(upbeat music) >> When I was a young analyst at IDC I remember sitting in a packed boardroom, listening to this new company called Teradata introduce a machine, that was specially designed to make databases run much faster at far less cost. At the time, the most advanced disc drive in the world was 2.5 gigabytes and it costs more than a $100,000. It was the size of a giant refrigerator. There was not a single data center in the US that housed the terabyte of data, underscoring this young startups, Moxie, with a name like Teradata. Fast forward nearly 40 years and the company is still going strong. It has a robust tech stack that has been matured and hardened over the decade, over the decades with capabilities around things like referential integrity, sophisticated workload management and support for complex joins, and many other factors. Recently, the company's financial performance has been in the news, with an earnings and revenue beat, in a large part attributed to its cloud business model. The stock roughly doubled in a few days as surprised investors took notice. Welcome to this CUBE Conversation, my name is Dave Vellante, and we're here with Steve McMillan, who's the CEO of Teradata, to give us the updates, Steve welcome. >> Hey Dave, it's great to be here, thanks for having me. >> Okay, so you're very welcome. So what's happening with Teradata? What's behind the recent surprise and the momentum that you're seeing? >> Look, Dave, I think over the last 12 to 18 months, we've just been continuously improving our cloud capabilities and the performance of our cloud business. I took over as CEO of Teradata in June of last year, and it's been my pleasure to really focus the company on a cloud-first agenda. And what that's really mean is that, we've built a great leadership team with some key new appointments, a new chief product officer, a new chief strategy officer, and most recently our new chief revenue officer, to really build up our cloud credentials and capability. We've also done things like completely invert our R&D spend. So we spend nearly $300 billion on research and development every year, but previously our focus have been only 30% of our spend was in cloud, we'll flipped that around to have 70% of our investment in cloud, and 30% on-prem, enabling us to do things like go general availability of Teradata in Google Cloud in Q3 of last year. And roles of these investments in moving that investment envelope has really enabled us to put forward Teradata as a very relevant modern cloud platform for our customers. And that's enabled us to win in the cloud fairly significantly. And we always knew that at some point, we would declare to the street what cloud revenues were, but we wanted to make sure that they were a substantial and relevant, and we felt that at over $100 million dollars of ARR and with an outlook to double that this year, that those were the kind of metrics that were going to get the market and our customers' attention in terms of us being modern and relevant. >> I got a lot of questions based on that. Thank you for that upfront. But so let me ask you, so you took over as CEO less than 90 days into a global pandemic. And so, how much did that affect your thinking around cloud-first? Did you come in, before that knowing this was the direction you're going to take the company, was that accelerated, can you comment? >> Look, I think, taking over at Teradata, you pointed out in the introduction, a 40-year heritage event at essentially inventing the enterprise data warehouse marketplace. I knew I was taking over a company with a fantastic heritage and a fantastic culture, a set of people that are absolutely focused on and are incredibly proud of Teradata's technology it's capability and how Teradata helps transform how businesses work and people lives through data. What I saw is, we had to really focus on what the market and our customers were looking for, and that meant we emphasizing the importance of cloud and saved the company. So it was really a lot about focus, and then about developing the culture of the company to be able to execute. In terms of the pandemic, I think the pandemic has act as an accelerant to digital transformation, as organizations want to use data to help optimize how they operate, makes sure they're operating effectively and efficiently. One of the customer examples that we had in our last quarter, was an airline in the US investing in Teradata technology to do just that, as clearly a distressed industry, but they see how the power of data can optimize their supply chain to enable them to work more effectively and more efficiently. >> Great, I want to get into some of those customer examples, but I want to stick on cloud-first for a minute. So it sounds like cloud-first is a mindset but then leads to sort of investment priorities. And there are some pretty prominent companies that had a switch from a sort of on-prem to a cloud-first mentality, Microsoft is the most obvious, but there are others. But what really does cloud-first mean for your customers? >> Well, what it means is, we really think about the future digital strategy of our customers, and clearly all of our customers want to embrace cloud. It's also about data gravity, where is data moving to? And we see the data gravity of many companies, we focus on the top 10,000 companies in the world where they're operating at that level of scale, Teradata can really give them the right kind of solution that meets their business requirements. But as that data gravity is moving towards the cloud, it really means that we have to be in front of that, and we have to have the technology in place to