>> 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)

(upbeat music) (air whooshing) >> Good afternoon, cloud nerds, and welcome back to beautiful Las Vegas, Nevada. We are at AWS re:invent day four. Afternoon of day four here on theCUBE. I'm Savannah Peterson, joined by my fabulous cohost, Paul Gillin. Paul, you look sharp today. How you doing? >> Oh, you're just as fabulous, Savannah. You always look sharp. >> I appreciate that. They pay you enough to keep me buttered up over here at- (Paul laughing) It's wonderful. >> You're holding up well. >> Yeah, thank you. I am excited about our next conversation. Two fabulous gentlemen. Please welcome Sam and Monty, welcome to the show. >> Thank you. >> And it was great. Of the PR 2%, the most interesting man alive. (Paul and Savannah laughing) >> In person. Yeah, yeah. >> In the flesh. Our favorite guests so far. So how's the show been for you guys? >> Sam: It's been phenomenal. >> Just spending a lot of time with customers and partners and AWS. It's been great. It's been great. >> It is great. It's really about the community. It feels good to be back. >> Monty: Eating good food, getting my steps in above goals. >> I feel like the balance is good. We walk enough of these convention centers that you can enjoy the libations and the delicious food that's in Las Vegas and still not go home feeling like a cow. It is awesome. It's a win-win. >> To Sam's point though, meeting with customers, meeting with other technology providers that we may be able to partner with. And most importantly, in my role especially, meeting with all of our AWS key stakeholders in the partnership. So yeah, it's been great. >> Everyone's here. It's just different having a conversation in person. Even like us right now. So just in case folks aren't familiar, tell me about Talend. >> Yeah. Well, Talend is a data integration company. We've been around for a while. We have tons of different ways to get data from point A to point B, lots of different sources, lots of different connectors, and it's all about creating accessibility to that data. And then on top of that, we also have a number of solutions around governance, data health, data quality, data observability, which I think is really taking off. And so that's kind of how we're changing the business here. >> Casual change, data and governance. I don't know if anyone's talking about that at all on the snow floor. >> Been on big topic here. We've had a lot of conversations with the customers about that. >> So governance, what new dynamics has the cloud introduced into data governance? >> Well, I think historically, customers have been able to have their data on-prem. They put it into things like data lakes. And now having the flexibility to be able to bring that data to the clouds, it opens up a lot of doors, but it also opens up a lot of risks. So if you think about the chief data officer role, where you have, okay, I want to be able to bring my data to the users. I want to be able to do that at scale, operationally. But at the same time you have a tension then between the governance and the rules that really restrict the way that you can do that. Very strong tension between those two things. >> It really is a delicate balance. And especially as people are trying to accelerate and streamline their cloud projects, a lot to consider. How do you all help them do that? Monty, let's go to you. >> Yeah, we keep saying data, data, what is it really? It's ones and zeros. In this day and age, everything we see, we touch, we do, we either use data, or we create data, and then that... >> Savannah: We are data quite literally. >> We literally are data. And so then what you end up with is all these disparate data silos and different applications with different data, and how do you bring all that together? And that's where customers really struggle. And what we do is we bring it all together, and we make it actionable for the customer. We make it very simple for them to take the data, use it for the outcomes that they're looking for in their business initiatives. >> Expand on that. What do you mean make it actionable? Do you tag it? Do you organize it in some way? What's different about your approach? >> I mean, it's a really flexible platform. And I think we're part of a broader ecosystem. Even internally, we are a data driven company. Coming into the company in April, I was able to come in and get this realtime view of like, "Hey, here's where our teams are." And it's all in front of me in a Tableau dashboard that's populated from Talend integration, bringing data out of our different systems, different systems like Workday where we're giving offers out to people. And so everything from managing headcount to where our AWS spend is, all of that stuff. >> Now, we've heard a lot of talk about data and in fact the keynote yesterday that was focused mainly on data and getting data out of silos. How do you play with AWS in that role? Because AWS has other data integration partners. >> Sam: For sure. >> What's different about your relationship? Yeah. >> Go ahead. >> Yeah, we've had a strong relationship with AWS for many years now. We've got more than 80 connectors into the different AWS services. So we're not new to the AWS game. We align with the sales teams, we align with the partner teams, and then of course, we align with all the different business units and verticals so that we can enact that co-sell motion together with AWS. >> Sam: Yeah. And I think from our product standpoint, again, just being a hyper flexible platform, being able to put, again, any different type of source of data, to any type of different destination, so things like Redshift, being able to bring data into those cloud data warehouses is really how we do that. And then I think we have between bringing data from A to B, we're also able to do that along a number of different dimensions. Whether that's just like, "Hey, we just need to do this once a day to batch, all the way down to event driven things, streaming and the like. >> That customization must be really valuable for your customers as well. So one of the big themes of the show has been cost reduction. Obviously with the economic times as we're potentially dipping our toes into as well, is just in general, always wanting to increase margins. How do you help customers cut cost? >> Well, it's cost cutting, but it's also speed to market. The faster you can get a product to market, the faster you can help your customers. Let's say healthcare life sciences, pharmaceutical companies, patient outcomes. >> Great and timely example there. >> Patient outcomes, how do they get drugs to market quicker? Well, AstraZeneca leveraged our platform along with AWS. And they even said >> Cool. >> for every dollar that they spend on data initiatives, they get $40 back. That's a billion dollars >> Wow. >> savings by getting a drug to market one month faster. >> Everybody wins. >> How do you accelerate that process? >> Well, by giving them the right data, taking all the massive data that I mentioned, siloed in everywhere, and making it so that the data scientists can take all of this data and make use of it, makes sense of it, and move their drug production along much quicker. >> Yeah. And I think there's other things too like being very flexible in the way that it's deployed. Again, I think like you have this historical story of like, it takes forever for data to get updated, to get put together. >> Savannah: I need it now. And in context. >> And I think where we're coming from is almost more of a developer focus where your jobs are able to be deployed in any way you want. If you want to containerize those, you want to scale them, you need to schedule them that way. We plug into a lot of different ecosystems. I think that's a differentiation as well. >> I want to hang out on this one just for a second 'cause it's such a great customer success story and so powerful. I mean, in VC land, if you can take a dollar and make two, they'll give you a 10x valuation, 40. That is so compelling. I mean, do you think other customers could expect that kind of savings? A billion dollars is nothing to laugh at especially when we're talking about developing a vaccine. Yeah, go for it, Sam. >> It really depends on the use case. I think what we're trying to do is being able to say, "Hey, it's not just about cost cutting, but it's about tailoring the offerings." We have other customers like major fast food vendors. They have mobile apps and when you pull up that mobile app and you're going to do a delivery, they want to be able to have a customized offering. And it's not like mass market, 20% off. It's like, they want to have a very tailored offer to that customer or to that person that's pulling open that app. And so we're able to help them architect and bring that data together so that it's immediately available and reliable to be able to give those promotions. >> We had ARP on the show yesterday. We're talking about 50 million subscribers and how they customize each one of their experiences. We all want it to be about us. We don't want that generic at... Yeah, go for it, Paul. >> Oh, okay. >> Yeah. >> Well, I don't want to break break the rhythm here, but one area where you have differentiated, about two years ago you introduced something called the trust score. >> Sam: Yeah. >> Can you explain what that is and how that has resonated with your customers? >> Yeah, let's talk about this. >> Yeah, the thing about the trust score is, how many times have you gotten a set of data? And you look at it and you say, "Where did you get this data? Something doesn't look right here." And with the trust score, what we're able to do is quantify and value the different attributes of the data. Whether it's how much this is being used. We can profile the data, and we have a trust score that runs over time where you can actually then look at each of these data sets. You can look at aggregates of data sets to then say... If you're the data engineer, you can say, "Oh my, something has gone wrong with this particular dataset." Go in, quickly pull up the data. You can see if some third party integration has polluted your data source. I mean, this happens all the time. And I think if you sort of compare this to the engineering world, you're always looking to solve those problems sooner, earlier in the chain. You don't want your consumer calling you saying, "Hey, I've got a problem with the data, or I've got a problem- >> You don't want them to know there was ever a problem in theory. >> Yeah, the trust score helps those data engineers and those people that are taking care of the data address those problems sooner. >> How much data does somebody need to be able to get to the point where they can have a trust score? If you know what I'm trying to say. How do we train that? >> I mean, it can be all the way from just like a single data source that's getting updated, all the way to very large complex ones. That's where we've introduced this hierarchy of data sets. So it's not just like, "Hey, you've got a billion data sources here and here are the trust scores." But it's like, you can actually architect this to say like, "Okay, well, I have these data sets that belong to finance." And then finance will actually get, "Here's the trust score for these data sets that they rely on." >> What causes datasets to become untrustworthy? >> Yeah. Yeah. I mean, it happens all the time. >> A of different things, right? >> In my history, in the different companies that I've been at, on the product side, we have seen different integrations that maybe somebody changes something. In upstream, some of those integrations can actually be quite brittle. And as a consumer of that data, it's not necessarily your fault, but that data ends up getting put into your production database. All of a sudden your data engineering team is spending two days unwinding those transactions, fixing the data that's in there. And all the while, that bad data that's in your production system, is causing a problem for somebody that is ultimately relying on that. >> Is that usually a governance problem? >> I think governance is probably a separate set of constraints. This is sort of the tension between wanting to get all of the data available to your consumers versus wanting to have the quality around it as well. >> It's tough balance. And I think that it's really interesting. Everybody wants great data, and you could be making decisions that affect people's wellness, quite frankly. >> For sure. >> Very dramatically if you're ill-informed. So that's very exciting. >> To your point, we are all data. So if the data is bad, we're not going to get the outcomes that we want ultimately, >> I know. We certainly want the best outcomes for ourselves. >> We track that data health for its entire life cycle throughout the process. >> That's cool. And that probably increases your confidence in the trust score as well 'cause you're looking at so much data all the time. You got a smart thing going on over here. I like it. I like it a lot. >> We believe in it and so does AWS because they are a strong partner of ours, and so do customers. I think we mentioned we've had some phenomenal customer conversations along with- >> What a success story and case study. I want to dust your shoulders off right now if I wasn't tethered in. That's super impressive. So what's next for you all? >> Yeah, so I think we're going to continue down this path of data health and data governance. Again, I kind of talked about the... you're talking about data health being this differentiator on top of just moving the data around and being really good at that. I think you're also going to have different things around country level or state level governance, literal laws that you need to comply with. And so like- >> Savannah: CCPA- >> I mean, a long list- >> Oodles. Yeah. Yeah, yeah, yeah. >> I think we're going to be doing some interesting things there. We are continuing to proliferate the sources of data that we connect to. We're always looking for the latest and greatest things to put the data into. I think you're going to see some interesting things come out of that too. >> And we continue to grow our relationship with AWS, our already strong relationship. So you can procure Talend products to the AWS marketplace. We just announced Redshift serverless support for Talend. >> All their age. >> Which sounds amazing, but because we've been doing this for so long with AWS, dirty little secret, that was easy for us to do because we're already doing all this stuff. So we made the announcement and everyone was like, "Congratulations." Like, "Thanks." >> Look at you all. Full of the humble brags. I love it. >> Talend has gone through some twists and turns over the last couple of years. Company went private, was purchased by Thoma Bravo about a year and a half ago. At that time, your CEO said that it was a chance to really refocus the company on some core strategic initiatives and move forward. Both of you joined obviously after that happened. But what did you see about sort of the new Talend that attracted you, made you want to come over here? >> For sure. Yeah. I think, when I got a chance to talk to the board and talk to Chris, our chair, we talked about there being the growth thesis behind it. So I think Thoma been a great partner to Talend. I think we're able to do some things internally that would be I think, fairly challenging for companies that are in the public markets right now. I think especially, just a lot of pressure on different prices and the cost capital and all of that. >> Right now. >> That was a really casual way of stating that. But yeah, just a little pressure. >> Little bit of pressure. And who knows? Who knows how long that's going to last, right? But I think we've got a great board in place. They've been very strong strategic partner for us talking about all the different ways that we can grow. I think it's been a good partner for us- >> One of the strengths of Thoma's strategy is synergy between the companies they've acquired. >> Oh, for sure. >> They've acquired about 40 software companies. Are you seeing synergy? You talk to those other companies a lot? >> Yeah, so I have an operating partner. I talk with him on a weekly, sometimes daily basis. If we have questions or like, "Hey, what are you seeing in this space?" We can get plugged in to advisors very quickly. I think it's been a very helpful thing where... otherwise, you're relying on your personal network or things like that. >> This is why Monty was saying it was easy for you guys to go serverless. >> And we keep talking about trust, but in this case, Thoma Bravo really trusts our senior leadership team to make the right decisions that Sam and I are here making as we move forward. It's a great relationship. >> Sam: A good team. >> It sounds like it. All the love. I can feel the love even from you guys talking about it, it's genuine. You're not just getting paid to show this. That's fantastic. >> Are we getting paid for this or... >> Yeah. (Savannah giggling) (Paul laughing) I mean, some folks in the audience are probably going to want your autograph after this, although you get that a lot- >> Pictures are available after- >> Yeah, selfies are 10 bucks. That's how I get my boos budget. So last question for you. We have a challenge here on the theCUBE re:invent. We're looking for your 32nd hot take. Think of it as your thought leadership sizzle reel. Biggest takeaway, key themes from the show or looking forward into 2023? Sam, you're ready to rock, go. >> Yeah, totally. >> I think you're going to continue to hear the tension between being able to bring the data to the masses versus the simplicity and being able to do that in a way that is compliant with all the different laws, and then clean data. It's like a lot of different challenges that arise when you do this at scale. And so I think if you look at the things that AWS is announcing, I think you look at any sort of vendor in the data space are announcing, you see them sort of coming around to that set of ideas. Gives me a lot of confidence in the direction that we're going that we're doing the right stuff and we're meeting customers and prospects and partners, and everybody is like... We kind of get into this conversation and I'll say, "Yeah, that's it. We want to get involved in that." >> You can really feel the momentum. Yeah, it's true. It's great. What about you, Monty? >> I mean, I don't need 30 seconds. I mentioned it. >> Great. >> Between Talend and AWS, we're aligned from the sales teams to the product teams, the partner teams and the alliances. We're just moving forward and growing this relationship. >> I love it. That was perfect. And on that note, Sam, Monty, thank you so much for joining us. >> Yeah, thanks for having us. >> I'm sure your careers are going to continue to be rad at Talend and I can't wait to continue the conversation. >> Sam: Yeah, it's a great team. >> Yeah, clearly. I mean, look at you two. If you're any representation of the culture over there, they're doing something great. (Monty laughing) I thank all of you for tuning in to our nearly... Well, shoot. I think now over 100 interviews at AWS Reinvent in Sin City. We are hanging out here. Paul and I've got a couple more for you. So we hope to see you tuning in with Paul Gillin. I'm Savannah Peterson. You're watching theCUBE, the leader in high tech coverage. (upbeat music)

