking. And typically what happens is the DevOps team kind of gives the Heisman to the security team it says, "No, you're not doing that." You know this is my production servers, and my infrastructure that's you know running our business, you can't block anything without us knowing about it. So I think we're really early. I believe that you know we're going to move to a world that's more about orchestration and automation, where there's a set of parameters where you can orchestrate certain things or maybe an ops assist mode. You know for example, we have some customers that will send our alerts to Slack, then they have a Slack bot and they say, "Okay, is it okay that Bob just opened "an S3 bucket in this region, yes or no?" No, and then it runs a serverless function and closes it. So there's kind of a what we call driver assist mode versus you know full you know, no one behind the steering wheel today. But I think it's going to mature over time. >> Yeah, Dan one of the other big challenges customer has is that their environments are even more fragmented than they would in the past. So often they're leveraging multiple cloud providers, multiple SaaS providers then they have their hosting providers. And security is something that I need to have holistically across these environments but not have to worry about okay, do I have the skill set and understanding between those environments? Hopefully you know that's something you see out there and want to understand, you know how the security industry in general and maybe Lacework specifically is helping customers, get their arms a little bit more around that multi cloud challenge if you will? >> Yeah. So I totally agree things are you know, I think we have this Silicon Valley, West Coast bias that the world is all you know, great. And it says to utopia Kubernetes, modern infrastructure, everything runs up and down, and it's all you know super easy. The reality is much different. Even in the most sophisticated sets of infrastructure in the most sophisticated customers are very fragmented and diverse. The other challenge that security runs into is security in the past a lot of traditional security mindsets are all about point in time. And they're really all about inventory. So you know, I know used to be able to ask, you know a security person, how many servers do you have? Where are they? What are they doing this? They say, "Oh, you know we have 10 racks with 42 servers in each rack. "And here's our IP addresses." Nowadays, the answer is kind of like, "I don't know what time is it you know, "how busy is a service?" It's very ephemeral. So you have to have a system which can adapt with the ephemeral nature of everything. So you know in the past it was really difficult to spin up, say 10,000 servers in a Asia data center for four hours to do research you know. Security probably know if that's happening, you know they would know through a number of different ways could make big change control window would be really hard they have to ship the units, they bake them in you know, et cetera. Nowadays that's like three lines of code. So the security people have to know and get visibility into the changes and have an engine which can determine those changes and what the risk profile of those in near real time. >> Yeah it's the what we've seen is the monitoring companies out there now talking all about observability. Its real time, it's streamings. You know it reminds me of you know my physics. So you know Heisenberg's uncertainty principle when you try to measure something, you already can't because it's already changed. So what does that mean-- >> Dan: Yeah. >> You know what does security look like in my you know, real time serverless ever changing world? You know, how is it that we are going to be able to stay secure? >> Yeah, so I think there are some really positive trends. The first one is that this is kind of a reboot. So this is kind of a restart. You know there are things we've learned in the past that we can bring forward but it's also an opportunity to kind of clean the slate and think about how we can rebuild the infrastructure. The first kind of key one is that over time security in the traditional data center started understanding less and less about the application over time, what they did was they built this big fortress around it, some called it defense in depth you know, the Security Onion whatever you want to call it you know, the M&M'S. But they were really lacking in the understanding of the application. So now security really has to understand the application because that's the core of what's important. And that allows them to be smarter about what are the changes in their environment, and if those are good, bad or indifferent. The other thing that I think is interesting is that compliance was kind of a dirty word that no one really wanted to talk about. It was kind of this boring thing or auditors would show up once every six months go through a very complex checklist and say you're okay. Now compliance is actually very sophisticated. And the ability to look at your configuration in near real time and understand if you are compliant or following best practices is real. And we do that for our customers all the time. You know we can tell them how they're doing against the compliance standard within a you know, a minute timeframe. And we can tell that they're drifting in and out of that. And the last one and the one that I think most are excited about is really the journey towards least privileges and minimizing the scope of your attack surface within your developers and their access in your infrastructure. Now it's... We're pretty far from there, it's an easy thing to say it's a pretty hard thing to do. But getting towards and driving towards that journey of least privilege I think is where most people are looking to go. >> Alright Dan, I want to go back to something that we talked about early in the conversation, that relationship with the cloud providers themselves, so you know talking AWS, Azure, Google Cloud and the like. How should customers be thinking about how they manage security, dealing with them dealing with companies like Lacework and the ecosystem you mentioned in companies like Datadog and the New Relic? You know how do they sort through and manage how they can maintain those relationships? >> So there's kind of the layer eight relationships, of course which are starting you know in particular with the cloud providers, it's a lot more about bottoms up relationships and very technical understanding of product and features, than it is about being on the golf course, and you know eating steak dinners. And that's very different you know, security and buying IT infrastructure was very relationship driven in the past. Now you really especially with SaaS and subscriptions, you're really proving out your technology every day. You know I say kind of trust is built on consistent positive results over time. So you really have to have trust within your solution and within that service and that trust is built on obviously a lot of that go to market business side. But more often than not it's now being built on the ability for that solution to get better over time because it's a subscription. You know how do you deliver more features and increase value to the customer as you do more things over time? So that's really, really important. The other one is like, how do I integrate the technology together? And I believe it's more important for us to integrate our stack with the cloud provider with the adjacent spaces like APM and metrics and monitoring and with open source, because open source really is a core component to this. So how do we have the API's and integrations and the hooks and the visibility into all of those is really, really important for our customers in the market? >> Well Dan as I said at the beginning, security is such an important topic to everyone out there. You know we've seen from practitioners we talked to for the last few years not only is it a top issue it's a board level discussion for pretty much every company out there. So I want to give you the final word as to in today's you know modern era, what advice do you give to users out there to make sure that they are staying as secure as possible? >> Yeah so you know first and foremost, people often say, "Hey you know, when we build our business, "you