capture that data as it moves to the cloud. And so the vision from a product perspective in terms of cloud-first, is to be the leader from a connected multi-cloud data platform perspective. And I that each component of that product description is really important, connected in terms of being able to access data either in native object store or in loads of different data sources, multi cloud in terms of being available across all of the cloud platforms, but for our existing customers extending and reaching into their on-prem capabilities, and from a data platform, thinking about it in terms of the services that Teradata has been known for, in terms of enterprise data warehousing but also real data analytics capabilities that we built into our core SQL engine. So super excited about the future of Teradata in this cloud first world. >> Yes, the definition of cloud, by the way of course it is evolving as we all know. And I spent a fair amount of my time trying to squint through earnings statements, and figure out okay, what's exactly in there? So, $100 million in ARRs, that's that's a pretty big number. I mean, for a lot of companies, that's like they're getting ready for an IPO if they're doing that kind of ARR. So what is in that cloud number? I presume there's a hybrid, a component of that, but can you help us understand what's that definition? >> Yeah, we were very careful with that because we wanted to be assured that we're talking to you all about cloud and being true cloud. So that is just revenues of our vantage product running in AWS or Azure or Google Cloud. It doesn't include any private cloud or hybrid cloud environment. So we wanted to be really specific about, that's a success and the hyper scaler environment and the public cloud environment. Thanks for asking that question, that's great. >> Thank you for the answer, and that's really important. There's just so much cloud washing going on, and so it's good to hear that you're making that clean, what you call the true cloud number, I would agree. That's a great way to look at it. And of course, there's a lot of evolution going on in cloud and on-prem, and from a hybrid standpoint out to the edge, so is your cloud strategy to be compatible with the cloud native AWS, Azure, Google maybe Alibaba someday. But is your strategy also to try to cross connect those clouds in some way which is a kind of metadata challenge. Maybe you could talk about that. >> Yeah, that's exactly that when I use the term, connected multi-cloud data platform, that's exactly the point. We see companies want to have a data fabric that spans across, either from on-premise and from on-prem, but they want to span across those public cloud environments. Our perspective as the companies seem to crave, how to use compute transparently across multi-cloud environments, our perspective is, we want to give that same ability to essentially federate data across a multi-cloud environment. Because the CIO is, I talked to the too, and I'm sure you do too, Dave, they want optionality in terms of cloud provider. They don't want to be locked in to an AWS or an Azure or Google, they want to be able to keep a competitive environment, competitive sourcing environment, be able to use the right services from the right cloud provider. So from a Teradata perspective, one of the other key things about our cloud focus is, we're starting to think about Teradata vantage as much more of a platform rather than a product. And so, you know, we've got 17 integrations in the product to native cloud services and Amazon alone, about 13 in Azure and 12 in Google Cloud, where we utilize and enable our customers to use those native cloud services, in the way that their dev ops teams have become very accustomed to. And I think that level of integration that our R&D spend has enabled recently, has really positioned then our customers minds the ability for Teradata to be modern in terms of that dev ops, and for Teradata to be at the core of their data architecture. And then from a pervade and a fabric perspective, we've really invested in what we called our query grid technology to really be able to federate queries out across multiple cloud environments. And we've put a commercial model in place that we charge per query. So we don't charge per megabyte of storage, that we charge for successful query execution. And our thesis says, if we open the Teradata platform to as many data sources as possible, our customers are going to want to query that data, connect it together, and get unique valuable insights that they can't get anywhere else other than using a solution like Teradata. So we were super excited about that. >> I'm excited too, that it's kind of the Holy grail, because the other thing CIO is telling me Steve is like, look, we've spent a decade in our developers, they got the cloud native thing. They know how to optimize for AWS or Google or Azure, we got that. What we need, is we need to enable the businesses, so if you can abstract away that complexity, that's innovation that they want, 'cause they want to go faster. And this notion of a federated query, I think what I'm hearing is, you're building out the knowledge to wherever the query should be serviced, whether it's remote, or local, on AWS or Azure or Google, or on-prem, you're going to be able to service that query in the most efficient manner. Is that's kind of the vision here? >> That's the vision, that's exactly it. It is a connected, we enable a connected data fabric, a multi-cloud for our biggest customers who are always going to have an on-prem capability. They can reach back into their on-prem system from the data, the storage