>> From the Cube Studios in Palo Alto in Boston bringing you data-driven insights from the Cube and ETR. This is Breaking Analysis with Dave Vellante. >> The unraveling of market enthusiasm continued in Q4 of 2022 with the earnings reports from the US hyperscalers, the big three now all in. As we said earlier this year, even the cloud is an immune from the macro headwinds and the cracks in the armor that we saw from the data that we shared last summer, they're playing out into 2023. For the most part actuals are disappointing beyond expectations including our own. It turns out that our estimates for the big three hyperscaler's revenue missed by 1.2 billion or 2.7% lower than we had forecast from even our most recent November estimates. And we expect continued decelerating growth rates for the hyperscalers through the summer of 2023 and we don't think that's going to abate until comparisons get easier. Hello and welcome to this week's Wikibon Cube Insights powered by ETR. In this Breaking Analysis, we share our view of what's happening in cloud markets not just for the hyperscalers but other firms that have hitched a ride on the cloud. And we'll share new ETR data that shows why these trends are playing out tactics that customers are employing to deal with their cost challenges and how long the pain is likely to last. You know, riding the cloud wave, it's a two-edged sword. Let's look at the players that have gone all in on or are exposed to both the positive and negative trends of cloud. Look the cloud has been a huge tailwind for so many companies like Snowflake and Databricks, Workday, Salesforce, Mongo's move with Atlas, Red Hats Cloud strategy with OpenShift and so forth. And you know, the flip side is because cloud is elastic what comes up can also go down very easily. Here's an XY graphic from ETR that shows spending momentum or net score on the vertical axis and market presence in the dataset on the horizontal axis provision or called overlap. This is data from the January 2023 survey and that the red dotted lines show the positions of several companies that we've highlighted going back to January 2021. So let's unpack this for a bit starting with the big three hyperscalers. The first point is AWS and Azure continue to solidify their moat relative to Google Cloud platform. And we're going to get into this in a moment, but Azure and AWS revenues are five to six times that of GCP for IaaS. And at those deltas, Google should be gaining ground much faster than the big two. The second point on Google is notice the red line on GCP relative to its starting point. While it appears to be gaining ground on the horizontal axis, its net score is now below that of AWS and Azure in the survey. So despite its significantly smaller size it's just not keeping pace with the leaders in terms of market momentum. Now looking at AWS and Microsoft, what we see is basically AWS is holding serve. As we know both Google and Microsoft benefit from including SaaS in their cloud numbers. So the fact that AWS hasn't seen a huge downward momentum relative to a January 2021 position is one positive in the data. And both companies are well above that magic 40% line on the Y-axis, anything above 40% we consider to be highly elevated. But the fact remains that they're down as are most of the names on this chart. So let's take a closer look. I want to start with Snowflake and Databricks. Snowflake, as we reported from several quarters back came down to Earth, it was up in the 80% range in the Y-axis here. And it's still highly elevated in the 60% range and it continues to move to the right, which is positive but as we'll address in a moment it's customers can dial down consumption just as in any cloud. Now, Databricks is really interesting. It's not a public company, it never made it to IPO during the sort of tech bubble. So we don't have the same level of transparency that we do with other companies that did make it through. But look at how much more prominent it is on the X-axis relative to January 2021. And it's net score is basically held up over that period of time. So that's a real positive for Databricks. Next, look at Workday and Salesforce. They've held up relatively well, both inching to the right and generally holding their net scores. Same from Mongo, which is the brown dot above its name that says Elastic, it says a little gets a little crowded which Elastic's actually the blue dot above it. But generally, SaaS is harder to dial down, Workday, Salesforce, Oracles, SaaS and others. So it's harder to dial down because commitments have been made in advance, they're kind of locked in. Now, one of the discussions from last summer was as Mongo, less discretionary than analytics i.e. Snowflake. And it's an interesting debate but maybe Snowflake customers, you know, they're also generally committed to a dollar amount. So over time the spending is going to be there. But in the short term, yeah maybe Snowflake customers can dial down. Now that highlighted dotted red line, that bolded one is Datadog and you can see it's made major strides on the X-axis but its net score has decelerated quite dramatically. Openshift's momentum in the survey has dropped although IBM just announced that OpenShift has a a billion dollar ARR and I suspect what's happening there is IBM consulting is bundling OpenShift into its modernization projects. It's got a, that sort of captive base if you will. And as such it's probably not as top of mind to the respondents but I'll bet you the developers are certainly aware of it. Now the other really notable call out here is CloudFlare, We've reported on them earlier. Cloudflare's net score has held up really well since January of 2021. It really hasn't seen the downdraft of some of these others, but it's making major major moves to the right gaining market presence. We really like how CloudFlare is performing. And the last comment is on Oracle which as you can see, despite its much, much lower net score continues to gain ground in the market and thrive from a profitability standpoint. But the data pretty clearly shows that there's a downdraft in the market. Okay, so what's happening here? Let's dig deeper into this data. Here's a graphic from the most recent ETR drill down asking customers that said they were going to cut spending what technique they're using to do so. Now, as we've previously reported, consolidating redundant vendors is by far the most cited approach but there's two key points we want to make here. One is reducing excess cloud resources. As you can see in the bars is the second most cited technique and it's up from the previous polling period. The second we're not showing, you know directly but we've got some red call outs there. Reducing cloud costs jumps to 29% and 28% respectively in financial services and tech telco. And it's much closer to second. It's basically neck and neck with consolidating redundant vendors in those two industries. So they're being really aggressive about optimizing cloud cost. Okay, so as we said, cloud is great 'cause you can dial it up but it's just as easy to dial down. We've identified six factors that customers tell us are affecting their cloud consumption and there are probably more, if you got more we'd love to hear them but these are the ones that are fairly prominent that have hit our radar. First, rising mortgage rates mean banks are processing fewer loans means less cloud. The crypto crash means less trading activity and that means less cloud resources. Third lower ad spend has led companies to reduce not only you know, their ad buying but also their frequency of running their analytics and their calculations. And they're also often using less data, maybe compressing the timeframe of the corpus down to a shorter time period. Also very prominent is down to the bottom left, using lower cost compute instances. For example, Graviton from AWS or AMD chips and tiering storage to cheaper S3 or deep archived tiers. And finally, optimizing based on better pricing plans. So customers are moving from, you know, smaller companies in particular moving maybe from on demand or other larger companies that are experimenting using on demand or they're moving to spot pricing or reserved instances or optimized savings plans. That all lowers cost and that means less cloud resource consumption and less cloud revenue. Now in the days when everything was on prem CFOs, what would they do? They would freeze CapEx and IT Pros would have to try to do more with less and often that meant a lot of manual tasks. With the cloud it's much easier to move things around. It still takes some thinking and some effort but it's dramatically simpler to do so. So you can get those savings a lot faster. Now of course the other huge factor is you can cut or you can freeze. And this graphic shows data from a recent ETR survey with 159 respondents and you can see the meaningful uptick in hiring freezes, freezing new IT deployments and layoffs. And as we've been reporting, this has been trending up since earlier last year. And note the call out, this is especially prominent in retail sectors, all three of these techniques jump up in retail and that's a bit of a concern because oftentimes consumer spending helps the economy make a softer landing out of a pullback. But this is a potential canary in the coal mine. If retail firms are pulling back it's because consumers aren't spending as much. And so we're keeping a close eye on that. So let's boil this down to the market data and what this all means. So in this graphic we show our estimates for Q4 IaaS revenues compared to the "actual" IaaS revenues. And we say quote because AWS is the only one that reports, you know clean revenue and IaaS, Azure and GCP don't report actuals. Why would they? Because it would make them look even, you know smaller relative to AWS. Rather, they bury the figures in overall cloud which includes their, you know G-Suite for Google and all the Microsoft SaaS. And then they give us little tidbits about in Microsoft's case, Azure, they give growth rates. Google gives kind of relative growth of GCP. So, and we use survey data and you know, other data to try to really pinpoint and we've been covering this for, I don't know, five or six years ever since the cloud really became a thing. But looking at the data, we had AWS growing at 25% this quarter and it came in at 20%. So a significant decline relative to our expectations. AWS announced that it exited December, actually, sorry it's January data showed about a 15% mid-teens growth rate. So that's, you know, something we're watching. Azure was two points off our forecast coming in at 38% growth. It said it exited December in the 35% growth range and it said that it's expecting five points of deceleration off of that. So think 30% for Azure. GCP came in three points off our expectation coming in 35% and Alibaba has yet to report but we've shaved a bid off that forecast based on some survey data and you know what maybe 9% is even still not enough. Now for the year, the big four hyperscalers generated almost 160 billion of revenue, but that was 7 billion lower than what what we expected coming into 2022. For 2023, we're expecting 21% growth for a total of 193.3 billion. And while it's, you know, lower, you know, significantly lower than historical expectations it's still four to five times the overall spending forecast that we just shared with you in our predictions post of between 4 and 5% for the overall market. We think AWS is going to come in in around 93 billion this year with Azure closing in at over 71 billion. This is, again, we're talking IaaS here. Now, despite Amazon focusing investors on the fact that AWS's absolute dollar growth is still larger than its competitors. By our estimates Azure will come in at more than 75% of AWS's forecasted revenue. That's a significant milestone. AWS is operating margins by the way declined significantly this past quarter, dropping from 30% of revenue to 24%, 30% the year earlier to 24%. Now that's still extremely healthy and we've seen wild fluctuations like this before so I don't get too freaked out about that. But I'll say this, Microsoft has a marginal cost advantage relative to AWS because one, it has a captive cloud on which to run its massive software estate. So it can just throw software at its own cloud and two software marginal costs. Marginal economics despite AWS's awesomeness in high degrees of automation, software is just a better business. Now the upshot for AWS is the ecosystem. AWS is essentially in our view positioning very smartly as a platform for data partners like Snowflake and Databricks, security partners like CrowdStrike and Okta and Palo Alto and many others and SaaS companies. You know, Microsoft is more competitive even though AWS does have competitive products. Now of course Amazon's competitive to retail companies so that's another factor but generally speaking for tech players, Amazon is a really thriving ecosystem that is a secret weapon in our view. AWS happy to spin the meter with its partners even though it sells competitive products, you know, more so in our view than other cloud players. Microsoft, of course is, don't forget is hyping now, we're hearing a lot OpenAI and ChatGPT we reported last week in our predictions post. How OpenAI is shot up in terms of market sentiment in ETR's emerging technology company surveys and people are moving to Azure to get OpenAI and get ChatGPT that is a an interesting lever. Amazon in our view has to have a response. They have lots of AI and they're going to have to make some moves there. Meanwhile, Google is emphasizing itself as an AI first company. In fact, Google spent at least five minutes of continuous dialogue, nonstop on its AI chops during its latest earnings call. So that's an area that we're watching very closely as the buzz around large language models continues. All right, let's wrap up with some assumptions for 2023. We think SaaS players are going to continue to be sticky. They're going to be somewhat insulated from all these downdrafts because they're so tied in and customers, you know they make the commitment up front, you've got the lock in. Now having said that, we do expect some backlash over time on the onerous and generally customer unfriendly pricing models of most large SaaS companies. But that's going to play out over a longer period of time. Now for cloud generally and the hyperscalers specifically we do expect accelerating growth rates into Q3 but the amplitude of the demand swings from this rubber band economy, we expect to continue to compress and become more predictable throughout the year. Estimates are coming down, CEOs we think are going to be more cautious when the market snaps back more cautious about hiring and spending and as such a perhaps we expect a more orderly return to growth which we think will slightly accelerate in Q4 as comps get easier. Now of course the big risk to these scenarios is of course the economy, the FED, consumer spending, inflation, supply chain, energy prices, wars, geopolitics, China relations, you know, all the usual stuff. But as always with our partners at ETR and the Cube community, we're here for you. We have the data and we'll be the first to report when we see a change at the margin. Okay, that's a wrap for today. I want to thank Alex Morrison who's on production and manages the podcast, Ken Schiffman as well out of our Boston studio getting this up on LinkedIn Live. Thank you for that. Kristen Martin also and Cheryl Knight help get the word out on social media and in our newsletters. And Rob Hof is our Editor-in-Chief over at siliconangle.com. He does some great editing for us. Thank you all. Remember all these episodes are available as podcast. Wherever you listen, just search Breaking Analysis podcast. I publish each week on wikibon.com, at siliconangle.com where you can see all the data and you want to get in touch. Just all you can do is email me david.vellante@siliconangle.com or DM me @dvellante if you if you got something interesting, I'll respond. If you don't, it's either 'cause I'm swamped or it's just not tickling me. You can comment on our LinkedIn post as well. And please check out ETR.ai for the best survey data in the enterprise tech business. This is Dave Vellante for the Cube Insights powered by ETR. Thanks for watching and we'll see you next time on Breaking Analysis. (gentle upbeat music)

from the cube studios in Palo Alto in Boston bringing you data-driven insights from the cube and ETR this is breaking analysis with Dave vellante over the past decade cloudflare has built a Global Network that has the potential to become the fourth us-based hyperscale class cloud in our view the company is building a durable Revenue model with hooks into many important markets these include the more mature DDOS protection space to other growth sectors such as zero trust a serverless platform for application development and an increasing number of services such as database and object storage and other network services in essence cloudflare could be thought of as a giant distributed supercomputer that can connect multiple clouds and act as a highly efficient scheduling engine at scale its disruptive DNA is increasingly attracting novel startups and established Global firms alike looking for Reliable secure high performance low latency and more cost-effective alternatives to AWS and Legacy infrastructure Solutions hello and welcome to this week's wikibon Cube insights powered by ETR in this breaking analysis we initiate our deeper coverage of cloudflare we'll briefly explain our take on the company and its unique business model we'll then share some peer comparisons with both the financial snapshot and some fresh ETR survey data finally we'll share some examples of how we think cloudflare could be a disruptive force with a super cloud-like offering that in many respects is what multi-cloud should have been cloudflare has been on our peripheral radar Ben Thompson and many others have written about their disruptive business model and recently a breaking analysis follower who will remain anonymous emailed with some excellent insights on cloudflare that prompted us to initiate more detailed coverage let's first take a look at how cloudflare seize the world in terms of its view of a modern stack this is a graphic from cloudflare that shows a simple three-layer Stack comprising Storage and compute the lower level and application layer and the network and their key message is basically that the big four hyperscalers have replaced the on-prem leaders apps have been satisfied and that mess of network that you see and Security in the upper left can now be handled all by cloudflare and the stack can be rented via Opex versus requiring heavy capex investment so okay somewhat of a simplified view is those companies on the the left are you know not standing still and we're going to come back to that but cloudflare has done something quite amazing I mean it's been a while since we've invoked Russ hanneman of Silicon Valley Fame on breaking analysis but remember when he was in a meeting one of his first meetings if not the first with Richard Hendricks it was the whiz kid on the show Silicon Valley and hanneman said something like if you had a blank check and you could build anything in the world what would it be and Richard's answer was basically a new internet and that led to Pied Piper this peer-to-peer Network powered by decentralized devices and and iPhones and this amazing compression algorithm that enabled high-speed data movement and low latency uh up to no low latency access across the network well in a way that's what cloudflare has built its founding premise reimagined how the internet should be built with a consistent set of server infrastructure where each server had lots of cores lots of dram lots of cash fast ssds and plenty of network connectivity and bandwidth and well this picture makes it look like a bunch of dots and points of presence on a map which of course it is there's a software layer that enables cloudflare to efficiently allocate resources across this Global Network the company claims that it's Network utilization is in the 70 percent range and it has used its build out to enter the technology space from the bottoms up offering for example free tiers of services to users with multiple entry points on different services and selling then more services over time to a customer which of course drives up its average contract value and its lifetime value at the same time the company continues to innovate and add new services at a very rapid cloud-like Pace you can think of cloudflare's initial Market entry as like a lightweight Cisco as a service the company's CFO actually he uses that term he calls it that which really must tick off Cisco who of course has a massive portfolio and a dominant Market position now because it owns the network cloudflare is a marginal cost of adding new Services is very small and goes towards zero so it's able to get software like economics at scale despite all this infrastructure that's building out so it doesn't have to constantly face the increasing infrastructure tax snowflake for example doesn't own its own network infrastructure as it grows it relies on AWS or Azure gcp and and while it gives the company obvious advantages it doesn't have to build out its own network it also requires them to constantly pay the tax and negotiate with hyperscalers for better rental rates now as previously mentioned Cloud Fair cloudflare claims that its utilization is very high probably higher than the hyperscalers who can spin up servers that they can charge for underutilized customer capacity cloudflare also has excellent Network traffic data that it can use to its Advantage with its Analytics the company has been rapidly innovating Beyond its original Core Business adding as I said before serverless zero trust offerings it has announced a database it calls its database D1 that's pretty creative and it's announced an object store called R2 that is S3 minus one both from the alphabet and the numeric I.E minus the egress cost saying no egress cost that's their big claim to fame and they've made a lot of marketing noise around about that and of course they've promised in our a D2 database which of course is R2D2 RR they've launched a developer platform cloudflare can be thought of kind of like first of all a modern CDN they've got a simpler security model that's how they compete for example with z-scaler that brings uh they also bring VPN sd-wan and DDOS protection services that are that are part of the network and they're less expensive than AWS that's kind of their sort of go to market and messaging and value proposition and they're positioning themselves as a neutral Network that can connect across multiple clouds now to be clear unlike AWS in particular cloudflare is not well suited to lift and shift your traditional apps like for instance sap Hana you're not going to run that in on cloudflare's platform rather the company started by making websites more secure and faster and it flew under the radar and much in the same way that clay Christensen described the disruption in the steel industry if you've seen that where new entrants picked off the low margin rebar business then moved up the stack we've used that analogy in the semiconductor business with arm and and even China cloudflare is running a similar playbook in the cloud and in the network so in the early part of the last decade as aws's ascendancy was becoming more clear many of us started thinking about how and where firms could compete and add value as AWS is becoming so dominant so for instance take an industry Focus you could do things like data sharing with snowflake eventually you know uh popularized you could build on top of clouds again snowflake is doing that as are others you could build private clouds and of course connect to hybrid clouds but not many had the wherewithal and or the hutzpah to build out a Global Network that could serve as a connecting platform for cloud services cloudflare has traction in the market as it adds new services like zero trust and object store or database its Tam continues to grow here's a quick snapshot of cloudflare's financials relative to Z scalar which is both a competitor and a customer fastly which is a smaller CDN and Akamai a more mature CDN slash Edge platform cloudflare and fastly both reported earnings this past week Cloud Fair Cloud flare surpassed a billion dollar Revenue run rate but they gave tepid guidance and the stock got absolutely crushed today which is Friday but the company's business model is sound it's growing close to 50 annually it has sas-like gross margins in the mid to high 70s and it's it it's got a very strong balance sheet and a 13x revenue run rate multiple in fact it's Financial snapshot is quite close to that of z-scaler which is kind of interesting which zinc sailor of course doesn't own its own network that's a pure play software company fastly is much smaller and growing more slowly than cloudflare hence its lower multiple well Akamai as you can see is a more mature company but it's got a nice business now on its earnings call this week cloudflare announced that its head of sales was stepping down and the company has brought in a new leader to take the firm to five billion dollars in sales I think actually its current sales leader felt like hey you know my work is done here bring on somebody else to take it to the next level the company is promising to be free cash flow positive by the end of the year and is working hard toward its long-term financial model or so working towards sorry it's a long-term financial model with gross margin Targets in the mid 70s it's targeting 20 non-gaap operating margins so so solid you know very solid not like completely off the charts but you know very good and to our knowledge it has not committed to a long-term growth rate but at that sort of operating profit level you would like to see growth be consistently at least in the 20 range so they could at least be a rule of 40 company or perhaps even even five even higher if they're going to continue to command a premium valuation okay let's take a look at the ETR data ETR is very positive on cloudflare and has recently published a report on the company like many companies cloudflare is seeing an across the board slowdown in spending velocity we've reported on this quite extensively using the ETR data to quantify the degree to that Slowdown and on the data set with ETR we see that many customers they're shifting their spend to Flat spend you know plus or minus let's say you know single digits you know two three percent or even zero or in the market we're seeing a shift from paid to free tiers remember cloudflare offers a lot of free services as you're seeing customers maybe turn off the pay for a while and going with the freebie but we're also seeing some larger customers in the data and the fortune 1000 specifically they're actually spending more which was confirmed on cloudflare's earnings call they did say everything across the board was softer but they did also indicate that some of their larger customers are actually growing faster than their smaller customers and their churn is very very low here's a two-dimensional graphic we'd like to share this view a lot it's got Net score or spending momentum on the vertical axis and overlap or pervasiveness in the survey on the horizontal axis and this cut isolates three segments in the etrs taxonomy that cloudflare plays in Cloud security and networking now the table inserted in that upper left there shows the raw data which informs the position of each company in the dots with Net score in the ends listed in that rightmost column the red dotted line indicates a highly elevated Net score and finally we posted the breakdown those colors in the bottom right of cloudflare's Net score the lime green that's new adoptions the forest green is we're spending more six percent or more the gray is flat plus or minus uh five percent and you can see that the majority of customers you can see that's the majority of the customers that gray area the pink is we're spending Less in other words down six percent or worse and the bright red is churn which is minimal one percent very good indicator for for cloudflare what you do to get etr's proprietary Net score and they've done this for many many quarters so we have that time series data you subtract the Reds from the greens and that's Net score cloudflare is at 39 just under that magic red line now note that cloudflare and zscaler are right on top of each other Cisco has a dominant position on the x-axis that cloudflare and others are eyeing AWS is also dominant but note that its Net score is well above the red dotted line it's incredible Palo Alto networks is also very impressive it's got both a strong presence on the horizontal axis and it's got a Net score that's pretty comparable to cloudflare and z-scaler to much smaller companies Akamai is actually well positioned for a reasonably mature company and you can see fastly ATT Juniper and F5 have far less spending momentum on their platforms than does cloudflare but at least they are in positive Net score territory so what's going to be really interesting to see is whether cloudflare can continue to hold this momentum or even accelerate it as we've seen with some other clouds as it scales its Network and keeps adding more and more services cloudflare has a couple of potential strategic vectors that we want to talk about and it'll be going to be interesting to see how that plays out Now One path is to compete more directly as a Cloud Player offering secure access Edge services like firewall as a service and zero Trust Services like data loss prevention email security from its area one acquisition and other zero trust offerings as well as Network Services like routing and network connectivity this is The Sweet Spot of the company load balancing many others and then add in things like Object Store and database Services more Edge services in the future it might be telecom like services such as Network switching for offices so that's one route and cloudflare is clearly on that path more services more cohorts at innovating and and growing the company and bringing in more Revenue increasing acvs and and increasing long-term value and keeping retention high now the other Vector is what we're just going to refer to as super cloud as an enabler of cross-cloud infrastructure this is new value uh relative to the former Vector that we were just talking about now the title of this episode is what multi-cloud should have been meaning cloudflare could be the control plane providing a consistent experience across clouds one that is fast and secure at global scale now to give you Insight on this let's take a look at some of the comments made by Matthew Prince the CEO and co-founder of cloudflare cloudflare put its R2 Object Store into public beta this past May and I believe it's storing around a petabyte of data today I think that's what they said in their call here's what Prince said about that quote we are talking to very large companies about moving more and more of their stored objects to where we can store that with R2 and one of the benefits is not only can we help them save money on the egress fees but it allows them to then use those object stores or objects across any of the different Cloud platforms they're that they're using so by being that neutral third party we can let people adopt a little bit of Amazon a little bit of Microsoft a little bit of Google a little bit of SAS vendors and share that data across all those different places so what's interesting about this in the super cloud context is it suggests that customers could take the best of each Cloud to power their digital businesses I might like AWS for in redshift for my analytic database or I love Google's machine learning Microsoft's collaboration and I'd like a consistent way to connect those resources but of course he's strongly hinting and has made many public statements that aws's egress fees are a blocker to that vision now at a recent investor event Matthew Prince added some color to this concept when he talked about one metric of success being how much R2 capacity was consumed and how much they sold but perhaps a more interesting Benchmark is highlighted by the following statement that he made he said a completely different measure of success for R2 is Andy jassy says I'm sick and tired of these guys meaning cloudflare taking our objects away we're dropping our egress fees to zero I would be so excited because we've then unlocked the ability to be the network that interconnects the cloud together now of course it would be Adam solipski who would be saying that or maybe Andy Jesse you know still watching over AWS and I think it's highly unlikely that that's going to happen anytime soon and that of course but but in theory gets us closer to the super cloud value proposition and to further drive that point home and we're paraphrasing a little bit his comments here he said something the effect of quote customers need one consistent control plane across clouds and we are the neutral Network that can be consistent no matter which Cloud you're using interesting right that Prince sees the world that's similar to if not nearly identical to the concepts that the cube Community has been putting forth around supercloud now this vision is a ways off let's be real Prince even suggested that his initial vision of an application running across multiple clouds you know that's like super cloud Nirvana isn't what customers are doing today that's that's really hard to do and perhaps you know it's never going to happen but there's a little doubt that cloudflare could be and is positioning itself as that cross-cloud control plane it has the network economics and the business model levers to pull it's got an edge up on the competition at the edge pun intended cloudflare is the definition of Edge and it's distributed platform it's decentralized platform is much better suited for Edge workloads than these giant data centers that are you know set up to to try and handle that today the the hyperscalers are building out you know their Edge networks things like outposts you know going out to the edge and other local zones Etc now cloudflare is increasingly competitive to the hyperscalers and those traditional Stacks that it depositioned on an earlier slide that we showed but you know the likes of AWS and Dell and hpe and Cisco and those others they're not sitting in their hands they have a huge huge customer install bases and they are definitely a moving Target they're investing and they're building out their own Super clouds with really robust stacks as well let's face it it's going to take a decade or more for Enterprises to adopt a developer platform or a new database Cloud plus cloudflare's capabilities when compared to incumbent stacks and the hyperscalers is much less robust in these areas and even in storage you know despite all the great conversation that R2 generated and the buzz you take a specialist like Wasabi they're more mature they're more functional and they're way cheaper even than cloudflare so you know it's not a fake a complete that cloudflare is going to win in those markets but we love the disruption and if cloudflare wants to be the fourth us-based hyperscaler or join the the big four as the as the fifth if we put Alibaba in the mix it's got a lot of work to do in the ecosystem by its own admission as much to learn and is part of the value by the way that it sees in its area one acquisition it's email security company that it bought but even in that case much of the emphasis has been on reseller channels compare that to the AWS ecosystem which is not only a channel play but is as much an innovation flywheel filling gaps where companies like snowflake Thrive side by side with aws's data stores as well all the on-prem stacks are building hybrid connections to AWS and other clouds as a means of providing consistent experiences across clouds indeed many of them see what they call cross-cloud services or what we call super cloud hyper cloud or whatever you know Mega Cloud you want to call it we use super cloud they are really eyeing that opportunity so very few companies frankly are not going after that space but we're going to close with this cloudflare is one of those companies that's in a position to wake up each morning and ask who can we disrupt today and very few companies are in a position to disrupt the hyperscalers to the degree that cloudflare is and that my friends is going to be fascinating to watch unfold all right let's call it a wrap I want to thank Alex Meyerson who's on production and manages the podcast as well as Ken schiffman who's our newest addition to the Boston Studio Kristen Martin and Cheryl Knight help us get the word out on social media and in our newsletters and Rob Hof is our editor-in-chief over at silicon angle thank you to all remember all these episodes are available as podcasts wherever you listen all you're going to do is search breaking analysis podcasts I publish each week on wikibon.com and siliconangle.com you can email me at david.velante at siliconangle.com or DM me at divalante if you comment on my LinkedIn posts and please do check out etr.ai they got the best survey data in the Enterprise Tech business this is Dave vellante for the cube insights powered by ETR thank you very much for watching and we'll see you next time on breaking analysis