(upbeat music) >> Good morning everybody. Welcome back to Las Vegas. This is day four of theCUBE's wall-to-wall coverage of our Super Bowl, aka AWS re:Invent 2022. I'm here with my co-host, Paul Gillin. My name is Dave Vellante. Sanjay Poonen is in the house, CEO and president of Cohesity. He's sitting in as our guest market watcher, market analyst, you know, deep expertise, new to the job at Cohesity. He was kind enough to sit in, and help us break down what's happening at re:Invent. But Paul, first thing, this morning we heard from Werner Vogels. He was basically given a masterclass on system design. It reminded me of mainframes years ago. When we used to, you know, bury through those IBM blue books and red books. You remember those Sanjay? That's how we- learned back then. >> Oh God, I remember those, Yeah. >> But it made me think, wow, now you know IBM's more of a systems design, nobody talks about IBM anymore. Everybody talks about Amazon. So you wonder, 20 years from now, you know what it's going to be. But >> Well- >> Werner's amazing. >> He pulled out a 24 year old document. >> Yup. >> That he had written early in Amazon's evolution about synchronous design or about essentially distributed architectures that turned out to be prophetic. >> His big thing was nature is asynchronous. So systems are asynchronous. Synchronous is an illusion. It's an abstraction. It's kind of interesting. But, you know- >> Yeah, I mean I've had synonyms for things. Timeless architecture. Werner's an absolute legend. I mean, when you think about folks who've had, you know, impact on technology, you think of people like Jony Ive in design. >> Dave: Yeah. >> You got to think about people like Werner in architecture and just the fact that Andy and the team have been able to keep him engaged that long... I pay attention to his keynote. Peter DeSantis has obviously been very, very influential. And then of course, you know, Adam did a good job, you know, watching from, you know, having watched since I was at the first AWS re:Invent conference, at time was President SAP and there was only a thousand people at this event, okay? Andy had me on stage. I think I was one of the first guest of any tech company in 2011. And to see now this become like, it's a mecca. It's a mother of all IT events, and watch sort of even the transition from Andy to Adam is very special. I got to catch some of Ruba's keynote. So while there's some new people in the mix here, this has become a force of nature. And the last time I was here was 2019, before Covid, watched the last two ones online. But it feels like, I don't know 'about what you guys think, it feels like it's back to 2019 levels. >> I was here in 2019. I feel like this was bigger than 2019 but some people have said that it's about the same. >> I think it was 60,000 versus 50,000. >> Yes. So close. >> It was a little bigger in 2019. But it feels like it's more active. >> And then last year, Sanjay, you weren't here but it was 25,000, which was amazing 'cause it was right in that little space between Omicron, before Omicron hit. But you know, let me ask you a question and this is really more of a question about Amazon's maturity and I know you've been following them since early days. But the way I get the question, number one question I get from people is how is Amazon AWS going to be different under Adam than it was under Andy? What do you think? >> I mean, Adam's not new because he was here before. In some senses he knows the Amazon culture from prior, when he was running sales and marketing prior. But then he took the time off and came back. I mean, this will always be, I think, somewhat Andy's baby, right? Because he was the... I, you know, sent him a text, "You should be really proud of what you accomplished", but you know, I think he also, I asked him when I saw him a few weeks ago "Are you going to come to re:Invent?" And he says, "No, I want to leave this to be Adam's show." And Adam's going to have a slightly different view. His keynotes are probably half the time. It's a little bit more vision. There was a lot more customer stories at the beginning of it. Taking you back to the inspirational pieces of it. I think you're going to see them probably pulling up the stack and not just focused in infrastructure. Many of their platform services are evolved. Many of their, even application services. I'm surprised when I talk to customers. Like Amazon Connect, their sort of call center type technologies, an app layer. It's getting a lot. I mean, I've talked to a couple of Fortune 500 companies that are moving off Ayer to Connect. I mean, it's happening and I did not know that. So it's, you know, I think as they move up the stack, the platform's gotten more... The data centric stack has gotten, and you know, in the area we're working with Cohesity, security, data protection, they're an investor in our company. So this is an important, you know, both... I think tech player and a partner for many companies like us. >> I wonder the, you know, the marketplace... there's been a big push on the marketplace by all the cloud companies last couple of years. Do you see that disrupting the way softwares, enterprise software is sold? >> Oh, for sure. I mean, you have to be a ostrich with your head in the sand to not see this wave happening. I mean, what's it? $150 billion worth of revenue. Even though the growth rates dipped a little bit the last quarter or so, it's still aggregatively between Amazon and Azure and Google, you know, 30% growth. And I think we're still in the second or third inning off a grand 1 trillion or 2 trillion of IT, shifting not all of it to the cloud, but significantly faster. So if you add up all of the big things of the on-premise world, they're, you know, they got to a certain size, their growth is stable, but stalling. These guys are growing significantly faster. And then if you add on top of them, platform companies the data companies, Snowflake, MongoDB, Databricks, you know, Datadog, and then apps companies on top of that. I think the move to the Cloud is inevitable. In SaaS companies, I don't know why you would ever implement a CRM solution on-prem. It's all gone to the Cloud. >> Oh, it is. >> That happened 15 years ago. I mean, begin within three, five years of the advent of Salesforce. And the same thing in HR. Why would you deploy a HR solution now? You've got Workday, you've got, you know, others that are so some of those apps markets are are just never coming back to an on-prem capability. >> Sanjay, I want to ask you, you built a reputation for being able to, you know, forecast accurately, hit your plan, you know, you hit your numbers, you're awesome operator. Even though you have a, you know, technology degree, which you know, that's a two-tool star, multi-tool star. But I call it the slingshot economy. This is like, I mean I've seen probably more downturns than anybody in here, you know, given... Well maybe, maybe- >> Maybe me. >> You and I both. I've never seen anything like this, where where visibility is so unpredictable. The economy is sling-shotting. It's like, oh, hurry up, go Covid, go, go go build, build, build supply, then pull back. And now going forward, now pulling back. Slootman said, you know, on the call, "Hey the guide, is the guide." He said, "we put it out there, We do our best to hit it." But you had CrowdStrike had issues you know, mid-market, ServiceNow. I saw McDermott on the other day on the, on the TV. I just want to pay, you know, buy from the guy. He's so (indistinct) >> But mixed, mixed results, Salesforce, you know, Octa now pre-announcing, hey, they're going to be, or announcing, you know, better visibility, forward guide. Elastic kind of got hit really hard. HPE and Dell actually doing really well in the enterprise. >> Yep. >> 'Course Dell getting killed in the client. But so what are you seeing out there? How, as an executive, do you deal with such poor visibility? >> I think, listen, what the last two or three years have taught us is, you know, with the supply chain crisis, with the surge that people thought you may need of, you know, spending potentially in the pandemic, you have to start off with your tech platform being 10 x better than everybody else. And differentiate, differentiate. 'Cause in a crowded market, but even in a market that's getting tougher, if you're not differentiating constantly through technology innovation, you're going to get left behind. So you named a few places, they're all technology innovators, but even if some of them are having challenges, and then I think you're constantly asking yourselves, how do you move from being a point product to a platform with more and more services where you're getting, you know, many of them moving really fast. In the case of Roe, I like him a lot. He's probably one of the most savvy operators, also that I respect. He calls these speedboats, and you know, his core platform started off with the firewall network security. But he's built now a very credible cloud security, cloud AI security business. And I think that's how you need to be thinking as a tech executive. I mean, if you got core, your core beachhead 10 x better than everybody else. And as you move to adjacencies in these new platforms, have you got now speedboats that are getting to a point where they are competitive advantage? Then as you think of the go-to-market perspective, it really depends on where you are as a company. For a company like our size, we need partners a lot more. Because if we're going to, you know, stand on the shoulders of giants like Isaac Newton said, "I see clearly because I stand on the shoulders giants." I need to really go and cultivate Amazon so they become our lead partner in cloud. And then appropriately Microsoft and Google where I need to. And security. Part of what we announced last week was, last month, yeah, last couple of weeks ago, was the data security alliance with the biggest security players. What was I trying to do with that? First time ever done in my industry was get Palo Alto, CrowdStrike, Wallace, Tenable, CyberArk, Splunk, all to build an alliance with me so I could stand on their shoulders with them helping me. If you're a bigger company, you're constantly asking yourself "how do you make sure you're getting your, like Amazon, their top hundred customers spending more with that?" So I think the the playbook evolves, and I'm watching some of these best companies through this time navigate through this. And I think leadership is going to be tested in enormously interesting ways. >> I'll say. I mean, Snowflake is really interesting because they... 67% growth, which is, I mean, that's best in class for a company that's $2 billion. And, but their guide was still, you know, pretty aggressive. You know, so it's like, do you, you know, when it when it's good times you go, "hey, we can we can guide conservatively and know we can beat it." But when you're not certain, you can't dial down too far 'cause your investors start to bail on you. It's a really tricky- >> But Dave, I think listen, at the end of the day, I mean every CEO should not be worried about the short term up and down in the stock price. You're building a long-term multi-billion dollar company. In the case of Frank, he has, I think I shot to a $10 billion, you know, analytics data warehousing data management company on the back of that platform, because he's eyeing the market that, not just Teradata occupies today, but now Oracle occupies or other databases, right? So his tam as it grows bigger, you're going to have some of these things, but that market's big. I think same with Palo Alto. I mean Datadog's another company, 75% growth. >> Yeah. >> At 20% margins, like almost rule of 95. >> Amazing. >> When they're going after, not just the observability market, they're eating up the sim market, security analytics, the APM market. So I think, you know, that's, you look at these case studies of companies who are going from point product to platforms and are steadily able to grow into new tams. You know, to me that's very inspiring. >> I get it. >> Sanjay: That's what I seek to do at our com. >> I get that it's a marathon, but you know, when you're at VMware, weren't you looking at the stock price every day just out of curiosity? I mean listen, you weren't micromanaging it. >> You do, but at the end of the day, and you certainly look at the days of earnings and so on so forth. >> Yeah. >> Because you want to create shareholder value. >> Yeah. >> I'm not saying that you should not but I think in obsession with that, you know, in a short term, >> Going to kill ya. >> Makes you, you know, sort of myopically focused on what may not be the right thing in the long term. Now in the long arc of time, if you're not creating shareholder value... Look at what happened to Steve Bomber. You needed Satya to come in to change things and he's created a lot of value. >> Dave: Yeah, big time. >> But I think in the short term, my comments were really on the quarter to quarter, but over a four a 12 quarter, if companies are growing and creating profitable growth, they're going to get the valuation they deserve. >> Dave: Yeah. >> Do you the... I want to ask you about something Arvind Krishna said in the previous IBM earnings call, that IT is deflationary and therefore it is resistant to the macroeconomic headwinds. So IT spending should actually thrive in a deflation, in a adverse economic climate. Do you think that's true? >> Not all forms of IT. I pay very close attention to surveys from, whether it's the industry analysts or the Morgan Stanleys, or Goldman Sachs. The financial analysts. And I think there's a gluc in certain sectors that will get pulled back. Traditional view is when the economies are growing people spend on the top line, front office stuff, sales, marketing. If you go and look at just the cloud 100 companies, which are the hottest private companies, and maybe with the public market companies, there's way too many companies focused on sales and marketing. Way too many. I think during a downsizing and recession, that's going to probably shrink some, because they were all built for the 2009 to 2021 era, where it was all about the top line. Okay, maybe there's now a proposition for companies who are focused on cost optimization, supply chain visibility. Security's been intangible, that I think is going to continue to an investment. So I tell, listen, if you are a tech investor or if you're an operator, pay attention to CIO priorities. And right now, in our business at Cohesity, part of the reason we've embraced things like ransomware protection, there is a big focus on security. And you know, by intelligently being a management and a security company around data, I do believe we'll continue to be extremely relevant to CIO budgets. There's a ransomware, 20 ransomware attempts every second. So things of that kind make you relevant in a bank. You have to stay relevant to a buying pattern or else you lose momentum. >> But I think what's happening now is actually IT spending's pretty good. I mean, I track this stuff pretty closely. It's just that expectations were so high and now you're seeing earnings estimates come down and so, okay, and then you, yeah, you've got the, you know the inflationary factors and your discounted cash flows but the market's actually pretty good. >> Yeah. >> You know, relative to other downturns that if this is not a... We're not actually not in a downturn. >> Yeah. >> Not yet anyway. It may be. >> There's a valuation there. >> You have to prepare. >> Not sales. >> Yeah, that's right. >> When I was on CNBC, I said "listen, it's a little bit like that story of Joseph. Seven years of feast, seven years of famine." You have to prepare for potentially your worst. And if it's not the worst, you're in good shape. So will it be a recession 2023? Maybe. You know, high interest rates, inflation, war in Russia, Ukraine, maybe things do get bad. But if you belt tightening, if you're focused in operational excellence, if it's not a recession, you're pleasantly surprised. If it is one, you're prepared for it. >> All right. I'm going to put you in the spot and ask you for predictions. Expert analysis on the World Cup. What do you think? Give us the breakdown. (group laughs) >> As my... I wish India was in the World Cup, but you can't get enough Indians at all to play soccer well enough, but we're not, >> You play cricket, though. >> I'm a US man first. I would love to see one of Brazil, or Argentina. And as a Messi person, I don't know if you'll get that, but it would be really special for Messi to lead, to end his career like Maradonna winning a World Cup. I don't know if that'll happen. I'm probably going to go one of the Latin American countries, if the US doesn't make it far enough. But first loyalty to the US team, and then after one of the Latin American countries. >> And you think one of the Latin American countries is best bet to win or? >> I don't know. It's hard to tell. They're all... What happens now at this stage >> So close, right? >> is anybody could win. >> Yeah. You just have lots of shots of gold. I'm a big soccer fan. It could, I mean, I don't know if the US is favored to win, but if they get far enough, you get to the finals, anybody could win. >> I think they get Netherlands next, right? >> That's tough. >> Really tough. >> But... The European teams are good too, but I would like to see US go far enough, and then I'd like to see Latin America with team one of Argentina, or Brazil. That's my prediction. >> I know you're a big Cricket fan. Are you able to follow Cricket the way you like? >> At god unearthly times the night because they're in Australia, right? >> Oh yeah. >> Yeah. >> I watched the T-20 World Cup, select games of it. Yeah, you know, I'm not rapidly following every single game but the World Cup games, I catch you. >> Yeah, it's good. >> It's good. I mean, I love every sport. American football, soccer. >> That's great. >> You get into basketball now, I mean, I hope the Warriors come back strong. Hey, how about the Warriors Celtics? What do we think? We do it again? >> Well- >> This year. >> I'll tell you what- >> As a Boston Celtics- >> I would love that. I actually still, I have to pay off some folks from Palo Alto office with some bets still. We are seeing unprecedented NBA performance this year. >> Yeah. >> It's amazing. You look at the stats, it's like nothing. I know it's early. Like nothing we've ever seen before. So it's exciting. >> Well, always a pleasure talking to you guys. >> Great to have you on. >> Thanks for having me. >> Thank you. Love the expert analysis. >> Sanjay Poonen. Dave Vellante. Keep it right there. re:Invent 2022, day four. We're winding up in Las Vegas. We'll be right back. You're watching theCUBE, the leader in enterprise and emerging tech coverage. (lighthearted soft music)