on-prem, in terms of the data that travels across for that is only though for the query. So you don't need to duplicate queries, you don't need to duplicate data in lots of different places. But not only that, to your point, that this is all about business outcome and use cases. And the 40 years of experience that Teradata has, in terms of helping customers know how to use data to solve business problems, they get that in the cloud with the Teradata that they know, and so that whole, if they want to migrate from on-prem to in the cloud, if they wanted federate, we can give that range of options, layer on top our industry and use case experience to deliver a fantastic overall cloud migration experience to our customer set. >> I like the pricing model too, because essentially, you're charging for value. I mean, I think you look, we've gone through decades and for the past decade, a lot of SAS companies have done really well but it's kind of a one-way street. And the charge per query really is a sort of, to me anyway, a gain share, the customers win, you win, as long as you deliver a good product, they'll stay loyal to you. >> That's right. I think our customers are saying that pricing model relates directly to business value. And the total cost of ownership of the Teradata technology, is as much more efficient and effective, it gives a much better TCO, especially with enterprise skill, either data volumes, data complexity or query complexity or query concurrency. And there's entrust, and I'll reflect back to your opening remarks, right? And not very many people use this. We were born on-prem, but what we're finding in the cloud is that it's given us a better advantage, because we are used to squeezing every bit of performance out of the storage and compute and the Teradata system. So, and our poor SQL engine or workload management and query optimization means that we don't run away with the consumption of compute and storage. What we find from a native cloud pervade that are solutions as to solve these really enterprise skill challenges, they spin up more compute or spin up more storage. And it's an exponential increase in terms of the total cost of ownership, whereas we believe we give a much more predictable cost profile and performance profile, utilizing the technologies that we honed on-prem. >> Yeah, that's an important point. I mean, Teradata is by design, it's architected to be a perfectly tuned system. I mean, and so back in the day, where it was $100, 000 for 2.5 gigabytes, you had better architected it that way. And so the prevailing way to solve these problems today, there's not a lot of ways to skin a cat, but just throwing resources at it as it is the only way. And that as you pointed out, can get a little bit out of control, it makes the CFO's nervous. On the earnings score, you referenced two customer situations where you beat out snowflake for the deal. I wonder if you could add some color and elaborate on that. >> Yeah, we've been working with a number of customers that kind of kicked the tires on cloud native solutions, and we're delighted to see some of them coming by, recommitted to Teradata. And I think there's really a couple of reasons for that. One is the challenge of migration. I guess I think snowflake mentioned that in the earnings call yesterday about the challenge of migrating enterprise workload, from a Teradata perspective, because what you get in the cloud is exactly the same as what you've got on-prem. We can lift and shift, and then we can look to modernize once it's in the cloud. So it's dramatically different approach. So there's no interruption to the business users, so it's less risk, less costs, quicker time to value from a migration perspective. So one of those wins with an e-commerce company in the US, was because the new CTO came in and said, "Those 70 engineers, they'd been working on for the last 12 months." And it was about to try and migrate Teradata workload to a cloud native solution. And he said, "Why don't we just use Teradata in the cloud?" Which was a logical question and we were delighted to help them with that answer. And then the other example really was about, the projected cost of running in the cloud, and how expensive it was going to be once that organization had scaled up to the level of queries and execution that their enterprise was going to be generating, and also from the growth trajectory that they were anticipating, just from a tool cost of ownership perspective Teradata made a lot of sense. And that probably would surprise quite a lot of people over there who have always considered Teradata as being reassuringly expensive. But what we're really demonstrating now is when we think about it in terms of query execution and as customers try alternative solutions to execute the kind of queries the enterprise skill that Teradata does every day, we are actually a really good price performance player. >> Yeah, I don't think anybody would ever question your database chops. I mean, I think people were trying to understand it and I my myself was trying to understand, okay, what happens to the on-prem business? And you're sort of connected the dots there for me. So my question is, what are your on-prem customers? What's their motivation for moving to the cloud? Are they actually leaning in, or are they kind of many of them putting a brick wall around their on-prem, and sort of carving out a cloud agenda? How do you see that evolving? >> Look, I think, and I'm talking about existing customers rather than winning new customers here. But our existing customers are going to continue growing their on-prem environments. You know, if you