know, it'd be a good problem to start have to worry "about customers and you know, "all kinds of people using the service. "And you know, we'll worry about security then." And it's easy lip service to say start it as early as possible. The reality is sometimes it's hard to do that. You've got all kinds of competing interests, you're trying to build a business and an application and everything else depending obviously, the maturity of your organization. I would say that this is a great time to kind of crawl, walk, run. And you don't have to think about it. If you're building in the cloud you don't have to think of the end game you know right away, you can kind of stair step into that. So you know my suggestion to people that are moving into the cloud is really think about compliance and configuration best practices first and visibility, and then start thinking of the more complex things like triage alerts and how does that fit into my workflow? How do I look at breaches down the line? Now for the more mature orgs that are taking, you know an application or a new application or Stack and just dropping it in, those are the ones that should really think about how do I fit security into this new world order? And how do I make it as part of the design process? And it's not about how do I take my existing security stack and move it over? That's like taking, you know a centralized application moving to the cloud and calling it cloud. You know if you're going to build in the cloud, you have to secure it the same way that you're building it in a modern way. So really think about you know, modern, you know new generation vendors and solutions and a combination of kind of your provider, maybe some open source and then a service, of course like Lacework. >> Alright well Dan Hubbard, thank you so much for helping us dig into this important topic Cloud Native security, pleasure talking with you. >> Thank you. Have a great day. >> And I'm Stu Miniman your hosts for Cloud Native Insights and looking forward to hearing more of your Cloud Native Insights in the future. (upbeat music)

>> From theCUBE studios in Palo Alto in Boston, connecting with thought leaders around the globe, these are cloud native insights. >> Welcome to another episode of Cloud Native Insights. I'm your host Stu Miniman and of course with Cloud Native Insights will really help understand you know, where we have gone from cloud, how we are taking advantage of innovation, a real driver for what happens in the spaces of course developers. You think back to the early days, it was often developers that were grabbing a credit card, using cloud services and then it had to be integrated into what was being done and the rest of the organization saw the large rise of DevOps and all the other pieces around that, that help bring in things like security and finance and the like. Happy to welcome to the program first time guest, William Janssen. He is the CEO of DeltaBlue. Deep in this discussion of cloud native DeltaBlue is a European company helping with continuous deployment across cross cloud providers in the space. William, thanks so much for joining us, nice to see you. >> Glad to be on the show, thank you Stu. >> All right, so one of the reasons I'm glad to have you on is because of some of the early episodes here, you know we were discussing really what cloud native is and what it should be. I had my first interview on the program, Joep Piscaer, who you know, had given the analogy and said when you talked about DevOps, DevOps isn't something you could buy. But it's something that lots of vendors would try to sell you. And we're trying to dispel, lots of companies out there, they're like, "Oh, cloud native, well we support Kubernetes. "And we have this tool and you should buy our cloud native, "you know, A, B, C or D." So, want to start a little first with what you see out there and what you think the ultimate goal and outcome of cloud native should be? >> I think cloud native, to start with your last question, I think cloud native should make life fun again. We have a lot of technical problems, we solve them in technical things. You mentioned Kubernetes but Kubernetes is solving a technical problem. And introducing another technical problem. So what I think cloud native should do is focus on what you're actually good at. So a developer should develop. Someone from the infrastructure, an operator, should focus on their key points and not try to mix it up. So, not Kubernetes, Kubernetes is again introducing another technical issue. Our view on cloud native is that people should have fun again and should be focusing on what they're good at. And so it's not about technology, it's about getting the procedures right and focusing on the things you love to do. And not to talk to the cross border, talk to a lot of developers and solve operational kind of things. That's what we try to solve and that's our view of cloud native. >> Yeah, I'll poke that a little bit because one thing you say, people should do what they're good at. It's really what is important for the business, what do we need to get done? There's often new skills that we need to do. So it's really great if we could just keep doing the same thing we're doing. We know how to do it. We optimize it, we play with all of our geek knobs. But the drumbeat that I hear is, we need to be agile, we need to be able to create new applications. IT needs to be responsive for the business and rather than in the past it was about, building this beautiful stack that we could optimize and build these pieces together. Today, the analogy I hear more is, there's layers out there, there's lots of different tooling, especially if you look at the developer world. There is just too many options out there. So, maybe bring us a little bit as to you know, what DeltaBlue does. How you look at allowing developers to build what they, new things that they need but not be, I guess the word, locked into a certain place or certain technology. >> Yes, I've been on IT for 20 years. So I've seen a lot of things go around. And when we started out with DeltaBlue, the only thing we had in mind is how could we make the lifecycle of applications and all the things you had to do, the government around applications way more easy. Back in the days, we already saw that containerization solved some of the issues. But it solves technical issues. So like when you start coding, you don't need to go to the network card anymore. We took the same approach to our cloud native approach. So we started on the top level. We started with applications in mind. And the things back in the day you had Bitnami already had the option to have a VM or standard installation of an application. So what we see is that nowadays, many developers and many organizations try to focus on that specific part, how to get your code into some kind of under configuration solution. We take that for granted. There are so many great solutions out there, already tried to solve that problem. So instead of reinventing that wheel again, we take that for granted. But we take another approach. We think that if the application is there, you need to test it. You need to take it into production. You want to have several versions of a specific application into the production environment. So what we've tried to solve with our platform is to make that part of the life cycle, let's call it horizontal version of your application lifecycle, not getting an application built or running up different stuff, we take that for granted. We take the horizontal approach. How to get your traditional application from your development environment to your testing, acceptance. That's a different kind of people test your application, security testing before you take it into production. And that should be all be done from a logical point of view. So we built one web interface, a logical portal. And you can simply drag and drop any type of application, not just a more than micro service oriented or Kubernetes based application but any type of application from your acceptance environment to your production environment. That's going to solve the real problem. So now, any business can have 10 different acceptance environments for even your old legacy SAP or your Intershop environment. That's going to get your business value. So going back to your definition of cloud native, getting that