>>Kicking things off I'm Lisa Martin with Richard Hummel manager of threat intelligence at NetScout in this segment, we're going to be talking about the rise of server class bot net armies. Richard. Good to see you >>Again, Lisa, as always >>Likewise, so botnet armies, it sounds a bit ominous, especially given the current global climate. Now the first botnets came in the early 1990s. Those were comprised of servers followed over the years by PCs and then it botnets. But recently in the second half of 2021, what have you seen with respect to botnets and the armies? >>Yeah, so I think it's important for us to look at the history of where did we come from? How did we get here? What kind of kicked off this phenomena of botnets specifically DDoSs related botnets and bonnets have existed for a long time. Lisa, you mentioned it in the nineties, and then we move into kind of the two thousands and talking about IOT devices entering the scene. And then 2013, you start to see, hear more about these IOT botnets and in their surge, but then it wasn't until 2016, when the Mariah code was publicly released. And we all heard about the dine attacks at the time, which were record-breaking oh man, we launched this 600 gigabit per second attack using an IOT button and the world's is on fire and everything's going to burn down. And that was kind of the feeling at the time. >>Uh, little did we know that IOT based botnets typically have limits? And the reason for that as an IOT device itself, doesn't have a whole lot of processing capability. Often they're sitting in home networks, home networks that maybe don't have high bandwidth high throughput. Now that is changing, right? The world is adopting this 5g. And even for jeez, you're using mobile hotspots and now IOT devices being directly connected to 5g networks, you're talking about much more bandwidth throughput capabilities. However, they're still limited to what that device is capable of doing. And so an IOT device itself probably can't generate a whole lot of throughput or bandwidth, but what happens if you're able to compromise really high powered devices, such as routers or even server grade routers or even servers themselves sitting in data centers. So inter kind of what we're seeing the second half of the year, I think a lot of us heard about some of the recent attacks with the nearest bottleneck taking down notable websites and Maris is a little bit different because it uses what's called HTTP pipeline. >>And essentially what that does is the bot itself will take all of its butted nodes. And in today is sitting on Microtech routers using a old vulnerability from 2018 managed to be able to compromise these things. And it will generate a bunch of these HTTP requests and then it will release the gate. And so all of these requests essentially flood a web server and the web server just can't handle it. So maybe the first few thousand it can process, but eventually it starts to slow, slow down before it completely chokes off. And so that's kind of how that attack works. Now, the Maris button itself leveraging these Microtech routers. And again, like I said, a vulnerability from 2018 that a lot of these used to compromise these routers on, but what was notable about that vulnerability is that you could force the router itself to give you the username and password, and even patching those routers in, unless you explicitly change the usernames and passwords and those persistent the patch. >>And so inter a new button that called the Venice that also takes advantage of this same existing vulnerability, but leveraging these credentials that then are able to compromise. So now you have two botnets operating on these Microtech riders that often sit in high bandwidth, high throughput networks, being able to launch these really fast potent attacks. Now into the third one here, getting a ride. This is a version of Mariah that has been forked and now uses your vulnerability or an exploit against get servers and where to compromise server grade hardware. So if it wasn't bad enough that you have these high powered routers. Now you're talking about a server that maybe it has a TIG 10 gig interface. What happens if you get a hundred or even a thousand of these things launching a really fast attack? And so, yes, it's the rise of a server class button at army and army I think is very apt here. >>Um, often we think about button ads and we used to use the term zombies or zombie network and ever really heard that too much lately because zombie is basically these things exist. They're kind of out there. They don't really get initiated until they're used, but in the DDoSs world, these botnets are typically always active. So I don't really consider them zombies, um, because they're always brute forcing, and they're always trying to propagate and they're doing this automatically. And so a lot of times when we see these connections coming into like things like our honeypot, these are Muray or Satoria Lucifer GAF kit XR DDoSs I could go on, right? There's a lot of these different IOT botnets out there, but more and more they're turning towards these more high powered hardware in these servers in order to up the potency of their attacks. >>Let's talk about speed for a second. You mentioned the new server class, Mariah botnets. One of the things that the report uncovered was that online criminals were able to really quickly employ them to launch attacks that were details had talks that were pretty vicious. Why were they able to do that so quickly? >>The ecosystem and the criminal underground is so fast. It's so rapid. They have no red tape. You know, let's look at it from a defensive standpoint, there's a new hardware software that rolls out. There's a new patch that rolls out. What do we have to do? We have to go through this process of validating, testing it against our network, figuring out is it going to tip anything over? Maybe we deploy a first to a staging environment. Then we have to get executive bless off and approval. It has to evaluate this. We have to go to industry standards, okay, is it meeting these benchmarks? And we have this whole process, right? And sometimes even for critical patches, it can take us months to be able to roll these out for deployment. Adversaries have none of that. They have no, they have no oversight. A new vulnerability comes out. New capability comes out new exploits, come out the very next day, we're seeing this in metal split modules. A couple of days later, we're seeing it in Mariah and various other IOT flavors of Mauer. And so these guys have super fast, rapid adoption of new things that are coming out with zero overhead. And so they can implement this in practice very, very quickly, not just in bots, but even in DDoS for hire platforms. They're starting to use these kinds of novel attack vectors very, very quickly after they'd been uncovered or reveal >>No overhead, no red table. That must be like another thing that I noticed in the report in the second half of 2021 was that NetScout saw the first known terabit class direct path DDoSs attack terabit class. What's the significance of that. >>And so the significance here is, like I said, with IOT, achieving those kinds of levels is very, very difficult because IOT devices cannot gen up to that amount of bandwidth. But with these botnets existing on segments of the internet that have one gig or even 10 gig of capacity and the power by which to generate enough traffic to achieve those volumes. So it's, it's something we've never seen before, even going all the way back to the diner tacks with the IOT and marae, we were talking to hundreds of thousands of devices here contributing to that 600 gigabit per second range. That was a lot by those standards, right. And I would say that we probably have more button that's existing today, but the more fragmented, right? So you might have 30,000 over here. You might have 50,000 over here. Maybe you have a hundred thousand over here. Um, and so a lot of these botnets are a little bit smaller, but now if we can do 10,000 routers with one particular button ad that has the capacity to do one gig each, I mean, we're talking massive amounts of traffic here. And so that's really, it, that's the evolution that we're seeing. And I think that the, the advent and introduction of 5g more and more across the world is going to make this exponentially worse in terms of what botnets are capable of launching. >>Let's dig into that in about a minute or so. The significance of 5g, you know, we were talking about that as so much opportunity that that's going to unlock, but is that potentially going to be a bad thing? >>It could be in the DDoSs world. Um, we have some statistics actually, where we're already starting to see more attacks against the wireless. And so wireless is in, uh, it used to be Latin time would have a lot of wireless and mobile type stuff because a lot of gamers over there use mobile hotspots, but we're seeing them move over to the lad time. And in fact, globally, we saw 32% increase in wireless attacks. And I believe firmly that a lot of that is attributed to this rollout of 5g across the world. >>Interesting. We'll have to keep our eye on that. Well, I'm sure not Scott. Well, another thing, if we think about one of the things that we've been through the last couple of years in the pandemic, the adoption and the embracing of this hybrid work model, that we're many of us still in, what does NetScout expect to see with respect to expansion of botnets into our homes, into our residences. >>That is the key question there, because what, what happened when COVID kicked off, everybody took their corporate machines. We took all of our devices that were sitting inside a corporate office. We went home, we went home behind routers that have no firewall that had no IDs to have no IPS. In fact, most of us probably don't even know how to log into our routers to change things. And so they're using your default usernames and passwords, or maybe you haven't patched it, or there's no auto patching setup. So you are taking all of your essential vital components for working in you're leaving the castle. And now you are out in an open field and adversaries have free reign to do whatever they want. Couple that with the fact that a lot of us don't even care about the security of our IOT devices, uh, I always like to use this example of Christmas day. >>You get these cool new gadgets and tech devices. And for me, that's pretty much all I get because I love tech. And if you see this now I've got four monitors, plus my laptop and all kinds of stuff here on my desktop. But when I get a new device on Christmas morning, it's not my first instinct or gut reaction to get online and change my default using passwords, or to make sure it's patched or to update it. Now, sometimes those are being forced now, which is awesome. We need to do more of that, but it's not your first reaction, but we know that as soon as an IOT device goes online, you have about five minutes at most before you start getting inundated with, through forcing attempts. And so, yeah, the, the global work from home has really changed how we need to think about security and how organizations and enterprises really should consider how they secure those at-home devices versus being inside the enterprise. >>A lot to think about Richard. And if you're not thinking about it first on Christmas day, then I certainly am not thinking about it. Thanks so much for talking to us about what you guys uncovered with respect to that armies. A lot of interesting evolution there, and the fact that there's no red tape. Wow. What an environment in a moment, Richard and I are going to be back to talk about the vertical industries where attackers zeroed in for DDoSs attacks. You're watching the cube, the leader in tech enterprise coverage.

>> From theCUBE studios in Palo Alto and Boston, bringing you data-driven insights from theCUBE and ETR. This is Breaking Analysis with Dave Vellante. >> Techniques to protect sensitive data have evolved over thousands of years literally. The pace of modern data protection is rapidly accelerating and presents both opportunities and threats for organizations. In particular, the amount of data stored in the cloud combined with hybrid work models, the clear and present threat of cyber crime, regulatory edicts and the ever expanding edge and associated use cases should put CXOs on notice that the time is now to rethink your data protection strategies. Hello, and welcome to this week's Wikibon theCUBE Insights powered by ETR. In this Breaking Analysis, we're going to explore the evolving world of data protection and share some information on how we see the market changing in the competitive landscape for some of the top players. Steve Kenniston AKA the Storage Alchemist shared a story with me and it was pretty clever. Way back in 4,000 BC the Sumerians invented the first system of writing. Now they used clay tokens to represent transactions at that time. Now, to prevent messing with these tokens, they sealed them in clay jars to ensure that the tokens or either data would remain secure with an accurate record, let's call it quasi immutable and lived in a clay vault. Since that time, we've seen quite an evolution in data protection. Tape, of course, was the main means of protecting data, backing data up during most of the mainframe era and that carried into client server computing, which really accentuated and underscored the issues around backup windows and challenges with RTO, Recovery Time Objective and RPO, Recovery Point Objective, and just overall recovery nightmares. Then in the 2000s data reduction made displace backup more popular and push tape into an archive last resort media data domain then EMC now Dell still sell many purpose built backup appliances as do others as a primary backup target disc base. The rise of virtualization brought more changes in backup and recovery strategies as a reduction in physical resources squeezed the one application that wasn't under utilizing compute i.e backup. And we saw the rise of Veeam, the cleverly named company that became synonymous with data protection for virtual machines. Now the cloud has created new challenges related to data sovereignty, governance latency, copy creep, expense, et cetera but more recently cyber threats have elevated data protection to become a critical adjacency to information security. Cyber resilience to specifically protect against ransomware attacks as the new trend being pushed by the vendor community as organizations are urgently looking for help with this insidious threat. Okay, so there are two major disruptors that we're going to talk about today, the cloud and cyber crime, especially around ransoming your data. Every customer is using the cloud in some way, shape or form. Around 76% are using multiple clouds that's according to a recent study by HashiCorp. We've talked extensively about skill shortages on theCUBE and data protection and security concerns are really key challenges to address given that skill shortage is a real talent gap in terms of being able to throw people at solving this problem. So what customers are doing they're either building out or they're buying, really mostly building abstraction layers to hide the underlying cloud complexity. So, what this does, the good news is it simplifies provisioning and management but it creates problems around opacity. In other words, you can't see sometimes what's going on with the data, these challenges fundamentally become data problems in our view. Things like fast, accurate, and complete backup recovery, compliance, data sovereignty, data sharing, I mentioned copy creep, cyber resiliency, privacy protections these are all challenges brought to fore by the cloud, the advantages, the pros and the cons. Now, remote workers are especially vulnerable and as clouds expand rapidly data protection technologies are struggling to keep pace. So let's talk briefly about the rapidly expanding public cloud. This chart shows worldwide revenue for the big four hyperscalers, as you can see we projected they're going to surpass $115 billion in revenue in 2021, that's up from 86 billion last year. So it's a huge market, it's growing in the 35% range. The interesting thing is last year, 80 plus billion dollars in revenue but a 100 billion dollars was spent last year by these firms in CapEx. So they're building out infrastructure for the industry. This is a gift to the balance of the industry. Now to date legacy vendors and their surrounding community have been pretty defensive around the cloud, "Oh, not everything is going to move to the cloud, it's not a zero sum game we here." And while that's all true the narrative was really kind of a defense posture and that's starting to change as large tech companies like Dell, IBM, Cisco, HPE, and others see opportunities to build on top of this infrastructure. You certainly see that with Arvind Krishna's comments at IBM, Cisco obviously leaning in from a networking and security perspective. HPE using language that is very much cloud-like with its GreenLake strategy. And of course, Dell is all over this. Let's listen to how Michael Dell is thinking about this opportunity when he was questioned on theCUBE by John Furrier about the cloud. Play the clip. >> Well, clouds are infrastructure, right? So you can have a public cloud, you can have an edge cloud, a private cloud, a Telco cloud, a hybrid cloud, multicloud, here cloud, there cloud, everywhere cloud, cloud. Yet, they'll all be there, but it's basically infrastructure. And how do you make that as easy to consume and create the flexibility that enables everything. >> Okay, so in my view, Michael nailed it, the cloud is everywhere. You have to make it easy and you have to admire the scope of his comments. We know this guy, he thinks big, right? He said enables everything. What he's basically saying is that, technology is at the point where it has the potential to touch virtually every industry, every person, every problem, everything. So let's talk about how this informs the changing world of data protection. Now, we've seen with the pandemic there's an acceleration toward digital and that has caused an escalation if you will, in the data protection mandate. So essentially what we're talking about here is the application of Michael Dell's cloud everywhere comments. You've got on-prem, private clouds, hybrid clouds, you've got public clouds across AWS, Azure, Google, Alibaba, really those big four hyperscalers. You got many clouds that are popping up all over the place, but multicloud to that HashiCorp data point, 75, 76%, and then you now see the cloud expanding out to the edge, programmable infrastructure heading out to the edge. So the opportunity here to build the data protection cloud is to have the same experiences across all these estates with automation and orchestration in that cloud, that data protection cloud if you will. So think of it as an abstraction layer that hides that underlying complexity, you log into that data protection cloud it's the same experience. So you've got backup, you've got recovery, you can handle bare-metal, you can do virtualized backups and recoveries, any cloud, any OS, out to the edge, Kubernetes and container use cases, which is an emerging data protection requirement and you've got analytics, perhaps you've got PII, Personally Identifiable Information protection in there. So the attributes of this data protection cloud, again, it abstracts the underlying cloud primitives, takes care of that. It also explodes cloud native technologies. In other words, it takes advantage of whether it's machine learning, which all the big cloud players have expertise in, new processor models things like Graviton and other services that are in the cloud natively. It doesn't just wrap it's on-prem stack in a container and shove it into the cloud, no, it actually re architects or architects around those cloud native services and it's got distributed metadata to track files and volumes and any organizational data irrespective of location. And it enables sets of services to intelligently govern in a federated governance manner while ensuring data integrity and all this is automated and orchestrated to help with the skills gap. Now, as it relates to cyber recovery, air gap solutions must be part of the portfolio, but managed outside of that data protection cloud that we just briefly described. The orchestration and the management must also be gapped if you will, otherwise, you don't have an air gap. So all of this is really a cohort to cyber security or your cybersecurity strategy and posture, but you have to be careful here because your data protection strategy could get lost in this mess. So you want to think about the data protection cloud as again, an adjacency or maybe an overlay to your cybersecurity approach, not a bolt on it's got to be fundamentally architectured from the bottom up. And yes, this is going to maybe create some overheads and some integration challenges but this is the way in which we think you should think about it. So you'll likely need a partner to do this, again, we come back to the skills gap if were seeing the rise of MSPs, managed service providers and specialist service providers, not public cloud providers, people are concerned about lock-in and that's really not their role. They're not high touch services company, probably not your technology arms dealer, excuse me, they're selling technology to these MSPs. So the MSPs, they have intimate relationships with their customers. They understand their business and specialize in architecting solutions to handle these difficult challenges. So let's take a look at some of the risk factors here and dig a little bit into the cyber threat that organizations face. This is a slide that, again, the Storage Alchemists, Steve Kenniston shared with me, it's based on a study that IBM funds with the Panama Institute, which is a firm that studies these things like cost of breaches and has for many, many, many years. The slide shows the total cost of a typical breach within each dot and on the Y-axis and the frequency in percentage terms on the horizontal axis. Now it's interesting, the top two are compromised credentials and fishing, which once again proves that bad user behavior trumps good security every time. But the point here is that the adversary's attack vectors are many and specific companies often specialize in solving these problems often with point products, which is why the slide that we showed from Optiv earlier, that messy slide looks so cluttered. So it's a huge challenge for companies, and that's why we've seen the emergence of cyber recovery solutions from virtually all the major players. Ransomware and the SolarWinds hack have made trust the number one issue for CEOs and CSOs and boards of directors, shifting CSO spending patterns are clear. Shifting largely because they're catalyzed by the work from home. But outside of the moat to endpoint security identity and access management, cloud security, the horizontal network security. So security priorities and spending are changing that's why you see the emergence of disruptors like we've covered extensively, Okta, Crowdstrike, Zscaler. And cyber resilience is top of mind and robust solutions are required and that's why companies are building cyber recovery solutions that are most often focused on the backup corpus because that's a target for the bad guys. So there is an opportunity, however to expand from just the backup corpus to all data and protect this kind of 3-2-1, or maybe it's 3-2-1-1, three copies, two backups, a backup in the cloud and one that's air gapped. So this can be extended to primary storage, copies, snaps, containers, data in motion, et cetera, to have a comprehensive data protection strategy. Customers as I said earlier, increasingly looking to manage service providers and specialists because of that skills gap and that's a big reason why automation is so important in orchestration. And automation and orchestration I'll emphasize on the air gap solutions should be separated physically and logically. All right, now let's take a look at some of the ETR data and some of the players. This is a chart that we like to show often, it's a X, Y axis, and the Y-axis is net score, which is a measure of spending momentum and the horizontal axis is market share. Now market share is an indicator of pervasiveness in the survey. It's not spending market share, it's not market share of the overall market, it's a term that ETR uses. It's essentially market share of the responses within the survey set, think of it as mind share. Okay, you've got the pure plays here on this slide in the storage category, there is no data protection or backup category so what we've done is we've isolated the pure plays or close to pure plays in backup and data protection. Notice that red line, that red line is kind of our subjective view of anything that's over that 40% line is elevated, you can see only rubric in the July survey is over that 40% line. I'll show you the ends in a moment. Smaller ends, but still rubric is the only one. Now look at Cohesity and rubric in the January, 2020. So last year pre-pandemic Cohesity and Rubrik they've come well off their peaks for net score. Look at Veeam, Veeam having studied this data for the last say 24 plus months, Veeam has been Steady Eddie. It is really always in the mid to high 30s, always shows a large shared end so it's coming up in the survey, customers are mentioning Veeam and it's got a very solid net score. It's not above that 40% line but it's hovering just below consistently, that's very impressive. Commvault has steadily been moving up. Sanjay Mirchandani has made some acquisitions, he did the Hedvig acquisition. They launched metallic that's driving cloud affinity within a Commvault large customer base so it's a good example of a legacy player, pivoting and evolving and transforming itself. Veritas continues to underperform in the ETR surveys relative to the other players. Now, for context, let's say add IBM and Dell to the chart. Now just note, this is IBM and Dell's full storage portfolio. The category in the taxonomy at ETR is all storage. Okay, this previous slide I isolated on the pure plays, but this now adds in IBM and Dell. It probably representative of where they would be, probably Dell larger on the horizontal axis than IBM, of course and you could see the spending momentum in accordingly. So you could see that in the data chart that we've inserted. So smaller ends for Rubrik and Cohesity, but still enough to pay attention, it's not like one or two when you're 20 plus, 15 plus, 25 plus you can start to pay attention to trends. Veeam again is very impressive. Its net score is solid, it's got a consistent presence in the dataset, it's clear leader here. SimpliVity is small but it's improving relative to last several surveys and we talked about Commvault. Now, I want to emphasize something that we've been hitting on for quite some time now and that's the renaissance that's coming in compute. Now we all know about Moore's law, the doubling of transistor density every two years, 18 to 24 months and that leads to a doubling of performance in that time frame. X86, that X86 curve is in the blue and if you do the math, this is expressed in trillions of operations per second. The orange line is a representative of Apple's A series culminating in the A-15 most recently, the A series is what Apple is now... It's the technology basis for what's inside, and one the new Apple laptops, which is replacing Intel. That's that orange line there we'll come back to that. So go back to the blue line for a minute. If you do the math on doubling performance every 24 months, it comes out to roughly 40% annual improvement in processing power per year. That's now moderated. So Moore's law is waning in one sense so we wrote a piece Moore's law is not dead so I'm sort of contradicting myself there, but the traditional Moore's law curve on X86 is waning. It's probably now down to around 30%, low 30s, but look at the orange line. Again, using the A series as an indicator, if you combine the CPU, the NPU, which is the neural processing unit, XPU, pick whatever PU you want, the accelerators, the DSPs, that line is growing at a 100% plus per year. It's probably more accurately around 110% a year. So there's a new industry curve occurring and it's being led by the Arm ecosystem. The other key factor there you see in a lot of use cases, a lot of consumer use cases Apple is an example but you're also seeing it in things like Tesla, Amazon with AWS Graviton, the Annapurna acquisition, building out Graviton and Nitro that's based on Arm. You can get from design to tape out in less than two years Whereas the Intel cycles we know they've been running it four to five years now, maybe Pat Gelsinger is compressing those, but Intel is behind. So, organizations that are on that orange curve are going to see faster acceleration, lower cost, lower power, et cetera. All right, so what's the tie to data protection? I'm going to leave you with this chart. Arm has introduced it's confidential compute architecture, and is ushering in a new era of security and data protection. Zero Trust is the new mandate and what Arm has done with what they call realms is create physical separation of the vulnerable components by creating essentially physical buckets to put code in and to put data in separate from the OS. Remember the OS is the most valuable entry point for hackers or one of them because it contains privileged access and it's a weak link because of things like memory leakages and vulnerabilities. And malicious code can be placed by bad guys within data in the OS and appear benign even though it's anything but. So in this architecture, all the OS does is create API calls to the realm controller. That's the only interaction. So it makes it much harder for bad actors to get access to the code and the data. And importantly, very importantly, it's an end-to-end architecture so there's protection throughout if you're pulling data from the edge and bringing it back to on-prem and the cloud you've got that end-to-end architecture and protection throughout. So the link to data protection is that backup software vendors need to be the most trusted of applications. Backup software needs to be the most trusted of applications because it's one of the most targeted areas in the cyber attack. Realms provide an end-to-end separation of data and code from the OS and is a better architectural construct to support Zero Trust and confidential computing and critical use cases like data protection/backup and other digital business apps. So our call to action is backup software vendors you can lead the charge. Arm is several years ahead at the moment, head of Intel in our view. So you got to pay attention to that, research that, we're not saying over rotate, but go investigate that. And use your relationships with Intel to accelerate its version of this architecture or ideally the industry should agree on common standards and solve this problem together. Pat Gelsinger told us in theCUBE that if it's the last thing he's going to do in his industry life he's going to solve this security problem. That's when he was at VMware. Well, Pat you're even in a better place to do it now, you don't have to solve it yourself, you can't and you know that. So while you're going about your business saving Intel, look to partner with Arm I know it sounds crazy to use these published APIs and push to collaborate on an open source architecture that addresses the cyber problem. If anyone can do it, you can. Okay, that's it for today. Remember, these episodes are all available as podcasts all you got to do is search Breaking Analysis podcast, I publish weekly on Wikibon.com and SiliconANGLE.com. Or you can reach me at dvellante on Twitter, email me at Dave.Vellante@SiliconANGLE.com. And don't forget to check out ETR.plus for all the survey and data action. This is Dave Vellante for theCUBE Insights powered by ETR. Thanks for watching everybody, be well and we'll see you next time. (upbeat music)