look at the market analysis it says, between one and 4% growth per annum for the existing on-prem traditional technologies. So, and we expect Teradata to more than gain our share in terms of that one to 4% market share grows every year, but really the growth, the 30% plus growth, in terms of year on year data growth in the cloud, is really driven by that DevOps approach, one to utilize first party cloud services to augment the technology development that's going on inside organizations, also as data starts moving into a SaaS environments, being able to do the analytics of that data that's already in a cloud environment and a cloud environment starts to make a lot of sense. So we are investing in connectors to the sales force, the service now, so that you can have access to that data from Teradata. So we think that hybrid approach, in many of the biggest companies in the world is going to continue to make a lot of sense, but the big growth, and I think is going to be in those cloud environments. >> So as I model, my mental model around Teradata is really holding serve and that on-prem business, low single digit growth, keep that stable, and then you're growing very very rapidly in the ARR model, the cloud business. And then at some point you've got, let's Teradata, 1.8 billion in revenue, somewhere around there. So you've got ways to go before that cloud business is as large as the on-prem business, obviously, but that's the opportunity. And we've seen a number of companies transition through that very successfully. You're obviously communicating to the street, they liked the story. This seems to be some upside people are, you know, the investors are saying, "Well this is an undervalued company you don't have- >> Yeah, no, absolutely. And I would say is, we look at our current ARR, we know that we're going to have a stable base of on-prem ARR for the foreseeable future. But, the ability to migrate some of that ARR to cloud is low hanging fruit in terms of growing our cloudy ARR. But then what we've seen is, once we migrate an on-prem customer to the cloud, it kind of unlocks the Teradata environment for that customer, because, remember we usually run all of the mission critical production workloads, and so that system is like tied tightly down, you don't, if you're the CFO, you don't want the marketing team like disrupting your month end running. But when you're in the cloud, to run those ad hoc queries or ad hoc analytics capabilities, then we can spin up and we can elastically grow more compute, more storage, so that workload can be satisfied, both still predicting those mission critical workloads and the core SQL engine. And so we're seeing the expansion once we move some of those workloads to the cloud and some of those customers to the cloud as being really, really significant. So expanding the ARR that the did have on-prem, when it lands in the cloud, as we've seen more than 50% expansion rates. >> I mean, I see the future. You used the term, I think data fabric, I see the future is data warehouse, data warehouse, data lake or whatever repository you want. Those are just nodes in my mind within that fabric. And you mentioned marketing, if I'm in the marketing department, I want my own data. I have the context, I know what I need, I don't want to be subservient to some complex data pipeline and data scientists to get permission. I just want to... I want to go for it and create data products. And so, my last question is sort of, there's my sort of simple vision. How do you see the future? >> Look, I think I'll give an example of telcos who are increasingly trying to move to be techcos. And how orchestration of data across multiple silos in an enterprise can create significant enterprise value. So if you imagine the IOT use case 5G deployment strategy, you've got all of these 4G handsets, so you just know, telco is wanting to know where all of that usage data is, so that they can mane that usage data into customer usage patterns to then influence their capital allocation strategy as they build out 5G networks. So it takes data from the consumer level and puts it into a corporate planning process, on the really backend of the company. And so we believe with our connected multi-cloud data platform and our outstanding and data warehousing analytics, we can get those kind of most complex use cases, the lever to our customers really successfully. >> Hey Steve, great story, it's clear to me you've got your priorities straight. So thanks so much for coming on theCUBE and sharing your story there. >> Dave, it's been an absolute pleasure, I hope to do it again. >> All right, you got it. And thank you for watching everybody. This is Dave Vellante for theCUBE, we'll see you next time. (upbeat music)

(upbeat music) >> Narrator: From around the globe. It's the cube with digital coverage of AWS reinvent 2020 sponsored by Intel, AWS and our community partners. >> Hi, welcome to the Q virtual. You're watching our coverage or AWS free event 2020. We are the Q virtual and let me hope you in skevent . I'm joined with Steve Mcmilla CEO, president of teradata Stephen, welcome to the show. >> Hey Keith, great to be here today. Glad to be joining you. So teradata, this is a big, exciting market analytics in the public cloud, but let's start with a little history. I remember teradata as being the thing that I do as a data says that my big data on premises and asking questions of teradata, how's the public cloud changed teradata's business. >> I think Teradata has got a fantastic heritage. We've, you know, being in the cloud, the data analytics business for over 40 years. So in fact, you could say that teradata