kind of abstraction between getting your and code your application and get it get somewhere up and running and all the stuff that's needs to be done from your development environment into the production environment. That's going to add to your business value. That's going to speed up your time to market, that's going to make sure that you have a better cloud quality because now you can test even your legacy application from 10 different points of view and 10 different types of different branches, all in a parallel environment. So, when we started with DeltaBlue, we took a different approach, took the technical stuff for granted, and focus on all the government around applications and the governance that's the thing, I think that's the most important part in the cloud native discussion. >> So governance, especially in Europe, has a lot of importance there. If you could, bring us inside a little bit, customers you're talking to, where they are in this journey. If you've got an example of something you're doing specifically we'd love to hear how that happens in real world. >> Yes we have many different customers but I think one of our best examples, for example is Wunderman Thompson, a big eCommerce party across the globe but also here in the Netherlands. And we made a blueprint of their development environment the way they develop application and the way they host applications. So, now they started a new project, 40 developers go to the new big eCommerce application. In the past, everyone had to install their own Intershop environment on their own laptop, Java, Oracle, that kind of stuff. It took me a day and a half. Since we abstracted that into like a simple cell, like you would do in any serverless environment nowadays, they can now simply click on a button. And since they made their laptop or their development environment part of our platform, they can now simply drag and drop the complete initial environment to the laptop and they can send development in 10 minutes instead of a day and a half. That's just the first step that makes their life easier. But also imagine, we have an application up and running for two, three months and our security patch, we all know the trouble of getting a patch installed in production but also then install it into the acceptance environment, test environment, development environment, all those kind of different versions. With our platform, since we have the application in mind, we can, with simple one simple click of the button, we can propagate that security patch across all the different environments. So from a developer point of view, there's no need to have any kind of knowledge of course they need to configure a port or something like that but no need of knowledge of any type of infrastructure anymore. We have made the same blueprint for the complete development environment. So with a single click of the button, they have a complete detail environment, known over the need to go to their infrastructure to get the service to their operating guys, they have them installed, industrial Nexus, very book of repository, all that kind of stuff. It's all within one blueprint. So again, we think that the application should come first. That should be abstracted, and not abstracted just in a single spin up a container or spinning up a VM. Now, the complete business case, application, complete environment should be up and running with a single click of a button. So now they can start if they have a demo tomorrow, for example, and they want to have a demo setup. With a single click, they have a complete environment up and running, instead of having to wait three weeks, four weeks before they can start coding. And the same comes with a production environment. We now have an intelligent proxy in front of it. So they can have three different versions of the same shot in their production environment. And based on business rules, we can spread the load against the different versions of a business application, eCommerce application. We signed a new contract with New Relic last week. And the next thing we're going to do, and it's going to be there in two weeks, is fit New Relic data, I mean, an eCommerce application is about performance. A longer response time of a page page load time will drop your drop your revenue. So what we're going to do with New Relic is feed it's performance data back into that the intelligent proxy in front of their application. So now they're going to drop the new version of their intershop application on a Thursday evening, they go to sleep. Friday morning, they wake up and from the three versions, and the best performing website will be up and running. That's the kind of intelligence and that's the kind of feedback we can put into our platform since we started with applications in mind first. It's getting better quality, because you can do better testing. I mean, we all want to test, but we never want to wait for those different kinds of setups, they want to have fast development cycles. That kind of flexibility where you do the functional deployment, the functional release, not the technical stuff. What we now see in the market is that most people, when they go to the cloud, try to solve the technical release problems of getting the application up and running in a technical way into the production time, we try to focus on the functional level. >> So, William, being data driven, a very important piece of what you talked about there. What I want to help our audience understand is concerns about if you talk about abstractions, or if you want to be able to live across different environments, is can you take advantage of the full capabilities of the underlying platform? Because, that is, one of the reasons we go to cloud isn't just because it's got limitless compute Pricing comes down. But there's only new features coming out, or I want to be able to go to, a cloud provider and take advantage of some specific feature. So help us understand how I can live across these environments, but still take advantage of those cloud native features and innovations as they come out. >> Great. There are actually two ways. For most alternatives, we also have an alternative component in our platform as well. We have complete marketplace with all kinds of functionality like AWS has, but I can imagine that people want to develop an AWS and get our AWS lambda functions or s3 buckets or that that kind of specific functionality. And going back to the Intershop example, they run their application as a CaaS solution on Azure. So when you went to Azure DevOps, or that kind of specific functionality included, our platform connects over 130 different data centers across the globe and Azure and AWS, and Oviedo Digital Ocean are all part of the huge mix of different cloud providers. For every provider, we have what we call gateway components. We deploy natively, mostly bare metal or equivalents of bare metal within those cloud providers. And we made an abstraction layer on the network layer. So now we can include those kind of specific services like they were part of our platform natively. Because if we would have just build a layer and couldn't use the specific components of an AWS or an Azure or that kind of stuff, we would just be another hosting provider. I haven't liked VMware. So that kind of stuff. We want to and we are aware that we need to include a specific stuff, functionality. And what we do with this with what we call gateway components. So we have AWS, gay components, educators, but also for IBM, or Google specific environment. So we can combine the network of AWS, with our specific network. And that's possible, because we made a complete abstraction layer between the network of the infrastructure provider and our network. So we can complete IP subnets DNS resolver as if it was running on their local environment. And thereby, since we have that abstraction layer, we can even move the workloads on AWS to Azure. And since we have the abstraction layer network, we can even make sure that you don't need to reconfigure your application. I think that's the flexibility that people are looking for. And if they have a specific workload and Azure and it's getting too expensive, for the ones that includes AWS stuff, they want to shift the workload to different kind of cloud providers based on the characteristics of a specific worker, or even if you want to