>> Announcer: From around the globe it's theCUBE with digital coverage of Commvault Future Ready 2020 brought to you by Commvault. >> Hi and welcome to theCUBE's coverage of Commvault Future Ready. I'm Stu Miniman and I'm joined by David Vellante here. Of course, we just had the keynote for Commvault Future Ready, Sanjay Mirchandani, CEO. Dave, he's been there a little bit over a year. We've been watching the transformation of Commvault as they are trying to go much deeper in the cloud. Of course, the space, data protection overall, backup and recovery, been a super hot one. Especially, if you talk about everybody accelerating what they're doing with the cloud, Dave, from an end user standpoint, as well as for Commvault. So why don't we start with the company first, as I said, the move to subscription, the move to cloud, a lot of change needed, and that's one of the reasons they brought Sanjay into the company. Of course, he'd been at Puppet before that, he was the CIO of EMC before that. So Dave, tell us your thoughts lately on Commvault. >> Okay, so Commvault, obviously Stu, has been around for a long, long time, and it's kind of a diversified player in the data protection space. I've always felt like they've had a more diversified sort of vision and portfolio. Sanjay took over, what was it February last year, right? So he kind of came in and inherited a company in transition. And transitioning from what has largely been a legacy sort of on-prem, perpetual software licensed business to now one that's transferring into a subscription based model, obviously a large maintenance base. I think about 60% of their revenues comes from services, and most of that is maintenance, okay? So he's inherited that, and then they're going into a subscription model. So that's going to hit the income statement, and then boom COVID hits. So Sanjay is getting it all from all sides, but Commvault is a 670, roughly, million dollar company on a trailing 12 month basis. And the market cap's in the 1.7, 1.8 range, so they trade at about 2.7 times revenue. So that's much better than a hardware company, but it should be better than that as a software company. So the challenge that he has is, okay, how do we get the company growing again? How do we transition to that subscription based model? The good news on Commvault is their balance sheet is tremendous. I mean, they have no debt, no debt. I mean, several hundred million dollars in cash, over 300 million and zero debt, which kind of interesting to me, Stu. Because many companies during this COVID pandemic have tapped the credit markets, Commvault has chosen not to. Maybe they should right now with such low interest rates, and maybe that can help get the growth engine going. But I think they're very conservative in that standpoint and obviously very proud of their balance sheet, but with the likes of Cohesity and Rubrik, and I know we're going to talk about that pouring money into the market, trying to attack them, and we'll talk more about their position relative to those guys, you might like to see 'em raise a little bit of money or take on some debt and really go after some of those opportunities that you referred to upfront, it is a hot market. >> Yeah, well, Dave, you talk about some of the newer entrants raised just insane amounts of money when you talk about that space. Not only Cohesity and Rubrik, but also talked about Veem. Of course, we've watched Veem go from a change in ownership and how much money they have. And from a revenue standpoint, Veem actually might be bigger than Commvault at this point, I believe, right? >> Yeah, I think so. I mean, they're billion dollar bookings, they say. I mean, I believe it, but they're a privately held company. Commvault, we can tell actually what their numbers are. Guaranteed Cohesity and Rubrik are losing money. So their cost of acquiring a customer is huge. Commvault is, let's face it, it's servicing its install base, and it's mining that. And that's why it's, it's cashflow positive. I mean, it's a very healthy company financially. The challenge that, again, Sanjay has is how do you get growth? They're a company, as I said earlier, in transition. Let me share with you, if I may, some data from our friends at ETR. What we're showing here is the fundamental methodology of ETR, which is that net score, Stu. We talk about that all the time, ETR is, as I say, our data partner, Enterprise Technology Research. Every quarter, they go out and they say, "Based for each company and their various segments, "are you adopting new?" That's the lime green, that's the 2%. "Are you increasing spending?" That's the 30%, and this is from the July survey so this is relative to the first half. "Are you flat?" You can see that fat middle 56%, and then you can see decrease is 7% and that's in the pink, and then 5% replacing. So good news here is more people are spending more, more customers spending more, than are spending less. Net score's the red subtracted from the green, so it comes out at roughly 20%, which is that's certainly not terrible. It's a legacy company that's been around a long time. So you would see a company that's a newbie, that's hot. We'd always talked about UI path automation anywhere, Snowflake, they're in the 70% range, but they're much, much smaller companies but they're growing very, very rapidly. So this is respectable and very common for a company that has been around as long as Commvault. >> Yeah, thanks so much for sharing that data, Dave. Of course, as you said, huge customer base, they've been around for awhile. I remember when we first did Commvault GO two years ago, very excited, very engaged user base. There was a good strategy discussion and an understanding for what Commvault needed to do to get to the cloud, but there was an understanding that they couldn't keep doing with the same team what had brought them to the place before. You always say, Dave, what got you to where you were isn't going to get you to where you need to go. Talk a little bit about the keynote. Last year at Commvault there were a couple of big pieces. Number one, is they really had their first SaaS offering with Metallic. And what the momentum has been on Metallic is, first of all, they made a big partnership announcement with Microsoft ahead of this event. Multi-year, Metallic has a few different solutions. One of them, of course, is to work on Office 365, so when we go to SaaS and we go to the cloud, we understand that data protection isn't something that just comes inherently. Some people thought, "Oh hey, I did it "in my own data center, but once I go to the cloud, well, "I'm sure it just takes care of things "like data protection and security." The answer is I still need to think about it, and the ecosystem has helped filling that gap. So Metallic was the first step and what we saw, Dave, really looks like a holistic refresh of the product line. Commvault back in recovery, Commvault disaster recovery, Commvault complete data protection, all aligning themselves to be more to what you were talking about, going to that full ratable model, and the other piece was Hedvig. So Hedvig software company, helping them to be in more cloud-native environments. And they launched a Hedvig X, so it's the full integration of that solution. Less than a year from the acquisition to fully integrating it and making it an offering that's ready for what they're doing. >> Is that they're cloud play? Actually Hedvig is sort of in that space, right? As with cloud you think subscription, but also Commvault is basically putting its stack in the cloud, right? And taking advantage of cloud services, right? >> Yeah, absolutely, Dave. Metallic, specifically is built for the cloud. >> So let's talk a little bit about cloud, I have some other data here. And the cloud, if you pull up that next slide, the cloud has been eating away at on-prem vendors. We know it's been growing at 2000, 3000 basis points higher than the on-prem business. But what this slide shows is that same net score methodology that we talked about before, but it's filtering, you can see in the left hand side here, it's filtering on AWS, Google and Microsoft. So there's 585, AWS, Google and Microsoft customers in the ETR dataset. There's like about 1200 in the overall survey this quarter. And this shows the over time the net score of Commvault in those accounts, so you can see, as I was saying, go back to 2018, you can see prior to Sanjay taking over this thing was dipping and dipping, losing momentum coming into kind of the April survey and then July survey of 2019, and it's kind of bouncing off the bottom now. So it seems like they're making some progress there, and what we want to see is that momentum continue to grow. Again, net score is a measure of spending velocity. So what you want to see is as that transition occurs more sort of a net score increases over each quarter. >> Yeah, well, Dave as you mentioned earlier, there absolutely are some headwinds potentially there, but it looks like Sanjay, at least, has stopped some of the bleeding on this and, stated goal of course, to return to growth. And so we would want to see that go from just up one or 2% to be able to track with the cloud. Probably a good time for us to talk a little bit about the competition, Dave, because if you talk just in cloud markets, are you tracking along with the cloud? So the hyperscales themselves, of course, growing at very huge percent. A company that's been around as long as Veritas isn't necessarily going to be doing 35 to 70% growth as you would see from AWS or Azure. But what do you see out there for some of the competition in general, who were some of the key players that we need to look at? >> Yeah, so I mean, think about the backup guys. I mean, the traditional space, you've mentioned Veritas. Veritas, by the way, in the ETR survey data is not playing well, they're in the red. They've been losing share, the share donors, as they say, you've got some big players, Dell EMC, obviously, kind of living off the data domain base. Remember Dell EMC fell behind, prior to the Dell acquisition, they weren't investing heavily in the data protection business. They were kind of living milking off that data domain base. Back when you were there, they had the networker and they had Avamar, and so there was a bifurcated thing. Frank Slootman came and he tried to clean some of that up, but then he was onto his next big thing, of course, it was ServiceNow. And so, you know, Dell is a big footprint, obviously, but they're very hardware centric, as you know, so they have a big hardware agenda. IBM with Spectrum Protect, Veem was hurting them. They did the deal with Catalogic to kind of stop the bleeding, he kind of did. Again, big install base, and then you got the sort of newcomers. Veem is not really a newcomer anymore. I think they've been around for 15 years, big acquisition. Decent momentum in the market, especially started the Microsoft base, and they're kind of everywhere, so you see them. And of course you see Cohesity and Rubrik spend a lot of money, as you said. And it's interesting, let me pull up this next data point. In the ETR data set this past quarter you saw Cohesity actually overtake Rubrik. Rubrik was very, very strong earlier on. They're kind of neck and neck in this chart, what this chart shows is not net score, it's now market share. Now market shares, not real market shares, Stu. I have to be cautious here because it's not like IDC tracks market share. What it is is pervasiveness in the dataset. So in other words, within this segment, the number of mentions of the vendor divided by the total mentions in the segment, okay? So it's really pervasiveness or presence in the data set. And what this shows is you can see we've got 65 Commvault customers in the survey, and it shows the impact of Veem, Rubrik and Cohesity in the Commvault base. And you can see up through, let's see, that's the recent surveys is you see the increases up to the increasing red line is Veem, and then you got the Rubrik line and then the Cohesity line, but they're all recently, since the October 19th survey, down, trending down. So that says to me that Commvault is holding serve within its own base and actually doing better as these guys are declining in this base. You can see the comment that ETR made, "Rubrik, Cohesity and Veeam are all seeing "market share declines in shared accounts with Commvault," so that's good news. I think this is very important, Stu, and here's why. Is Commvault has got to hunker down and maintain those customers. It does not want to be a share donor much in the same way that Veritas has been. So that's a quick scan of the competitive marketplace. And again, from my standpoint, I'd like to see Sanjay maybe get a little bit more aggressive. I liked the acquisitions. Hedvig, it's great, deal with actually some more subscription, but I'd like to see them go hard after a cloud native. I have to dig into that, maybe you can comment, but really cloud native and multicloud across clouds being able to have that same experience on-prem as I do in the clouds at very high performance, very low latency. >> Yeah. Well, Dave, first of all, one thing, talk about the competitive win rate. That's something you always look at is how are you doing against the competitors? Not only did Sanjay come in, but you saw changes along how the channel chief, I believe, and the salespeople. So definitely reinvigorating that piece of it, as well as, Dave we saw, in the keynote. So the portfolio is updated, an aggressive engineering investment, some through acquisition, some through changing the code and moving in these environments, leveraging partnerships, great to see the Microsoft one, love to see something along the lines of Google. We understand Amazon, you play in that ecosystem, it is challenging to necessarily partner deeply with AWS, unless you're one of a few strong players in the marketplace, but working closer in cloud. And Dave, one thing I'd point out, last year, one of the things that really impressed me at Commvault GO is they did have some good developer actions. So when you talk about cloud native, of course, enabling developers is one of the key things. Like many companies out there, inside the company you've got developers, so how are you unleashing that? So Hedvig, a good acquisition along those lines, but you know, in the middle of the show floor, they had people that you set up with whiteboards and just go at it. So, you know, reminds me of days past when you used to have these engineering-driven shows where you could go in and really understand that. So helping to developers, enable them, backup and recovery just needs to tie into all my DevOps and IT Ops and all my other environments to make things just more automated because also you talk cloud native, Dave, automation has to be a big piece of it. And to your point, we actually have really good guests coming on the program. Not only will we have Sanjay, relatively fresh off the keynote, I've got a panel with the product people to really dig in and understand that. We'll poke and prod at some of the cloud native pieces and understand where that's going, got their head of strategy also on the program. >> Yes, I think you're making a great point about automation. Just speaking about M&A for a moment, I like M&A, I like growth through M&A, I'm comfortable with that as long as it fits into the portfolio. Your point about automation, I see opportunities there for M&A, things like visibility, observability, obviously hot analytics, automated operations, IT Ops, anything that sort of removes labor and complexity and gives me visibility across clouds. That I think is something that could be interesting, again, as long as it fits into the portfolio. I'll say this, I mean, Sanjay was at EMC and knows M&A because I've no doubt they were bringing all their M&A candidates to Sanjay and saying, "Okay, what do you think of this tech, do you use it?" Probably kick the tires a little bit, so he, I'm sure, was a part of those. I'm sure he saw the good, the bad, and the ugly. You were there, EMC was pretty good at acquisitions, but then it got a little out of control. >> And Dave, talk automation, Sanjay came from Puppet. Puppet was one of the early companies along helping people move along from those manual tasks to how can we automate those? So, absolutely, Sanjay now a little over a year in there, starting to see from the product standpoint, and expect to see some of the trailing results as to how that moves forward. >> And then again, blending that, if it's a tuck in or whatever, maybe there's some big chess move out there. I would just suspect given Commvault's conservative nature you wouldn't see that. Although, they could do it. I mean, at their revenue level, their balance sheet would allow them to raise some debt, if they wanted to do that now would be the time to do it. But it's interesting, everybody's doing it and they're not. So I kind of liked the contrarian play. Given the opportunity in the market, given the TAM expansion through, beyond backup into data management, and it's a cloud and multicloud, I do think there's maybe an opportunity for them to be a little bit more aggressive. >> All right, well, Dave, thanks so much for helping us dig in and kick off our coverage. >> You're welcome, Stu. >> All right, stay with us. We have a bunch of interviews here for Commvault Future Ready. I'm Stu Miniman, and thank you for watching theCUBE. (gentle music)

>> Jeff: Hello everybody, and thank you for joining us today for the virtual Vertica BDC 2020. Today's break-out session has been titled, "Migrating Your Vertica Cluster to the Cloud." I'm Jeff Healey, and I'm in Vertica marketing. I'll be your host for this break-out session. Joining me here are Sumeet Keswani and Chris Daly, Vertica product technology engineers and key members of our customer success team. Before we begin, I encourage you to submit questions and comments during the virtual session. You don't have to wait, just type your question or comment in the question box below the slides and click Submit. As always, there will be a Q&A session at the end of the presentation. We'll answer as many questions as we're able to during that time. Any questions that we don't address, we'll do our best to answer them offline. And alternatively, you can visit Vertica forums at forum.vertica.com to post your questions there after the session. Our engineering team is planning to join the forums to keep the conversation going. Also as a reminder that you can maximize your screen by clicking the double arrow button in the lower right corner of the slides. And yes, this virtual session is being recorded and will be available to view on demand this week. We'll send you a notification as soon as it's ready. Now let's get started. Over to you, Sumeet. >> Sumeet: Thank you, Jeff. Hello everyone, my name is Sumeet Keswani, and I will be talking about planning to deploy or migrate your Vertica cluster to the Cloud. So you may be moving an on-prem cluster or setting up a new cluster in the Cloud. And there are several design and operational considerations that will come into play. You know, some of these are cost, which industry you are in, or which expertise you have, in which Cloud platform. And there may be a personal preference too. After that, you know, there will be some operational considerations like VM and cluster sizing, what Vertica mode you want to deploy, Eon or Enterprise. It depends on your use keys. What are the DevOps skills available, you know, what elasticity, separation you need, you know, what is your backup and DR strategy, what do you want in terms of high availability. And you will have to think about, you know, how much data you have and where it's going to live. And in order to understand the cost, or the cost and the benefit of deployment and you will have to understand the access patterns, and how you are moving data from and to the Cloud. So things to consider before you move a deployment, a Vertica deployment to the Cloud, right, is one thing to keep in mind is, virtual CPUs, or CPUs in the Cloud, are not the same as the usual CPUs that you've been familiar with in your data center. A vCPU is half of a CPU because of hyperthreading. There is definitely the noisy neighbor effect. There is, depending on what other things are hosted in the Cloud environment, you may see performance, you may occasionally see performance issues. There are I/O limitations on the instance that you provision, so that what that really means is you can't always scale up. You might have to scale up, basically, you have to add more instances rather than getting bigger or the right size instances. Finally, there is an important distinction here. Virtualization is not free. There can be significant overhead to virtualization. It could be as much as 30%, so when you size and scale your clusters, you must keep that in mind. Now the other important aspect is, you know, where you put Vertica cluster is important. The choice of the region, how far it is from your various office locations. Where will the data live with respect to the cluster. And remember, popular locations can fill up. So if you want to scale out, additional capacity may or may not be available. So these are things you have to keep in mind when picking or choosing your Cloud platform and your deployment. So at this point, I want to make a plug for Eon mode. Eon mode is the latest mode, is a Cloud mode from Vertica. It has been designed with Cloud economics in mind. It uses shared storage, which is durable, available, and very cheap, like S3 storage or Google Cloud storage. It has been designed for quick scaling, like scale out, and highly elastic deployments. It has also been designed for high workload isolation, where each application or user group can be isolated from the other ones, so that they'll be paid and monitored separately, without affecting each other. But there are some disadvantages, or perhaps, you know, there's a cost for using Eon mode. Storage in S3 is neither cheap nor efficient. So there is a high latency of I/O when accessing data from S3. There is API and data access cost. There is API and data access cost associated with accessing your data in S3. Vertica in Eon mode has a pay as you go model, which you know, works for some people and does not work for others. And so therefore it is important to keep that in mind. And performance can be a little bit variable here, because it depends on cache, it depends on the local depot, which is a cache, and it is not as predictable as EE mode, so that's another trade-off. So let's spend about a minute and see how a Vertica cluster in Eon mode looks like. A Vertica cluster in Eon mode has S3 as the durability layer where all the data sits. There are subclusters, which are essentially just aggregation groups, which is separated compute, which will service different workloads. So for in this example, you may have two subclusters, one servicing ETL workload and the other one servicing (mic interference obscures speaking). These clusters are isolated, and they do not affect each other's performance. This allows you to scale them independently and isolate workloads. So this is the new Vertica Eon mode which has been specifically designed by us for use in the Cloud. But beyond this, you can use EE mode or Eon mode in the Cloud, it really depends on what your use case is. But both of these are possible, and we highly recommend Eon mode wherever possible. Okay, let's talk a little bit about what we mean by Vertica support in the Cloud. Now as you know, a Cloud is a shared data center, right. Performance in the Cloud can vary. It can vary between regions, availability zones, time of the day, choice of instance type, what concurrency you use, and of course the noisy neighbor effect. You know, we in Vertica, we performance, load, and stress test our product before every release. We have a bunch of use cases, we go through all of them, make sure that we haven't, you know, regressed any performance, and make sure that it works up to standards and gives you the high performance that you've come to expect. However, your solution or your workload is unique to you, and it is still your responsibility to make sure that it is tuned appropriately. To do this, one of the easiest things you can do is you know, pick a tested operating system, allocate the virtual machine, you know, with enough resources. It's something that we recommend, because we have tested it thoroughly. It goes a long way in giving you predictability. So after this I would like to now go into the various platforms, Cloud platforms, that Vertica has worked on. And I'll start with AWS, and my colleague Chris will speak about Azure and GCP. And our thoughts forward. So without further ado, let's start with the Amazon Web Services platform. So this is Vertica running on the Amazon Web Services platform. So as you probably are all aware, Amazon Web Services is the market leader in this space, and indeed really our biggest provider by far, and have been here for a very long time. And Vertica has a deep integration in the Amazon Web Services space. We provide a marketplace offering which has both pay as you go or a bring your own license model. We have many, you know, knowledge base articles, best practices, scripts, and resources that help you configure and use a Vertica database in the Cloud. We have several customers in the Cloud for many, many years now, and we have managed and console-based point and click deployments, you know, for ease of use in the Cloud. So Vertica has a deep integration in the Amazon space, and has been there for quite a bit now. So we communicate a lot of experience here. So let's talk about sizing on AWS. And sizing on any platform comes down to you know, these four or five different things. It comes down to picking the right instance type, picking the right disk volume and type, tuning and optimizing your networking, and finally, you know, some operational concerns like security, maintainability, and backup. So let's go into each one of these on the AWS ecosystem. So the choice of instance type is one of the important choices that you will make. In Eon mode, you know, you don't really need persistent disk. You can, you should probably choose ephemeral disk because it gives you extra speed, and speed with the instance type. We highly recommend the i3.4x instance types, which are very economical, have a big, 4 terabyte depot or cache per node. The i3.metal is similar to the i3.4, but has got significantly better performance, for those subclusters that need this extra oomph. The i3.2 is good for scale out of small ad hoc clusters. You know, they have a smaller cache and lower performance but it's cheap enough to use very indiscriminately. If you were in EE mode, well we don't use S3 as the layer of durability. Your local volumes is where we persist the data. Hence you do need an EBS volume in EE mode. In order to make sure that, you know, that the instance or the deployment is manageable, you might have to use some sort of a software RAID array over the EBS volumes. The most common instance type you see in EE mode is the r4.4x, the c4, or the m4 instance types. And then of course for temp space and depot we always recommend instance volumes. They're just much faster. Okay. So let's go, let's talk about optimizing your network or tuning your network. So the best, the best thing you can do about tuning your network, especially in Eon mode but in other modes too, is to get a VPC S3 endpoint. This is essentially a route table that makes sure that all traffic between your cluster and S3 goes over an internal fabric. This makes it much faster, you don't pay for egress cost, especially if you're doing external tables or your communal storage, but you do need to create it. Many times people will forget doing it. So you really do have to create it. And best of all, it's free. It doesn't cost you anything extra. You just have to create it during cluster creation time, and there's a significant performance difference for using it. The next thing about tuning your network is, you know, sizing it correctly. Pick the closest geographical region to where you'll consume the data. Pick the right availability zone. We highly recommend using cluster placement groups. In fact, they are required for the stability of the cluster. A cluster placement group is essentially, it operates this notion of rack. Nodes in a cluster placement group, are, you know, physically closer to each other than they would otherwise be. And this allows, you know, a 10 Gbps, bidirectional, TCP/IP flow between the nodes. And this makes sure that, you know, you get a high amount of Gbps per second. As you probably are all aware, the Cloud does not support broadcast or UDP broadcast. Hence you must use point-to-point UDP for spread in the Cloud, or in AWS. Beyond that, you know, point-to-point UDP does not scale very well beyond 20 nodes. So you know, as your cluster sizes increase, you must switch over to large cluster mode. And finally, use instances with enhanced networking or SR-IOV support. Again, it's free, it comes with the choice of the instance type and the operating system. We highly recommend it, it makes a big difference in terms of how your workload will perform. So let's talk a little bit about security, configuration, and orchestration. As I said, we provide CloudFormation scripts to make the ease of deployment. You can use the MC point and click. With regard to security, you know, Vertica does support instance profiles out of the box in Amazon. We recommend you use it. This is highly desirable so that you're not passing access keys and secret keys around. If you use our marketplace image, we have picked the latest operating systems, we have patched them, Amazon actually validates everything on marketplace and scans them