>>Hey guys and girls, welcome back to Motor City, Lisa Martin here with John Furrier on the Cube's third day of coverage of Coon Cloud Native Con North America. John, we've had some great conversations over the last two and a half days. We've been talking about identity and security management as a critical need for enterprises within the cloud native space. We're gonna have another quick conversation >>On that. Yeah, we got a great segment coming up from someone who's been in the industry, a long time expert, running a great company. Now it's gonna be one of those pieces that fits into what we call super cloud. Others are calling cloud operating system. Some are calling just Cloud 2.0, 3.0. But there's definitely a major trend happening around how cloud is going Next generation. We've been covering it. So this segment should be >>Great. Let's unpack those trends. One of our alumni is back with us, O Rika Zi, co-founder and CEO of Aerio. Omri. Great to have you back on the >>Cube. Thank you. Great to be here. >>So identity move to the cloud, Access authorization did not talk to us about why you found it assertive, what you guys are doing and how you're flipping that script. >>Yeah, so back 15 years ago, I helped start Azure at Microsoft. You know, one of the first few folks that you know, really focused on enterprise services within the Azure family. And at the time I was working for the guy who ran all of Windows server and you know, active directory. He called it the linchpin workload for the Windows Server franchise, like big words. But what he meant was we had 95% market share and all of these new SAS applications like ServiceNow and you know, Workday and salesforce.com, they had to invent login and they had to invent access control. And so we were like, well, we're gonna lose it unless we figure out how to replace active directory. And that's how Azure Active Directory was born. And the first thing that we had to do as an industry was fix identity, right? Yeah. So, you know, we worked on things like oof Two and Open, Id Connect and SAML and Jot as an industry and now 15 years later, no one has to go build login if you don't want to, right? You have companies like Odd Zero and Okta and one login Ping ID that solve that problem solve single sign-on, on the web. But access Control hasn't really moved forward at all in the last 15 years. And so my co-founder and I who were both involved in the early beginnings of Azure Active directory, wanted to go back to that problem. And that problem is even bigger than identity and it's far from >>Solved. Yeah, this is huge. I think, you know, self-service has been a developer thing that's, everyone knows developer productivity, we've all experienced click sign in with your LinkedIn or Twitter or Google or Apple handle. So that's single sign on check. Now the security conversation kicks in. If you look at with this no perimeter and cloud, now you've got multi-cloud or super cloud on the horizon. You've got all kinds of opportunities to innovate on the security paradigm. I think this is kind of where I'm hearing the most conversation around access control as well as operationally eliminating a lot of potential problems. So there's one clean up the siloed or fragmented access and two streamlined for security. What's your reaction to that? Do you agree? And if not, where, where am I missing that? >>Yeah, absolutely. If you look at the life of an IT pro, you know, back in the two thousands they had, you know, l d or active directory, they add in one place to configure groups and they'd map users to groups. And groups typically corresponded to roles and business applications. And it was clunky, but life was pretty simple. And now they live in dozens or hundreds of different admin consoles. So misconfigurations are rampant and over provisioning is a real problem. If you look at zero trust and the principle of lease privilege, you know, all these applications have these course grained permissions. And so when you have a breach, and it's not a matter of if, it's a matter of when you wanna limit the blast radius of you know what happened, and you can't do that unless you have fine grained access control. So all those, you know, all those reasons together are forcing us as an industry to come to terms with the fact that we really need to revisit access control and bring it to the age of cloud. >>You guys recently, just this week I saw the blog on Topaz. Congratulations. Thank you. Talk to us about what that is and some of the gaps that's gonna help sarto to fill for what's out there in the marketplace. >>Yeah, so right now there really isn't a way to go build fine grains policy based real time access control based on open source, right? We have the open policy agent, which is a great decision engine, but really optimized for infrastructure scenarios like Kubernetes admission control. And then on the other hand, you have this new, you know, generation of access control ideas. This model called relationship based access control that was popularized by Google Zanzibar system. So Zanzibar is how they do access control for Google Docs and Google Drive. If you've ever kind of looked at a Google Doc and you know you're a viewer or an owner or a commenter, Zanzibar is the system behind it. And so what we've done is we've married these two things together. We have a policy based system, OPPA based system, and at the same time we've brought together a directory, an embedded directory in Topaz that allows you to answer questions like, does this user have this permission on this object? And bringing it all together, making it open sources a real game changer from our perspective, real >>Game changer. That's good to hear. What are some of the key use cases that it's gonna help your customers address? >>So a lot of our customers really like the idea of policy based access management, but they don't know how to bring data to that decision engine. And so we basically have a, you know, a, a very opinionated way of how to model that data. So you import data out of your identity providers. So you connect us to Okta or oze or Azure, Azure Active directory. And so now you have the user data, you can define groups and then you can define, you know, your object hierarchy, your domain model. So let's say you have an applicant tracking system, you have nouns like job, you know, know job descriptions or candidates. And so you wanna model these things and you want to be able to say who has access to, you know, the candidates for this job, for example. Those are the kinds of rules that people can express really easily in Topaz and in assertive. >>What are some of the challenges that are happening right now that dissolve? What, what are you looking at to solve? Is it complexity, sprawl, logic problems? What's the main problem set you guys >>See? Yeah, so as organizations grow and they have more and more microservices, each one of these microservices does authorization differently. And so it's impossible to reason about the full surface area of, you know, permissions in your application. And more and more of these organizations are saying, You know what, we need a standard layer for this. So it's not just Google with Zanzibar, it's Intuit with Oddy, it's Carta with their own oddy system, it's Netflix, you know, it's Airbnb with heed. All of them are now talking about how they solve access control extracted into its own service to basically manage complexity and regain agility. The other thing is all about, you know, time to market and, and tco. >>So, so how do you work with those services? Do you replace them, you unify them? What is the approach that you're taking? >>So basically these organizations are saying, you know what? We want one access control service. We want all of our microservices to call that thing instead of having to roll out our own. And so we, you know, give you the guts for that service, right? Topaz is basically the way that you're gonna go implement an access control service without having to go build it the same way that you know, large companies like Airbnb or Google or, or a car to >>Have. What's the competition look like for you guys? I'm not really seeing a lot of competition out there. Are there competitors? Are there different approaches? What makes you different? >>Yeah, so I would say that, you know, the biggest competitor is roll your own. So a lot of these companies that find us, they say, We're sick and tired of investing 2, 3, 4 engineers, five engineers on this thing. You know, it's the gift that keeps on giving. We have to maintain this thing and so we can, we can use your solution at a fraction of the cost a, a fifth, a 10th of what it would cost us to maintain it locally. There are others like Sty for example, you know, they are in the space, but more in on the infrastructure side. So they solve the problem of Kubernetes submission control or things like that. So >>Rolling your own, there's a couple problems there. One is do they get all the corner cases who built a they still, it's a company. Exactly. It's heavy lifting, it's undifferentiated, you just gotta check the box. So probably will be not optimized. >>That's right. As Bezo says, only focus on the things that make your beer taste better. And access control is one of those things. It's part of your security, you know, posture, it's a critical thing to get right, but you know, I wanna work on access control, said no developer ever, right? So it's kind of like this boring, you know, like back office thing that you need to do. And so we give you the mechanisms to be able to build it securely and robustly. >>Do you have a, a customer story example that is one of your go-tos that really highlights how you're improving developer productivity? >>Yeah, so we have a couple of them actually. So there's the largest third party B2B marketplace in the us. Free retail. Instead of building their own, they actually brought in aer. And what they wanted to do with AER was be the authorization layer for both their externally facing applications as well as their internal apps. So basically every one of their applications now hooks up to AER to do authorization. They define users and groups and roles and permissions in one place and then every application can actually plug into that instead of having to roll out their own. >>I'd like to switch gears if you don't mind. I get first of all, great update on the company and progress. I'd like to get your thoughts on the cloud computing market. Obviously you were your legendary position, Azure, I mean look at the, look at the progress over the past few years. Just been spectacular from Microsoft and you set the table there. Amazon web service is still, you know, thundering away even though earnings came out, the market's kind of soft still. You know, you see the cloud hyperscalers just continuing to differentiate from software to chips. Yep. Across the board. So the hyperscalers kicking ass taking names, doing great Microsoft right up there. What's the future? Cuz you now have the conversation where, okay, we're calling it super cloud, somebody calling multi-cloud, somebody calling it distributed computing, whatever you wanna call it. The old is now new again, it just looks different as cloud becomes now the next computer industry, >>You got an operating system, you got applications, you got hardware, I mean it's all kind of playing out just on a massive global scale, but you got regions, you got all kinds of connected systems edge. What's your vision on how this plays out? Because things are starting to fall into place. Web assembly to me just points to, you know, app servers are coming back, middleware, Kubernetes containers, VMs are gonna still be there. So you got the progression. What's your, what's your take on this? How would you share, share your thoughts to a friend or the industry, the audience? So what's going on? What's, what's happening right now? What's, what's going on? >>Yeah, it's funny because you know, I remember doing this quite a few years ago with you probably in, you know, 2015 and we were talking about, back then we called it hybrid cloud, right? And it was a vision, but it is actually what's going on. It just took longer for it to get here, right? So back then, you know, the big debate was public cloud or private cloud and you know, back when we were, you know, talking about these ideas, you know, we said, well you know, some applications will always stay on-prem and some applications will move to the cloud. I was just talking to a big bank and they basically said, look, our stated objective now is to move everything we can to the public cloud and we still have a large private cloud investment that will never go away. And so now we have essentially this big operating system that can, you know, abstract all of this stuff. So we have developer platforms that can, you know, sit on top of all these different pieces of infrastructure and you know, kind of based on policy decide where these applications are gonna be scheduled. So, you know, the >>Operating schedule shows like an operating system function. >>Exactly. I mean like we now, we used to have schedulers for one CPU or you know, one box, then we had schedulers for, you know, kind of like a whole cluster and now we have schedulers across the world. >>Yeah. My final question before we kind of get run outta time is what's your thoughts on web assembly? Cuz that's getting a lot of hype here again to kind of look at this next evolution again that's lighter weight kind of feels like an app server kind of direction. What's your, what's your, it's hyped up now, what's your take on that? >>Yeah, it's interesting. I mean back, you know, what's, what's old is new again, right? So, you know, I remember back in the late nineties we got really excited about, you know, JVMs and you know, this notion of right once run anywhere and yeah, you know, I would say that web assembly provides a pretty exciting, you know, window into that where you can take the, you know, sandboxing technology from the JavaScript world, from the browser essentially. And you can, you know, compile an application down to web assembly and have it real, really truly portable. So, you know, we see for example, policies in our world, you know, with opa, one of the hottest things is to take these policies and can compile them to web assemblies so you can actually execute them at the edge, you know, wherever it is that you have a web assembly runtime. >>And so, you know, I was just talking to Scott over at Docker and you know, they're excited about kind of bringing Docker packaging, OCI packaging to web assemblies. So we're gonna see a convergence of all these technologies right now. They're kind of each, each of our, each of them are in a silo, but you know, like we'll see a lot of the patterns, like for example, OCI is gonna become the packaging format for web assemblies as it is becoming the packaging format for policies. So we did the same thing. We basically said, you know what, we want these policies to be packaged as OCI assembly so that you can sign them with cosign and bring the entire ecosystem of tools to bear on OCI packages. So convergence is I think what >>We're, and love, I love your attitude too because it's the open source community and the developers who are actually voting on the quote defacto standard. Yes. You know, if it doesn't work, right, know people know about it. Exactly. It's actually a great new production system. >>So great momentum going on to the press released earlier this week, clearly filling the gaps there that, that you and your, your co-founder saw a long time ago. What's next for the assertive business? Are you hiring? What's going on there? >>Yeah, we are really excited about launching commercially at the end of this year. So one of the things that we were, we wanted to do that we had a promise around and we delivered on our promise was open sourcing our edge authorizer. That was a huge thing for us. And we've now completed, you know, pretty much all the big pieces for AER and now it's time to commercially launch launch. We already have customers in production, you know, design partners, and you know, next year is gonna be the year to really drive commercialization. >>All right. We will be watching this space ery. Thank you so much for joining John and me on the keep. Great to have you back on the program. >>Thank you so much. It was a pleasure. >>Our pleasure as well For our guest and John Furrier, I'm Lisa Martin, you're watching The Cube Live. Michelle floor of Con Cloud Native Con 22. This is day three of our coverage. We will be back with more coverage after a short break. See that.