have the cheapest option, you can even use your on premise data center. >> William, do that there absolutely is interest in doing that. One of the barriers to being able to just go between environments is of course that the skills required to do this. So, there's something to be said about, if I use a single provider, I understand how to do it, I understand how to optimize it, I understand the finances of it. And while there may be very similar things in another cloud, or in my own data center, the management tools are different and everything. So how do we overcome, that skill set challenge, between different environments. >> We had a different approach the same as we do it on application level, we took it also in data center level, so we're going to handle most cannot say all because there's always specific components. But from our interface, you can simply go to a specific application and select the type of data center you want to run on your application. And if your application is running on an AWS, you get the gateway components with the components, like an s3 bucket or a lambda or an RDS, based on the data center you're running in. So we took that abstraction layer even on that level. But I got to be honest, I think 80% of our customers is not interested in the data center, they run their application in unless they have specific functionality, and which is not available on our platform, or they have a long running application, or use a specific or they bought a specific application. Otherwise, they don't care. Because from a traditional application, there is no difference between running on Azure or Google Cloud or an IBM cloud or whatever. The main difference is that we can make a guarantee about the SLA. I mean, IBM has a better uptime guarantee. A better performance and a better network compared to let's say, digitalocean. Kind of set this up. But there is a huge difference. But it's more like the guarantee that we can give them. So we have this abstraction layers, and we try to put as many as possible as much as possible into our portal interface. There will no way that we're going to redesign and we work about the complete AWS interface, or we're not going to include 100% of their functionality. That's not possible. We're, small company. AWS is somewhat more developers in place. But the main components and people are asking for like RDS or these kind of specific setups, that's where we have the gateway components for available and they can include them into their own application. But we also going to advise them why they were looking for those specific AWS components. Is it within the application architecture or is it something gauges right? Isn't there a better solution or an other solution? And I think, since we have that objection that one of the biggest benefits is, and what we see our customers also do is we incorporate that data center into our platform. And we have one huge network across all the cloud providers and including their own data center. So in the past, they had to have two different development teams, one specialized in AWS development, with all that kind of specific stuff. And all one development team which had more like a traditional point of view, because their internal system and data which was not allowed to go outside the company or had to stay within the firewall. And since we have now one big network, which is transparent to them, we can make sure that their code for their internal systems stays internal and is running on internal systems. But we could still use some kind of functionality from the outside. We do it all unencrypted today, and we have one big platform available. So with our gateway components, we can make sure that that data and application data is really staying internally. And only is allowed to grow internal data access and that kind of stuff, but still use external functionality or price. But again, I would say 80% of our customers, they don't care because they just want to get rid of the burden. I think going back to what we think cloud native means is just getting rid of the burden. And you shouldn't be concerned about what type of cloud we're actually using. >> Absolutely, William, the goal of infrastructure support, my applications and my data and we want companies to be able to focus on what is important for the business and not get bogged down and certain technical arguments introduction. So William, thank you so much for joining us. Really great to hear about Delta blue. Looking forward to hearing more in the future. >> Thank you. >> I'm Stu Miniman. And look forward to hearing more of your cloud native insights.

>> Narrator: From theCUBE Studios in Palo Alto in Boston, connecting with thought leaders all around the world, this is a CUBE Conversation. >> Hi, I'm Stuart Miniman and welcome to this CUBE Conversation. I'm in our Boston area studio and one of the things we always love to do is talk to startups and really find out they're usually on the leading edge of helping customers, new technologies, conquering challenges. And to that point, we have the co-founder and CEO of env0, that is, Ohad Maislish and we brought along with him he's got two of his investors, one of his advisors. So sitting next to Maish, we have Ed Sim, who's the founder and managing partner of Boldstart Ventures and sitting next to him is Guy Podjarny, who is the founder of Snyk. So now, you know is the acronym for Snyk and if you didn't know that, I know I'd heard about the company a couple years before that and my understanding is, Guy your the ones that connected Ohad with Ed who was the first investor. So Guy let's talk to Ohad in a second, but how the conversation started? And what what piqued your interest about what is now env0? >> Yeah, I think it started with people. I mean, I think fundamentally when you think about technology and think about startups, it needs to be an interesting market, it needs to be a good idea, but it really, first and foremost is about the people. So I've I've known Ohad from actually some work that he's done at Snyk earlier on, and was really impressed with his sharpness, his technical chops, and a lot of times the bias for feedback. And then when he presented the idea to me around kind of making Infrastructure as Code easy, and I don't want to sort of steal his thunder, talking about it and about kind of engaging with developers for it, a thought that literally resonated with me, I think, we'll probably dig into it some more. But in we live in a world in which more and more activities, more and more decisions, and really more effort is rolled on to developers. So, there's a constant need for great solutions that make on one hand make it easy for developers to embrace these solutions, on the other hand, still kind of allow the right kind of governance and controls. And I felt like Infrastructure as Code was like a great space for that, where we asked developers to do more, there's a ton of value in developers doing more around controlling these Infrastructure decisions, but it's just too hard today. So, anyways, I kind of liked the skills, I liked the idea. And I pulled in Ed, who I felt was kind of natural to kind of help introduce these experiences with other startups that share a similar philosophy to kind of help make this happen. >> Awesome, thank you Guys. So Ohad, let's let's throw it to you. Give us a little bit about your background, your team, Infrastructure as Code is not a new term. So I guess would love you to kind of weave into it. You know why now? Is it becoming more real in why your solution is positioned to help the enterprise? >> Awesome, first of all, thank you for having me. It's really exciting and again thank you for the opportunity. Regarding your question, so my background is technical. I was maybe still am a geek started University at a young age at the age of 14 in Palo Alto High School. And started my career in non technical roles very early. I have now like 21 years of experience, this is my second startup and third company, as I mentioned, my previous company is services company, provided services for Snyk and we became friends and later on partners, investors, and so on. And, we we've seen huge shift, we call the Infrastructure as Code the third data center revolution. We look at the first one being virtualization about 20 years ago led by VMware and then ZenSourcer. The