for security vulnerabilities. So you get that for free. We do some basic configuration, like we disable root ssh access, we disallow any password access, we turn on encryption. And we run a basic set of security checks to make sure that the image is secure. Of course, it could be made more secure. But we try to balance out security, performance, and convenience. And finally, let's talk about backups. Especially in Eon mode I get the question, "Do we really need to back up our system, "since the data is in S3?" And the answer is yes, you do. Because you know, S3's not going to protect you against an accidental drop table. You know, S3 has a finite amount of reliability, durability, and availability. And you may want to be able to restore data differently. Also, backups are important if you're doing DR, or if you have additional cluster in a different region. The other cluster can be considered a backup. And finally, you know, why not create a backup or a disaster recovery cluster, you know, storage is cheap in the Cloud. So you know, we highly recommend you use it. So with this, I would like to hand it over to my colleague Christopher Daly, who will talk about the other two platforms that we support, that is Google and Azure. Over to you, Chris, thank you. >> Chris: Thanks, Sumeet, and hi everyone. So while there's no argument that we here at Vertica have a long history of running within the Amazon Web Services space, there are other alternative Cloud service providers where we do have a presence, such as Google Cloud Platform, or GCP. For those of you who are unfamiliar with GCP, it's considered the third-largest Cloud service provider in the marketspace, and it's priced very competitively to its peers. Has a lot of similarities to AWS in the products and services that it offers, but it tends to be the go-to place for newer businesses or startups. We officially started supporting GCP a little over a year ago with our first entry into their GCP marketplace. So a solution that deployed a fully-functional and ready-to-use Enterprise mode cluster. We followed up on that with the release and the support of Google storage buckets, and now I'm extremely pleased to announce that with the launch of Vertica 10, we're officially supporting Eon mode architecture in GCP as well. But that's not all, as we're adding additional offerings into the GCP marketplace. With the launch of version 10 we'll be introducing a second listing in the marketplace that allows for the deployment of an Eon mode cluster. It's all being driven by our own management consult. This will allow customers to quickly spin up Eon-based clusters within the GCP space. And if that wasn't enough, I'm also pleased to tell you that very soon after the launch we're going to be offering Vertica by the hour in GCP as well. And while we've done a lot to automate the solutions coming out of the marketplace, we recognize the simple fact that for a lot of you, building your cluster manually is really the only option. So with that in mind, let's talk about the things you need to understand in GCP to get that done. So wag me if you think this slide looks familiar. Well nope, it's not an erroneous duplicate slide from Sumeet's AWS section, it's merely an acknowledgement of all the things you need to consider for running Vertica in the Cloud. In Vertica, the choice of the operational mode will dictate some of the choices you'll need to make in the infrastructure, particularly around storage. Just like on-prem solutions, you'll need to understand the disk and networking capacities to get the most out of your cluster. And one of the most attractive things in GCP is the pricing, as it tends to run a little less than the others. But it does translate into less choices and options within the environment. If nothing else, I want you to take one thing away from this slide, and Sumeet said this earlier. VMs running, about AWS, Sumeet said this about AWS earlier. VMs running in the GCP space run on top of hardware that has hyperthreading enabled. And that a vCPU doesn't equate to a core, but rather a processing thread. This becomes particularly important if you're moving from an on-prem environment into the Cloud. Because a physical Vertica node with 32 cores is not the same thing as a VM with 32 vCPUs. In fact, with 32 vCPUs, you're only getting about 16 cores worth of performance. GCP does offer a handful of VM types, which they categorize by letter, but for us, most of these don't make great choices for Vertica nodes. The M series, however, does offer a good core to memory ratio, especially when you're looking at the high-mem variants. Also keep in mind, performance in I/O, such as network and disk, are partially dependent on the VM size, so customers in GCP space should be focusing on 16 vCPU VMs and above for their Vertica nodes. Disk options in GCP can be broken down into two basic types, persistent disks and local disks, which are ephemeral. Persistent disks come in two forms, standard or SSD. For Vertica in Eon mode, we recommend that customers use persistent SSD disks for the catalog, and either local SSD disks or persistent SSD disks for the depot and the temp space. Couple of things to think about here, though. Persistent disks are provisioned as a single device with a settable size. Local disks are provisioned as multiple disk devices with a fixed size, requiring you to use some kind of software RAIDing to create a single storage device. So while local SSD disks provide much more throughput, you're using CPU resources to maintain that RAID set. So you're giving, it's a little bit of a trade-off. Persistent disks offer redundancy, either within the zone that they exist or within the region, and if you're selecting regional redundancy, the disks are replicated across multiple zones in the region. This does have an effect in the performance to VM, so we don't recommend this. What we do recommend is the zonal redundancy when you're using persistent disks, as it gives you that redundancy level without actually affecting the performance. Remember also, in the Cloud space, all I/O is network I/O, as disks are basically block storage devices. This means that disk actions can and will slow down network traffic. And finally, the storage bucket access in GCP is based on GCP interoperability mode, which means that it's basically compliant with the AWS S3 API. In interoperability mode, access to the bucket is granted by a key pair that GCP refers to as HMAC keys. HMAC keys can be generated for individual users or for service accounts. We will recommend that when you're creating HMAC keys, choose a service account to ensure that the keys are not tied to a single employee. When thinking about storage for Enterprise mode, things change a little bit. We still recommend persistent SSD disks over standard ones. However, the use of local SSD disks for anything other than temp space is highly discouraged. I said it before, local SSD disks are ephemeral, meaning that the data's lost if the machine is turned off or goes down. So not really a place you want to store your data. In GCP, multiple persistent disks placed into a software RAID set does not create more throughput like you can find in other Clouds. The I/O saturation usually hits the VM limit long before it hits the disk limit. In fact, performance of a persistent disk is determined not just by the size of the disk but also by the size of the VM. So a good rule of thumb in GCP is to maximize your I/O throughput for persistent disks, is that the size tends to max out at two terabytes for SSDs and 10 terabytes for standard disks. Network performance in GCP can be thought of in two distinct ways. There's node-to-node traffic, and then there's egress traffic. Node-to-node performance in GCP is really good within the zone, with typical traffic between nodes falling in the 10-15 gigabits per second range. This might vary a little from zone to zone and region to region, but usually it's only limited, they're only limited by the existing traffic where the VMs exist. So kind of a noisy neighbor effect. Egress traffic from a VM, however, is subject to throughput caps, and these are based on the size of the VM. So the speed is set for the number of vCPUs in the VM at two gigabits per second per vCPU, and tops out at 32 gigabits per second. So the larger the VM, the more vCPUs you get, the larger the cap. So some things to consider in the NAV ring space for your Vertica cluster, pick a region that's physically close to you, even if you're connecting to the GCP network from a corporate LAN as opposed to the internet. The further the packets have to travel, the longer it's going to take. Also, GCP, like most Clouds, doesn't support UDP broadcast traffic on their virtual NAV ring, so you do have to use the point-to-point flag for spread when you're creating your cluster. And since the network cap on VMs is set at 32 gigabits per second per VM, maximize your network egress throughput and don't use VMs that are smaller than 16 vCPUs for your Vertica nodes. And that gets us to the one question I get asked the most often. How do I get my data into and out of the Cloud? Well, GCP offers many different methods to support different speeds and different price points for data ingress and egress. There's the obvious one, right, across the internet either directly to the VMs or into the storage bucket. Or you can, you know, light up a VPN tunnel to encrypt all that traffic. But additionally, GCP offers direct network interconnect from your corporate network. These get provided either by Google or by a partner, and they vary in speed. They also offer things called direct or carrier peering, which is connecting the edges of the networks between your network and GCP, and you can use a CDN interconnect, which creates, I believe, an on-demand connection from the GCP network, your network to the GCP network provided by a large host of CDN service providers. So GCP offers a lot of ways to move your data around in and out of the GCP Cloud. It's really a matter of what price point works for you, and what technology your corporation is looking to use. So we've talked about AWS, we've talked about GCP, it really only leaves one more Cloud. So last, and by far not the least, there's the Microsoft Azure environment. Holding on strong to the number two place in the major Cloud providers, Azure offers a very robust Cloud offering that's attractive to customers that already consume services from Microsoft. But what you need to keep in mind is that the underlying foundation of their Cloud is based on the Microsoft Windows products. And this makes their Cloud offering a little bit different in the services and offerings that they have. The good news here, though, is that Microsoft has done a very good job of getting their virtualization drivers baked into the modern kernels of most Linux operating systems, making running Linux-based VMs in Azure fairly seamless. So here's the slide again, but now you're going to notice some slight differences. First off, in Azure we only support Enterprise mode. This is because the Azure storage product is very different from Google Cloud storage and S3 on AWS. So while we're working on getting this supported, and we're starting to focus on this, we're just not there yet. This means that since we're only supporting Enterprise mode in Azure, getting the local disk performance right is one of the keys to success of running Vertica here, with the other major key being making sure that you're getting the appropriate networking speeds. Overall, Azure's a really good platform for Vertica, and its performance and pricing are very much on par with AWS. But keep in mind that the newer versions of the Linux operating systems like RHEL and CentOS run much better here than the older versions. Okay, so first things first again, just like GCP, in Azure VMs are running on top of hardware that has hyperthreading enabled. And because of the way Hyper-V, Azure's virtualization engine works, you can actually see this, right? So if you look down into the CPU information of the VM, you'll actually see how it groups the vCPUs by core and by thread. Azure offers a lot of VM types, and is adding new ones all the time. But for us, we see three VM types that make the most sense for Vertica. For customers that are looking to run production workloads in Azure, the Es_v3 and the Ls_v2 series are the two main recommendations. While they differ slightly in the CPU to memory ratio and the I/O throughput, the Es_v3 series is probably the best recommendation for a generalized Vertica node, with the Ls_v2 series being recommended for workloads with higher I/O requirements. If you're just looking to deploy a sandbox environment, the Ds_v3 series is a very suitable choice that really can reduce your overall Cloud spend. VM storage in Azure is provided by a grouping of four different types of disks, all offering different levels of performance. Introduced at the end of last year, the Ultra Disk option is the highest-performing disk type for VMs in Azure. It was designed for database workloads where high throughput and low latency is very desirable. However, the Ultra Disk option is not available in all regions yet, although that's been changing slowly since their launch. The Premium SSD option, which has been around for a while and is widely available, can also offer really nice performance, especially higher capacities. And just like other Cloud providers, the I/O throughput you get on VMs is dictated not only by the size of the disk, but also by the size of the VM and its type. So a good rule of thumb here, VM types with an S will have a much better throughput rate than ones that don't, meaning, and the larger VMs will have, you know, higher I/O throughput than the smaller ones. You can expand the VM disk throughput by using multiple disks in Azure and using a software RAID. This overcomes limitations of single disk performance, but keep in mind, you're now using CPU cycles to maintain that raid, so it is a bit of a trade-off. The other nice thing in Azure is that all their managed disks are encrypted by default on the server side, so there's really nothing you need to do here to enable that. And of course I mentioned this earlier. There is no native access to Azure storage yet, but it is something we're working on. We have seen folks using third-party applications like MinIO to access Azure's storage as an S3 bucket. So it might be something you want to keep in mind and maybe even test out for yourself. Networking in Azure comes in two different flavors, standard and accelerated. In standard networking, the entire network stack is abstracted and virtualized. So this works really well, however, there are performance limitations. Standard networking tends to top out around four gigabits per second. Accelerated networking in Azure is based on single root I/O virtualization of the Mellanox adapter. This is basically the VM talking directly to the physical network card in the host hardware, and it can produce network speeds up to 20 gigabits per second, so much, much faster. Keep in mind, though, that not all VM types and operating systems actually support accelerated networking, and you know, just like disk throughput, network throughput is based on VM type and size. So what do you need to think about for networking in the Azure space? Again, stay close to home. Pick regions that are geographically close to your location. Yes, the backbones between the regions are very, very fast, but the more hops your packets have to make, the longer it takes. Azure offers two types of groupings of their VMs, availability sets and availability zones. Availability zones offer good redundancy across multiple zones, but this actually increases the node-to-node latency, so we recommend you avoid this. Availability sets, on the other hand, keep all your VMs grouped together within a single zone, but makes sure that no two VMs are running on the same host hardware, for redundancy. And just like the other Clouds, UDP broadcast is not supported. So you have to use the point-to-point flag when you're creating your database to ensure that the spread works properly. Spread time out, okay, this is a good one. So recently, Microsoft has started monthly rolling updates of their environment. What this looks like is VMs running on top of hardware that's receiving an update can be paused. And this becomes problematic when the pausing of the VM exceeds eight seconds, as the unpaused members of the cluster now think the paused VM is down. So consider adjusting the spread time out for your clusters in Azure to 30 seconds, and this will help avoid a little of that. If you're deploying a large cluster in Azure, more than 20 nodes, use large closer mode, as point-to-point for spread doesn't really scale well with a lot of Vertica nodes. And finally, you know, pick VM types and operating systems that support accelerated networking. The difference in the node-to-node speeds can be very dramatic. So how do we move data around in Azure, right? So Microsoft views data egress a little differently than other Clouds, as it classifies any data being transmitted by a VM as egress. However, it only bills for data egress that actually leaves the Azure environment. Egress speed limits in Azure are based entirely on the VM type and size, and then they're limited by your connection to them. While not offering as many pathways to access their Cloud as GCP, Azure does offer a direct network-to-network connection called ExpressRoute. Offered by a large group of third-party processors, partners, the ExpressRoute offers multiple tiers of performance that are based on a flat charge for inbound data and a metered charge for outbound data. And of course you can still access these via the internet, and securely through a VPN gateway. So on behalf of Jeff, Sumeet, and myself, I'd like to thank you for listening to our presentation today, and we're now ready for Q&A.

>>Live from Las Vegas. It's the cube covering UI path forward Americas 2019 brought to you by UI path. >>We're back in Las Vegas. UI path forward three. You're watching the cube, the leader in live tech coverage. Bobby Patrick is here. He's the COO of UI path. Welcome. Hi Dave. Good to see it to be here. Wow. Great to have the cube here again. Right? Q loves these hot shows like this. I mean this is, you've said Gardner hasn't done the fastest growing software segment you've seen in the data that we share from ETR. You guys are off the chart in terms of net score. It's happening. I hanging onto the rocket ship. How's it feel? Well it's crazy. I mean it's great. You all have seen some of the growth along the way too, right? I mean we had our first forward event less than two years ago and you know about 500 plus plus non UI path and people then go year later. It was Miami USY. >>There's probably a lot. Cube I think was Miami right yet and a, and that was a great event, but that was more in the 13 1400 range. This one's almost 3000 and the most amazing part about it was we had 8% attrition from the registrations. Yeah. That's never seen that we're averaging 18% of 20% for all of our, most of our events worldwide. But 8% the commitment is unbelievable. Even 18 to to 20% is very good. I mean normally you'll see 25 to sometimes as high as 50% yeah. It just underscores the heat. >> Well I think what's also great, other stats that you might find interesting. So over 50% of the attendees here are exec. Our senior executives, like for the first time we actually had S you know, C level executive CHRs and CEOs on stage. Right. You could feel the interest level. Now of course we want RPA developers at events too, right? >>But this show really does speak, I think to the bigger value propositions and the bigger business transformation opportunity from RPA. And I mean, you've come so far where no one knew RPA two years ago to the CIO of Morgan Stanley on stage, just warning raving about it. That's, we've come a long way in two years. >> Well, and I saw a lot of the banks here hovering around, you know, knocking on your door so they, they know they are like heat seeking missiles, you know, so, but the growth has been amazing. I mean I think ARR in 2017 was what, 25 million at this time. Uh, at the end of 17 it was 43 and 43 and 25 and now you're at 12 times higher now 1212 X solve X growth, which is the fastest growing software company. I think in that we know from one to 100 we were, we did that in 21 months and all that. >>And we had banks who now we're not really counting anymore and we're kind of, you know, now focus more on customer expansion. Even though we hit 5,000 customers, which we started the year at 2050 ish. We just crossed 5,000. I mean, so the number of customers is great, but there's no question. This conference is focused on scaling, helping them grow at enterprise wide with, with, with RPA. So I think our focus will be in to shift a bit, you know, to really customer expansion. Uh, and that's a lot of what this announcements, the product announcements were about a lot of what the theme here is about. We had four dozen customers on, on stage, you know, the Uber's of the world, the Amazons of the world. It's all about how they've been scaling. So that's the story now. Well, you know, we do a lot of these events and I go back to some of the, uh, when the cube first started, companies like Tablo, Dallas Blunck great service. >>Now, I mean, these you can, and when you talk to customers, first of all, it's easy to get customers to come talk about RPA. Yeah. And they're, they're all saying the same thing. I mean, Jeanne younger said she's never been more excited in her career from security benefit. But the thing is, Bobby, it's, I feel like they're, they're really just getting started. Yeah. I mean most of the use cases that you see are again, automating mundane task. We had one which was the American fidelity, which is a really bringing in AI. Right. But they're really just getting started. It's like one to 3% penetration. So what are your thoughts on that to kind of land and expand, if you will? I think, you know, look, last year we announced our vision of a robot for every person. At that point we had SNBC on stage and they were the one behind it. >>And they are an amazing story. Now we have a dozen or so that are onstage talking about a robot for every person like st and others. And so, but that, that, that's a pretty, pretty, pretty bold vision I think. Look, I think it's important to look at it both ways. Um, there's huge gold and applying RPA to solve real problems. There's a big opportunity, enterprise wide, no question. We've got that. But I look New York Foundling was on stage yesterday. We have New York Foundling is a 150 year old associate. Our charity in New York focused on child welfare, started by three fishers of charity. They focused on infants. And anyway, it's an amazing firm. Just the passion that New York family had on stage with Daniel yesterday was amazing. But what they flew here because for once they found a technology that actually makes a huge difference for them and what in their mission. >>So their first RPA operation was they have 850 clinicians every week. They spend four hours a week moving their contact, uh, a new contact data associate with child child issues from system to system to spreadsheet and paper to system, right? They use RPA and they now say for a 200,000 hours a year. But more importantly, those clinicians spend those four hours every week with children not moving. So I'm still taking, I think Daniel had a bit of a tear in his eye, hearing them talk about it on stage, but I'm still taken by, by the, by the sheer massive opportunity for RPA in, in a particular to solve some really amazing things. Now on a mass scale, a company can drive, you know, 10, 15, 20% productivity by every employee having a robot. Yes, that's true on a mass scale. They can completely transform their business, your transform customer experience, transform the workplace on a mass scale. >>And that, that is, that's a sea level GFC level goal and that's a big deal. But I love the stories that are very real. Um, and, and I think those are important to still do plug some great tech for good story. Look, tech gives, you know, the whole Facebook stuff and the fake news got beat up and it had Benny come out recently say, Hey, it's, it's not just about increasing the value to shareholders, you know, it's about tech for good and doing other things affecting lifestyle's life changing. And Michael Dell is another one. Now I've, I've, I've kind of said tongue in cheek, you know, show me the CEO misses is four quarters in a row and see if that holds up. But nonetheless, you love to see successful companies giving back. It seems to be, it's part of your, well look I've been part of hardware companies and I met you all through a few of them and others they have good noble causes but it was hard to really connect the dots. >>Yes there CPS underneath a number of these things. But I think judging by the emotional connection that these customers have on stage, right and these are the Walmarts and Uber's and others in the world judging by the employee and job satisfaction that they talk about the benefits there. I just, I my career, I have not seen that kind of real direct impact from you know, from B2B software for example on the lives of people both everyday at work but also just solving the solving, you know, help accelerate human achievement. Right. And so many amazing ways. We had the CEO of the U N I T shared services group on stage yesterday and they have a real challenge with, you know, with the growth of refugees worldwide and he would express them and they can't hit keep up. They don't have the funding, which is, you know, with everybody and, and Trump and others trying to hold back money. >>But they had this massive charter for of good, the only way they get there is through digital. The new CEO, the new head of the U N is a technology engineer. He came in and said, the way we solve this is with templates, with technology. And they decided, they said on stage yesterday that RPA and RPA has the path to AI and the greater, the greater new technologies and that's how they're going to do it. And it's just a, it's a really, it's, I think it's, it feels really great. You know, it's funny too, one of the things we've been talking about this week is people might be somewhat surprised that there's so much head room left for automation because the boy, 50 years of tech, Kevin, we automated everything. That's the other, but, and Daniel put forth the premise last night, it actually, technology is created more process problems or inefficiencies. >>So it's almost like tech has created this new problem. Can tech get us out of the problem? Well, essentially you think about all the applications we use in our lives, right? Um, you know, although people do have, you know, a Salesforce stack and sometimes in this SAP, the reality is they have a mix of a bunch of systems and then we add Slack to it and we add other tools and we add all the tools alone, have some great value. But from a process perspective of how we work everyday, right? How a business user might work at a call center, they have to interact then. And the reality is they're often interacting with old systems too because moving them is not easy, right? So now you've got old systems, new systems and, and really the only way to do that is to put a layer on top of the systems of engagement and the systems of record, right? >>A layer on top that's easy to actually build an application that goes between all of these different, these different applications, outlook, Excel, legacy systems and salesforce.com and so on and so on and, and build an app that solves a real problem, have it have outcomes quickly. And this is why, Dave, we unveiled the vision here that we believe that automation is the application. And when you begin to think about I could solve a problem now without requiring a bunch of it engineers who already are maxed out, right? Uh, I can solve a problem that can directly impact the businesses or directly impact customers. And I can do that on top of these old technologies by just dragging and dropping and using a designer tool like studio or studio X in a business user can do that. That's, that's a game changer. I think what's amazing is when you go to talk to a CIO who says, I've been automating for 20 years, you know, take up the ROI. >>Once they realize this is different, the light bulb goes off. We call it the automation first mindset. A light bulb goes off and you realize, okay, this is a very different whole different way of creating value for, for an organization. I think about how people weigh the way that people work today. You're constantly context switching. You're in different systems. Like you said, Slack, you're getting texts and you want to be responsive. You want to be real time. I know Jeff Frick who was the GM of the cube has got two giant screens right on his desk. I myself, I always have 1520 tabs open if I go, Oh you got so many tabs on my, yeah. Cause I'm constantly context switching, pulling things out of email, going back and forth and so and so. I'm starting to grok this notion of the automation is the app. >>At first I thought, okay, it's the killer app, but it's not about stitching things together with through API APIs. It's really about bringing an automation perspective across the organization. We heard it from Pepsi yesterday. Yeah, right. Sort of the fabric, the automation fabric throughout the organization. Now that's aspirational for most companies today, but that really is the vision. Well, I think you had Layla from Coca-Cola also on, right. And her V their vision there and they actually took the CDO role of the CIO and put them together. And they're realizing now that that transformation is driven by this new way of thinking. Yeah, I think, you know, look, we introduced a whole set of new brand new products and capabilities around scaling around helping build these applications quicker. I, I think, you know, fast forward one year from now, the, you know, the vision we outlined will be very obvious the way people interact with, you know, via UI path to build applications, assault come, the speed to the operate will be transformational and, and so, you know, and you see this conference hear me walk around. >>I mean you saw last year in the year before you see the year before, but it's, it's a whole, the speed at which we're evolving here, I think it's unprecedented. And so I'll talk a little bit about the market for has Crigler killer was awesome this morning. He really knows his stuff now. Last year I saw some data from him and said the market by 2020 4 billion, and I said, no way. It's going to be much larger than that. Gonna be 10 billion by 2020 I did Dave Volante fork, Becca napkin by old IDC day forecast. Now what he, what he showed today is data. It actually was 10 billion by 2020 because he was including services, the services, which is what I was including in my number as well, but the of it, which was so good for him now, but the only thing is he had this kind of linear growth and that's not how these rocket ship Marcus grow. >>They're more like an old guy for an S curve. You're going to get some steep part now, so I'd love to see like a longer term forecast because that it feels like that's how this is going to evolve. Right now it's like you've seated the base and you can just feel the momentum building and then I would expect you're going to see massive steep sort of exponential growth. Steeper. There may be, you know, nonlinear because that's how these markets go >> to come from the expansion potential, right? And none of our customers are more than 1% audit automated from an RPA perspective. So that shows you the massive opportunity. But back to the market site, data size, Craig and I and the other analysts, we talk often about this. I think the Tam views are very low and you'll look at our market share, let's just get some real data out there, right? >>Our market share in 2017 was 5% let's use Craig's linear data for now. You know, our market share this year is over 20% our market share applying, and I don't want to give the exact numbers as you don't provide guidance anymore, is substantially we're substantially gaining share now. I believe that's the reality of the market. I think because we know blue prisms numbers, we go four times faster than the every quarter automation. The world won't share their numbers. But you know, I can make some guesses, but either way I think, you know, I think we're gaining share on them significantly. I think, you know, Craig's not gonna want us to be 50% of the market two years, he's just not. And so he's going to have to figure out how to identify how to think. That brought more broadly about, about that market trend. He talked about it on stage today about how does he calculate the AI impact and the other pieces now the process mining now that now that we are integrating process mining into RPA, right? >>It's strategic component of that. How does that also involve the market? So I think you have both the expansion and the plot product