>> From theCUBE Studios in Palo Alto and Boston, bringing you data driven insights from theCUBE and ETR. This is breaking analysis with Dave Vellante. >> The technology spending outlook is not pretty and very much unpredictable right now. The negative sentiment is of course being driven by the macroeconomic factors in earnings forecasts that have been coming down all year in an environment of rising interest rates. And what's worse, is many people think earnings estimates are still too high. But it's understandable why there's so much uncertainty. I mean, technology is still booming, digital transformations are happening in earnest, leading companies have momentum and they got cash runways. And moreover, the CEOs of these leading companies are still really optimistic. But strong guidance in an environment of uncertainty is somewhat risky. Hello and welcome to this week's Wikibon CUBE Insights Powered by ETR. In this breaking analysis, we share takeaways from ETR'S latest spending survey, which was released to their private clients on October 21st. Today, we're going to review the macro spending data. We're going to share where CIOs think their cloud spend is headed. We're going to look at the actions that organizations are taking to manage uncertainty and then review some of the technology companies that have the most positive and negative outlooks in the ETR data set. Let's first look at the sample makeup from the latest ETR survey. ETR captured more than 1300 respondents in this latest survey. Its highest figure for the year and the quality and seniority of respondents just keeps going up each time we dig into the data. We've got large contributions as you can see here from sea level executives in a broad industry focus. Now the survey is still North America centric with 20% of the respondents coming from overseas and there is a bias toward larger organizations. And nonetheless, we're still talking well over 400 respondents coming from SMBs. Now ETR for those of you who don't know, conducts a quarterly spending intention survey and they also do periodic drilldowns. So just by the way of review, let's take a look at the expectations in the latest drilldown survey for IT spending. Before we look at the broader technology spending intentions survey data, followers of this program know that we reported on this a couple of weeks ago, spending expectations that peaked last December at 8.3% are now down to 5.5% with a slight uptick expected for next year as shown here. Now one CIO in the ETR community said these figures could be understated because of inflation. Now that's an interesting comment. Real GDP in the US is forecast to be around 1.5% in 2022. So these figures are significantly ahead of that. Nominal GDP is forecast to be significantly higher than what is shown in that slide. It was over 9% in June for example. And one would interpret that survey respondents are talking about real dollars which reflects inflationary factors in IT spend. So you might say, well if nominal GDP is in the high single digits this means that IT spending is below GDP which is usually not the case. But the flip side of that is technology tends to be deflationary because prices come down over time on a per unit basis, so this would be a normal and even positive trend. But it's mixed right now with prices on hard to find hardware, they're holding more firms. Software, you know, software tends to be driven by lock in and competition and switching costs. So you have those countervailing factors. Services can be inflationary, especially now as wages rise but certain sectors like laptops and semis and NAND are seeing less demand and maybe even some oversupply. So the way to look at this data is on a relative basis. In other words, IT buyers are reporting 280 basis point drop in spending sentiment from the end of last year. Now, something that we haven't shared from the latest drilldown survey which we will now is how IT bar buyers are thinking about cloud adoption. This chart shows responses from 419 IT execs from that drilldown and depicts the percentage of workloads their organizations have in the cloud today and what the expectation is through years from now. And you can see it's 27% today and it's nearly 50% in three years. Now the nuance is if you look at the question, that ETRS, it's they asked about IaaS and PaaS, which to some could include on-prem. Now, let me come back to that. In particular, financial services, IT, telco and retail and services industry cited expectations for the future for three years out that we're well above the average of the mean adoption levels. Regardless of how you interpret this data there's most certainly plenty of public cloud in the numbers. And whether you believe cloud is an operating environment or a place out there in the cloud, there's plenty of room for workloads to move into a cloud model well beyond mid this decade. So you know, as ho hum as we've been toward recent as-a-service models announced from the likes of HPE with GreenLake and Dell with APEX, the timing of those offerings may be pretty good actually. Now let's expand on some of the data that we showed a couple weeks ago. This chart shows responses from 282 execs on actions their organizations are taking over the next three months. And the Deltas are quite traumatic from the early part of this charter than the left hand side. The brown line is hiring freezes, the black line is freezing IT projects, and the green line is hiring increases and that red line is layoffs. And we put a box around the sort of general area of the isolation economy timeframe. And you can see the wild swings on this chart. By mid last summer, people were kickstarting things and more hiring was going on and the black line shows IT project freezes, you know, came way down. And now, or on the way back up as our hiring freezes. So we're seeing these wild swings in organizational actions and strategies which underscores the lack of predictability. As with supply chains around the world, this is likely due to the fact that organizations, pre pandemic they were optimized for efficiency, not a lot of waste rather than business resilience. Meaning, you know, there's again not a lot of fluff in the system or if there was it got flushed out during the pandemic. And so the need for productivity and automation is becoming increasingly important, especially as actions that solely rely on headcount changes are very, very difficult to manage. Now, let's dig into some of the vendor commentary and take a look at some of the names that have momentum and some of the others possibly facing headwinds. Here's a list of companies that stand out in the ETR survey. Snowflake, once again leads the pack with a positive spending outlook. HashiCorp, CrowdStrike, Databricks, Freshworks and ServiceNow, they round out the top six. Microsoft, they seem to always be in the mix, as do a number of other security and related companies including CyberArk, Zscaler, CloudFlare, Elastic, Datadog, Fortinet, Tenable and to a certain extent Akamai, you can kind of put them sort of in that group. You know, CDN, they got to worry about security. Everybody worries about security, but especially the CDNs. Now the other software names that are highlighted here include Workday and Salesforce. On the negative side, you can see Dynatrace saw some negatives in the latest survey especially around its analytics business. Security is generally holding up better than other sectors but it's still seeing greater levels of pressure than it had previously. So lower spend. And defections relative to its observability peers, that's really for Dynatrace. Now the other one that was somewhat surprising is IBM. You see the IBM was sort of in that negative realm here but IBM reported an outstanding quarter this past week with double digit revenue growth, strong momentum in software, consulting, mainframes and other infrastructure like storage. It's benefiting from the Kyndryl restructuring and it's on track IBM to deliver 10 billion in free cash flow this year. Red Hat is performing exceedingly well and growing in the very high teens. And so look, IBM is in the midst of a major transformation and it seems like a company that is really focused now with hybrid cloud being powered by Red Hat and consulting and a decade plus of AI investments finally paying off. Now the other big thing we'll add is, IBM was once an outstanding acquire of companies and it seems to be really getting its act together on the M&A front. Yes, Red Hat was a big pill to swallow but IBM has done a number of smaller acquisitions, I think seven this year. Like for example, Turbonomic, which is starting to pay off. Arvind Krishna has the company focused once again. And he and Jim J. Kavanaugh, IBM CFO, seem to be very confident on the guidance that they're giving in their business. So that's a real positive in our view for the industry. Okay, the last thing we'd like to do is take 12 of the companies from the previous chart and plot them in context. Now these companies don't necessarily compete with each other, some do. But they are standouts in the ETR survey and in the market. What we're showing here is a view that we like to often show, it's net score or spending velocity on the vertical axis. And it's a measure, that's a measure of the net percentage of customers that are spending more on a particular platform. So ETR asks, are you spending more or less? They subtract less from the mores. I mean I'm simplifying, but that's what net score is. Now in the horizontal axis, that is a measure of overlap which is which measures presence or pervasiveness in the dataset. So bigger the better. We've inserted a table that informs how the dots in the companies are positioned. These companies are all in the green in terms of net score. And that right most column in the table insert is indicative of their presence in the dataset, the end. So higher, again, is better for both columns. Two other notes, the red dotted line there you see at 40%. Anything over that indicates an highly elevated spending momentum for a given platform. And we purposefully took Microsoft out of the mix in this chart because it skews the data due to its large size. Everybody else would cluster on the left and Microsoft would be all alone in the right. So we take them out. Now as we noted earlier, Snowflake once again leads with a net score of 64%, well above the 40% line. Having said that, while adoption rates for Snowflake remains strong the company's spending velocity in the survey has come down to Earth. And many more customers are shifting from where they were last year and the year before in growth mode i.e. spending more year to year with Snowflake to now shifting more toward flat spending. So a plus or minus 5%. So that puts pressure on Snowflake's net score, just based on the math as to how ETR calculates, its proprietary net score methodology. So Snowflake is by no means insulated completely to the macro factors. And this was seen especially in the data in the Fortune 500 cut of the survey for Snowflake. We didn't show that here, just giving you anecdotal commentary from the survey which is backed up by data. So, it showed steeper declines in the Fortune 500 momentum. But overall, Snowflake, very impressive. Now what's more, note the position of Streamlit relative to Databricks. Streamlit is an open source python framework for developing data driven, data science oriented apps. And it's ironic that it's net score and shared in is almost identical to those of data bricks, as the aspirations of Snowflake and Databricks are beginning to collide. Now, however, the Databricks net score has held up very well over the past year and is in the 92nd percentile of its machine learning and AI peers. And while it's seeing some softness, like Snowflake in the Fortune 500, Databricks has steadily moved to the right on the X axis over the last several surveys even though it was unable to get to the public markets and do an IPO during the lockdown tech bubble. Let's come back to the chart. ServiceNow is impressive because it's well above the 40% mark and it has 437 shared in on this cut, the largest of any company that we chose to plot here. The only real negative on ServiceNow is, more large customers are keeping spending levels flat. That's putting a little bit pressure on its net score, but that's just conservatives. It's kind of like Snowflakes, you know, same thing but in a larger scale. But it's defections, the ServiceNow as in Snowflake as well. It's defections remain very, very low, really low churn below 2% for ServiceNow, in fact, within the dataset. Now it's interesting to also see Freshworks hit the list. You can see them as one of the few ITSM vendors that has momentum and can potentially take on ServiceNow. Workday, on this chart, it's the other big app player that's above the 40% line and we're only showing Workday HCM, FYI, in this graphic. It's Workday Financials, that offering, is below the 40% line just for reference. Now let's talk about CrowdStrike. We attended Falcon last month, CrowdStrike's user conference and we're very impressed with the product visio, the company's execution, it's growing partnerships. And you can see in this graphic, the ETR survey data confirms the company's stellar performance with a net score at 50%, well above the 40% mark. And importantly, more than 300 mentions. That's second only to ServiceNow, amongst the 12 companies that we've chosen to highlight here. Only Microsoft, which is not shown here, has a higher net score in the security space than CrowdStrike. And when it comes to presence, CrowdStrike now has caught up to Splunk in terms of pervasion in the survey. Now CyberArk and Zscaler are the other two security firms that are right at that 40% red dotted line. CyberArk for names with over a hundred citations in the security sector, is only behind Microsoft and CrowdStrike. Zscaler for its part in the survey is seeing strong momentum in the Fortune 500, unlike what we said for Snowflake. And its pervasion on the X-axis has been steadily increasing. Again, not that Snowflake and CrowdStrike compete with each other but they're too prominent names and it's just interesting to compare peers and business models. Cloudflare, Elastic and Datadog are slightly below the 40% mark but they made the sort of top 12 that we showed to highlight here and they continue to have positive sentiment in the survey. So, what are the big takeaways from this latest survey, this really quick snapshot that we've taken. As you know, over the next several weeks we're going to dig into it more and more. As we've previously reported, the tide is going out and it's taking virtually all the tech ships with it. But in many ways the current market is a story of heightened expectations coming down to Earth, miscalculations about the economic patterns and the swings and imperfect visibility. Leading Barclays analyst, Ramo Limchao ask the question to guide or not to guide in a recent research note he wrote. His point being, should companies guide or should they be more cautious? Many companies, if not most companies, are actually giving guidance. Indeed, when companies like Oracle and IBM are emphatic about their near term outlook and their visibility, it gives one confidence. On the other hand, reasonable people are asking, will the red hot valuations that we saw over the last two years from the likes of Snowflake, CrowdStrike, MongoDB, Okta, Zscaler, and others. Will they return? Or are we in for a long, drawn out, sideways exercise before we see sustained momentum? And to that uncertainty, we add elections and public policy. It's very hard to predict right now. I'm sorry to be like a two-handed lawyer, you know. On the one hand, on the other hand. But that's just the way it is. Let's just say for our part, we think that once it's clear that interest rates are on their way back down and we'll stabilize it under 4% and we have clarity on the direction of inflation, wages, unemployment and geopolitics, the wild swings and sentiment will subside. But when that happens is anyone's guess. If I had to peg, I'd say 18 months, which puts us at least into the spring of 2024. What's your prediction? You know, it's almost that time of year. Let's hear it. Please keep in touch and let us know what you think. Okay, that's it for now. Many thanks to Alex Myerson. He is on production and he manages the podcast for us. Ken Schiffman as well is our newest addition to the Boston Studio. Kristin Martin and Cheryl Knight, they help get the word out on social media and in our newsletters. And Rob Hoff is our EIC, editor-in-chief over at SiliconANGLE. He does some wonderful editing for us. Thank you all. Remember all these episodes, they are available as podcasts. Wherever you listen, just search breaking analysis podcast. I publish each week on wikibon.com and siliconangle.com. Or you can email me at david.vellante@siliconangle.com or DM me @dvellante. Or feel free to comment on our LinkedIn posts. And please do check out etr.ai. They've got the best survey data in the enterprise tech business. If you haven't checked that out, you should. It'll give you an advantage. This is Dave Vellante for theCUBE Insights Powered by ETR. Thanks for watching. Be well and we'll see you next time on Breaking Analysis. (soft upbeat music)