second obviously, is the public cloud when companies started clicking buttons in order to get those compute resources but now nobody is clicking those buttons anymore. And instead writing, maintaining and executing that code, that Infrastructure as Code and as the Guy mentioned, it made it much more relevant for developers to influence the Infrastructure decisions and not just the app decisions. With that many challenges and opportunities around Infrastructure as Code management and automation, and that's where we focus. >> All right, so Ed I'm sure like me, you've seen a number of companies, try to climb this mountain and fall down and crash so I feel like five years ago, I would talk to a company and they say, oh, we're going to help, really help the enterprise enable developers for networking for storage, for security or anything like that. And it was like, oh, okay, good luck with that. And they just kind of crashed and burned or got acquired or did something like that. So, I feel like from our viewpoint we've seen for a long time that growth of developers and how important that is, but that gap between the enterprise and the developers feels like we're getting there. So, it gets similar what I asked Ohad why now, why this group, why the investment from you? >> Yeah, so I'll echo Guy's comment about the people. So, first and foremost, I was fortunate enough to invest in Guy back in his prior company before he started Snyk and then invested in Snyk. And there are lots of elements of env0 that remind me of Snyk the idea, for example, that developers are doing more, and that security is no longer a separate piece of developing, it's now embedded kind of in what developers and teams are doing. And I felt like the opportunity was still there for Infrastructure as Code. How do you make developers more productive, but provide that control plan or governance that's centralized so that environments can easily be reproduced. And the thing that got me so excited, was the idea that Ohad was going to tie kind of cloud costs from a proactive basis versus a reactive basis. Meaning that once we know that your environments are up and running, you could actually automatically tag it and tie the environment to the actual application. And to me, tying the business piece to the development piece was a huge, huge opportunity that hasn't been tapped yet. And so there are lots of elements of both Snyk and env0 and we're super excited to be invested in both. >> Alright, so Ohad maybe just step back for a second, give us some of the speeds and feeds we read your blog post 3.3 million dollars of the early investment, how many people you have, what is the stage of the product customer acquisition and the like? >> Sure, so we just launched our public beta and announced the funding couple of months ago led by Boldstart and another VC in Israel named Grove, and then angel investors Guy is the greatest investor among those and so we have some others as well. And now we have like 10 employees nine in Israel, one in New York City, I'm relocating after this all pandemic thing will get better. I'm moving to the Bay Area as soon as possible. That's more or less the status. And as I've mentioned, we just launched our public beta. So we have our first few design partners and early like private beta customers now starting to grow more. >> Yeah, and how would you characterize, what is the relationship between what you're doing in the public clouds. We understand, in the early days, it was like, Oh, well, cloud is going to be easy, it's going to just be enable it, it has been a wonderful tool set for developers. But simple is definitely not, I think anyone would describe the current state of environments. So, help it help us give it a little bit of what you're seeing there. And how you deal with like some very large players in ecosystem. >> Our customers are the same as the cloud vendors customers. The cloud vendors provide great value with the technical aspect with Infrastructure. But once you want to manage your organization, you want to empower your developers, you want to shift left some decisions, APM, did shift left for a performance, Snyk is doing great shift left for security. I believe that we are doing similar things to the cost. And you in the cloud vendors are in charge of you being able to do some technical orchestration. But when do you need to tear down those resources? When do you understand that there is a problematic resource or environment and what exactly made it? What is the association, how you can prevent from (mumbles) deployments from even happening at first. So all of those management information and insight ties back to your business logic and processes that's where we fit. >> I think there's actually a lot of analogy if I can chime in, on maybe an ownership aspect that happens in cloud. So we talk about the cloud and oftentimes cloud is interpreted as the technical aspect of it. So the fact that it allows you to do a bunch of things in the clouds and sort of renting someone else's hardware, and then automating a lot of it. But what cloud also does and that definitely represents what we're doing security and I think applies here, is that it moves a lot of things that used to be IT responsibility being a part of the application. So a lot of decisions, including ones really security, and including ones related cost around anywhere from provisioning of servers to, network access, to when you burst out, and to the balancing of business value to the cost involved or the risk involved. Those are no longer done by a central IT organizations, but rather, they're being done by developers day in and day out. And so I think that's really where the analogy really works with cloud is, it's not so much, like clearly there's an aspect of that that is the the technical piece of tracking how much does it cost in the on demand surrounding of cloud, but there's a lot of the ownership change, or the fact that the decisions that impact that are done by developers, and they're not yet well equipped to have the insights, to have the tools, to make the right decisions with a press of button. >> Thank you Guy and absolutely, 'cause cloud is just one of the platforms you're living on, you know well from Snyk that integration between what's happening in the platform, where open source fits into it, the various parts of the organization that are there. So, you've got some good background, I'm sure, helps you're an advisor to Ohad there to helps pull through a little bit of some of those challenges. Yeah, I mean, Ed I'd love to hear just in general your viewpoint on how startups are doing at monetizing things in the era of... You've got the massive players like Amazon and Microsoft out there. >> Look, the enterprise pain is higher than ever right now, every fortune 500 is a tech company right now and they need engineers, and they're hiring engineers. In fact, many of the largest fortune 500 have more engineers than some of the tech companies. And developer productivity is number one, front and center. And if you talk to CIOs, we just hosted a panel with the CIO of Guardian Life and the CTO of Priceline. They're all looking at how do I kind of automate my tool chain? How do I get things done faster? How do I do things more scalable? And then how do I coordinate processes amongst teams. As Guy hit upon and Ohad as well, not just security, there's product design being embedded with developers as product management being embedded with developers. There's finance now, FinOps. If you're going to spend more and more in the cloud, how do you actually control that proactively before things happen versus after or months after that happens? So I think this is going to be a huge, huge opportunity on the FinOps side. And, the final thing I would say is that winning the hearts and minds of developers to win the enterprise is a tried and trued model, and I think it's going to be even more important as we move forward in the next few years, to be honest with you. >> All right, so Ohad you know I think Ed talked about those hearts and minds of developers absolutely critical. When you look at the tooling landscape out there, the challenge of course, is there's so many tools out there, that there's platform battles, there's developers that find certain things that they love, and then there's, oh, wait, can I have a general