portfolio, which drives it. And then you have the fact that customers are going to add more automations at faster pace and more robots and that's where the expansion really kicks in. And we often say, you know, look as a, as a, as a, as a company that, you know, one day we'll be public company, our ARR numbers. Very important. We do openly transparently share that. But you know, the other big metric will be, you know, dollar based net expansion rate that shows really how customers are expanding. I think that, I know it, our numbers, we haven't shared it yet. I know all the SAS companies, the top 10 I can tell you, you know we're higher than all of them. >>The market projections are low. And I think he knows it well. >> Speaking of Tam, and when we, I saw this with, with service now, now service now the core was it right? So the, the ROI was not as obvious with, with, with you guys, you're touching business process. And so, so in David Flory are way, way back, did an analysis of service and now he said, wow, the Tam is way being way under counted by everybody. That wall street analyst Gardner, it feels like the same here because there are so many adjacencies and just talk to the customers and you're seeing that the Tam could be enormous, much bigger than the whatever 16 billion a Daniel show, the other Danielson tangles, the guy's balls. He said, Oh that's 16 billion. That's you. I pass this data. And you know, we laugh, but I'm, I'm like listening. Say I wonder if he's serious cause this guy thinks big. >>I mean, who would've thought that he'd be at this point by now? And you're just getting started? Well, I think, you know, one thing I think is, you know, we're, we're, you know, we were a little bit kind of over a little less humble when we talked about things like valuation over the last few years. We were trying to show this market's real, you know, we want to now focus more on outcomes and things get a little less from around those numbers. And I think that shows the evolution of a company's maturity, um, that we, I think we're going through right now. Uh, you know, the outcomes of, you know, Walmart on stage saying, you know, their first robot that was, this was, this was two years ago, delivered 360,000 hours of capacity for them in, in, in, in, in HR, right? That, you know, I think those, that's where we're gonna be focused because the reality is if we can deliver these big outcomes and continue them and we can go company-wide deliver on the robot for every, every, every, every person, then you know, the numbers follow along with it. >>Well we saw some M and a this week as well, which again leads me to the larger Tam cause we had PD on, um, with Rudy and you can start to see how, okay now we're going to actually move into that vision that the guy from PepsiCo laid out this, this fabric of this automation fabric across the organization. So M and a is, is a part of that as well. That starts to open up new Tam. Opportunity does. And I think, you know, a process mind is a great example of a market that is pretty well known in Europe, not so much in the U S um, and there are really only a few players in that, in that market today. Look, we're going to do what we did in RPA. We're going to do the same thing. You're process mining. We're going to just say anything we're doing in it, not as democratization, you'll our strategy will be to go mass market with these technologies, make it very easy for accessibility for every single person in the case of process mining, every business analyst to be able to mind their processes for them and, and ultimately that flows through to drive faster implementations and then faster, faster outcomes. >>I think our approach, again, our approach to the business users, our approach to democratization, um, you know it's very different than our competitors. A lot of these low code companies, I won't name a number cause I don't remember our partners here at our conference. They're IT-focused their services heavy and, and you know, their growth rates I'll be at okay are 30% year over year in this market. That shouldn't be the case at all. I mean we're a 200 plus a year. We are still and we've got big numbers and we have a whole different approach to the market. I don't think people have figured it out yet, Dave. Exactly, exactly. The strategy behind which is, which is when you have business users, subject matter experts and citizen developers that can access our technology and build automations quickly and deliver value proof for their company. And you do that in mass scale. >>Right. And then you will now allow with our apps for your end users, I get a call center to engage with a robot as part of their daily operation that none of the other it vendors who are all kind of conventional thinking and that's not, our models are very different, which I think shows in our numbers and and, and the growth rates. Yeah. Well you bet on simplicity early on. In fact, when you join you iPad, you challenged me so you have some of your Wiki bond analysts go out. I remember head download our stuff and then try to download the competitors and they'll tell us, you know how easy it as well we were able to download UI path. We, we built some simple automations. We couldn't get ahold of the other other, other companies products we tried. We were told we'll go to the reseller or how much did you have to spend and okay so you bet on simplicity, which was interesting because Daniel last night kind of admitted, look, he tracked the audience. >>He said thank you for taking a chance on us because frankly a couple of years ago this wasn't fully baked right and and so, so I want to talk about last, the last topic is sort of one of the things Craig talked about was consolidation and I've been saying that all week and said this, this market is going to consolidate. You guys are a leader now you've got to get escape velocity cause the leader makes a lot of money and becomes, gets big. The number two does. Okay, number three man, everybody else and the big guys are starting to jump in as well. You saw SAP, you know, makes an announcement and you guys are specialists and so your thoughts on hitting escape velocity, I wouldn't say you're quite there yet. I want to see more on the ecosystem. There's maybe, who knows, maybe there's an IPO coming. I've predicted that there is, but your thoughts on achieving escape velocity and some of the metrics around there, whether it's customer adoption penetration, what are your thoughts? >>Yeah, I mean we definitely don't have a timetable on an IPO, but we have investors, public investors and VCs that at some point are going to want, this is the reality of how, of how it works. Right. Um, you know, I think the, uh, you know, I think the numbers to focus right now are on around, you know, customer outcomes. I think the ecosystem is a good one. Right? You know, we have, I'd say the biggest ecosystem for us to date has been the SAP ecosystem. When we look at our advisory board members, for others, that's really where, where the action is. Supply chain management, ERP, you know, certainly CRM and others, we don't have a view that, so our competitors have, but we have chosen not to take money from our, from ecosystem companies because we don't, our customers here are building processes, all the automation across ecosystems. >>Right? So you know, we don't want to go bet on say just one like Salesforce or Workday. We want to help them across all the ecosystem now. So I think it's a little bit of a different strategy there. Look, I think the interesting thing is the SAP is the world. They bought a small company in France called contexture. They're trying to do this themselves. Microsoft, Microsoft didn't in Mark Benioff and Salesforce are asked on every earnings call now what are you doing for RPA? So they've got pressure. So maybe they invest in one of our competitors or maybe they, you'll take flow in Microsoft and expanded. I think we can't move fast enough because you know, I don't know if Microsoft has, I mean they're a great sponsor by the way. So I don't want to only be careful we swept with what I say. But you know, strategically speaking, these larger companies operate in 18 months, 12 1824 months kind of planning cycles. >>If he did that, he will never keep up with us. There's no one at any of our traditional large enterprise software companies that ever would have bet that we would come out and say that the best way to build applications right to solve problems will be through RPA. Either there'll be a layer on top of all their technologies that makes it easier than ever for business users to build applications and solve problems, that's going to scare them to death. Why? Because you don't have to move all your legacy systems anymore. Yes, you've got tons of databases, but guess what? Don't worry about it. Leave him alone. Stop spending money on ridiculous upgrades right now. Just build a new layer and I'm telling you I there. As they figured this out, they're going to keep looking back and say, Oh my God, why didn't we know? >>Why did we know there's it looked I hopefully we could all partner. We're going to try to go down that route, but there's something much bigger going on here and they haven't figured it out. Well, the SAP data is very interesting to me that I'm starting to connect the dots. I just did a piece on my breaking analysis and SAP, they thank you. They, they've acquired 31 companies over the last nine years, right? And they've not bit the bullet on integration the way Oracle had to with fusion. Right? And so as a result, there's this, they say throw everything into HANA. It's a memory that's not going to work from an integration standpoint, right? Automation is actually a way to connect, you know, the glue across all those disparate systems, right? And so that makes a lot of sense that you're having success inside SAP and there's no reason that can't continue. >>Why there's, you know, there's a number of major kind of trends we've outlined here. One of, uh, we call human in the loop. And you know, today, you know, when each, when an unattended robot could actually stop a process and instead of sending the exception to a, an it person who monitoring, say, orchestrator actually go to an inbox, a task and box of that business user in a call center or wherever, and that robot can go do something else because it's so, so efficient and productive. But once that human has to solve that problem, right, that robot or a robot will take that back on and keep going. This human and robot interaction, it doesn't exist today and we know we're rolling that out in our UI path apps. I think you know that that's kind of mind blowing and then when you add a, I can't go too far into our roadmap and strategy or when you added the app programming layer and you add data science, that's a little bit of a hint into where we're going because we're open and transparent. >>Our data science connection, it's, it's this platform here, this kind of, I'd like to still call it all RPA. I think that that's a good thing, but the reality is this platform does Tam. What it can do is nothing like it was a year ago and it won't be like where it is today. A year from now you've got the tiger by the tail, Bobby, you got work to do, but congratulations on all the success. It's really been great to be able to document this and cover it, so thanks for coming on the cube. Thank you. All right. Thank you for watching everybody back with our next guest. Right after this short break, you're watching the cube live from UI path forward three from Bellagio in Vegas right back.

(upbeat music) >> From the SiliconANGLE media office, in Boston Massachusetts, it's theCUBE. (upbeat music) Now, here's your host, Dave Vellante. >> Hi everybody, welcome to this cube conversation. This is part of our CIO series and Jason Thomas is here, he's the CIO of Cole, Scott, and Kissane. CSK is Florida's largest civil defense law firm. Cube along Jason Thomas, great to see you again, thanks for coming on. >> Yeah, thanks for having me. >> So, let's talk a little bit about, the firm. largest firm in Florida, the focus is on Civil Defense, so you got lawyers, you got paralegals running around, you got demanding clients. What's the business like that's driving your technology strategy? >> so when I I'm new to legal, so this, I've been here about almost four years now, so I started January. a whole different world. I came from, from Startup Biotech, that line of business and a completely different animal. it's some of what you imagine, very always on the go, very busy, lot of business, we open dozens of cases a day, new cases, so a lot of things going on. >> Really event driven? >> Yeah very, very busy, so and you know technology's, you know the firm has taken stance that, technology is very important, to the firm and, we want to use the best technology possible, to make us as efficient as possible, so that's the chief driver, for tech at the law firm. >> So tech, you know, 15 years ago, whatever it was like, take an email to SaaS, right? So, but I would imagine you're focusing a lot on just attorney and employee productivity, maybe collaboration, document management, compliance. Are those some of the hot topics? And how are you applying technology to deal with those? >> Yep, so that is a big drive, efficiency, using technology to be efficient, and to make our folks productive. What we don't want to see, and that you see sometimes, you throw a whole bunch of technology at folks thinking that it's going to make them efficient and productive, and actually, it could be the greatest technology in the world for one place, and apply it, and you put it in another firm, and it makes us unproductive, so that's kind of the magic there. Kind of a trick to figuring out, what is it that actually is going to make us productive? >> Are there pretty clear swim lanes in your firm? Or is there a lot of shadow IT going on? Because I would imagine a lot of the frustration of, you know, IT folks is, you get the shadow IT, they bring in a point product, and that IT goes, "CIO's calling clean up this crime scene," and is that a problem in your firm specifically? Or even your industry? Or is it pretty much hey, let the tech folks figure out what the right tool for the job is? >> so in my mind the trick here is, it's not going to be any one person, or any practice group that's going to define what's the best option, what's the best tech. I mean thankfully for me, I do try and drive most of the tech out the firm, but the key is, you have to understand how the business runs. Just because it's cool tech, or it's working at one firm, doesn't mean it's going to apply or work in others. So, I spent a lot of time, in conversations with, a lot of the partners and associates. I try to make myself available as much, just to chat, see what they're doing. see what could make them more efficient. Sometimes if you don't ask, they don't even tell you, but if you ask the question, you can learn a lot in 20 minutes from somebody. And that kind of helps me decide, okay, what is going to make sense, or what's the next thing I should be looking at, to help folks out. >> So basically, Columbo questions, for those of you who remember Columbo, kind of ask your basic questions? What about work flow, how do you spend your time? What kinds of questions would you ask attorneys? >> honestly they could be calling about something completely unrelated to what, you know, what I'm thinking. It just could be as simple as, "Hey I'm this thing with this program where I'm trying to do X and this is the way we're doing now. Is there a better way to do it?" Or, it could be as simple as, we just kind of fall into the conversation based on other things. You know. They just want to talk to somebody sometimes. But they're not necessarily going to bring it up, or just don't have the time, they don't have the time. >> So a lot of times in theCUBE we get caught up, We love the tech, we talk about data science, and machine learning, and block chains and everything else, but then there's this basic blocking and tackling, that the CIO has to worry about. I wondered if you could share your perspectives based on your experience, just in terms of, some of the advice you might give to, organizations that are maybe growing, maybe haven't had the experience of a CIO that's been around the block, maybe in different industries? But some of the basic blocking and tackling that you see, that maybe doesn't happen in organizations, that really needs to happen. >> the expectation, or when you're thinking about, thinking about what the next thing is for the firm, or for your company, you also want to kind of think, you want to think long term as well. You want to think three to five years out. So, if we do this now and based on our current, growth projections, will this work for us in three years? Will this work for us in five years? Or what's our game plan? Maybe we start small, and, expand from there, but you don't want to just plan for the immediate you want to plan for the future. That's kind of, I think that's what CIO should be doing. It's not just about the tech, or is it going to work in our environment, but is it going to work for us down the road. Because we don't want, nobody, CFOs don't want to hear, and CEOs don't want to hear that, hey, yeah we just bought this thing last year, but, yeah we're going to have to buy something new now because it doesn't work anymore. >> But it does happen sometimes? >> It happens all the time, you know. >> Right, I remember, it goes a ways back now, but the federal rules of civil procedure, I think it was 2006, and everybody was rushing to plug holes because the courts ruled that electronic material was evidentiary, for whatever, seven years or something. So everybody was like okay, we need to have a system that allows us to comply. So, they went out and bought email archiving systems, which they knew they were going to have to throw away in three or four year. So how do you deal with it? Do you face that? Especially in a compliance oriented world, and you just try to sort of balance the cost and the throw away nature of that initiative with something more strategic? How do you deal with that? And how do you communicate that to the powers that be? >> Number one, no one likes to be held at gunpoint, number one, and especially my boss, so. I mean he gets it right, I mean there's regulations. But I will say, nothing happens as fast as everyone says it's going to happen. so there's always that idea. There's always this panic, oh we've got to put this in, and honestly I feel like tech folks use an excuse, and of course I do too. Say like, oh you all this is awesome. You know, we get to put something new in and, you know no one's going to say no and, it's not always the best approach, and again you kind of have to look at it long term, holistically for the business. You know, what is really going to happen in a few years? Is this technology going to even be a thing in a few years? Or is it just like, just to satisfy an immediate solution? Because again, I don't want, the last thing I hate doing is putting something in and telling my boss that it has to be replaced. He hates hearing that, and I don't want to tell him that either, quite frankly it's embarrassing. >> I don't blame your boss. >> Yeah it's embarrassing, it's just, let's do it right the first time. >> How do you do planning? I mean obviously there's a technology component, of planning, but I'm inferring from what you say that the end of technology is kind of the, the last thing you should be worrying about. You should be worried about the direction of the firm, the business, the growth plan, how do you do, as CIO, planning and how do you align that with the business? >> conversations, so lots of conversations. Lots of conversations with the attorneys. continued conversations with my boss, the CEO, and sometimes I'm not really great about it sometimes. And, you know, weeks will go by, you know, and I won't even have a conversation with him, about what's going on, and he wants to know what's going on. He doesn't understand all of it, but in those, you know, 15, 20 minute conversations, you'll be surprised what you'll learn. What's going on in the business that you didn't, or I didn't know about, and from there I can make decisions about, you know, six months from now, or next year, or during budgeting season, what it is that we need because, budgeting season is not really the time that you need to try and figure out what you want to do for next year. You want to have a plan months before that. You know, You already want to have kind of an idea of what you want to do, I mean, I've been talking to my CFO since, the beginning of summer about things we want to do for 2020. you know, six months, nine months, ahead of time, so. >> So, do you do basically annual planning? Do you try to look out further? Do you formally document that stuff? >> Every quarter, so we have, we kind of have most of the conversations with our, with my CFO and COO. every quarter we have kind of a list of projects/ what is it we want to do for the next couple quarters. We just kind of, track that and based on what we're seeing and how we do, then we, basically we plan each quarter, is how it comes down to. And we have a, we'll call it a white board, a virtual white board of what we're doing and what we want to do. >> But relatively near the midterm planning, you know doing like five year plannings though right? >> No. >> Waste of time to try to do that, or? At least in your business, maybe in pharmaceuticals? >> At least for us it was really, it's hard for us, to do that because of how quickly we grew over the last, again I've only been here almost four years, but even when I started, in 2015, I think we had somewhere around 300 plus attorneys. Now we're somewhere in the 475 range, I'm not saying no one saw that happening, but I don't think we expected that. I mean business has been great and we're happy, and we're fortunate to have it, but you can only plan so much. but do the best you can with the data you have. >> And for organization structure, you report to the CFO, is that correct? >> CEO. >> CEO? Okay so the, so you're a peer essentially of the CFO, is that right? >> Yeah. >> So you talk to the CFO about budgeting? >> Yeah. >> So you've got the CEO's >> More of the nitty gritty you know the details and numbers. >> What's that conversation like? Is it obviously you've got to justify, show a business case, or is it more sort of hate space? >> So here's the good news. I got lucky again. the CFO is very technology forward and so he understands that it drives a lot of efficiencies within the firm. So he gets it but he's been in the history long enough to get it and knows that we can, again he's efficiency a lot, but there's just a lot of efficiencies, and a lot of inefficiencies seen in a lot of what folks do in law firms that no one takes the time to sit down and say okay why do you do it like this? there's got to be a better way. Well this is the way I just do it, and so, we've been able to kind of adjust a lot of those work flows, or change those work flows to make it more cost effective for the business. Like even things simple as, just manage print service, you know, do we store 100 toners in the back somewhere and then wait for someone to, say that they're out of toners? That's not very efficient. and it's very expensive actually, so you put in a much more efficient process in place for toners. Because we're a paperless firm, but you know, I mean we still have to print, so. >> So, the joke about the paperless office was something like paperless bathroom. So, the other way around, I want to ask you about security. Are you the defacto Chief Information Security Officer, or do you have a CISO, or? >> I do not have a CISO that is me, so that'll be me. >> So, that is you. Alright so let's talk security. So, what is the state of security and as you see it? it's constantly evolving. Security practitioners tell us that they got so many tools, they got, they might have a SEC ops team, you may or may not, it may be something embedded in your team, but they've got to respond, they've got to respond, sometimes it's hard to figure out what they should respond to, prioritization, the data, keeping up with the bad guys, all that stuff. What's your state of security? >> so I think these days, it's not really, it's not really about having the best firewall, or the best, outside protection, so I think a lot of the attacks that are happening now, not that they don't happen form the outside, but a lot of it is a lot of social engineering, and a lot of everything. They're taking advantage of the the ignorance of the users, for lack of a better way to say it, so a lot of it's coming in through email, malicious links, and they're taking advantage of the inside, and bad practices, and bad policies, and/or lack of So, I think based on what we see in the news now, and what you read about, it seems like there's a breech every week somewhere. And when it comes down to it you find out that X company didn't, didn't use a strong hashing. For assaulting, on the hashes for their passwords. Like simple simple, just basic basic stuff. It's not like some massive operation like you see in a movie where you know, they're making this big plan to break in a building and it pans out and they're sneaking in you know, from the ceiling and all that kind of stuff. They're just basic stuff, they're just passwords. How can passwords, reused passwords, just databases of passwords everywhere, out in the dark where you can just buy, and they're just utilizing simple stuff like that. It's not even complicated anymore, it's just, it's a lot of social engineering. >> Often times I say that bad user behavior trumps good security every time, I wanted to ask you about the state of the self security in the industry. So you are reinforced, we were there, and Steven Schmidt stood up and he said, "Look at this narrative from the vendor community that says security is broken, isn't productive. It hurts the industry at the same time." I was at VM world recently a couple months ago, last month actually, Pat Kelsinger basically stood up and said security is broken and we're here to fix it, they bought, you know made a big acquisition of carbon black a local company, so you have these two different, you know, polarizing opinions, I don't necessarily feel like the state of security is great. I look back every year I say do I feel more secure or not, you know remember art cove yellow, every year RSA would write his letter. but what are your thoughts on that? Are you basically saying hey, it's, a lot of times it's user behavior, it's things that maybe, you know it's education, is security a do over? I guess is my question. >> A do over in the sense that I think it just comes out to basic education. I have, you'd be, we're in tech and we understand security and we have all these grand ideas and technologies and vendors and software that we use to do different things on all these fancy dashboards. But, if you ask the basic person off the street about, I think I saw a skit on Twitter the other day and you know there was this guy going around asking them, asking people, you know, what's your Facebook password, or you know how complex is it and they'll just give them their passwords and stuff you know, and I mean there's just a lack of basic education, so all us security buffs walk around, and they don't understand what we're talking about, but they don't need to understand what we're talking about. We just need to be able to look, to just have a basic security awareness and training with folks. I have a friend who works in industry, or in a nonprofit that does, that helps folks who've been you know kind of, harassed or abused online. And she's saying, she's telling me, she's like, "Look you guys are great you're really smart, but these folks, they don't know the basic stuff like hey you know someone keeps logging into my internet, and I keep seeing someone, you know, these weird things in my yard, like cameras in my yard and, can I do this with my phone, and oh well I can't use, like, my dogs name for my Facebook password? Like this is just basic stuff that nobody knows. It's not because they're stupid it's just, they just don't know." And so, like we're up here, and your average everyday person is just on this level. >> How about ransom ware? Obviously a hot topic in the business. what should people be, what should they know and what should they be doing? >> at a basic level security ware is training, it's very simple to do, there's a lot of, no that I'm, pushing products there's plenty of products out there. Secure great ones that kind of help your user, or teach them what not to do, or what to look for. we run a fishing campaign in our firm every once in a while and at this point no one clicks on anything without asking. I mean I get direct emails and I say hey, how's this look? Does it look like I should click it or, you know, does it look legit, I mean it's great. They ask now, they know not to do it. Whereas, I mean that's how they get you. That's how they get most of these places. Especially from we get a lot of, we constantly hear about small firms or smaller clients/companies getting hacked, we constantly get emails from them all the time. They'll get hacked and then we'll get the the emails with the links or whatever. that's one on the user side. On the IT side, we just really need to take it back to the basics, let's make sure we have, backups, and a backup policy, and a data protection policy, and an instant response plan. Let's have a plan here, let's not react when something happens, let's just have a plan. Honestly at our firm, we do have backups, we have layered strategy, but there's just some basic things that we don't do, like you know, IT folks, we don't, we don't keep things on our desktop. Let's start with us, you know we're supposed to be the leadership, in this regard, so let's not keep stuff on our desk let's keep stuff on the network. Let's keep it protected. Make sure it's part of the backup schedule. things like that, I think you just start there, because I was you know, I was just reading about, there's an article that came out yesterday, I think it was Washington Post, and it was talking about the ransomer incident in Baltimore a few months ago. They're just now finding out that the, even the IT folks had stuff on their local computers that couldn't be recovered, important documentation. So, this is just data protection 101. You know, we've got to take it back to the basics, take it back. >> Last question, is just kind of your career, so you mentioned before, you were in, I think you said health care, or? >> Yeah so I worked with MSP, so I worked with a lot of start ups. >> So, how'd you get here how'd you become a CIO? People out there may be, you know people in tech, they aspire perhaps to stay in tech, but they want maybe more of a management role. What was your path, and what kind of advice would you give them? >> what I would say is, so it worked out where, I was I was a lead at the company I was at here in Mass at the time, and so long story short my wife had an opportunity in Orlando, we moved, and I said I would never work for a law firm, ever. because I was, when my current boss found out I was coming we have a, a long relationship. When I was in, grew up in Florida and so part of that yeah, okay so I was in the right place at the right time and I knew somebody, that's why it's important to stay on top of networking. Always be networking, not for any other reason, just get to know people, you know. the tough thing that I had growing in the industry, I didn't get involved early on, which I should've. I should've gone to events, things like that. Get to know folks because if the people don't know you, why are they going to hire you? It's easier to get in somewhere, or get an opportunity, if they at least know you, or know your name, or know somebody that knows you. That's number one, so I'm big on that. as soon as I moved back here I've already started, I have quarterly lunches with some of the CIOs at different firms, I just put myself put there. Just hey I'm here, want to get together for lunch? It's that simple. number two make sure this is what you want to do, it's a lot of it, and you hear this all the time, a lot of it has to do with personalities and people. You're managing personalities and people half the time. You are not just doing the tech. If you think you're just going to be doing tech, or you're just going to be doing cool stuff, not the case. So, make sure you can, you know, make sure you know what you're getting into because it's, it's very challenging. >> Now that's great, great advice, so network, it's not, I like to say it's not who you know it's who knows you, so get out there. And then, Love it because, a lot of times I would imagine it's thankless. Right, you hear, >> Yep. >> You hear a lot of the chatter when something goes wrong, >> It's like a defense of a football team, you know, it's fine until, >> Until somebody scores. >> And someone gets sacked you know what I mean, otherwise no one cares. >> Alright Jason well thanks for the update, really appreciate you coming on theCUBE again. >> Thank you. >> Alright you're welcome, alright keep it right there buddy. We will be back with our next segment, right after this short break. (mood music)