invented data analytics. The cloud for us` is just a really exciting opportunity. It gives our customers another deployment option, and we are looking at how we can take our capabilities from on-prem and extend those into the cloud. And that's really what a lot of teradata's existing customers are looking for. But we also see tremendous opportunity as customers are responding to their market and their environments. They want to use the cloud as a platform, an agile platform, and we're finding that they can see the benefits of using teradata in terms of performance in scale and given a level of insight and to the data that they've got in the cloud, that other platforms can't touch. >> So we're talking about real time, current issues that's going on in customer environments. Talk to me about the teradata top de sure the pandemic. How's the pandemic impacting your customer environments or working the need for this type of analytics capabilities? >> I think the pandemic has just been an accelerant for a lot of transformation for companies. And you know, that the situation with COVID-19 globally has really resulted in a need for companies to be able to respond very harshly, to an uncertain environment. And an environment is changing all of the time. You know, AWS as a cloud provider can provide that level of agility. What teredata does set it on top of AWS has provided a level of business insight that enables companies to use their data, to dynamically respond to the situations that are in front of them today, even as that changes day by day or hour by hour or minute to minute. >> So I've talked to a lot of customer who have looked at the public cloud as a way to respond, celebrate their businesses in the era of the pandemic. But let's talk about long term vision. How are customers going to use teradata moving forward in a post pandemic. >> Okay I think that just from a data strategy perspective, cloud is one aspect of it. Really what our customers want to get from the data, Is real insights, that help them transform how their businesses work, especially in these changing times. So businesses we find are overwhelmed by the amount of data that they've got. There's never a day in the world where there's less data than there was the day before and coping with that explosion of data, getting real insights so they can work what they going to do that is we believe forms the basis of a long term data strategy. >> So help me paint a picture for customers as they look at their multi-cloud or hybrid cloud environments, which you know, I have my systems of record on premises feel, I have my next generation customer facing complications, Back far diverse is transactional. customer experience data. How does Teradata help bridge those worlds? >> That's where I think Teradata is uniquely placed. You know we bring that 40 years of heritage and investment and data analytics and we help our customers take that end to the cloud. We see most of our customers now have a cloud strategy. I was reading an industry report the other day that said that, on average organizations will have seven clouds that they have to deal with. Many customers are deploying on AWS because they see it as a great cloud platform where they can extend their on-prem data capabilities into the cloud use the facilities and features of AWS convened web teradata to really transform the data fabric and the analytics capabilities of their organization. So it's really that combination, that is provide some unique opportunities for our customers. And again, like using teradata in AWS quote, probates, unprecedented a scale, a scale that we've been able to develop in our technology over the last few decades. And we take that know-how and deploy it in the Amazon cloud so that customers have a great degree of control. They can optimize how their queries run inside the environment. They can get degrees of cost certainty that they don't otherwise have they can govern their data and ways that gives them complete control and security over the analytics, the insights that they make available so that they can really change how their companies operate. >> So obviously you run a sizable business, a mature business, that's finding this incredible growth mechanism, but at the end of the day, when your employees come to you with a new idea, you want to know what's the return on investment, you know money, isn't free resources, aren't free. You have limited staff just like everyone else. Talk to me about the return on investment from teradata. >> So I think teradata really offers the ability to get that cost per query and the sweet spot for our customers. So we've done a number of things we've made a cost calculator available on our website so that our, our customers can look at and compare how much it costs to run and say a data environment or an, an AWS quote, and how that compares to all of the other options that may be available to them. And what we see is often an order of magnitude difference in terms of the cost profile for running teradata and getting true business level insights from the data that they have compared to some of the competitive solutions out there. And that might really surprise some of your viewers said, Keith, in terms of that, that's not usually what you'd associate teradata West, or you associate teradata as, an absolutely robust system that's completely meshing critical. But David, we get those features and a really controlled environment, where the cost per query is optimized. we've got consumption-based pricing models that enables that return and investment curve that you're talking about to be either really early on in their