purpose solution that can help. You talk about this being the third wave, how does this kind of tie into or potentially replace some of the last generation of automation tools. How do you see yourself getting into the accounts and growing your developer base? >> I think, I have a very simple answer, because, now enterprises have two options. Either they go with productivity self-service, or they go with governance, but they cannot have both. So if it's the smaller or they have less risks, so they go with the productivity and they take those risks, take the extra costs, take that potential damage that can happen. But more we see the case of I cannot allow myself this mess, so I have to block this velocity. I have to block those developers, they cannot just orchestrate cloud resources as they wish they have to open tickets, they have to go through some manual process of approval or we see more and more developers that understand there is a challenge they built in-house env0 of self-service combined with governance solution, and they always struggle doing it well, because it's not their core business. So once you see the opportunity of a more and more customers doing a lot of investment in in-house solution that do the same thing, probably a good idea to do it, as a separate product. And also the fact that we have the visibility of different customers, we can be very early but for later on adds pattern recognition, and notice what makes sense, what is problematic and give those insights and more business logic back to the customers which is impossible for them to do if they're only isolated on their cases. So as providing the same great solution to different companies, allowing them self-service combined with governance, and then additionally, add those and Smart Insights later on. >> Yeah, I think what I love about what he said is that I don't think he even sort of said finance or cost at any time of those. So really, like you said, governance and I think you can swap governance or you can swap the kind of the entity that's doing the governance for security for all of those. And that sounds awfully familiar for Snyk, which really kind of begs the answer to be the same, it's the reason that env0 approach is promising and that it would win against competition is that it tends to be that the competition or the people that are around are focused on the governance piece, they're they're focused on just sort of the entity that is the controlling entity. I like to say that it's actually not about shift left, it's about if you want to choose a direction, it's going to be the sort of the top to bottom. So it's more about, like this governance entities, whether security or finance, they need to shift from a controlling mindset that is top down that is like this dictatorship of sort of telling you what you should and shouldn't do to more of a bottom up element and allowing the teams the people in the trenches people actually make decisions to make correct decisions, and in this case, correct decisions from a financial perspective. And then alongside that, the governing entity, they need to switch to being a supportive entity an enabling entity and I think that transition will happen across many aspects of sort of software development and definitely anything that requires that type of governance from from outside of the development process today that is to change. >> Yeah, to chime in and add to Guys point, development is so important, it touches every aspect of an organization. So I always think about it as almost a collaborative workflow layer versus being reliant on kind of one control entity. Great developers always want to move fast. But, how do you kind of build that collaborative workflow and I think that Ohad in env0 is providing that for the environment and finance. Guys doing it for security. And there's lots of other opportunities out there, like privacy as well. And I wouldn't be surprised if finance folks start getting embedded with development at some point just like security is, or design is, product management is as well, because that is probably one of the highest costs around right now for many companies, and they're all trying to figure out how to stop the bleeding much earlier. >> Yeah, it's been lots of discussion, of course, we kind of go beyond DevOps, I think FinOps is in there. Ohad you have a favorite term that you've had from your advisors yet, how you categorize what you're doing. Any final words on kind of that organizational dynamic which we know so often it's the technology can be the easy part, it's getting everybody in the org, pulling in the same direction. >> Yeah, I think I'm looking at maybe a physical metaphor, or just an example, if you just enter a developer's room, you might see a screen TV there with some APM Datadog, New Relic Metrics, developers care about performance. They know very early if they did something wrong. And now they see more and more in those dashboards, in the developers rooms, things like Snyk to make sure you're not putting any bad open source package, which has security or ability. What we believe is that now they don't have the right tools, the right product that they can be part of the responsibility, of course, and that's like somebody else's problem. In other rooms, you have those TVs, those screens that show what is the cost, and maybe only later on in the waterfall kind of way you try to isolate and root cause analysis on what went wrong, but there is no good reason why those graphs of the past should be in the same rooms next to the APM and the Snyks and to prevent those as early as possible, maybe to change the discussion and build more trust between the developers that now seem not to care about the cost because they used not to care like 10 years ago when we used to have is called Apex-Cloud. The VMware or even EC2 Instances with the predicted pricing, that's all school. Now you have auto scaling Kubernetes, you have Lambda those kind of things you pay per usage. So the possibility for engineers to know how much their code is about to cost to the organization is very challenging now. If we tie from the developer up to, the financial operations, we will provide better service, and just better business value for our customer. >> Awesome, so final question I have for you, and Ohad I'm going to have you go last on this one is you kind of painted the picture of where things are going to go. So give us what success look like, Ed, start with you, give us out 12 to 24 months as to env0 in this wave as what should we be looking for? >> Success to me would be that every large enterprise has this on their budget line item as a must have. And the market is still early and evolving right now, but I have no doubt in my mind, it's going to happen. And as you hear about many large enterprises saying that we were in the second inning of cloud migration now we're in the fourth. That is what success will be and I know it's going to happen faster than we all thought. >> I'll take the developer angle to it, I think success is really when developers are delighted, or sort of they feel they're building better software by using env0 and by factoring this aspect of quality into their daily activities. And I think a lot of that comes down to ease of use. Like, I kind of encourage folks to sort of try out the env0 and see the cost calculation, it's all about making it easy. So what excites me is really around that type of success where it's so easy that it's embedded into their sort of daily activities, and that they're happy it's not a forced thing. It's something they've accepted and like having as part of their software development process. >> I fully agree with both Ed in Guy, but I want to add on on a personal note, that one of the reasons we started env0 is because we saw developers quitting jobs at some places. And the reason for that was that they didn't give them self-service, they didn't empower those developers, they were blocked by DevOps, they needed to open tickets, to do trivial things. And this frustration is just a bigger motivation for us to solve. So we want to reduce this frustration. We want developers to be happy and productive, and do what they need to do, and not getting blocked by others. So that's, I think, another way to look at it, to make sure that those developers are really making good use out of their time and