>> From Cambridge, Massachusetts. It's theCUBE, covering MIT Chief Data Officer and Information Quality Symposium 2019. Brought to you by SiliconANGLE Media. >> Welcome back to Cambridge, Massachusetts, everybody. We're here at MIT, sweltering Cambridge, Massachusetts. You're watching theCUBE, the leader in live tech coverage, my name is Dave Vellante. I'm here with my co-host, Paul Gillin. Special coverage of the MITCDOIQ. The Chief Data Officer event, this is the 13th year of the event, we started seven years ago covering it, Mark Ramsey is here. He's the Chief Data and Analytics Officer Advisor at Ramsey International, LLC and former Chief Data Officer of GlaxoSmithKline. Big pharma, Mark, thanks for coming onto theCUBE. >> Thanks for having me. >> You're very welcome, fresh off the keynote. Fascinating keynote this evening, or this morning. Lot of interest here, tons of questions. And we have some as well, but let's start with your history in data. I sat down after 10 years, but I could have I could have stretched it to 20. I'll sit down with the young guns. But there was some folks in there with 30 plus year careers. How about you, what does your data journey look like? >> Well, my data journey, of course I was able to stand up for the whole time because I was in the front, but I actually started about 32, a little over 32 years ago and I was involved with building. What I always tell folks is that Data and Analytics has been a long journey, and the name has changed over the years, but we've been really trying to tackle the same problems of using data as a strategic asset. So when I started I was with an insurance and financial services company, building one of the first data warehouse environments in the insurance industry, and that was in the 87, 88 range, and then once I was able to deliver that, I ended up transitioning into being in consulting for IBM and basically spent 18 years with IBM in consulting and services. When I joined, the name had evolved from Data Warehousing to Business Intelligence and then over the years it was Master Data Management, Customer 360. Analytics and Optimization, Big Data. And then in 2013, I joined Samsung Mobile as their first Chief Data Officer. So, moving out of consulting, I really wanted to own the end-to-end delivery of advanced solutions in the Data Analytics space and so that made the transition to Samsung quite interesting, very much into consumer electronics, mobile phones, tablets and things of that nature, and then in 2015 I joined GSK as their first Chief Data Officer to deliver a Data Analytics solution. >> So you have long data history and Paul, Mark took us through. And you're right, Mark-o, it's a lot of the same narrative, same wine, new bottle but the technology's obviously changed. The opportunities are greater today. But you took us through Enterprise Data Warehouse which was ETL and then MAP and then Master Data Management which is kind of this mapping and abstraction layer, then an Enterprise Data Model, top-down. And then that all failed, so we turned to Governance which has been very very difficult and then you came up with another solution that we're going to dig into, but is it the same wine, new bottle from the industry? >> I think it has been over the last 20, 30 years, which is why I kind of did the experiment at the beginning of how long folks have been in the industry. I think that certainly, the technology has advanced, moving to reduction in the amount of schema that's required to move data so you can kind of move away from the map and move type of an approach of a data warehouse but it is tackling the same type of problems and like I said in the session it's a little bit like Einstein's phrase of doing the same thing over and over again and expecting a different answer is certainly the definition of insanity and what I really proposed at the session was let's come at this from a very different perspective. Let's actually use Data Analytics on the data to make it available for these purposes, and I do think I think it's a different wine now and so I think it's just now a matter of if folks can really take off and head that direction. >> What struck me about, you were ticking off some of the issues that have failed like Data Warehouses, I was surprised to hear you say Data Governance really hasn't worked because there's a lot of talk around that right now, but all of those are top-down initiatives, and what you did at GSK was really invert that model and go from the bottom up. What were some of the barriers that you had to face organizationally to get the cooperation of all these people in this different approach? >> Yeah, I think it's still key. It's not a complete bottoms up because then you do end up really just doing data for the sake of data, which is also something that's been tried and does not work. I think it has to be a balance and that's really striking that right balance of really tackling the data at full perspective but also making sure that you have very definitive use cases to deliver value for the organization and then striking the balance of how you do that and I think of the things that becomes a struggle is you're talking about very large breadth and any time you're covering multiple functions within a business it's getting the support of those different business functions and I think part of that is really around executive support and what that means, I did mention it in the session, that executive support to me is really stepping up and saying that the data across the organization is the organization's data. It isn't owned by a particular person or a particular scientist, and I think in a lot of organization, that gatekeeper mentality really does put barriers up to really tackling the full breadth of the data. >> So I had a question around digital initiatives. Everywhere you go, every C-level Executive is trying to get digital right, and a lot of this is top-down, a lot of it is big ideas and it's kind of the North Star. Do you think that that's the wrong approach? That maybe there should be a more tactical line of business alignment with that threaded leader as opposed to this big picture. We're going to change and transform our company, what are your thoughts? >> I think one of the struggles is just I'm not sure that organizations really have a good appreciation of what they mean when they talk about digital transformation. I think there's in most of the industries it is an initiative that's getting a lot of press within the organizations and folks want to go through digital transformation but in some cases that means having a more interactive experience with consumers and it's maybe through sensors or different ways to capture data but if they haven't solved the data problem it just becomes another source of data that we're going to mismanage and so I do think there's a risk that we're going to see the same outcome from digital that we have when folks have tried other approaches to integrate information, and if you don't solve the basic blocking and tackling having data that has higher velocity and more granularity, if you're not able to solve that because you haven't tackled the bigger problem, I'm not sure it's going to have the impact that folks really expect. >> You mentioned that at GSK you collected 15 petabytes of data of which only one petabyte was structured. So you had to make sense of all that unstructured data. What did you learn about that process? About how to unlock value from unstructured data as a result of that? >> Yeah, and I think this is something. I think it's extremely important in the unstructured data to apply advanced analytics against the data to go through a process of making sense of that information and a lot of folks talk about or have talked about historically around text mining of trying to extract an entity out of unstructured data and using that for the value. There's a few steps before you even get to that point, and first of all it's classifying the information to understand which documents do you care about and which documents do you not care about and I always use the story that in this vast amount of documents there's going to be, somebody has probably uploaded the cafeteria menu from 10 years ago. That has no scientific value, whereas a protocol document for a clinical trial has significant value, you don't want to look through manually a billion documents to separate those, so you have to apply the technology even in that first step of classification, and then there's a number of steps that ultimately lead you to understanding the relationship of the knowledge that's in the documents. >> Side question on that, so you had discussed okay, if it's a menu, get rid of it but there's certain restrictions where you got to keep data for decades. It struck me, what about work in process? Especially in the pharmaceutical industry. I mean, post Federal Rules of Civil Procedure was everybody looking for a smoking gun. So, how are organizations dealing with what to keep and what to get rid of? >> Yeah, and I think certainly the thinking has been to remove the excess and it's to your point, how do you draw the line as to what is excess, right, so you don't want to just keep every document because then if an organization is involved in any type of litigation and there's disclosure requirements, you don't want to have to have thousands of documents. At the same time, there are requirements and so it's like a lot of things. It's figuring out how do you abide by the requirements, but that is not an easy thing to do, and it really is another driver, certainly document retention has been a big thing over a number of years but I think people have not applied advanced analytics to the level that they can to really help support that. >> Another Einstein bro-mahd, you know. Keep everything you must but no more. So, you put forth a proposal where you basically had this sort of three approaches, well, combined three approaches. The crawlers to go, the spiders to go out and do the discovery and I presume that's where the classification is done? >> That's really the identification of all of the source information >> Okay, so find out what you got, okay. >> so that's kind of the start. Find out what you have. >> Step two is the data repository. Putting that in, I thought it was when I heard you I said okay it must be a logical data repository, but you said you basically told the CIO we're copying all the data and putting it into essentially one place. >> A physical location, yes. >> Okay, and then so I got another question about that and then use bots in the pipeline to move the data and then you sort of drew the diagram of the back end to all the databases. Unstructured, structured, and then all the fun stuff up front, visualization. >> Which people love to focus on the fun stuff, right? Especially, you can't tell how many articles are on you got to apply deep learning and machine learning and that's where the answers are, we have to have the data and that's the piece that people are missing. >> So, my question there is you had this tactical mindset, it seems like you picked a good workload, the clinical trials and you had at least conceptually a good chance of success. Is that a fair statement? >> Well, the clinical trials was one aspect. Again, we tackled the entire data landscape. So it was all of the data across all of R&D. It wasn't limited to just, that's that top down and bottom up, so the bottom up is tackle everything in the landscape. The top down is what's important to the organization for decision making. >> So, that's actually the entire R&D application portfolio. >> Both internal and external. >> So my follow up question there is so that largely was kind of an inside the four walls of GSK, workload or not necessarily. My question was what about, you hear about these emerging Edge applications, and that's got to be a nightmare for what you described. In other words, putting all the data into one physical place, so it must be like a snake swallowing a basketball. Thoughts on that? >> I think some of it really does depend on you're always going to have these, IOT is another example where it's a large amount of streaming information, and so I'm not proposing that all data in every format in every location needs to be centralized and homogenized, I think you have to add some intelligence on top of that but certainly from an edge perspective or an IOT perspective or sensors. The data that you want to then make decisions around, so you're probably going to have a filter level that will impact those things coming in, then you filter it down to where you're going to really want to make decisions on that and then that comes together with the other-- >> So it's a prioritization exercise, and that presumably can be automated. >> Right, but I think we always have these cases where we can say well what about this case, and you know I guess what I'm saying is I've not seen organizations tackle their own data landscape challenges and really do it in an aggressive way to get value out of the data that's within their four walls. It's always like I mentioned in the keynote. It's always let's do a very small proof of concept, let's take a very narrow chunk. And what ultimately ends up happening is that becomes the only solution they build and then they go to another area and they build another solution and that's why we end up with 15 or 25-- (all talk over each other) >> The conventional wisdom is you start small. >> And fail. >> And you go on from there, you fail and that's now how you get big things done. >> Well that's not how you support analytic algorithms like machine learning and deep learning. You can't feed those just fragmented data of one aspect of your business and expect it to learn intelligent things to then make recommendations, you've got to have a much broader perspective. >> I want to ask you about one statistic you shared. You found 26 thousand relational database schemas for capturing experimental data and you standardized those into one. How? >> Yeah, I mean we took advantage of the Tamr technology that Michael Stonebraker created here at MIT a number of years ago which is really, again, it's applying advanced analytics to the data and using the content of the data and the characteristics of the data to go from dispersed schemas into a unified schema. So if you look across 26 thousand schemas using machine learning, you then can understand what's the consolidated view that gives you one perspective across all of those different schemas, 'cause ultimately when you give people flexibility they love to take advantage of it but it doesn't mean that they're actually doing things in an extremely different way, 'cause ultimately they're capturing the same kind of data. They're just calling things different names and they might be using different formats but in that particular case we use Tamr very heavily, and that again is back to my example of using advanced analytics on the data to make it available to do the fun stuff. The visualization and the advanced analytics. >> So Mark, the last question is you well know that the CDO role emerged in these highly regulated industries and I guess in the case of pharma quasi-regulated industries but now it seems to be permeating all industries. We have Goka-lan from McDonald's and virtually every industry is at least thinking about this role or has some kind of de facto CDO, so if you were slotted in to a CDO role, let's make it generic. I know it depends on the industry but where do you start as a CDO for an organization large company that doesn't have a CDO. Even a mid-sized organization, where do you start? >> Yeah, I mean my approach is that a true CDO is maximizing the strategic value of data within the organization. It isn't a regulatory requirement. I know a lot of the banks started there 'cause they needed someone to be responsible for data quality and data privacy but for me the most critical thing is understanding the strategic objectives of the organization and how will data be used differently in the future to drive decisions and actions and the effectiveness of the business. In some cases, there was a lot of discussion around monetizing the value of data. People immediately took that to can we sell our data and make money as a different revenue stream, I'm not a proponent of that. It's internally monetizing your data. How do you triple the size of the business by using data as a strategic advantage and how do you change the executives so what is good enough today is not good enough tomorrow because they are really focused on using data as their decision making tool, and that to me is the difference that a CDO needs to make is really using data to drive those strategic decision points. >> And that nuance you mentioned I think is really important. Inderpal Bhandari, who is the Chief Data Officer of IBM often says how can you monetize the data and you're right, I don't think he means selling data, it's how does data contribute, if I could rephrase what you said, contribute to the value of the organization, that can be cutting costs, that can be driving new revenue streams, that could be saving lives if you're a hospital, improving productivity. >> Yeah, and I think what I've shared typically shared with executives when I've been in the CDO role is that they need to change their behavior, right? If a CDO comes in to an organization and a year later, the executives are still making decisions on the same data PowerPoints with spinning logos and they said ooh, we've got to have 'em. If they're still making decisions that way then the CDO has not been successful. The executives have to change what their level of expectation is in order to make a decision. >> Change agents, top down, bottom up, last question. >> Going back to GSK, now that they've completed this massive data consolidation project how are things different for that business? >> Yeah, I mean you look how Barron joined as the President of R&D about a year and a half ago and his primary focus is using data and analytics and machine learning to drive the decision making in the discovery of a new medicine and the environment that has been created is a key component to that strategic initiative and so they are actually completely changing the way they're selecting new targets for new medicines based on data and analytics. >> Mark, thanks so much for coming on theCUBE. >> Thanks for having me. >> Great keynote this morning, you're welcome. All right, keep it right there everybody. We'll be back with our next guest. This is theCUBE, Dave Vellante with Paul Gillin. Be right back from MIT. 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>> from Seattle WASHINGTON. It's the Q covering AWS Imagine brought to you by Amazon Web service is >> Hey, welcome back already, Jeffrey. Here with the cue, we're in downtown Seattle at the AWS. Imagine, Edie, you event. It's a small conference. It's a second year, but it'll crow like a weed like everything else does the of us. And it's all about Amazon and a degree. As for education, and that's everything from K through 12 community college, higher education, retraining vets coming out of the service. It's a really big area. And we're really excited to have fresh off his keynote presentations where he changed his title on me from what it was >> this morning tow. It was the senator duties >> David Raymond, the director of what was the Virginia Cyber Range and now is the U. S. Cyber range. Virginia Tech. David, Great to see you. >> Yeah, Thank you. Thanks. So the Virginia cyber age actually will continue to exist in its current form. Okay, Well, it'll still serve faculty and students in the in the Commonwealth of Virginia, funded by the state of Virginia. Now the U. S. Cyber Angel fund will provide service to folks outside over, >> so we jumped ahead. So? So it's back up. A step ladder is the Virginia, >> So the Virginia Cyber Range provides courseware and infrastructure so students could do hands on cyber security, educational activities in Virginia, high schools and colleges so funded by the state of Virginia and, um provides this service at no charge to the schools >> and even in high school, >> even in high school. Yes, so now that there are now cybersecurity courses in the Virginia Department of Education course catalogue as of two years ago, and I mean they've grown like wildfire, >> I'm just so a ton of talk here about skills gap. And there's tremendous skills gap. Even the machine's gonna take everybody's job. There's a whole lot of jobs are filled, but what's interesting? I mean, it's the high school angle is really weird. I mean, how do you Most high school kids haven't even kind of clued in tow, privacy and security, opting in and opting out. It's gotta be a really interesting conversation when now you bring security into that a potential career into that and directly reflects on all those things that you do on your phone. >> Well, I would argue that that's exactly the problem. Students are not exposed to cyber security, you know. They don't want the curia potentials are they really don't understand what it is we talked about. We talked about teenagers being digital natives. Really? They know how to use smartphones. They know how to use computers, but they don't understand how they work. And they don't understand the security aspects that go along with using all this technology. And I would argue that by the time a student gets into college they have a plan, right? So I have a student in college. He's he's gonna be a doctor. He knows what a doctor is. He heard of that his whole life. And in high school, he was able to get certified as a nursing assistant. We need cyber security in that same realm, right? If we start students in high school and we and we expose them to cybersecurity courses, they're all elective courses. Some of the students will latch onto it, and I'll say, Hey, this is what I want to be when I grew up. And in Virginia, we have we have this dearth of cyber security expertise and this is true across the country. In Virginia, right now, we have over 30,000 cyber security jobs that are unfilled. That's about 1/3 of the cyber security jobs in this state. And I mean, that's a serious problem, not only in Virginia but nationwide. And one of the ways to fix that is to get high school students exposed to cybersecurity classes, give them some real hands on opportunities. So they're really doing it, not just learning the words and passing the test, and I mean really again in Virginia, this is this is grown like wildfire and really thinks revolutionized cybersecurity education in the state. >> And what are some of the topics that say, a high school level, where you know you're kind of getting versed on the vocabulary and the terminology vs when they go into into college and start to take those types, of course, is >> yeah, so in Virginia, there's actually cybersecurity courses across the C T E career pathways. And so SETI is the career and technical education curricula. And so there are courses like cyber security and health care, where students learn about personal health data and how to secure that specific specific kinds of data, they learn about the regulations behind that data. There's healthcare in manufacturing, where students learn about industrial control systems and you know how those things need to be secured and how they're different from a laptop or a phone. And the way those air secured and what feeds into all of those courses is an introductory course. Cyber security fundamentals, where students learn some of the very basics they learn the terminology. They learn things like the C I. A. Triad right, confidentiality, integrity and availability of the three basic components of security that you try to maintain for any system. So they start out learning the basics. But still they're doing that hands on. So they're so they're in a network environment where they see that you know that later on in the course during Capstone exercises, they might see someone trying to attack a computer that they're that they're tasked to defend and a defender of what does that look like? What are the things that I'm going to do? That computer? You know, I might install anti virus. I might have a firewall on the computer. And how do I set that up and etcetera etcetera. So high school start with the basics. As as students progressed through their high school years, there are opportunities to take further more advanced classes in the high schools. And then when they get to college, some of those students are gonna have latched onto cyber security as a potential career field. Now, now we've got him right way, get him into the right into the right majors and into the right courses. And our hope is that that's gonna sort of kick start this pipeline of students in Virginia colleges, >> right? And then I wonder if you could >> talk a little bit about the support at the state level. And it's pretty interesting that you had him from the state level we heard earlier today about supported the state level. And it was Louisiana for for another big initiative. So you know that the fact that the governor and the Legislature are basically branding this at the state level, not the individual school district level, is a pretty strong statement of the prioritization that they're putting on this >> that has been critical to our success. If we didn't have state level support, significant state level support, there's no way we could be where we are. So the previous governor of Virginia, Terry McAuliffe, he latched on to cyber security education as one of his signature initiatives. In fact, he was the president of the State Governors Association, and in that role he cybersecurity was one of his condition. So so he felt strongly about educating K 12 education college students feeding that cybersecurity pipeline Onda Cyberangels one of one of a handful of different initiatives. So they were veterans scholarships, and there were some community college scholarships and other other initiatives. Some of those are still ongoing so far are not. But but Cyber Range has been very successful. Funded by the state provides a service at no cost to high schools and colleges on Dad's Been >> critically, I can't help. We're at our say earlier this year, and I'm just thinking of all the CEOs that I was sitting with over the course of a couple of days that are probably looking for your phone number right now. Make introduction. But I'm curious. Are are the company's security companies. I mean, Arcee is a huge show. Amazon just had their first ever security conference means a lot of money being invested in this space. Are they behind it? Have you have you looked for in a kind of private company participation to help? Because they desperately need these employees? >> Definitely. So we've just started down that road, Really? I mean, our state funding has kept us strong to this point in our state funding is gonna continue into the foreseeable future. But you're right. There are definitely opportunities to work with industry. Certainly a DBS has been a very strong partner of our since the very beginning. They really I mean, without without the help of some, some of their cloud architects and other technical folks way could not have built what we built in the eight of us. Cloud. We've also been talking to Palo Alto about using some of their virtual appliances in our network environments. So yeah, so we're definitely going down the road of industry partners and that will continue to grow, I'm sure >> So then fast forward today to the keynote and your your announcement that now you taking it beyond just Virginia. So now it's the U. S. Cyber range. Have that come apart? Come about. What does that mean? >> Yes, So we've been We've been sharing the story of the Virginia cyber range for the last couple of years, and I goto national conferences and talk about it. And, um, just to just sort of inform other states, other other school systems what Virginia's doing. How could you? How could you potentially match what we're doing and what The question that I keep getting is I don't want to reinvent the wheel. How can I buy what you have? And that's been sort of a constant drumbeat over the last couple of years. So we decided fairly early on that we might want to try to expand beyond Virginia, and it just sort of the conditions were right about six months ago. So we set a mark on the wall, he said. In Summer of 2019 we're gonna make this available to folks outside of Virginia. And so, so again, the Virginia Cyberangels still exist. Funded by the Commonwealth of Virginia, the U. S cyber range is still part of Virginia Tech. So within Virginia Tech, but we will have to we will have to essentially recoup our costs so we'll have to spend money on cloud infrastructure and We'll have to spend salary money on folks who support this effort. And so we'll recoup costs from folks that are outside of Virginia using our service. But, um, we think the costs are gonna be very competitive compared to similar efforts. And we're looking forward to some successes here. >> And do you think you're you're kind of breakthrough will be at the high school level, the You know, that underground level, you know, where do you kind of see the opportunities? You've got the whole thing covered with state support in Virginia. How does that get started in California? How's that get started here? Yeah, that's a Washington state. >> That's a great question. So really, when we started this, I thought we were building a thing for higher ed. That's my experience. I've been teaching cyber security and higher ed for several years, and I knew I knew what I would want if I was using it, and I do use it. So I teach classes at Virginia Tech Graduate program. So I I used the Virginia side in my class, and, um, what has happened is that the high schools have latched onto this as I mentioned, and Most of our users are high schools. In Virginia, we have 180. Virginia High School is using the Virgin Cyber. That's almost >> 188 1 >> 180. That's almost half the high schools in the state using the Virginia cyber age. So we think. And if you think about, you know, higher. Ed has been teaching cybersecurity classes that the faculty members who have been teaching them a lot of them have set up their own network infrastructure. They have it set up the way they want it, and it ties into their existing courseware, and you know they're going to use that, At least for now. What we provide is is something that makes it so that a high school or a community college doesn't have to figure out how to fund or figure out how to actually put this network architecture together. They just come to us. They have the flexibility of the flexibility to use, just are very basic plug and play network environments, or they have flexibility to, um, make modifications depending on how sophisticated they themselves are with with, you know, manipulating systems and many playing the network so so Our expectation is that the biggest growth is going to be in the high school market, >> right? That's great, because when you say cyber range God, finally, Donna me use it like a target range. It's like a place to go practice >> where the name comes from, right? >> Absolutely. If I finally like okay, I get it. So because it's not only the curriculum and the course where and everything else but it's actually an environment, it depends on the stage things and do things exactly >> So students could d'oh offensive, offensive and defensive cybersecurity activities. And so early on, when we were teaching students howto hack essentially in colleges, you know, there were people who were concerned about that on the military case we make for that is you can't teach somebody how to defend unless they understand how they're gonna be attacked. The same is true in this case. So all of our all of our course, where has lots of ethics and no other legal and other other discussions embedded throughout. So students understand the implications of what their actions would be if they do it somewhere else. And, um, right, these are all isolated network environments their places where students can get hands on in a place where they can essentially do whatever they want without causing trouble on the school network or on the Internet. And it's very much akin to a rifle range, >> right? Like you said, you can have different scenarios. And I would imagine there's probably gonna be competitions of you think. Fact. You know what's going on in the robotics world for lots of all these things, right? Like white hat, black hat hacker. Well, very, very exciting. David, Congratulations. And it sounds like you're well on your way. Thanks. Great. Alright, >> He's David. I'm Jeff. You're watching The Cube were at Washington State Convention Centre just across the street at a W s. Imagine. Thanks for watching. We'll see you next time. >> Thanks.