process or using our technologies. >> So I've been part of these big, massive projects within enterprises, where we look at these, whether it's data leakes, unstructured data etc. We want to to next big questions of them. The big problem with that has always been cost or runs these projects always, always in my experience go over budget. How does the combination of AWS, which has the potential to have only limited budget and teradata, which falls basically unlimited budget issue or dresses, unlimited budget problem, how do you help control that risk and avoid cost? >> Yeah, so you know working in an environment like AWS, which is completely elastic can really does give tremendous value to our conveying customer set. But as you said, that elasticity comes at a cost. So in order to make sure that our customers run, the most important queries that they get the most value from, we utilize technologies that we've taken from our own prem deployments, things like query optimization and workload management, and that lets us give our customers a degree of control, and that environment that they wouldn't otherwise have. So we're really excited about the future of teradata and the AWS cloud. >> Now we spent a lot of time talking about the AWS cloud, but a lot of customers simply aren't there. A lot of them are just react to the pandemic, as a need for today. Do I have to be all in and AWS and public cloud in general to take advantage of all of these advantages of all of these capabilities? >> What we are, what we want to do from a teradata vantage perspective is really promote it as a platform and a platform that can be used across all of the cloud environments, and into the on-prem environment. If you have teradata vantage deployed in your on-prem So we're all about opening up choice and flexibility. You know, the teradata technology really enables our customers, not just to have a data Mart view of things where, you know, you're, no simple queries on, you know, the rear view mirror of what happened, but the analytics technology lets you get into questions like, well, why did that event happen? What's going to happen next? And what should we do to proactively plan that, you know we see use cases like the internet of things, where, there's a preventative and predictive maintenance on laws that the bases over there, and you can imagine the amount and volume of data that's getting consumed. And we analyze that data real time, get real answeres to make recommendations, to really enable an organization that's servicing these machines the the right level of end state to optimize how they're working on a day-to-day business. is really exciting. >> So again, we're now shipping the conversation back over to public health in consumption. How do I consume Cherokee advantage in AWS? >> We've got a number of different deployment models in terms of consuming teradata vantage , so you can have a pay as you go model, which means, you can start at nothing and work out overtaking or consumption model is really unique because we actually, we Bel on the basis of what we call logical IO, which means that it's only been queries work, inside the environment that our customer gets billed for it. So you don't just get charged by walking into the room and having the light switch on you only get charged when that late is doing something meaningful, for you and your organization, and actually result in an end state for use the company also the blended priests and models. So you can work out what the optimum deployment model as for teradata vantage and save quote. So loss of choice, we're all about giving that flexibility and choice in terms of how we operate. >> So you hit on the topic of IOT, but let's hit that dead on and talk about another hot part of not just the it conversation, but the cloud conversation and especially data analytics, the edge how does a solution like vantage play with datasets, that live at the edge and have to be carried at the edge? >> You know, one of the great things of a teradata vantage and how we're looking at it just now, If we think about, or you may recall as teradata, the desire was to try and get everything into a teradata and have all the data captured and say that ecosystem, that doesn't work as well in the cloud world. What we're all about is opening up that platform. So some of your viewers might be surprised. We now integrate with, 18 of AWS services to really start opening the platform up. We give access to from teradata and to native object stores and cloud environments so that, customers don't have to duplicate data. They don't have to copy it into teradata, and have that data locked in there. We can access a whole plethora of data capture mechanisms that the cloud providers AWS make available, in terms of those APO eyes and those calls. so that we can integrate it all together, and get the best possible set of data sources, for teradata VANTAGE to work on. So really exciting team in terms of opening up that platform being really modern in terms of looking at the data fabric, that our customers have and how they're using these cloud services on a day-to-day basis. And integrating that with the power advantage. >> Steve McMillan, president CEO of teradata. We really appreciate it. 40 years of analytics history. We're seeing the movement in public cloud where we're going from these companies that we put our, all our data into centralized, adapting to the reality of edge data center, public cloud, meeting us where the data's at. We're super excited to now promote you into an alum of the queue, make sure to join us for additional coverage of AWS reinvent 2020 on ducky. (upbeat music)