going back home at the end of the day, and feeling that they did what they were paid for, not for waiting for others to locate some cloud resources for them. >> All right, well, Ohad want to wish you the best, absolutely. Some of the early things that we've seen sometimes they're the tools that help, we've been talking gosh I remember 15, 20 years about breaking down the silos between various parts of the organization, some of the tools give you different viewpoints into what you're doing, help have some of the connection and hopefully some empathy as to what the various pieces are there. You really highlighted there's nothing worse than I'm not being appreciated for the work I'm doing, or they don't understand the challenges that I'm going through. So, congratulations on env0. We look forward to following going forward and definitely hope being part your customers in the future. Thanks so much. >> Thank you, thank you very much. >> All right, and Guy really appreciate your perspectives on this thank you for joining us. >> Thanks for having them. >> All right, be sure to check out theCUBE.net where you can find all of the events we're doing online these days, of course, where there's a huge back catalog of what we have in the thousands of interviews that we've done. I'm Stuart Miniman, and thank you for watching theCUBE. (upbeat music)

absolutely build on some of Ben's comments because I think what he articulated is one of the killer use cases of VMware cloud on a to us that I think is driving that momentum right which is we think it's one of the best solutions in the marketplace and customers have told us this to enable them to migrate and modernize right so let's talk about the migrate piece first right you have customers that have these tremendous enterprise class applications running on vSphere and their data centers they're built on top of that platform they depend upon it for performance availability everything else with VMware Club a native us we can migrate those applications with zero downtime no refactoring no additional cost in a matter of weeks or months as opposed to if you had to refactor everything to take years and millions of dollars right so that cloud migration use case I would say is that is the killer for us and that's you know exactly what Ben was we're definitely seeing that and I think that's the thing that really got me excited about a year ago was watching enterprises make that transition and say you know what the center of gravity has gone from architectures inside the on-prem data center is now moved to in the cloud I mean that shift has happened it happened to people talked about it five years ago but they didn't mean it and now when you talk to enterprises they are actually moving into the cloud not just talking about it and they're saying where that is the center of gravity and what's interesting to me was I think even just the tone of Andy Jesse today and what he was talking about was it's once you define what your architecture is you push it everywhere so cloud 1.0 and 2.0 was really more about taking my architecture that was on prem and pushing it into the cloud so let me take virtual appliance a virtual router basically my hardware router packaged it up put it on the cloud that's not cloud native it's cloud naive as we talk right and so what's the chase has happened is now everybody realizes the center of gravity is in the cloud and you start seeing things like outposts you see things like wavelength you see things like you know tgw network manager things getting pushed out the architecture of the cloud now actually pushing out and extending out into on-premises I've been at it for a couple of decades so in the beginning there was a lot of evangelism that this is safe it's consumable by the enterprise it's not some kind of crazy idea to bring open-source you're not going to lose your intellectual property or things like that those days I mean I I'm sure you can find an exception but those days are largely over in this in the sense that open-source has gone mainstream so I would say open-source is one most large enterprises have an open-source strategy they consider open source as critical to not only how they source software from vendors but also how they build their own applications so the world has really really evolved and now it's really a question of where are you partnering with vendors to build infrastructure that's critical to your business but not your differentiator and where are you leveraging open-source internally for your to differentiate your business I think that's a more sophisticated view it's not the safety question it's not is it is it legally you know that you're bringing legal concerns into the picture it's really a much different conversation and people in the enterprise are looking how can we contribute to these projects so that's really it's pretty exciting actually both are a great place for startups right they're not meters cluesive so I think if you go horizontal the amount of data being created by your applications your infrastructure your sensors time series data ridiculously large amount right and that's not going away anytime soon I recent did investment ain't chronosphere did you guys covered over at coupon a few weeks ago that's talking about metrics and absorbedly data time series data so they're gonna handle that horizontal amount of data petabytes and petabytes how can it query this quickly deeply with a lot of insight that's one play right cheaper better faster at scale the next play like you said is vertical it's how do I own data or slice the data the more contacts they know as can have we talked about like the virtual cycle of data right this the system of the tile well bye own set of da to be healthcare government or self-driving car data that no one else has I can build a solution and to end and go deep and so either pick a lane or pick a geography you can go either way it's hard to do both though it's hard for start-up any big company it's very few companies can do two things well starves especially succeed by doing one thing very well I'm impressed they got two CEOs the CEO of goldman sachs david solomon the CEO of Cerner coming to the show that's kind of rare that the CEO of your customer comes to the show I guess the second thing I'd say is you know Amazon is not a rinse and repeat company at these shows although they are when it comes to shock and awe so they ticked the Box on shock and awe but you're right John they're talking a lot about transformation I would sort of think of it as a disruption here's what I would say to that Amazon has a dual disruption agenda one is its disrupting the horizontal technology stack and two it's disrupting industries it wants to be the platform of which startups in particular but also incumbents can disrupt industries and it's in their DNA because it's in Amazon's DNA and I think it's the last thing I'll say as Amazon is the retai Amazon retail is the you can buy anything here store and now to your point Justin Amazon Web Services is you can get AWS anywhere at the edge and a little mini data centers that they're built on outpost and of course in the cloud absolutely you know I'd say primarily were most kind of pleased with the variety of workloads and these cases the customers are bringing us into you know I think when we started out on this journey we saw a tremendous promise for the technology to really improve the aw psycho system and customer experience for people that wanted to consume block storage in the cloud what we learned as we started working with customers is that because of the way we've architected the product brought a lot of the same capabilities we deliver on our flash arrays today into AWS it's a lot of customers to take us into all the same types of workloads that they put flush arrays into right so that's their Tier one you know mission-critical environments there VMware workloads their Oracle workloads or safety workloads they're also looking at us from everything from you know to do lifts and shifts test and dev in the cloud as well as dr right and and that again i think you know speaks to a couple things it speaks to the durability the higher level of service that were able to deliver in AWS but also the compatibility with which we're able to deliver the same sets of features and you know have it operate in exactly the same way on