(upbeat electronic music) >> Voiceover: Live from New York City, it's theCUBE, covering Lenovo Transform 2017. Brought to you by Lenovo. >> Welcome back to theCUBE's coverage of Lenovo Transform. I'm your host, Rebecca Knight, along with my cohost, Stu Miniman, who is a senior analyst at Wikibon. We are joined today by Julian Box. He is the founder and CEO of Calligo, and Shekhar Mishra, who is the director of product management here at Lenovo. Thanks so much for coming on the show. >> Thank you. >> So Julian, I want to start with you. Tell us a little bit about Calligo and your business challenges. >> Calligo is six years old now. We're a cloud service provider, but we do things slightly differently. We were set up with data privacy at its core, which is a little bit of a paradox for cloud, of course, because you shouldn't really care where the data is, but I believed people would care where the data was, and what laws were applicable, and who could look at the data, and so forth. Fast forward to today, and we've had Edward Snowden, and now we've got the EU GDPR, which, some people would say, is a lot tougher now because of Edward Snowden's stuff that he actually showed was going on. Interestingly, a lot of that stuff, was really focused very much on the U.S. and not really about outside the U.S. We focus very much around any organization that touches EU citizens. We have a privacy play around that. We do it just slightly differently than a standard cloud service provider. >> I do want to get into that new EU regulation you were talking about, but can you tell us a little bit about why you chose Lenovo? >> There's a lot of history there. Right back in the day, I was true blue in the '80s, coding away in the midrange, and I've always had that link with IBM. Then, through the acquisition that Lenovo did, we flowed into Lenovo, and it's been actually very, very good. Some people questioned whether that was a good move, but I saw what they'd done with the ThinkPad, and the Think Range, and the PC, and I was pretty confident it was going to carry on. We've been very happy with what we've had so far. >> Shekhar, want to bring you into the discussion. You've been talking a lot about infrastructure, things like server, storage, and networking. Bring us into how cloud fits into the Lenovo portfolio with the announcements that we've been talking about today. >> Definitely. If you really look at, not the how, but why people are moving towards having cloud structure, people like as he was talking earlier, that service provider, they're looking really for the agility and simplicity that a lot of the public cloud brings, but then, as he was talking, that a lot of the regulatory issues, SLA, security concerns really prohibit them to actually put everything on a public cloud, right? They want those benefits, but they want that at their own terms, right? The best people who can provide that is one who are able to embrace openness, play with the ecosystem, like partners, like Microsoft, Nutanix, and VMware, and also provide a very solid infrastructure, to run those things, right? We, as a company, Lenovo DCG, can offer that. Those are the key values, but also going beyond that, if you think about, cloud is really simple, but once you get it deployed and working, that is a big "if" there, right? What we have done as a strategy is to simplify this, to increase the kind of value for our customers. We promote this as a pre-integrated solution, which is really a turnkey with the simple support so customers are not running around for support or having to deploy it on their own terms, things like that. >> I would actually say, the idea of cloud is simple. Once you really get into it, it's not so simple. I've been at the Amazon re:Invent show for many years. They're adding 1,000 new features every year. That's not simple. Julian, six years? I mean, that's like multiple lifetimes since you started your company. The whole service provider marketplace has changed a lot. Can you talk about what's been changing in your business? You're involved with the Microsoft Azure Stack. How do you look at the public cloud, and that hybrid layer, and envision your role going forward? >> Yeah, it has changed a lot. If someone had asked me that we would be doing a Microsoft stack cloud-based system a few years ago, I wouldn't have thought we would be, but because of the way people perceive data now, and where it is, and where it's held, there's more and more of a demand that, "I want my data, and I want it executed "in the location, the jurisdiction that I live in." Microsoft, and Amazon, and all the other places, they can't be in every single country in the world, clearly. The scale is not there. Even for them, it's not. The Azure Stack is a way, I think, that Microsoft's going to attempt to deal with some of those challenges around actually where data is processed. That gives us an opportunity because we have a lot of clients that won't put their data into the Azure cloud because of where the Azure cloud actually is right now, but when we put it into the jurisdictions we're in, we've got a lot of people wanting to use it. The sooner we get it, the better, really. >> You look at it more from a actual, physical location more than kind of control or governance? >> No, that all goes part and parcel, but the starting point is jurisdictional position in the data. With the EU, you're either in the EU, or you're not in the EU, clearly. With the GDPR law, it's switching. It's switching to become who that person actually is. At the moment, it's all around where the data is. With the GDPR, it's more focused on the individual. The individual doesn't have to live in the EU anymore, but it's still protected by these same laws. People do care, very much so, where the data is actually going to be. Businesses don't want to be caught out either, and they have the challenges of actually processing the data, or controlling the data, as it's known. As a service provider, one of the biggest changes for us, is that we're now liable for some of the processes of what actually happens to that data. Before, it was just the client that was using it. Now, it's proportionally between the two of us. We have a role as a processor, and they have a role as a control of that data. Therefore, again, it comes down to, how do we minimize the risks? How do we ensure that we are meeting the obligations that we have under these new laws? It becomes easier if you're actually doing it in a jurisdiction that has the appropriate laws, or is physically in the EU. There's a thing called a adequacy rating that the EU give to a certain set of countries. You can apply for it. Anybody can apply for it, but only about a dozen or so countries around the world actually have it. What this gives them is the ability to be seen as being in the EU, even though you're not in the EU, from a data protection perspective. >> Companies are really fundamentally rethinking how they approach data privacy. Shekhar, how are you partnering with other companies and helping them work through this? I mean, your example with Calligo, and other companies, too, that are affected? >> That is one of the biggest challenge, if you would think about this. Not only have the companies have to think about, yes, I have to go to a cloud and have a cloud strategy, but the whole deployment model, the mindset of the companies themselves are also shifting, and they need to shift. A very simple example I'll give you, for instance. We have a very prominent educational institute. They're budget right now was allocated to build three more buildings, for instance, to accommodate the influx of new students coming in. They're now talking to us, respect to Azure Stack, that, "Should I move some of that budget "to build up an Azure Stack versus building a new building?" No one thought two years back that IT will be actually competing with the construction. It's very weird to think of that way. One of the key reasons, when you ask them, is, look, Amazon is there, but I cannot just go there. I need that flexibility, but I need it on my own terms, and that this makes sense for me. We are partnering with people like Microsoft to create those. We are doing innovations on a platform itself from the compute all the way to the networking, so as you asked earlier, we own, enter, and stack, whether it is compute, storage, or networking, we have our own IP around it, so we can really create that security across the platform. We are not trying to create an island for customers where you have to work towards the propriety solution because that's totally against the whole cloud model then. That's why we partner with Microsoft. We are partners with VMware, we are partners with Nutanix, and then other networking players also, but that helps our clients to get the best of the breed solution, the software, on a best of breed infrastructure. >> Where do you see data privacy right now? I mean, famously, Europeans and Americans look at data privacy very differently, just individually, consumers, also businesses. Edward Snowden, is he a hero, is he a villain? I mean, there's so many questions, and we're still really a society wrestling with all of this. How does Lenovo approach this? You talked about the mindset. >> From a piracy perspective, you see that, we have a very strict policy around the security and, what do you call, the real vicinity of the infrastructure itself. We do unique things inside our infrastructure itself. We control our infrastructure lineup, the manufacturing and everything. We have certain features enabled which are default, like IPv6 for instance, right? It won't let us ever go in a mode where it can be compromised in any way. We bring that into our software stack all the way from the comware. Those kind of things are helping us drive and maintain that piracy issue. >> Julian, Lenovo, of course, has a long history partnering with both Intel and with Microsoft. When I look at the first generation of Azure Stack, there's not a lot of feature differentiation. Microsoft says, "This is the configuration "you're going to offer, lock it in." So why Lenovo, in your mind? Because there's another three companies, two of which have more market share and other positions. What led you down the path of Lenovo? >> For me, it was very much the history that Lenovo and the Lenovo team that they inherited from IBM have got. They led the way when virtualization first came out. I remember when the 440 was released back in 2001, 2002, something like that, people didn't understand why it was being built. It was because they were ahead of the game. They could see that virtualization was coming. I think Lenovo has the edge from a capabilities perspective. The XClarity tool, I think it's the best management tool that's out there right now. And reliability. I've been using their technology for a very long time now, in all it's forms, and you can see why they're number one, because they genuinely hardly ever ... Literally, I can hardly think, in the last six years, we've probably replaced a couple of spinning disks. That's about it. It really is that reliable, actually. >> Julian, want to get your input. You've been looking at the Azure Stack here. Azure Pack's existed for a while. We've been talking about Azure Stack for a couple of years. This'll be a 1.0 release. What does it mean for your business and your customers? Are there things that you're looking at beyond the 1.0 that will expand it even further? >> Yeah, clearly, on the first version, it's not going to have every single feature that you want it to have, but it will have a lot of the things that our clients are calling for right now. I'm speaking to them right now, and they're prepared to wait for the extra features to come along. Right now, they can't get any of it, so we're giving them a big chunk of it, and they will take the extra features as they come along. As to the point you mentioned a little bit earlier about, it is what we're given, that's true, but people want it to be exactly the same as the big one. We don't care that it's not exactly the same. That said, it will be deployed alongside our standard infrastructure and server offering, which we call CloudCore, and again, it's all Lenovo equipment, not just the Azure Stack. We're 100% Flash. We guarantee any workload. We do things very, very slightly differently in a lot of cases, and you combine these two technologies because clearly, the Azure Stack does stuff that CloudCore doesn't, and CloudCore can do stuff that Azure doesn't do, so we actually think we can give a combination there that you wouldn't typically be able to get. Of course, they're right next to each other running at super high speeds, and not different clouds going across much slower high latency links. Lots and lots of positive stuff. >> Shekhar, from your standpoint in product development, what excites you the most about Azure Stack, and what your customers expect today, and what you see in the future from Lenovo? >> You asked a question that, that it's fixed, and is that a constraint? Actually, my view, I feel that, other than minor tweaks, customers actually don't want a lot of variations because that actually simplifies an environment, right? Today, there's a lot of overhead and management. What my group is really focused on is not about so much on what infrastructure layer. It's more about what the end to end solution is, and not just from a point product, but how the customer is consuming in the entire life cycle of it. All the way from when they start thinking about Azure Stack, for instance, how do you make sure that what kind of data is right on Azure and what is not? How do you make sure that, how much of Azure do they really need? How do they make sure that it's going to audit and ship promptly? And then they can deploy it. By the way, once you deploy it, how am I going to maintain it, right? Our onsite professional go and train them. Then, once you have it deployed, how do I do ongoing management? I'm going to have issues. Who is going to help me? Because this is now built with multiple things. We think of all those entrance consumption, and that's what the whole motivation around ThinkAjile is, to make all of that simplified for our clients, all the way from deployment, to support, to management, and things like that. >> Great point on the consistency because, if you ask any customer, "What version of Azure are you running?" they'll laugh at you 'cause Microsoft takes care of that, and you would want the customer environment to be similar. >> For us, the fact that they're actually going to come and commission it for us is one less thing I have to organize, I have to resource. Literally, the rack turns up, they do the commission, and give us two cables to plug into our core switches, and away we go. The time to delivery is far quicker for us. As we want to roll these out quite quickly around the globe, with everything else that we are up to at the moment, that's another massive plus for us. We actually like the fact that it's coming in this set form, and these guys are going to look after it for us at that lower level, and we're operating, run it with our clients, and that, again, is huge benefit for us. >> Julian, Shekhar, thank you so much for joining us. It's been a pleasure. >> [Julian And Shekhar] Thank you. >> I'm Rebecca Knight for Stu Miniman. We will have more from Lenovo Transform after this. (upbeat electronic music)

>> Narrator: Live from Las Vegas. It's the Cube covering Dell EMC World 2017. Brought to you by Dell EMC. >> Welcome back everyone, we are live here in Las Vegas for Dell EMC World 2017. I'm John Furrier with the Cube, and my co-host here is Keith Townsend, @CTOAdvisor on Twitter. Our next guest is David Goulden, the president of Dell EMC infrastructure business. Great to see you. Our eighth consecutive year covering EMC World, now Dell EMC World, the first Dell EMC World, kind of a seminal moment watershed event here. You've been to all of them, you've seen the movie with EMC now. Now eight months after the close, it's Dell EMC World, but it still feels like EMC World. What's your reaction, I mean, all the same? >> No, John, it's very different, it may maybe because it's in Vegas and it's in May. So those two things are common, but the content, the breadth of the message, you mentioned it, it's eight, nine months after the closing transaction, but of course bear in mind, we had a year before that of planning after we announced, so it's really quite some time into the concept of this transaction and to a larger extent, this week for us is the coming out party. It gives us a chance to demonstrate to the world what we've spent the last nine months and the year before that planning and doing, and actually investing in, and you saw just from my remarks this morning the breadth of technology we're bringing to our customers, and the amount of innovation, and the better together story coming real, I think it's exciting. >> You know, David, I'm always complimenting you and talking behind your back when you're not around as well, but the compliment is, you're a great operational person but you're also a strategic chess player as well in terms of the industry. The Dell EMC strategy's pretty clear on the existing traditional infrastructure, data center, whatever you want to call it. It's a mature market, it's consolidating, win that business, be the number one supplier in that market, we see that playing out. However, you got to have the growth strategy. That's the future revenues that are going to come down the pipe. Describe for a minute the strategy, 'cause pretty obvious the mature market on the data center is moving to hybrid cloud, and there's a pathway there, so you lock it and load it on that being number one fast 14 generation servers, we see that, cool. Growth strategy, what's the growth strategy for Dell EMC? >> Well, don't rule out growth in on-prem data centers, right, so, let's not put that into pure mature, no growth. >> I mean it's not hockey stick. >> Right, but the market is still a massive marketplace in on-prem data centers. It's true that all the infrastructure growth, so if you look at the infrastructure marketplace, $110 billion dollars that's served by service storing networking data protection. You look at that marketplace in total and you say where's all the growth? The growth is in off-prem, we'll come back to that in a second. But the on-prem, the data center is still over sixty percent of that marketplace. And in total that market isn't growing but the consolidation opportunity you talked about is huge. And segments of it like moving to a private cloud like hyper-converged infrastructure, there are rocket ships occurring inside of that big target adjustable market. That's $60 billion dollars our data center IT spend. So there is growth for us in that. And there is growth in being the largest most capable player to consolidate, pick up share, be stronger in the newer segments than we even were in the more mature segments. So I wouldn't rule off growth there. From an infrastructure point of view, of course there's a lot of growth off-prem. Now off-prem is a very fragmented marketplace. As soon as people think off-premises, they go immediately to the web scale public cloud providers. And they're certainly a part of it, but there's the SAS companies, there is the outsource integrators, the ITS and service companies. There's a huge opportunity there. >> I mean everyone is a cloud service provider. Everyone will be, I mean, Riot Games which does League of Legends, they're a cloud company, right? I mean, everyone's kind of a cloud company or a SAS company these days, or they're trying to get there. >> That's because the whole IT industry's moving to cloud. Because cloud is an operating model, not a place. And cloud is about delivering IT at all levels, application, infrastructure, networking, whatever you think about it. It's delivering IT as a service that can be monitored and metered and charged based upon use. That's a very simple definition of a cloud and everybody wants to do that. Whether you are an on-prem data center, whether you are a third party service provider, everybody wants to offer cloud. So we shouldn't get too confused about the cloud opportunity, it is the redefinition of the IT industry. >> So David as we talked through the opportunity within the data center, one of the obvious things when you look at Dell EMC is the breadth of products, the depth of capability compared to your competitors... Traditional knowledge would tell us that, you know what, you guys have the potential to really dominate this thing, but when you're coming to customers, what's the clear message that you're bringing when it comes to specific products and the core of that growth? >> So the message to customers is we are investing for the longterm and we're investing heavily. Our strategy is not to just be good enough, it's to be the number one, so we don't want to just be the number one market share player, but also have the best technology. So our message to customers is hey, Mr. Customer, Ms. Customer, you've got a lot of things to worry about in your IT world. Ultimately, you want to be providing IT services to your customers. You need an infrastructure partner, you want a company who can be that essential infrastructure company who can provide the vast vast majority of all the things you need to be able to equip your IT shop to provide services to your customers. That's the message, and it's very powerful. Because it spans the client, through the data center, and into the cloud. And it encompasses security and all other elements of the infrastructure plate. So it's a very very powerful message. And the final thought I would tell you is relative to that, is I haven't had a customer in the last two years who told me they want more IT suppliers. They want fewer and they want them to be strategic and more capable. And that's our plate. >> Great, I want to double down on that comment. They don't want more suppliers, I buy that, and I think end-to-end you're seeing architectures, we saw Intel on stage, you're seeing 5G being end-to-end with IOT. They like the end-to-end, they like the supplier consolidation. But the other thing we're hearing in the hallways here at the event is, and this is the question for you because you manage the product portfolio, is I don't want more products, I want less products or skews if you will, whatever you want to call it. So there's a product overlap certainly with the Dell EMC combination, there's been some overlap. People have been talking about that. So how are you managing that? I know we talked about it a little bit last year just getting the roadmap cleaned up, but what specifically are you doing to manage the product overlap with respect to some of the products that kind of are overlapping between the two companies? >> Well first of all, your earlier comment was right. Customers want outcomes, and we'll come back to that. But specifically, relative to your question on overlap. The beauty of this combination is we come with one of everything and two of almost nothing, which is most unusual in a large scale tech merger. The only area we had any overlap was in the mid-tier of our storage family. Where there was the Dell SC Compellents and there was the EMC Unity family. Now, if they'd both been mature at the end of their product cycle, it could have been a longer issue. But the point is they'd just gone through a full investment to create new versions of each one. So what do you do? You roll them out, you support your customers, and you look for convergence opportunities down the road. So we didn't have to make any short term keep one, kill one, type choices because it was a very fortuitous stage. Both had been through that cycle. But that's the only part of the entire portfolio where there's any overlap. The rest is all about... >> And you're saying it's opportunistic for you because there's no real conflicting overlap. >> There's no conflict. We have two mid-range storage products, one from each family. Big deal. Most customers don't want to be confused so if they were a Unity customer we sell them Unity. If they're a Compellent customer, we sell them Compellent and we say don't worry, we're going to bring you a converged solution in the future. It's really quite simple. Everywhere else, Dell came with their technology, EMC came with ours, and we can focus upon how you create the power of more. >> Okay, so back to the end-to-end conversation because you mentioned they want less suppliers is the trend, I agree. >> And more partners. >> Multi-cloud? For technical reasons, latency and things, I think it's not ready for prime time. But certainly the direction, hybrid clouds front and center, I see that. Talking with the CEO of Oracle last week, and his briefing with me, they want to be the supplier. Everybody wants to be the end-to-end supplier. So multi-cloud implies multiple vendors, so there is still a multi-vendor. Can you just share with us your vision on that? Because it's not a one vendor take all world. Certainly an end-to-end life cycle is good, but how are you guys dealing with this multi-vendor, multi-cloud scenario and how should customers look at that in dealing with Dell EMC? >> Well first of all, we didn't say we want to be anybody's exclusive IT provider, we want to be their most strategic. Everybody has a number of IT vendors, and this is one of the challenges that most IT operations have, they have tens of vendors. In some cases they have tens of vendors for just one piece of the stack, like their management tools. So they're looking for fewer, more capable partners. And what we want to do is to position ourselves to be the most strategic amongst their handful of key partners. As it comes to multi-cloud, that all ties back to applications. So this whole conversation about cloud is often mixed up with a question around applications. I was with a customer, a large financial services customer, after lunch we were having a conversation about cloud. I asked them how many applications they had. 6,900. And that by the way, that's after they've done two years of application rationalization. So what they now want to do is figure out a strategy for those applications. Well they're not all going to sit on one cloud, they're going to sit on multiple places. Some will sit upon an internal cloud. They may have a couple different flavors of internal cloud. They're going to have some SAS vendors, they're going to have some public cloud. So multi-cloud is a reality for anybody with more than, let's say, 50 to 100 applications. It's just a way of life, particularly when you take my definition of cloud or our definition of cloud as being an offering bowl and our place. >> In the final minutes we have I know Keith's got another question that he wants to ask, but I got to ask you, 'cause you've been on the EMC side, you've been running that business with the team there, the federation over the years. You had a good trajectory, you looked at the roadmap, you've seen the growth rates. Now with the combination, I'd like you to spend a minute talking about what's different now and be specific, because now you have so much more opportunity on the revenue side with the combination. So talk about, and Michael made a comment to me just now this morning, they're winning more business. So you're winning business, you're seeing some successes, NSX with VMWare is doing great, the convergence stuff is going great, got some good product announcements. What specific wins are you having that illustrate this new growth opportunity that wasn't there before the combination? >> We're having a number of wins. We're having a number of situations where, in the data center for example, a strong dell server customer may not have much EMC storage, and we're winning the storage footprint. Conversely, we're having a lot of wins where we've got a strong storage footprint in the data center with EMC's strength and we're winning significant server deals on the back of that. So we're seeing this cross synergy occurring just on the back of having a number one position on both sides. We're also seeing our ability to bring brand new products to the market like VxRail that includes a PowerEdge, that includes VMware, that includes EMC software. So we're winning because we have the broader portfolio, and we're winning because we're creating new products to leverage the best of both. And of course, a big piece of what I talked about this morning was 14G service. That is going to be the next generation bedrock of the data center. We'll incorporate that across our entire portfolio. >> Why is that important? Quickly, what's the value proposition? >> What's the value proposition for 14G? >> Yeah. >> It's been designed for the digital transformation of the future. It's been designed not only to host existing applications but to host those scale-out high performance applications of the future. And we can uniquely provide the scalability, the performance, the security those applications need. So it's built for the next generation. It's built thinking about things like machine learning, deep learning, artificial intelligence. It's the platform for those applications, and that's really powerful to have that inside the portfolio. >> So David, digital transformation, a lot of time to value, a lot of buzzwords I've heard today that I've generally heard from my management consultant days. Dell EMC is now the leader in the infrastructure space. You guys are now having conversations with much different people. CMO, COO, CEO, CIO... What lends Dell technologies, Dell EMC, the credibility to come to these new contacts within enterprise? >> Keith, I'd say a couple things. So first of all, we have the world's most advanced platform as a service tool with Pivotal. There are more cloud native applications being built on the Pivotal framework than any other single framework out there. >> Keith: I'm a big fan of Pivotal. >> So am I. And it lets customers become software businesses and everybody talks about becoming a software business. And it creates not just a platform but a toolkit, and also through Pivotal labs, the ability to train people. So Pivotal gives us the credibility to have that software conversation. And then on the back of Pivotal, and just on the back of what we're doing in the infrastructure business, we recognize that there's IT transformation and there's digital transformation. And we're building infrastructure that is aligned to support both of those. So we're building applications for big data Hadoop. We're building infrastructure for IOT. We're building applications for next generation digital transformations. So the infrastructure side of the business is able to address IT transformation and digital transformation at an infrastructure layer and then we've got the best tool out there for the digital transformation applications. So I think that gives us a lot of credibility, and so we're having that conversation. >> David final question, take your president of Dell EMC hat off for a second and put your personal David Goulden hat on. And I'd like to have you just reflect in your own words what surprises you about this combination? It's been historic, you've got the entrepreneurial led CEO Michael Dell, your private. It feels good, we haven't heard really any horror stories about the integrations. There's been some bumps but no major horror stories, so congratulations. But in your own words, what's the biggest surprise that you've seen given the history you have with EMC and as the senior executive at Dell EMC, what's the biggest surprise that folks might not know about in this massive combination? >> I think you've hit upon a couple of them, John. So one, we planned for contingencies that didn't happen. You put a big merger together you expect some things to go wrong in the night. They didn't, touch wood. So that perhaps is an attribute to the planning and the integration that went on. And then on the other side, it's just how quickly we've been able to bring things together. I thought it was going to take us another six to nine months before we could really have customers turn around to us and say we are now viewing you as our most strategic partner. And that's happening to me today, and I really didn't think we'd be there within the first Dell EMC World. I thought it would be the Dell EMC World a year later when we could have those conversations. I think when you just look at the amount of innovation and the progress we've made in a short period of time, because I think what's happened here is we've hit a little bit on an inflection point. We are touching upon a real requirement those customers have, and maybe even more than we ever realized. They really want a technology innovator who is broadly based, who is not constrained by some of the conventional models out there who can push the envelope with them. >> You must have those moments where you kind of pinch yourself and say wow, look where we are, kind of how the industry's changed over the years, how you guys have a nice pole position. Interesting times. >> We're excited about it and we think, also more importantly, we're playing a long term game. We view that in three to five years time the industry becomes even more consolidated. And we think that we have this unique position as this essential infrastructure broad based platform company that can just continue to grow from here. >> Michael Dell says the same thing, Jeff Bezos at Amazon, ten years of innovation is what it pretty much takes to kind of make things happen. Congratulations on your success David, great to see you inside the Cube. >> Thank you. >> Thanks for your candid commentary. We really don't talk behind your back, I mentioned that earlier. We have to say good things about you. David Goulden, president of Dell EMC infrastructure here inside the Cube. I'm John Furrier with Keith Townsend live from Las Vegas, we'll be back with more coverage, stay with us.