>> From theCUBE Studios in Palo Alto in Boston, bringing you data-driven insights from theCUBE and ETR. This is "Breaking Analysis" with Dave Vellante. >> Virtually all tech companies have expressed caution in their respective earnings calls, and why not? I know you're sick in talking about the macroeconomic environment, but it's full of uncertainties and there's no upside to providing aggressive guidance when sellers are in control. They punish even the slightest miss. Moreover, the spending data confirms the softening market across the board, so it's becoming expected that CFOs will guide cautiously. But companies facing execution challenges, they can't hide behind the macro, which is why it's important to understand which firms are best positioned to maintain momentum through the headwinds and come out the other side stronger. Hello, and welcome to this week's Wikibon Cube Insights powered by ETR. In this "Breaking Analysis," we'll do three things. First, we're going to share a high-level view of the spending pinch that almost all sectors are experiencing. Second, we're going to highlight some of those companies that continue to show notably strong momentum and relatively high spending velocity on their platforms, albeit less robust than last year. And third, we're going to give you a peak at how one senior technology leader in the financial sector sees the competitive dynamic between AWS, Snowflake, and Databricks. So I landed on the red eye this morning and opened my eyes, and then opened my email to see this. My Barron's Daily had a headline telling me how bad things are and why they could get worse. The S&P Thursday hit a new closing low for the year. The safe haven of bonds are sucking wind. The market hasn't seemed to find a floor. Central banks are raising rates. Inflation is still high, but the job market remains strong. Oh, not to mention that the US debt service is headed toward a trillion dollars per year, and the geopolitical situation is pretty tense, and Europe seems to be really struggling. Yeah, so the Santa Claus rally is really looking pretty precarious, especially if there's a liquidity crunch coming, like guess why they call Barron's Barron's. Last week, we showed you this graphic ahead of the UiPath event. For months, the big four sectors, cloud, containers, AI, and RPA, have shown spending momentum above the rest. Now, this chart shows net score or spending velocity on specific sectors, and these four have consistently trended above the 40% red line for two years now, until this past ETR survey. ML/AI and RPA have decelerated as shown by the squiggly lines, and our premise was that they are more discretionary than the other sectors. The big four is now the big two: cloud and containers. But the reality is almost every sector in the ETR taxonomy is down as shown here. This chart shows the sectors that have decreased in a meaningful way. Almost all sectors are now below the trend line and only cloud and containers, as we showed earlier, are above the magic 40% mark. Container platforms and container orchestration are those gray dots. And no sector has shown a significant increase in spending velocity relative to October 2021 survey. In addition to ML/AI and RPA, information security, yes, security, virtualizations, video conferencing, outsourced IT, syndicated research. Syndicated research, yeah, those Gartner, IDC, Forrester, they stand out as seemingly the most discretionary, although we would argue that security is less discretionary. But what you're seeing is a share shift as we've previously reported toward modern platforms and away from point tools. But the point is there is no sector that is immune from the macroeconomic environment. Although remember, as we reported last week, we're still expecting five to 6% IT spending growth this year relative to 2021, but it's a dynamic environment. So let's now take a look at some of the key players and see how they're performing on a relative basis. This chart shows the net score or spending momentum on the y-axis and the pervasiveness of the vendor within the ETR survey measured as the percentage of respondents citing the vendor in use. As usual, Microsoft and AWS stand out because they are both pervasive on the x-axis and they're highly elevated on the vertical axis. For two companies of this size that demonstrate and maintain net scores above the 40% mark is extremely impressive. Although AWS is now showing much higher on the vertical scale relative to Microsoft, which is a new trend. Normally, we see Microsoft dominating on both dimensions. Salesforce is impressive as well because it's so large, but it's below those two on the vertical axis. Now, Google is meaningfully large, but relative to the other big public clouds, AWS and Azure, we see this as disappointing. John Blackledge of Cowen went on CNBC this past week and said that GCP, by his estimates, are 75% of Google Cloud's reported revenue and is now only five years behind AWS in Azure. Now, our models say, "No way." Google Cloud Platform, by our estimate, is running at about $3 billion per quarter or more like 60% of Google's reported overall cloud revenue. You have to go back to 2016 to find AWS running at that level and 2018 for Azure. So we would estimate that GCP is six years behind AWS and four years behind Azure from a revenue performance standpoint. Now, tech-wise, you can make a stronger case for Google. They have really strong tech. But revenue is, in our view, a really good indicator. Now, we circle here ServiceNow because they have become a generational company and impressively remain above the 40% line. We were at CrowdStrike with theCUBE two weeks ago, and we saw firsthand what we see as another generational company in the making. And you can see the company spending momentum is quite impressive. Now, HashiCorp and Snowflake have now surpassed Kubernetes to claim the top net score spots. Now, we know Kubernetes isn't a company, but ETR tracks it as though it were just for context. And we've highlighted Databricks as well, showing momentum, but it doesn't have the market presence of Snowflake. And there are a number of other players in the green: Pure Storage, Workday, Elastic, JFrog, Datadog, Palo Alto, Zscaler, CyberArk, Fortinet. Those last ones are in security, but again, they're all off their recent highs of 2021 and early 2022. Now, speaking of AWS, Snowflake, and Databricks, our colleague Eric Bradley of ETR recently held an in-depth interview with a senior executive at a large financial institution to dig into the analytics space. And there were some interesting takeaways that we'd like to share. The first is a discussion about whether or not AWS can usurp Snowflake as the top dog in analytics. I'll let you read this at your at your leisure, but I'll pull out some call-outs as indicated by the red lines. This individual's take was quite interesting. Note the comment that quote, this is my area of expertise. This person cited AWS's numerous databases as problematic, but Redshift was cited as the closest competitors to Snowflake. This individual also called out Snowflake's current cross-cloud Advantage, what we sometimes call supercloud, as well as the value add in their marketplace as a differentiator. But the point is this person was actually making, the point that this person was actually making is that cloud vendors make a lot of money from Snowflake. AWS, for example, see Snowflake as much more of a partner than a competitor. And as we've reported, Snowflake drives a lot of EC2 and storage revenue for AWS. Now, as well, this doesn't mean AWS does not have a strong marketplace. It does. Probably the best in the business, but the point is Snowflake's marketplace is exclusively focused on a data marketplace and the company's challenge or opportunity is to build up that ecosystem and to continue to add partners and create network effects that allow them to create long-term sustainable moat for the company, while at the same time, staying ahead of the competition with innovation. Now, the other comment that caught our attention was Snowflake's differentiators. This individual cited three areas. One, the well-known separation of compute and storage, which, of course, AWS has replicated sort of, maybe not as elegant in the sense that you can reduce the compute load with Redshift, but unlike Snowflake, you can't shut it down. Two, with Snowflake's data sharing capability, which is becoming quite well-known and a key part of its value proposition. And three, its marketplace. And again, key opportunity for Snowflake to build out its ecosystem. Close feature gaps that it's not necessarily going to deliver on its own. And really importantly, create governed and secure data sharing experiences for anyone on the data cloud or across clouds. Now, the last thing this individual addressed in the ETR interview that we'll share is how Databricks and Snowflake are attacking a similar problem, i.e. simplifying data, data sharing, and getting more value from data. The key messages here are there's overlap with these two platforms, but Databricks appeals to a more techy crowd. You open a notebook, when you're working with Databricks, you're more likely to be a data scientist, whereas with Snowflake, you're more likely to be aligned with the lines of business within sometimes an industry emphasis. We've talked about this quite often on "Breaking Analysis." Snowflake is moving into the data science arena from its data warehouse strength, and Databricks is moving into analytics and the world of SQL from its AI/ML position of strength, and both companies are doing well, although Snowflake was able to get to the public markets at IPO, Databricks has not. Now, even though Snowflake is on the quarterly shock clock as we saw earlier, it has a larger presence in the market. That's at least partly due to the tailwind of an IPO, and, of course, a stronger go-to market posture. Okay, so we wanted to share some of that with you, and I realize it's a bit of a tangent, but it's good stuff from a qualitative practitioner perspective. All right, let's close with some final thoughts. Look forward a little bit. Things in the short-term are really hard to predict. We've seen these oversold rallies peter out for the last couple of months because the world is such a mess right now, and it's really difficult to reconcile these counterveiling trends. Nothing seems to be working from a public policy perspective. Now, we know tech spending is softening, but let's not forget it, five to 6% growth. It's at or above historical norms, but there's no question the trend line is down. That said, there are certain growth companies, several mentioned in this episode, that are modern and vying to be generational platforms. They're well-positioned, financially sound, disciplined, with strong cash positions, with inherent profitability. What I mean by that is they can dial down growth if they wanted to, dial up EBIT, but being a growth company today is not what it was a year ago. Because of rising rates, the discounted cash flows are just less attractive. So earnings estimates, along with revenue multiples on these growth companies, are reverting toward the mean. However, companies like Snowflake, and CrowdStrike, and some others are able to still command a relative premium because of their execution and continued momentum. Others, as we reported last week, like UiPath for example, despite really strong momentum and customer spending, have had execution challenges. Okta is another example of a company with strong spending momentum, but is absorbing off zero for example. And as a result, they're getting hit harder from evaluation standpoint. The bottom line is sellers are still firmly in control, the bulls have been humbled, and the traders aren't buying growth tech or much tech at all right now. But long-term investors are looking for entry points because these generational companies are going to be worth significantly more five to 10 years down the line. Okay, that's it for today. Thanks for watching this "Breaking Analysis" episode. Thanks to Alex Myerson and Ken Schiffman on production. And Alex manages our podcast as well. Kristen Martin and Cheryl Knight. They help get the word out on social media and in our newsletters. And Rob Hof is our editor-in-chief over at SiliconANGLE do some wonderful editing for us, so thank you. Thank you all. Remember that all these episodes are available as podcast wherever you listen. All you do is search "Breaking Analysis" podcast. I publish each week on wikibon.com and siliconangle.com and you can email me at david.vellante@siliconangle.com, or DM me @dvellante, or comment on my LinkedIn post. And please check out etr.ai for the very best survey data in the enterprise tech business. This is Dave Vellante for theCUBE Insights, powered by ETR. Thanks for watching, and we'll see you next time on "Breaking Analysis." (gentle music)

(upbeat music) >> Welcome back to The Cube's coverage of Fal.Con 22. I'm Dave Vellante with Dave Nicholson. This is day one of our coverage. We had the big keynotes this morning. Derek Jeter was one of the keynotes. We have a big Yankee fan here: George Kurtz is the co-founder and CEO of CrowdStrike. George, thanks for coming on The Cube. >> It's great to be here. >> Boston fan, you know, I tweeted out Derek Jeter. He broke my heart many times, but I can't hate on Jeter. You got to have respect for the guy. >> Well, I still remember I was in Japan when Boston was down you know, by three games and came back to win. So I've got my own heartbreak as well. >> It did heal some wounds, but it almost changed the rivalry, you know? I mean, >> Yeah. >> Once, it's kind of neutralized it, you know? It's just not as interesting. I mean, I'm a season ticket holder. I go to all the games and Yankee games are great. A lot of it used to be, you would never walk into Fenway park with, you know pin stripes, when today there's as many Yankee fans as there are... >> I know. >> Boston fans. Anyway, at Fenway, I mean. >> Yeah. >> Why did you start CrowdStrike? >> Biggest thing for me was to really change the game in how people were looking at security. And at my previous company, I think a lot of people were buying security and not getting the outcome that they wanted. Not- I got acquired by a company, not my first company. So, to be clear, and before I started CrowdStrike, I was in the antivirus world, and they were spending a lot of money with antivirus vendors but not getting the outcome I thought they should achieve, which is to stop the breach, not just stop malware. And for me, security should be outcome based not sort of product based. And the biggest thing for us was how could we create the sales force of security that was focused on getting the right outcome: stopping the breach. >> And the premise, I've seen it, the unstoppable breach is a myth. No CSOs don't live by that mantra, but you do. How are you doing on that journey? >> Well I think, look, there's no 100% of anything in security, but what we've done is really created a platform that's focused on identifying and stopping breaches as well as now, extending that out into helping IT identify assets and their hygiene and basically providing more visibility into IT assets. So, we talked about the convergence of that. Maybe we'll get into it, but. >> Dave Vellante: Sure. >> We're doing pretty well. And from our standpoint, we've got a lot of customers, almost 20,000, that rely on us day to day to help stop the breach. >> Well, and when you dig into the CrowdStrike architecture, what's so fascinating is, you know, Dave, we've talked about this: agent bad. Well, not necessarily, if you can have a lightweight agent that can scale and support a number of modules, then you can consolidate all these point tools out there. You talked about in your keynote, your pillars, workloads, which really end points >> Right. >> ID, which we're going to talk about. Identity data and network security. You're not a network security specialist, >> Right. >> But the other three, >> Yes. >> You're knocking down. >> Yeah. >> You guys went deep into that today. Talk about that. >> We did, most folks are going to know us for endpoint and Cloud workload protection and visibility. We did an acquisition almost two years to the day on preempt. And that was our identity play, identity threat protection and detection. And that really turned out to be a smart move, because it's the hottest topic right now. If you look at all the breaches over the last couple years, it's all identity based. Big, big talking points in our keynotes today. >> Dave Vellante: Right. >> And then the third area is on data, and data is really the you know, the new currency that people trade in. So how do you identify and protect endpoints and workloads? How do you tie that together with identity, as well as understanding how you connect the dots and the data and where data flows? And that's really been our focus and we continue to deliver on that for customers. >> And you've had a real dogma, I'll call it, about Cloud Native. I've had this conversation with Frank Slootman, "No we're not going to do a halfway house." You, I think, said it really well today. I think it was you who said it. If you've got On-Prem and Cloud, you got two code bases, >> George Kurtz: Right. >> That you got to maintain. >> That's it, yeah. >> And that means you're taking away resources from one or the other. >> That's exactly right. And what a lot of our competitors have done is they started On-Prem as an AV vendor, and then they took what they had and they basically put it in a Cloud instance called a Cloud, which doesn't really scale. And then, you know, where they need to, they basically still keep their On-Prem, and that just diffuses your engineering team. And most of the On-Prem stuff doesn't even have the features of what they're trying to offer from the Cloud. So either you're Cloud Native or you're not. You can't be halfway. >> But it doesn't mean that you can't include and ingest On-Prem data- >> Well, absolutely. >> into your platform, and that's what I think most people just some reason don't seem to understand. >> Well our agents run wherever. They certainly run On-Prem. >> Dave Vellante: Right. Right. >> And they run in the Cloud, they run wherever. But the crowd in the CrowdStrike is the fact that we can crowdsource this threat information at scale into our threat graph, which gives us unique insight, 7 trillion events per week. And you can't do that if you're not Cloud Native. And that crowd gives the, we call, community immunity. We see all kinds of attacks across 176 different countries. That benefit accrues to all of our customers. >> But how do you envision and maintain and preserve a lightweight agent that can support so many modules? As you do more acquisitions and you knock down new areas and bring in new functionality, go after things like operations technology, how is it that you're able to keep that agent lightweight? >> Well, we started as a platform company, meaning that the whole idea was we're going to build a lightweight agent. First iteration had no security capabilities. It was collect data, get it into a common data architecture or threat graph, in one spot. And then once we had the data then we applied AI to it and we created different workflows. So, the first incarnation was get data into the Cloud at scale. And that still holds true today. So if you think about why we can actually have all these different modules without an impact on the performance, it's we collect data one time. It's a threat data, you know? We're