prime in the cloud because it's look if you're gonna dr the last time you know the last point in time you want to discover that there's a caveat hey this feature doesn't quite work the way you expect is when you have a dr failover and so the fact that we set out with this mission in mind to create that exact level of sameness you know it's really paying dividends in the types of use cases the customers are bringing us into I think we're delighted you know Mike obviously and I've been friends for years he's had some connections with VMware in his past that that that certainly helped in setting up this partnership so we're grateful to Mike and Andy and the team for that and it's you know two and a half to three years now since we announced it tremendous amount of customer interest listen you know we said at the beginning of this when you take sort of the king of the public cloud and the king the private cloud together and don't force customers to say these have to be separate doors you can do them both together customers like that message and what we've been really doing over the course the last 12 18 months is perfecting use cases for this platform I think to us the key word is migrations cloud migrations when people are moving their workloads of an app off vmware vsphere or our cloud foundation we want this to be the best place for it to land we are more cloud and AWS for migration opportunity and anything short of that refactoring app would be you know not something that would be a good use of people's time and money because they should be then modernizing with all the wonderful services that Amazon's built once they've migrated so we've really perfected our message in the course the last six 12 months to two ms migrated and modernized migrated modernized so we could migrate you into this avenue and then modernized with a set of container and other services so that mess is working we put on stage at VMware and there are many of them here too big Amazon customers VMware cloud and Amazon Freddie Mac and IHS market and they were telling are tens of thousands customers at those shows and similarly many of them here that that's the best option to be able to do things yeah so if you know public sector public sector actually has a lot of Windows or Microsoft workloads in it and so we're seeing a lot of public sector customers looking to modernize their Windows workloads in fact we made several announcements just yesterday around helping more public sector customers modernize for example one is Windows Server 2003 and 2008 will go out of support and so we have a great new offering with technology that can help them to not refactor but actually abstract those layers and move quickly to 2016 and 2019 because both of those will go out of support in January and Dave mentioned you know cloud first strategies but we're also seeing a lot of movement around data you know data is really powerful Andy mentioned this as well yesterday but for example in our partner keynote where I just came from we had on stage Avis yeah hey this not public sector customer but what they're doing is the the gentleman said you know your car can now talk to you and that data is now being given to local state officials local city officials they can use it for emergency response systems so that public and private use of data coming together is also a big trend that we're seeing it's all about breaking down I mean if devops is all about breaking down silos between Devon operations and in other parts of the business Deb sack ops or secure dev ops or whatever we want to call it is just bringing more people into the fold and helping security join that party and get at things earlier in the cycle so we can catch it before it you know before before there's a breach that's in the news so you know I think there's going to continue to be convergence between Amazon business in AWS over time and in the marketplace we offer kind of a goods marketplace they offer a software marketplace and a services marketplace and so I think we're still working on how do we harmonize that experience better and we've got a lot of work to do there we have a saying at Amazon that it's always day one and that's a great example where we still have a lot of work to do but one of the things that is another one of our partners Koopa which is a procure-to-pay a platform and a longtime Amazon business partner we've done some pretty creative things to improve the user experience and make it easier for customers use both Koopa and Amazon business and in concert together Koopa announced a couple months ago they've built an integration to the AWS marketplace and so that's a pretty exciting opportunity where people who are provisioning services via AWS be a Dobis marketplace can have that that transaction flows seamlessly into their prepare to pay solution and let you know the user who's provisioning that focus on what they want to do which is developing new solutions to serve customers I mean the spectrum is massive so the our biggest challenge is keeping up with everything and continuing to innovate with all the things that are happening but again the benefits of the platform that we have enables us to do that and the enhancements we weight made this year this year now that our platform is is more open we can connect a collect data from multiple entities not just the New Relic agents that we've that we were built on so the concept of observability and being able to observe the entire application environment it is built on the fact that data's got to come from all these different places then we need to turn that around and curate it into the right experience in the right use case that the customer is looking for so all I can say is that our company's built on innovation we try and stay on the cutting edge of all that trying to stay current with that and meet the customers needs as as everyone here is innovating like crazy at scale well I mean there's a lot of a lot of the technology we build comes from things that we're doing ourselves you know and that we're learning ourselves it's kind of how we started thinking about microservices serverless - we saw the need we know we would have we would build all these functions that when some kind of object came into an object store we would spin up compute all those tasks would take like three or four hundred milliseconds then we spin it back down and yet we'd have to keep a cluster up in multiple availability zones because we needed that fault tolerance and it was we just said this is wasteful and that's part of how we came up with lambda and you know when we were thinking about land that people understandably said well if we build lambda and we build this serverless event-driven computing a lot of people were keeping clusters of instances aren't going to use them anymore it's going to lead to less absolute revenue for us but we we have learned this lesson over the last 20 years at Amazon which is if it's something it's good for customers you're much better off cannibalizing yourself and doing the right thing for customers and being part of shaping something and I think if you look at the history of technology you always build things and people say well that's going to cannibalize this and people are gonna spend less money what really ends up happening is they spend spend less money per unit of compute but it allows them to do so much more that they ultimately long-term end up being you know more significant customer look I mean the the SHA this show estate Volante says amazon always delivers with the shock and awe you know broadest and deepest so many pieces here you know I took a selfie with many people and the biggest celebrity of the show AWS outpost the rack it's over in the corner there and people asking me about all the gear inside I said you should stop asking about that because you will never touch it only AWS will so put a curtain around it it's managed as a service and that's what I think people are still trying to understand we've been talking about cloud for what 15 years now but Amazon's positioning on cloud is still different than everyone else's when I think back to some of the waves there's that buzzword and there's one or two that really architectural er different in deliver and Amazon laid out their strategy even more and through the geeky pieces and transformation was the theme you [Music]