>> Narrator: Live from Las Vegas. It's the Cube covering Dell EMC World 2017. Brought to you by Dell EMC. >> Welcome back everyone, we are live here in Las Vegas for Dell EMC World 2017. I'm John Furrier with the Cube, and my co-host here is Keith Townsend, @CTOAdvisor on Twitter. Our next guest is David Goulden, the president of Dell EMC infrastructure business. Great to see you. Our eighth consecutive year covering EMC World, now Dell EMC World, the first Dell EMC World, kind of a seminal moment watershed event here. You've been to all of them, you've seen the movie with EMC now. Now eight months after the close, it's Dell EMC World, but it still feels like EMC World. What's your reaction, I mean, all the same? >> No, John, it's very different, it may maybe because it's in Vegas and it's in May. So those two things are common, but the content, the breadth of the message, you mentioned it, it's eight, nine months after the closing transaction, but of course bear in mind, we had a year before that of planning after we announced, so it's really quite some time into the concept of this transaction and to a larger extent, this week for us is the coming out party. It gives us a chance to demonstrate to the world what we've spent the last nine months and the year before that planning and doing, and actually investing in, and you saw just from my remarks this morning the breadth of technology we're bringing to our customers, and the amount of innovation, and the better together story coming real, I think it's exciting. >> You know, David, I'm always complimenting you and talking behind your back when you're not around as well, but the compliment is, you're a great operational person but you're also a strategic chess player as well in terms of the industry. The Dell EMC strategy's pretty clear on the existing traditional infrastructure, data center, whatever you want to call it. It's a mature market, it's consolidating, win that business, be the number one supplier in that market, we see that playing out. However, you got to have the growth strategy. That's the future revenues that are going to come down the pipe. Describe for a minute the strategy, 'cause pretty obvious the mature market on the data center is moving to hybrid cloud, and there's a pathway there, so you lock it and load it on that being number one fast 14 generation servers, we see that, cool. Growth strategy, what's the growth strategy for Dell EMC? >> Well, don't rule out growth in on-prem data centers, right, so, let's not put that into pure mature, no growth. >> I mean it's not hockey stick. >> Right, but the market is still a massive marketplace in on-prem data centers. It's true that all the infrastructure growth, so if you look at the infrastructure marketplace, $110 billion dollars that's served by service storing networking data protection. You look at that marketplace in total and you say where's all the growth? The growth is in off-prem, we'll come back to that in a second. But the on-prem, the data center is still over sixty percent of that marketplace. And in total that market isn't growing but the consolidation opportunity you talked about is huge. And segments of it like moving to a private cloud like hyper-converged infrastructure, there are rocket ships occurring inside of that big target adjustable market. That's $60 billion dollars our data center IT spend. So there is growth for us in that. And there is growth in being the largest most capable player to consolidate, pick up share, be stronger in the newer segments than we even were in the more mature segments. So I wouldn't rule off growth there. From an infrastructure point of view, of course there's a lot of growth off-prem. Now off-prem is a very fragmented marketplace. As soon as people think off-premises, they go immediately to the web scale public cloud providers. And they're certainly a part of it, but there's the SAS companies, there is the outsource integrators, the ITS and service companies. There's a huge opportunity there. >> I mean everyone is a cloud service provider. Everyone will be, I mean, Riot Games which does League of Legends, they're a cloud company, right? I mean, everyone's kind of a cloud company or a SAS company these days, or they're trying to get there. >> That's because the whole IT industry's moving to cloud. Because cloud is an operating model, not a place. And cloud is about delivering IT at all levels, application, infrastructure, networking, whatever you think about it. It's delivering IT as a service that can be monitored and metered and charged based upon use. That's a very simple definition of a cloud and everybody wants to do that. Whether you are an on-prem data center, whether you are a third party service provider, everybody wants to offer cloud. So we shouldn't get too confused about the cloud opportunity, it is the redefinition of the IT industry. >> So David as we talked through the opportunity within the data center, one of the obvious things when you look at Dell EMC is the breadth of products, the depth of capability compared to your competitors... Traditional knowledge would tell us that, you know what, you guys have the potential to really dominate this thing, but when you're coming to customers, what's the clear message that you're bringing when it comes to specific products and the core of that growth? >> So the message to customers is we are investing for the longterm and we're investing heavily. Our strategy is not to just be good enough, it's to be the number one, so we don't want to just be the number one market share player, but also have the best technology. So our message to customers is hey, Mr. Customer, Ms. Customer, you've got a lot of things to worry about in your IT world. Ultimately, you want to be providing IT services to your customers. You need an infrastructure partner, you want a company who can be that essential infrastructure company who can provide the vast vast majority of all the things you need to be able to equip your IT shop to provide services to your customers. That's the message, and it's very powerful. Because it spans the client, through the data center, and into the cloud. And it encompasses security and all other elements of the infrastructure plate. So it's a very very powerful message. And the final thought I would tell you is relative to that, is I haven't had a customer in the last two years who told me they want more IT suppliers. They want fewer and they want them to be strategic and more capable. And that's our plate. >> Great, I want to double down on that comment. They don't want more suppliers, I buy that, and I think end-to-end you're seeing architectures, we saw Intel on stage, you're seeing 5G being end-to-end with IOT. They like the end-to-end, they like the supplier consolidation. But the other thing we're hearing in the hallways here at the event is, and this is the question for you because you manage the product portfolio, is I don't want more products, I want less products or skews if you will, whatever you want to call it. So there's a product overlap certainly with the Dell EMC combination, there's been some overlap. People have been talking about that. So how are you managing that? I know we talked about it a little bit last year just getting the roadmap cleaned up, but what specifically are you doing to manage the product overlap with respect to some of the products that kind of are overlapping between the two companies? >> Well first of all, your earlier comment was right. Customers want outcomes, and we'll come back to that. But specifically, relative to your question on overlap. The beauty of this combination is we come with one of everything and two of almost nothing, which is most unusual in a large scale tech merger. The only area we had any overlap was in the mid-tier of our storage family. Where there was the Dell SC Compellents and there was the EMC Unity family. Now, if they'd both been mature at the end of their product cycle, it could have been a longer issue. But the point is they'd just gone through a full investment to create new versions of each one. So what do you do? You roll them out, you support your customers, and you look for convergence opportunities down the road. So we didn't have to make any short term keep one, kill one, type choices because it was a very fortuitous stage. Both had been through that cycle. But that's the only part of the entire portfolio where there's any overlap. The rest is all about... >> And you're saying it's opportunistic for you because there's no real conflicting overlap. >> There's no conflict. We have two mid-range storage products, one from each family. Big deal. Most customers don't want to be confused so if they were a Unity customer we sell them Unity. If they're a Compellent customer, we sell them Compellent and we say don't worry, we're going to bring you a converged solution in the future. It's really quite simple. Everywhere else, Dell came with their technology, EMC came with ours, and we can focus upon how you create the power of more. >> Okay, so back to the end-to-end conversation because you mentioned they want less suppliers is the trend, I agree. >> And more partners. >> Multi-cloud? For technical reasons, latency and things, I think it's not ready for prime time. But certainly the direction, hybrid clouds front and center, I see that. Talking with the CEO of Oracle last week, and his briefing with me, they want to be the supplier. Everybody wants to be the end-to-end supplier. So multi-cloud implies multiple vendors, so there is still a multi-vendor. Can you just share with us your vision on that? Because it's not a one vendor take all world. Certainly an end-to-end life cycle is good, but how are you guys dealing with this multi-vendor, multi-cloud scenario and how should customers look at that in dealing with Dell EMC? >> Well first of all, we didn't say we want to be anybody's exclusive IT provider, we want to be their most strategic. Everybody has a number of IT vendors, and this is one of the challenges that most IT operations have, they have tens of vendors. In some cases they have tens of vendors for just one piece of the stack, like their management tools. So they're looking for fewer, more capable partners. And what we want to do is to position ourselves to be the most strategic amongst their handful of key partners. As it comes to multi-cloud, that all ties back to applications. So this whole conversation about cloud is often mixed up with a question around applications. I was with a customer, a large financial services customer, after lunch we were having a conversation about cloud. I asked them how many applications they had. 6,900. And that by the way, that's after they've done two years of application rationalization. So what they now want to do is figure out a strategy for those applications. Well they're not all going to sit on one cloud, they're going to sit on multiple places. Some will sit upon an internal cloud. They may have a couple different flavors of internal cloud. They're going to have some SAS vendors, they're going to have some public cloud. So multi-cloud is a reality for anybody with more than, let's say, 50 to 100 applications. It's just a way of life, particularly when you take my definition of cloud or our definition of cloud as being an offering bowl and our place. >> In the final minutes we have I know Keith's got another question that he wants to ask, but I got to ask you, 'cause you've been on the EMC side, you've been running that business with the team there, the federation over the years. You had a good trajectory, you looked at the roadmap, you've seen the growth rates. Now with the combination, I'd like you to spend a minute talking about what's different now and be specific, because now you have so much more opportunity on the revenue side with the combination. So talk about, and Michael made a comment to me just now this morning, they're winning more business. So you're winning business, you're seeing some successes, NSX with VMWare is doing great, the convergence stuff is going great, got some good product announcements. What specific wins are you having that illustrate this new growth opportunity that wasn't there before the combination? >> We're having a number of wins. We're having a number of situations where, in the data center for example, a strong dell server customer may not have much EMC storage, and we're winning the storage footprint. Conversely, we're having a lot of wins where we've got a strong storage footprint in the data center with EMC's strength and we're winning significant server deals on the back of that. So we're seeing this cross synergy occurring just on the back of having a number one position on both sides. We're also seeing our ability to bring brand new products to the market like VxRail that includes a PowerEdge, that includes VMware, that includes EMC software. So we're winning because we have the broader portfolio, and we're winning because we're creating new products to leverage the best of both. And of course, a big piece of what I talked about this morning was 14G service. That is going to be the next generation bedrock of the data center. We'll incorporate that across our entire portfolio. >> Why is that important? Quickly, what's the value proposition? >> What's the value proposition for 14G? >> Yeah. >> It's been designed for the digital transformation of the future. It's been designed not only to host existing applications but to host those scale-out high performance applications of the future. And we can uniquely provide the scalability, the performance, the security those applications need. So it's built for the next generation. It's built thinking about things like machine learning, deep learning, artificial intelligence. It's the platform for those applications, and that's really powerful to have that inside the portfolio. >> So David, digital transformation, a lot of time to value, a lot of buzzwords I've heard today that I've generally heard from my management consultant days. Dell EMC is now the leader in the infrastructure space. You guys are now having conversations with much different people. CMO, COO, CEO, CIO... What lends Dell technologies, Dell EMC, the credibility to come to these new contacts within enterprise? >> Keith, I'd say a couple things. So first of all, we have the world's most advanced platform as a service tool with Pivotal. There are more cloud native applications being built on the Pivotal framework than any other single framework out there. >> Keith: I'm a big fan of Pivotal. >> So am I. And it lets customers become software businesses and everybody talks about becoming a software business. And it creates not just a platform but a toolkit, and also through Pivotal labs, the ability to train people. So Pivotal gives us the credibility to have that software conversation. And then on the back of Pivotal, and just on the back of what we're doing in the infrastructure business, we recognize that there's IT transformation and there's digital transformation. And we're building infrastructure that is aligned to support both of those. So we're building applications for big data Hadoop. We're building infrastructure for IOT. We're building applications for next generation digital transformations. So the infrastructure side of the business is able to address IT transformation and digital transformation at an infrastructure layer and then we've got the best tool out there for the digital transformation applications. So I think that gives us a lot of credibility, and so we're having that conversation. >> David final question, take your president of Dell EMC hat off for a second and put your personal David Goulden hat on. And I'd like to have you just reflect in your own words what surprises you about this combination? It's been historic, you've got the entrepreneurial led CEO Michael Dell, your private. It feels good, we haven't heard really any horror stories about the integrations. There's been some bumps but no major horror stories, so congratulations. But in your own words, what's the biggest surprise that you've seen given the history you have with EMC and as the senior executive at Dell EMC, what's the biggest surprise that folks might not know about in this massive combination? >> I think you've hit upon a couple of them, John. So one, we planned for contingencies that didn't happen. You put a big merger together you expect some things to go wrong in the night. They didn't, touch wood. So that perhaps is an attribute to the planning and the integration that went on. And then on the other side, it's just how quickly we've been able to bring things together. I thought it was going to take us another six to nine months before we could really have customers turn around to us and say we are now viewing you as our most strategic partner. And that's happening to me today, and I really didn't think we'd be there within the first Dell EMC World. I thought it would be the Dell EMC World a year later when we could have those conversations. I think when you just look at the amount of innovation and the progress we've made in a short period of time, because I think what's happened here is we've hit a little bit on an inflection point. We are touching upon a real requirement those customers have, and maybe even more than we ever realized. They really want a technology innovator who is broadly based, who is not constrained by some of the conventional models out there who can push the envelope with them. >> You must have those moments where you kind of pinch yourself and say wow, look where we are, kind of how the industry's changed over the years, how you guys have a nice pole position. Interesting times. >> We're excited about it and we think, also more importantly, we're playing a long term game. We view that in three to five years time the industry becomes even more consolidated. And we think that we have this unique position as this essential infrastructure broad based platform company that can just continue to grow from here. >> Michael Dell says the same thing, Jeff Bezos at Amazon, ten years of innovation is what it pretty much takes to kind of make things happen. Congratulations on your success David, great to see you inside the Cube. >> Thank you. >> Thanks for your candid commentary. We really don't talk behind your back, I mentioned that earlier. We have to say good things about you. David Goulden, president of Dell EMC infrastructure here inside the Cube. I'm John Furrier with Keith Townsend live from Las Vegas, we'll be back with more coverage, stay with us.

>> Announcer: Big Data Silicon Valley 2017. >> Hey, welcome back, everybody, Jeff Frick here with The Cube. We are live at the historic Pagoda Lounge in San Jose for Big Data SV, which is associated with Strathead Dupe World, across the street, as well as Big Data week, so everything big data is happening in San Jose, we're happy to be here, love the new venue, if you're around, stop by, back of the Fairmount, Pagoda Lounge. We're excited to be joined in this next segment by, who's now become a regular, any time we're at a Big Data event, a Spark event, Holden always stops by. Holden Karau, she's the principal software engineer at IBM. Holden, great to see you. >> Thank you, it's wonderful to be back yet again. >> Absolutely, so the big data meme just keeps rolling, Google Cloud Next was last week, a lot of talk about AI and ML and of course you're very involved in Spark, so what are you excited about these days? What are you, I'm sure you've got a couple presentations going on across the street. >> Yeah, so my two presentations this week, oh wow, I should remember them. So the one that I'm doing today is with my co-worker Seth Hendrickson, also at IBM, and we're going to be focused on how to use structured streaming for machine learning. And sort of, I think that's really interesting, because streaming machine learning is something a lot of people seem to want to do but aren't yet doing in production, so it's always fun to talk to people before they've built their systems. And then tomorrow I'm going to be talking with Joey on how to debug Spark, which is something that I, you know, a lot of people ask questions about, but I tend to not talk about, because it tends to scare people away, and so I try to keep the happy going. >> Jeff: Bugs are never fun. >> No, no, never fun. >> Just picking up on that structured streaming and machine learning, so there's this issue of, as we move more and more towards the industrial internet of things, like having to process events as they come in, make a decision. How, there's a range of latency that's required. Where does structured streaming and ML fit today, and where might that go? >> So structured streaming for today, latency wise, is probably not something I would use for something like that right now. It's in the like sub second range. Which is nice, but it's not what you want for like live serving of decisions for your car, right? That's just not going to be feasible. But I think it certainly has the potential to get a lot faster. We've seen a lot of renewed interest in ML liblocal, which is really about making it so that we can take the models that we've trained in Spark and really push them out to the edge and sort of serve them in the edge, and apply our models on end devices. So I'm really excited about where that's going. To be fair, part of my excitement is someone else is doing that work, so I'm very excited that they're doing this work for me. >> Let me clarify on that, just to make sure I understand. So there's a lot of overhead in Spark, because it runs on a cluster, because you have an optimizer, because you have the high availability or the resilience, and so you're saying we can preserve the predict and maybe serve part and carve out all the other overhead for running in a very small environment. >> Right, yeah. So I think for a lot of these IOT devices and stuff like that it actually makes a lot more sense to do the predictions on the device itself, right. These models generally are megabytes in size, and we don't need a cluster to do predictions on these models, right. We really need the cluster to train them, but I think for a lot of cases, pushing the prediction out to the edge node is actually a pretty reasonable use case. And so I'm really excited that we've got some work going on there. >> Taking that one step further, we've talked to a bunch of people, both like at GE, and at their Minds and Machines show, and IBM's Genius of Things, where you want to be able to train the models up in the cloud where you're getting data from all the different devices and then push the retrained model out to the edge. Can that happen in Spark, or do we have to have something else orchestrating all that? >> So actually pushing the model out isn't something that I would do in Spark itself, I think that's better served by other tools. Spark is not really well suited to large amounts of internet traffic, right. But it's really well suited to the training, and I think with ML liblocal it'll essentially, we'll be able to provide both sides of it, and the copy part will be left up to whoever it is that's doing their work, right, because like if you're copying over a cell network you need to do something very different as if you're broadcasting over a terrestrial XM or something like that, you need to do something very different for satellite. >> If you're at the edge on a device, would you be actually running, like you were saying earlier, structured streaming, with the prediction? >> Right, I don't think you would use structured streaming per se on the edge device, but essentially there would be a lot of code share between structured streaming and the code that you'd be using on the edge device. And it's being vectored out now so that we can have this code sharing and Spark machine learning. And you would use structured streaming maybe on the training side, and then on the serving side you would use your custom local code. >> Okay, so tell us a little more about Spark ML today and how we can democratize machine learning, you know, for a bigger audience. >> Right, I think machine learning is great, but right now you really need a strong statistical background to really be able to apply it effectively. And we probably can't get rid of that for all problems, but I think for a lot of problems, doing things like hyperparameter tuning can actually give really powerful tools to just like regular engineering folks who, they're smart, but maybe they don't have a strong machine learning background. And Spark's ML pipelines make it really easy to sort of construct multiple stages, and then just be like, okay, I don't know what these parameters should be, I want you to do a search over what these different parameters could be for me, and it makes it really easy to do this as just a regular engineer with less of an ML background. >> Would that be like, just for those of us who are, who don't know what hyperparameter tuning is, that would be the knobs, the variables? >> Yeah, it's going to spin the knobs on like our regularization parameter on like our regression, and it can also spin some knobs on maybe the engram sizes that we're using on the inputs to something else, right. And it can compare how these knobs sort of interact with each other, because often you can tune one knob but you actually have six different knobs that you want to tune and you don't know, if you just explore each one individually, you're not going to find the best setting for them working together. >> So this would make it easier for, as you're saying, someone who's not a data scientist to set up a pipeline that lets you predict. >> I think so, very much. I think it does a lot of the, brings a lot of the benefits from sort of the SciPy world to the big data world. And SciPy is really wonderful about making machine learning really accessible, but it's just not ready for big data, and I think this does a good job of bringing these same concepts, if not the code, but the same concepts, to big data. >> The SciPy, if I understand, is it a notebook that would run essentially on one machine? >> SciPy can be put in a notebook environment, and generally it would run on, yeah, a single machine. >> And so to make that sit on Spark means that you could then run it on a cluster-- >> So this isn't actually taking SciPy and distributing it, this is just like stealing the good concepts from SciPy and making them available for big data people. Because SciPy's done a really good job of making a very intuitive machine learning interface. >> So just to put a fine sort of qualifier on one thing, if you're doing the internet of things and you have Spark at the edge and you're running the model there, it's the programming model, so structured streaming is one way of programming Spark, but if you don't have structured streaming at the edge, would you just be using the core batch Spark programming model? >> So at the edge you'd just be using, you wouldn't even be using batch, right, because you're trying to predict individual events, right, so you'd just be calling predict with every new event that you're getting in. And you might have a q mechanism of some type. But essentially if we had this batch, we would be adding additional latency, and I think at the edge we really, the reason we're moving the models to the edge is to avoid the latency. >> So just to be clear then, is the programming model, so it wouldn't be structured streaming, and we're taking out all the overhead that forced us to use batch with Spark. So the reason I'm trying to clarify is a lot of people had this question for a long time, which is are we going to have a different programming model at the edge from what we have at the center? >> Yeah, that's a great question. And I don't think the answer is finished yet, but I think the work is being done to try and make it look the same. Of course, you know, trying to make it look the same, this is Boosh, it's not like actually barking at us right now, even though she looks like a dog, she is, there will always be things which are a little bit different from the edge to your cluster, but I think Spark has done a really good job of making things look very similar on single node cases to multi node cases, and I think we can probably bring the same things to ML. >> Okay, so it's almost time, we're coming back, Spark took us from single machine to cluster, and now we have to essentially bring it back for an edge device that's really light weight. >> Yeah, I think at the end of the day, just from a latency point of view, that's what we have to do for serving. For some models, not for everyone. Like if you're building a website with a recommendation system, you don't need to serve that model like on the edge node, that's fine, but like if you've got a car device we can't depend on cell latency, right, you have to serve that in car. >> So what are some of the things, some of the other things that IBM is contributing to the ecosystem that you see having a big impact over the next couple years? >> So there's a lot of really exciting things coming out of IBM. And I'm obviously pretty biased. I spend a lot of time focused on Python support in Spark, and one of the most exciting things is coming from my co-worker Brian, I'm not going to say his last name in case I get it wrong, but Brian is amazing, and he's been working on integrating Arrow with Spark, and this can make it so that it's going to be a lot easier to sort of interoperate between JVM languages and Python and R, so I'm really optimistic about the sort of Python and R interfaces improving a lot in Spark and getting a lot faster as well. And we're also, in addition to the Arrow work, we've got some work around making it a lot easier for people in R and Python to get started. The R stuff is mostly actually the Microsoft people, thanks Felix, you're awesome. I don't actually know which camera I should have done that to but that's okay. >> I think you got it! >> But Felix is amazing, and the other people working on R are too. But I think we've both been pursuing sort of making it so that people who are in the R or Python spaces can just use like Pit Install, Conda Install, or whatever tool it is they're used to working with, to just bring Spark into their machine really easily, just like they would sort of any other software package that they're using. Because right now, for someone getting started in Spark, if you're in the Java space it's pretty easy, but if you're in R or Python you have to do sort of a lot of weird setup work, and it's worth it, but like if we can get rid of that friction, I think we can get a lot more people in these communities using Spark. >> Let me see, just as a scenario, the R server is getting fairly well integrated into Sequel server, so would it be, would you be able to use R as the language with a Spark execution engine to somehow integrate it into Sequel server as an execution engine for doing the machine learning and predicting? >> You definitely, well I shouldn't say definitely, you probably could do that. I don't necessarily know if that's a good idea, but that's the kind of stuff that this would enable, right, it'll make it so that people that are making tools in R or Python can just use Spark as another library, right, and it doesn't have to be this really special setup. It can just be this library and they point out the cluster and they can do whatever work it wants to do. That being said, the Sequel server R integration, if you find yourself using that to do like distributed computing, you should probably take a step back and like rethink what you're doing. >> George: Because it's not really scale out. >> It's not really set up for that. And you might be better off doing this with like, connecting your Spark cluster to your Sequel server instance using like JDBC or a special driver and doing it that way, but you definitely could do it in another inverted sort of way. >> So last question from me, if you look out a couple years, how will we make machine learning accessible to a bigger and bigger audience? And I know you touched on the tuning of the knobs, hyperparameter tuning, what will it look like ultimately? >> I think ML pipelines are probably what things are going to end up looking like. But I think the other part that we'll sort of see is we'll see a lot more examples of how to work with certain kinds of data, because right now, like, I know what I need to do when I'm ingesting some textural data, but I know that because I spent like a week trying to figure out what the hell I was doing once, right. And I didn't bother to write it down. And it looks like no one else bothered to write it down. So really I think we'll see a lot of tools that look very similar to the tools we have today, they'll have more options and they'll be a bit easier to use, but I think the main thing that we're really lacking right now is good documentation and sort of good books and just good resources for people to figure out how to use these tools. Now of course, I mean, I'm biased, because I work on these tools, so I'm like, yeah, they're pretty great. So there might be other people who are like, Holden, no, you're wrong, we need to rethink everything. But I think this is, we can go very far with the pipeline concept. >> And then that's good, right? The democratization of these things opens it up to more people, you get more creative people solving more different problems, that makes the whole thing go. >> You can like install Spark easily, you can, you know, set up an ML pipeline, you can train your model, you can start doing predictions, you can, people that haven't been able to do machine learning at scale can get started super easily, and build a recommendation system for their small little online shop and be like, hey, you bought this, you might also want to buy Boosh, he's really cute, but you can't have this one. No no no, not this one. >> Such a tease! >> Holden: I'm sorry, I'm sorry. >> Well Holden, that will, we'll say goodbye for now, I'm sure we will see you in June in San Francisco at the Spark Summit, and look forward to the update. >> Holden: I look forward to chatting with you then. >> Absolutely, and break a leg this afternoon at your presentation. >> Holden: Thank you. >> She's Holden Karau, I'm Jeff Frick, he's George Gilbert, you're watching The Cube, we're at Big Data SV, thanks for watching. (upbeat music)