not collecting user data, but threat data collection mechanism. Once we have all that data, then we can slice and dice and create other modules. So the new modules never have to even touch the agent 'cause we've already collected the data. >> I'm going to just keep going, Dave, unless you shove your way in. >> No, no, go ahead. No, no, no. I'm waiting to pounce. >> But okay, so, I think, George, but George, I need to ask you about a comment that you made about we're not just shoving it into a data lake. But you are collecting all the data. Can you explain that nuance? >> Yeah. So there's a difference between a collect and forward agent. It means they just collect a bunch of data. They'll probably store it in a lot of space on the endpoint. It's slow and cumbersome, and then they'll forward it up into another data lake. So you have no context going into no context. Our agent is a smart agent, which actually allows us to always track the context of all these processes in what's happening on the endpoint. And it's a mini graph, meaning we keep track of the relationships. And as we ship that contextual information to the Cloud, we never lose that context. And then it goes into the bigger graph database, always with the same level of context. So, we keep the context of each individual workload or endpoint, and then across the Cloud, we have the context of all of those put together. It's massive. And that allows us to create different insights rather than a data lake, which is, you know, you're looking for, you're creating a bigger needle stack looking for needles. >> And I'm envisioning almost an index that is super, super fast. I mean, you're talking about sub, well second kind of near real time responses, correct? >> Absolutely. So a lot of what we do in terms of protection is already pushed down to the endpoint , 'cause it has intelligence and the AI model. And then again, the Cloud is always looking for different anomalies, not only on each individual endpoint or workload, but across the entire spectrum of our customer base. And that's all real time. It continually self-learns from all the data we collect. >> So when, yeah, when you've made these architectural decisions over time, there was a time when saying that you needed to run an agent could be a deal killer somewhere for people who argued against that. >> George Kurtz: Right. >> You've made the right decision there, clearly. Having everything be crowdsourced into Cloud makes perfect sense. Has that, though, posed a challenge from a sovereignty perspective? If you were deploying stuff On-Prem all over the place, you don't need to worry about that. Everything is here >> George Kurtz: Yeah. >> in a given country. How do you address the challenges of sovereignty when these agents are sending data into some sort of centralized Cloud space that crosses boundaries? >> Well, yeah, I guess what we would, let me go back to the beginning. So I started company in 2011 and I had to convince people that delivering endpoint security from the Cloud was going to be a good thing. >> Dave Vellante: Right. (chuckles) >> You know, you go into a Swiss bank and a bunch of other places and they're like, you're crazy. Right? >> Dave Nicholson: Right. >> They all became customers afterwards, right? And you have to just look at what they're doing. And the question I would have in the early days is, well, let me ask you are you using Dropbox, Box? Are you using a Microsoft? You know, what are you using? Well, they're all sending data to the Cloud. So good news! You already have a model, you've already approved that, right? So let's talk about our benefit. And you know, you can either have an adversary steal your data or you can send threat data to our Cloud, which by the way is in a lot of sovereign Clouds that are out there. And when you actually break it down to what we're sending to the Cloud, it's threat data, right? It isn't user files and documents and stuff. It's threat data. So, we work through all of that. And the Cloud is bigger than CrowdStrike. So you look at Sales Force, Service Now, Workday, et cetera. That's being used all over the place, Box, Dropbox. We just tagged onto it. Like why shouldn't security be the platform of record, and why shouldn't CrowdStrike be the platform of record and be the pillar of Cloud security? >> Explain your observability strategy, 'cause you acquired Humio for, I mean, I think it was $400 million, which is a song. >> Yeah. >> And then Reposify is the latest acquisition. I see that as an extension, 'cause it gives you visibility. Is that part of your security, of your observability play? Explain where you do play and don't play. >> Sure. Well observability is a big, you know, fluffy word. Where we play is in probably the first two areas of observability, right? There's five, kind of, pillars. We're focused on event collection. Let's get events from the endpoints. Let's get events from really anywhere in the network. And we can do that with Humio is now log scale. And then the second piece is with our agents, let's get an understanding of their, the asset itself. What is the asset? What state is it in? Does it have vulnerabilities? Does it have, you know, is it running out of disc space? Is it have, does it have a performance issue? Those are really the first two, kind of, areas of observability. We're not in application performance, we're in let's collect data from the endpoint and other sources, and let's understand if the thing is working, right? And that's a huge value for customers. And we can do that because we already have a privileged spot on the endpoint with our agent. >> Got it. Question on the TAM. Like I look at your TAMs, your charts, I love it. You know, generally do. Were you taking known data from you know, firms like IDC >> George Kurtz: Yeah. >> and saying, okay we're going to play there, now we're made this acquisition. We're new modules, now we're playing there. Awesome. I think you got a big TAM. And I guess that's, that's the point. There's no lack of market for you. >> George Kurtz: Right. >> But I do feel like there's this unknown unquantifiable piece of your TAM. IDC can't see it, 'cause they're kind of looking back >> George Kurtz: Right. >> seein' what the market do last year and we'll forecast it out. It's almost, you got to be a futurist to see it. How do you think about your total available market and the opportunity that's out there? >> Well, it's well in excess of 120 billion and we've actually updated that recently. So it's even beyond that. But if you look at all the modules each module has a discreet TAM and again, for what, you know, what we're focused on is how do you give an outcome to a customer? So a lot of the modules map back into specific TAM and product categories. When you add 'em all up and when you look at, you know, some of the new things that we're coming out with, again, it's well in excess of 120 billion. So that's why we like to say like, you know, we're not an endpoint company. We're really, truly a security platform company that was born in the Cloud. And I think if you see the growth rates, and one of the things that we've talked about, and I think you might have pointed out in prior podcasts, is we're the second fastest company to 2 billion dollars in annual recurring revenue, only behind Zoom. And you know I would argue- great company, by the way, a customer- but that was a black Swan event in a pandemic, right? >> Dave Vellante: I'll say! >> Yeah. >> So we are rarefied air when you think about the capabilities that we have and the performance and the TAM that's available to us. >> The other thing I said in my breaking analysis was 'cause you guys aspire to be a generational company. And I think you got a really good shot at being one, but to be a generational company, you have to have an ecosystem. So I'd love you to talk about the ecosystem, but where you want to see it in five years. >> Well, it really is a good point and we are a partner first company. Ecosystem is really important. Cameras probably can't see all the vendors that are here that are our partners, right? It's a big part of this show that we're at. You see a lot of, well, you see some vendors behind us. >> Yep. >> We have to realize in 2022, and I think this is something that we did well and it's my philosophy, is we are not the only game in town. We like to be, and we are, for many companies the security platform on record, but we don't do everything. We talked about network in other areas. We can't do everything. You can't be good and try to do everything. So, for customers today, what they're looking at is best of platform. And in the early days of security, I've been in it over 30 years, it used to be best of breed products, then it was best of suite, now it's best of platform. So what do I mean by that? It means that customers don't want to engineer their own solution. They, like Lego blocks, they want to pull the platforms, and they want to stitch 'em together via API. And they want to say, okay, CrowdStrike works with Okta, works with Zscaler, works with Proofpoint, et cetera. And that's what customers want. So, ecosystem is incredibly important for us. >> Explain that. You mentioned Okta, I had another question for you. I was at Reinforce, and I saw this better together presentation, CrowdStrike and Okta talking about identity. You've got an identity module. Explain to people how you're not competing with Okta. You guys complement each other, there. >> Well, an identity kind of broker, if you will, is basically what Okta does in others, right? So you log in single sign on and you get access. They broker access to all these other applications. >> Dave Vellante: Right. >> That's not what we do. What we do is we look at those endpoints and workloads and domain controllers and directory services and we figure out, are there vulnerabilities and are there threats associated with them? And we call that out. The second piece, which is critical, is we prevent lateral movement. So if credentials are stolen we can prevent those credentials from being laundered or used and moved laterally, which is a key part of how breaches happen. We then create a trust score on those endpoints and workloads. And we basically say, okay, do we think the trust on the endpoint and workload is high or low? Do we think the identity, you know, is it George on the endpoint, or not? We give that a score. And we pass that along to Okta or Ping or whoever, and they then use that as part of their calculus in how they broker access to other resources. So it really is better together. >> So your execution has been stellar. This is my competition question. You obviously have competition out there. I think architecturally, you've got some advantages. You have a great relationship with AWS. I don't know what's going on with Google, but Kevin's up on stage. >> George Kurtz: Yeah. >> They're now part of Google. >> George Kurtz: We have a great relationship with them. >> Microsoft obviously, a competitor. You obviously do some things in, >> Right. >> in Azure. Are you building the security Cloud? >> We are. We think we are, because when you look at the amount of data that we actually ingest, when you look at companies using us for critical decisions and critical protection, not only on their On-Prem, but also in their Cloud environment, and the knowledge we have, we think it is a security Cloud. You know, you had, you had Salesforce and Workday and ServiceNow and each of them had their respective Clouds. When I started the company, there was no security Cloud. You know, it wasn't any of the companies that you know. It wasn't the firewall companies, wasn't the AV companies. And I think we really defined ourselves as the security Cloud. And the level of knowledge and insights we have in our Cloud, I think, are world class. >> But you know, it's a difference of being those- 'cause you mentioned those other, you know, seminal Clouds. They, like Salesforce, Workday, they're building their own Clouds. Maybe not so much Workday, but certainly Salesforce and ServiceNow built their own >> Yeah. >> Clouds, their own data centers. You're building on top of hyperscalers, correct? >> Well, >> Well you have your own data centers, too. >> We have our own data centers, yeah. So when we first started, we started in AWS as many do, and we have a great relationship there. We continue to build out. We are a huge customer and we also have, you know, with data sovereignty and those sort of things, we've got a lot of our sort of data that sits in our private Cloud. So it's a hybrid approach and we think it's the best of both worlds. >> Okay. And you mean you can manage those costs and it's, how do you make the decision? Is it just sovereignty or is it cost as well? >> Well, there's an operational element. There's cost. There's everything. There's a lot that goes into it. >> Right. >> And at the end of the day we want to make sure that we're using the right technology in the right Clouds to solve the right problem. >> Well, George, congratulations on being back in person. That's got to feel good. >> It feels really good. >> Got a really good audience here. I don't know what the numbers are but there's many thousands here, >> Thousands, yeah. >> at the ARIA. Really appreciate your time. And thanks for having The Cube here. You guys built a great set for us. >> Well, we appreciate all you do. I enjoy your programs. And I think hopefully we've given the audience a good idea of what CrowdStrike's all about, the impact we have and certainly the growth trajectory that we're on. So thank you. >> Fantastic. All right, George Kurtz, Dave Vellante for Dave Nicholson. We're going to wrap up day one. We'll be back tomorrow, first thing in the morning, live from the ARIA. We'll see you then. (calm music)

>> Welcome back to New York City everybody. This is The Cube's coverage of MongoDB World 2022, Dev Ittycheria, here is the president and CEO of MongoDB. Thanks for spending some time with us. >> It's Great to be here Dave, thanks for having me. >> You're very welcome. So your keynotes this morning, I was hearkening back to Steve Ballmer, running around the stage screaming, developers, developers, developers. You weren't jumping around like a madman, but the message was the same. And you've not deviated from that message. I remember when it was 10th Gen, so you've been consistent. >> Yes. >> Why is Mongo DB so alluring to developers? >> Yeah, because I would say the reason we're so popular Dave is that our whole business was founded on the ethos, so making developers incredibly productive. Just getting the infrastructure out of the way so that the developers is really focused on what's important and that's building great applications that transform their business. And the way you do that is you look at where they spend most of the time. and they spend most of the time working with data. How do you present data, the right data, the right time, at the right place, and the right way. And when you remove the friction of working with data, you unleash so much more productivity, which people just say, oh my goodness, I can move so much faster. Product leaders can get products out the door faster than the competitors. Senior level executives can seize new opportunities or respond to new threats. And that was so profound during COVID when everyone had to think about pivoting their business. >> When you came to MongoDB, why did you choose this company? What was it that excited you about it? >> I get that question a lot. I would say conventional wisdom would suggest that MongoDB was not a great choice. There weren't that many companies who were very successful in open source, Red Hat was the only one. No one had really built a deep technology company in New York city. They say, you got to do it in the valley. And database companies need a lot of capital. Now turns out that raising capital of this past decade was a lot easier, but it still takes a lot of time, and a lot of capitals, you have to have a lot of patience. When I did my diligence, I was actually a VC before I joined MongoDB. The whole next generation database segment was really taking off. And actually I looked at some competing investments to MongoDB, and when I did my diligence, it was clear even then. And this is circa 2012, that MongoDB is way ahead in terms of customer attraction, commercials, and even kind of developer mind share. And so I ended up passing those investments. and then lo and behold, I got a call from a very senior executive recruiter who said, Dev, you got to take a meeting with MongoDB, there's something really interesting going on. And they had raised a lot of capital and they had just not been able to kind of really execute in terms of the opportunity. And they realized they needed to make a change. And so one thing led to another. One of the things that really actually convinced me, is when I did my diligence, I realized the customers they had loved MongoDB. They just really weren't executing on all cylinders. And I always believe you never bet against a company whose customers love the product. And said, that's something here. The second thing I would say is open source. Yes, is true that open source was not very successful, but that was open source 1.0. Open source 2.0, the technology is much better than the commercial options. And so that convinced me. And then New York, I lived in New York a big part of my life. I think New York's a fabulous place to build a business. There's so much talent, your customers are right... You walk out the door, there's customers all over the place. And getting to Europe is very easy, Almost like flying to the west coast. So it's a very central place to build a business. >> And it's easier to fix execution, wouldn't you say? And maybe even go to market than it is to fix a product that customers really don't love. >> Correct, it's much easier to fix leadership issues, culture issues, execution issues. Nailing product market fit is very, very hard. And there were signs, there's still some issues, there's still some rough spots, but there a lot of signs that this company was very, very close, and that's why I took the bet. >> And this is before there was that huge influx of capital into the separating compute from storage and the whole cloud thing, which is interesting. Because you take a company like Cloudera, they got caught up in that and got kind of washed over. And I guess you could argue Hortonworks did too, and they could have dead ended both. And then that just didn't work. But it's interesting to see Mongo, the market kind of came to you. And that really does speak to the product. It wasn't a barrier for you. You guys have obviously a lot of work to get into the cloud with Atlas, but it seemed like a natural fit with the product. It wasn't like a complete fork. >> Well, I think the challenge that we had was we had a lot of adoption, but we had tough time commercializing the business. And at some point I had to tell the all employees, it's great that we have all these people who are using MongoDB, but if you don't start generating revenue, our investors are going to get tired of subsidizing this company. So I had to try and change the culture. And as you imagine, the engineers didn't really like the salespeople, the salespeople thought the engineers didn't really want to make any money. And what I said, like, let's all galvanize around customers and let's make them really excited and try and create a lot of value. And so we just put a lot more discipline in terms of how we prosecuted deals. We put a lot more discipline in terms of what are the problems we're trying to solve. And one thing led to another, we started building the business brick by brick. And one of the things that became clear for me was that the old open source model of trying to find that happy medium between what you give away and what you charge for, is always a tough game. Like because finding that where the paywall is, if you give away too much new features, you don't make any money. If you don't give away enough, you don't have any adoption. So you're caught in this catch-22. The best way to monetize open source, is open source as a service. And we saw Amazon do that frankly. We learned a lot from how Amazon did that. And one of the advantages that MongoDB had that I didn't fully appreciate when I joined the company, but I was very grateful. It is that they had a much more restrictive license. Which we ended up actually changing and made it even more restrictive, which allowed us to perfect ourselves from being cannibalized by the cloud providers, so that we could build our own business using our own IP that we had invested in and create a cloud service. >> That was a huge milestone. And of course you have great relationships with all the cloud providers, but it got contentious there for a while, but, you give the cloud providers an inch, they're going to take a mile. That's just the way, they're aggressive like that. But thank you for going through the history with me a little bit, because when you go back to the IPO, IPO was 2017, right? >> Correct. >> I always tell young investors, my kids especially, don't buy a stock at IPO, you're going to have a better chance, but the window from Mongo was very narrow. So, you didn't really get a much better chance a little bit. And then it's been a rocket ship since then. Sure, there's been some volatility, but you look at some of the big IPOs, like Facebook, or Snap, or even Snowflake, there was better opportunities. But you guys have executed really, really well. That's part of your ethos in your management team. And it came across on the earnings call recently. >> Yep. >> It was very optimistic, yet at the same time you set cautious tones and you got, I think high marks. >> Yes. >> For some of that caution but that execution. So talk about where you feel the business is today given the economic uncertainty? >> Well, what I'd say is we feel really good about the long term. We feel like the secular trends are really in our favor. Software's fundamentally transforming every industry. And people want to use modern software to either automate inefficient processes, enable new capabilities, drive better customer experiences. And the level of performance and scale you need for today's modern applications is profoundly different than applications yesterday. So we think we're well positioned for that. What we said on the earnings call was that we started seeing a moderation of growth, slight moderation of growth in our low end of the business in Europe. It was in our self-serve business and in the SMB space for the NQ1, towards the end of Q1. And we saw a little bit of that show up in the self-serve business in may in Q2. And that's why while we raised guidance, we basically quantified the impact, which is roughly about 30 to 35 million for the year, based on what we saw. And in that assumption, we assumed like... We just can't assume it's going to only be at the low in the market, probably some effect at the enterprise market. Maybe not as much, but there'll be some effect. So we need to factor that in. And we wanted to help kind of investors have some sort of framework to think about what the impact is. We don't want to be one of those companies that said absolutely nothing. And we don't want to be one of those companies that just waves the hand, but then it wasn't really that useful for investors. >> Yeah, I thought it was substantive. You talked about those market trends, you cited three things. The developers recognize that there are limits to legacy RDBMS. You talked about the, what I call point solutions creep. And then the document model is the best for developers. >> Great. >> And when the conversation turned to consumption, everybody's concerned about consumption obviously. You said... My take, somewhat insulated from that because you're running mission critical apps. It's not discretionary. My question to you is, should we rethink the definition of mission-critical? You think of Oracle mission critical running a bank. Mission -critical today in this digital world seems to be different, is that fair? >> Gosh, when's the last time you ever saw a website down? Like if you're running like any kind of digital channel, or engaging with the customers, or your partners, or your suppliers, you need to be up all the time. And so you need a very resilient, highly available data platform. It needs to be highly performance as you add more users, you need to be scale. And we saw a lot of that when COVID hit. Like companies had to completely repovit. And we talked about some examples where like a health and beauty retailer who was all kind of basically retail, had to suddenly pivot to e-commerce strategy. We've had streaming and gaming companies suddenly saw this massive influx of data that they scaled their operations very, very quickly. So I would say anytime you're engaging with customers, customers they're so used to the kind of the consumer facing applications. I almost joke like slow is the old down. If you're not performant, it doesn't matter. They're going to abandon you and go somewhere else. So if you're an e-commerce site and you're not performing well and not serving up the right skews, depending on what they're looking for, they're going to go somewhere else. >> So it's a click away. You talk about a hundred billion TAM, maybe that's even undercounted as you start to bring new capabilities in there. But there's no lack of market for you. >> Correct. >> How do you think about the market opportunity? >> Well, we believe... Again, software is transforming so many industries. IDC says that 715 million applications will be built over the next two to three years by 2025. To put that number of perspective, that's more apps that will be built the next three to four years than were built in the last 40. The rate and pace of innovation is as exploding. And people are building custom applications. Yes, Workday, Salesforce, other companies, commercial companies are great companies, but my competitors can use Workday or Salesforce, some of those commercial companies. That doesn't gimme a competitive advantage, what gives me a competitive advantage is building custom software that better engage my customers, that transforms my business in adding new capabilities or drives more efficiency. And the applications are only getting smarter. And so you're seeing that innovation explode and that plays to our strength. People need platforms like MongoDB to build the next generation of applications. >> So Atlas is now roughly 60% of your business, think is growing at 85%. So it's at least the midterm future. But my question to you is, is it the future? 'Cause when we start to think about the edge, it's not necessarily the cloud. You're not going to be able to go that round trip and the latency. And we had Verizon on earlier, talking about what they're doing with 5G, and the Mobile Edge. Is Mongo positioning for that edge? And is our definition of cloud changing? Where it's not just OnPrem and across clouds, but it's also out to the edge, this continuous experience. >> So I'll make two points. One, definitely we believe the applications of the future will be mobile first or purely mobile. Because one with the advent of 5G, the distinction between mobile and web is going to blur, with a hundred times faster networking speeds. But the second point I make is that how that shows up on our revenue on our income table will look like Atlas. Because we don't charge nothing for the end point, it's basically driving consumption of the back end. And so we've introduced a bunch of very, very sophisticated capabilities to synchronized data from the edge to the backend and vice versa with things like flexible sync. So we see so many customers now using that capability, whether you're field service technicians, whether you're a mobile first company, et cetera. So that will drive Atlas revenue. So on an income statement, it'll look like Atlas, but we're obviously addressing those broader set of mobile needs. >> You talk a lot about product market fit former VC, of course, Mark Andreen says, product market fit you kind of know when you see it, your hair's on fire, you can't buy a service. How do you know when you have product market fit? >> Well, one, we have the luxury of lots of customers. So they tell us pretty clearly when they're happy, and we can see that by usage behavior. Now the other benefit of a cloud service, is we can see the level of activity. We can see the level of engagement. We can see how much data they're consuming. We can see all the actions they're taking. So you get the fidelity of feedback you get from Atlas versus someone doing something behind their own firewall. And you kind of call 'em and check in on them is very, very different. So that level of insight gives us visibility in terms of what products and features have been used, gives us a sense how things going well, or is there something awry. Maybe they have misconfigured something or they don't know how to use some capabilities. So the level of engagement that we can have with a customer using a service is so much different. And so we've really invested in our customer success organization. So the byproduct of that is that our retention rates are also very, very strong. Because you have such better information about what's happening in terms of your customers. >> See retention in real time. You've been somewhat... Is just so hard to say this 'cause you're growing at 50% a year. But you're somewhat conservative about the pace of hiring for go to market. And I'm curious as to how you think about scaling, especially when you introduce new products. Atlas is several years ago. But as you extend your capabilities and add new products, how do you decide when to scale? >> So it's a constant process. We've been quite aggressive in scaling organization for a couple reasons. One, we have very low market share, so the market's vastly under penetrated. We still don't have reps in every NFL sitting in the United States, which just kind of crazy. There's other parts of the world that we are just still vastly under penetrated in. But we also look at how those organizations are doing. So if we see a team really killing it, we're going to deploy more resources. Because one, it tells us there's more opportunity there, and there's a strong team there. If we see a team that maybe is struggling a little bit, we'll try and uncover. Rather than just applying more resources in, we'll try and uncover what are the issues and make sure we stabilize the organization and then devote resources. It's all in the measure of like being very disciplined about where we deploy our resources, to get those kind of returns. And on the product side, we obviously go through a very iterative process and kind of do rank order all the projects and what we think the expected returns are. Obviously, we look at the customer feedback, we look at what our strategic priorities are. And that informs what projects we fund and what projects kind of are below the line. And we do that over and over again every quarter. So every quarter we revisit the business, we have a very QBR centric culture. So we're constantly checking in and seeing how the business is operating. And then we make those investment decisions. In general, we've been investing very aggressively in terms of expanding our reach around the world. >> It seems like, well, with Mongo, your product portfolios... From an outside observer standpoint, it seems like you've always had pretty good product market fit. But I was curious, in your VC days, would you ever encourage companies to scale go to market prior to having confidence in product market fit? Or did you always see those as sequential activities? >> Well, I think the challenge is this part it's analysis part is judgment. So you don't necessarily have to have perfect product market fit to start investing. But you also don't want to plow a bunch of resources and realize the product doesn't work and then how you're burning through a lot of cash. So there's a little bit of art to the process. When I joined MongoDB, I could tell that we had a strong engineering team. They knew how to build high quality products, but we just struggled with commercialization. The culture wasn't great across the company. And we had some leadership challenges. So that's when I joined, I kind of focused on those things and tried to bring the organization together. And slowly we started chipping away and making people feel like they were winners. And once you start winning, that becomes contagious. And then the nice thing is when you start winning, you get a lot more customer feedback. That feedback helps you refine your products even more, which then adds... It's like the flywheel effect that starts taking off. >> So it seems the culture's working now. Do you have a favorite product from the announcements today? >> Well, I really like our foray to analytics. And essentially what we're seeing is really two big trends. One you're seeing applications get smarter. What applications are doing is really automating a lot of processes and rather than someone having to press a button. Based on analytics, you can automate a lot of decision making. So that's one theme that we're seeing as applications get smarter. The second theme is that people want more and more insight in terms of what's happening. And the source of that is insights is your operational database. Because that's where you're having transactions, that's where you know what products are selling, that's where you know what customers are buying. So people want more and more real time data versus waiting to take that data, put it somewhere else and then run reports and then get some update at the end of the night or maybe at the week. So that's driving a lot of really interesting use cases. And especially when you marry in things like time series use cases where you're collecting a lot of data people want to see trend analysis what's happening. Which I think it's a very exciting area. We introduced a very cool feature called Queryable Encryption, which basically... The problem with encrypting data, is you can't really query it because my definition's encrypted. >> Yeah, you're right. >> But obviously data security is very important. What we announced, is we're using very sophisticated cryptography. People can query the data, but they don't have really access to the data. So it really protects you from like data breaches or malicious users accessing your data, but you still can kind of make that data usable. So that was a very interesting announcer that we made today. >> Sounds like magic without the performance hit. >> Yes. >> You can do that. Dev, thanks so much for coming in The Cube. Congratulations on all activity, bumper sticker on day one. >> Oh, it's super exciting. The energy was palpable, 3,300 people in the room, lots of customers, lots of users. We had lots of investors here as well for our investor day, have a dinner tonight with a bunch of senior execs, so it's been a busy day. >> Future is bright for MongoBD. Dev, thanks for so much for coming on The Cube. And thanks for watching, this is Dave Vellante and we'll see you next time. (upbeat music)

(upbeat music) >> Hey everyone. Welcome back to theCUBE's coverage of Coupa Inspire 2022. We are in Las Vegas at the beautiful Cosmopolitan hotel. I'm your host, Lisa Martin. Brian McKillips joins me next, a managing director at Accenture. Brian, it's great to have you on the program. >> Thanks for having me, I'm glad to be here. >> So you have an interesting, you lead a lot of stuff at Accenture and I want to read this off, so I get it right. You lead the intelligent platform services strategy and the industry and functions platform group. Talk to me about those responsibilities. >> Yeah, so the intelligent platform services is the place in the business where we have kind of our large software partners, SAP, Oracle, Microsoft, Workday, Salesforce and Adobe. And we kind of think of ourselves as kind of the engine that powers industry and functional solutions, right? And the way Accenture's gone to market over the last couple of years has been kind of bringing together our breadth of experience all the way from strategy, all the way through operations and these big technology transformations are at the core of that. So that's what we do in intelligent platform services. And we recently launched this what we call the industry and functions platforms group because we realized there's a lot of strategic partners that are critical for us to be have a strong practice around, COUPA being one of them, you know in the supply chain and sourcing and procurement space so that we could create a home to be able to deliver these solutions globally and at scale. So I lead both kind of the strategy across all of IPS and then the new industry and functions platform group. >> Got it. All right. So you're here to talk to me about composable technology. First of all, define that for the audience so they understand what you're talking about. >> Yeah, you bet. So, you know, at Accenture, we're talking a lot about this is the age of compressed transformation, meaning, you know, change is only going to speed up and the need to change and so our clients are really struggling with not only kind of moving fast but that pressure around having to change as dynamics around the world change. So in the age of compressed transformation, we were really talking about how our clients should be kind of reorienting the way they think about their tech stack. And because, you know, historically a lot of us grew up in kind of monolithic implementations with, you know one software provider. But today it's really about composing technology to create new industry, new ways to solve industry problems, functional processes, customer experiences, right? And so composable technology we think about it in three parts. One is a cloud foundation that is, you know, the hyperscalers are a critical part of that. Secondly, our digital core and these are the kind of the historic software packages at the center of a lot of the industry and functional business processes. So you think about SAP and Oracle and Salesforce and things like that. But then around that digital core you have composable elements to be able to plug in. And that could be things like other software packages but it's also kind of industry IP or you know, edge devices, you know think IOT, think smart appliances, think and when you put, pull all those things together you need to be able to not only configure it once but configure and reconfigure as the dynamics of the marketplace change. >> So composable technology isn't necessarily new but has the pandemic been an accelerator of some of the things that you're seeing now in terms of why it's important, what's different about it now as being a foundation for competitive differentiation? >> Yeah, for sure. And it's, you know, I, anybody who's in technology say, you know, you tell them about this idea, they're like, well this isn't new, we've had service oriented architectures for 20 years. >> Right. >> You know, we've been talking about integrating things forever, but the you know, much like we all five to seven years ago we knew that we'd be using our phones to pay for pretty much everything but the tech hadn't caught up, right. Not every restaurant or store that you went to had the point of sale set up, right. So we all kind of knew that was coming. And the same thing has kind of happened around this idea of about composable technology and the three things that are new are one is that the cloud foundation is here, right. >> Yes. >> Where, you know, you now have not only kind of hyperscale high speed compute in at the core you actually have at the edge as well. And the same thing with high speed network, you know you have Starlink, you have 5G rolling out. So you have that cloud foundation that really wasn't there before. The second thing that's happening is the posture of a lot of the ecosystem, major ecosystem players has changed, right. And this started, you know when Satya Nadella took over Microsoft where Microsoft was very much a kind of a closed environment. >> Right. >> Where Satya under his leadership has really kind of changed the posture of being able to integrate into that. And we've seen that really pretty much across the entire landscape. And then lastly, it's become, you know, cheaper and, you know, quicker to be able to integrate with platforms like MuleSoft and others where there's kind of full scale integration platforms. So those are, those are the kind of the things that are new that allows for composable technology to be here in the real world. >> So it's something that's tangible, it's real organizations need to be on this bandwagon I imagine or they're going to be left behind. Gartner had some interesting stats that your team sent over and they were talking about these stats that were very compelling in terms of a seismic shift which always, you hear seismic living in California I think earthquakes, but something substantial. And they said, this seismic shift is going to happen by 2023. And I thought, hang on, that's less than a year away. >> Yeah. >> And they talked about by 2023, organizations that have adopted an intelligent composable approach will outpace competition 80% in the speed of new feature implementation. So if an organization hasn't started on that now is it too late? >> I would say not necessarily too late but they need to look for ways to change their disposition, right. And one of the ways that we've been helping clients do this is through pre-integrated solutions, right. So you know, in the past, the motion would be we would work with a client, they would work with our kind of strategists and consultants and say, what does the the future of supply chain look like for example. And if the client liked it, they would say, okay, I love it, what do I do next? Right. Then there would be another consulting engagement, another consulting engagement and then there would be a blueprint and architecture and at some point there was an implementation and a run. We've actually said we're investing heavily with our ecosystem partners to be able to pre-integrate solutions. So when that supply chain strategist says this is what the post COVID supply chain should look like and the client says, I love it what do I do next, that strategist can turn around and say, well, we've got a pre-integrated solution with SAP at the core sitting on a Microsoft Azure stack integrated with Coupa, wrapped with AI and machine learning and we can drop that and configure it for an environment. So that's how we're working with clients who are in that position that really need to kind of change their disposition is to bring these pre-integrated solutions and drop them in. >> Where are your conversations at the C- Suite level? Because this is, I hear many things in what you just said. Part of it is change management, which is very challenging. There's, people are very resistant to that. >> Brian: Yeah. >> One of the things that we've learned in the last two years is if it's going to come it's going to come but where are your conversations within that executive suite in terms of getting buy-in and going this is the direction we have to go in. >> Brian: Yeah. >> Because our business needs to be not just survive but thrive. >> Yeah. Yeah. These are, I mean, there are certainly of course in kind of traditional channels of tech whether it's, you know, the CIO or the CTO, but increasingly we're seeing this is a CEO discussion and, you know, our CEO Julie Sweet, is very, very market pacing and is having top to top conversations talking about compressed transformation, talking about composable technology because it's no longer just a, you know, a back office function as you know, right. I mean, this is really core to how companies you know, are, change their business models, make money, right. And it's a constant evolution. And that's why we talk about that kind of configuring and reconfiguring, it's not just coming in, implementing once, run it for five years and then when it's time to upgrade, we come back. >> No. >> We really want to be the partner with our clients to basically move in and, you know, across the patch whether it's specific industry processes, specific functional processes, specific customer experiences, we want to be the partner that is constantly tuning and configuring and reconfiguring and composing these solutions from across the ecosystem. >> And helping those businesses in any industry evolve as you talked about this compressed timeline, compressed transformation, such an interesting way of describing it but it's really true, it's what we've been living the last couple of years. >> Brian: Yeah. And so I want to get into Accenture's technology vision. You touched on this a little bit but there was some stats that your team provided that I thought were really, really interesting, a survey that Accenture did, 77% of executives, and we were just talking about the C-suite, state that their tech architecture is becoming critical to the overall success of the organization. So that awareness is there for sure en masse. Another thing that, stat that was interesting was 90% of business and IT execs agree that to be agile we always talk about agility, right, be resilient, organizations need to fast forward this digital transformation at the core. There's that compressed transformation. >> Brian: Yeah. >> Those are very high numbers. >> Brian: Yeah. >> In terms of where organizations say we see where we need to be. What's the vision at Accenture to help organizations get there fast? >> Yeah. Well, I think it's, you know, the thing that came to mind as you were talking is that we have, you know, major clients that have had this had in the, you know consumer packaged goods and apparel space that have had one way that they've done business is directly through retailers, you know, for pretty much their whole existence. Suddenly they need to shift to a direct to consumer model both in terms of marketing, in terms of commerce and that's not, you know, you don't just flip a switch in the back office and, you know, call IT and say hey, hey, can you change around a few things? It's actually shifting the entire core, it touches everything, it touches point of sale, it touches the customer experience, it touches supply chain, it touches employee experience even, right. >> Yeah. >> And so that's why I think it's so important for, you know technology leaders and business leaders to continue to kind of integrate themselves more tightly. >> Yes. >> To be able to make these business model transformations not just, you know, the tech that supports things. >> It's essential. >> Yeah. >> You know, we often in so many shows, Brian, we talk about alignment of business and technology, but it's not trivial. >> Yeah, yeah. >> It's absolutely fundamental to the success of every organization. And they've got to do so and as you said, I'm going to use your, your word, the compressed transformation. >> Yeah. >> A compressed timeframe. So talk to me about some customer examples where you really feel that Accenture and Coupa have helped this organization transform its supply chain to be able to be, use composable technology. >> Brian: Yeah. >> To be a leader in its industry. >> Yeah. Well, one example of that is a major industrial client that we have that has global operations across the world. And they're on a journey to kind of upgrade their digital core ERP that they've been on for a long time. And that's a multi-year journey. But at, you know, today they have needs for sourcing and procurement solutions in specific geographies around the world like Japan, for example. So what we've been able to do and it's a relatively simple example but quickly work with the client and Coupa to identify the right Coupa solution that's born in the cloud that has a great kind of user experience and implement that quickly as well as integrated it into the digital core, right. So they're not separate things. And it becomes part of that architecture, right. It just starts to kind of show the flexibility of when you have, when you come with a kind of composable technology point of view, the way we can help our clients do that. And in some other cases it's even more, you know, more cutting edge. So think about a utilities client, for example that has IOT sensors on their wires and when the, when that wire swings too far they say something's wrong. Automatically it goes back to the digital core cuts a ticket and finds the closest worker. >> Lisa: Okay. >> To then dispatch. The worker then can put on their hollow lens, for example and climb the pole and get directions on how to solve the problem right then and there, right? That's another example of you know, multiple systems, edge devices things coming together in order to create that. And it's only going to get faster, you know, with the metaverse. >> Lisa: Right. >> You know, with web 3.0 coming, with blockchain becoming more and more mainstream, companies need to be thinking about in this age of compressed transformation how to do that composable technology that you can figure and reconfigure. >> Do you think that we're in an age of compressed transformation or is that how it's going to be going forward given the global climate the last two years? >> Yeah. It's definitely going to be that way going forward over the next, you know, probably for the large part of the, the remainder of our career. I mean, we're, our CTO, Paul Daugherty, talks about us being an mega cycle, right? There's so many things changing. And even without these externalities of, you know, political issues and pandemics, you know, the introduction of AI and machine learning, a lot of these technologies I just mentioned, it's, the change is happening in every industry, in every, you know kind of area of the marketplace and in a way that's, you know, that's really exciting, right. And we get to help our clients be able to kind of solve those things not just once, but continually >> There's a tremendous amount of opportunity that's come from compressed transformation, right. A lot of opportunity, a lot of potential. What are some of the things that you're looking forward to say in the next year, as we talked about some of those business and lines of business and IT folks understand we've got to move in this direction. What excites you about the potential that you have to help these organizations really transform? >> Yeah, well, I think, I mean, the, we just came out with our new tech vision which is about the metaverse. And I think that the things that excite me are there's brand new ways like we've lived in a world where transactions take place in a very predictable way with local currencies through a single channel. And that was, that's been sort of fixed for a long time. The fundamentals of the economy or actually in the marketplace are starting to change in terms of how do we transact with things like cryptocurrencies, things like non fungible tokens, you know, all these things that we didn't, you know, they weren't, even the metaverse these were not main line words, even six you know, months ago, 12 months ago. >> Lisa: Right, right. >> Now these things, you know, every it seems like every month there's something new that is, you know, seismic to use your word that is shifting the fundamentals of the marketplace. And I think that's what's really exciting. I mean, that's where, I mean, it's probably one of the most exciting times to be in business, be in the marketplace. It certainly has a lot of challenges. >> Lisa: Yes. >> But, you know, I think we're really about using, you know, the promise of technology to unlock human ingenuity and this is a great time to be able to unlock that human ingenuity. >> And that's such a great alignment with Coupa. I was just in the keynote and there was an Accenture video, Julie Sweet was talking to some other folks about that. Great alignment in the partnership. Brian, thank you for joining me talking about composable technology, what's new, why and the potential that organizations and every business have to use it to unlock competitive advantages. >> Brian: Yeah. >> We appreciate your insights and your time. >> You bet. Pleasure to be here. >> All right. With Brian McKillips, I'm Lisa Martin. You're watching theCUBEe from Coupa Inspire 2022. (upbeat music)

>> From theCUBE Studios in Palo Alto in Boston, bringing you data-driven insights from the cube in ETR. This is Breaking Analysis with Dave Vellante. >> On Friday, December 10th, Oracle announced a strong earnings beat and raise, on the strength of its licensed business, and slightly better than expected cloud performance. The stock was up sharply on the day and closed up nearly 16% surpassing 280 billion in market value. Oracle's success is due largely to its execution, of a highly differentiated strategy, that has really evolved over the past decade or more, deeply integrating its hardware and software, heavily investing in next generation cloud, creating a homogeneous experience across its application portfolio, and becoming the number one platform. Number one for the world's most mission critical applications. Now, while investors piled into the stock, skeptics will point to the beat being weighed toward licensed revenue and likely keep one finger on the sell button until they're convinced Oracle's cloud momentum, is more consistent and predictable. Hello and welcome to this week's Wikibond CUBE insights powered by ETR. In this breaking analysis, we'll review Oracle's most recent quarter, and pull in some ETR survey data, to frame the company's cloud business, the momentum of fusion ERP, where the company is winning and some gaps and opportunities that we see. The numbers this quarter was strong, particularly top line growth. Here are a few highlights. Oracle's revenues that grew 6% year on year that's in constant currency, surpassed $10 billion for the quarter. Oracle's non-gap operating margins, were an impressive 47%. Safra Catz has always said cloud is more profitable business and it's really starting to show in the income statement. Operating cash and free cash flow were 10.3 billion and 7.1 billion respectively, for the past four quarters, and would have been higher, if not for charges largely related to litigation expenses tied to the hiring of Mark Hurd, which the company said would not repeat in the future quarters. And you can see in this chart how Oracle breaks down its business, which is kind of a mishmash of items they lump into so-called the cloud. The largest piece of the revenue pie is cloud services, and licensed support, which in reading 10Ks, you'll find statements like the following; licensed support revenues are our largest revenue stream and include product upgrades, and maintenance releases and patches, as well as technical support assistance and statements like the following; cloud and licensed revenue, include the sale of cloud services, cloud licenses and on-premises licenses, which typically represent perpetual software licenses purchased by customers, for use in both cloud, and on-premises, IT environments. And cloud license and on-prem license revenues primarily represent amounts earned from granting customers perpetual licenses to use our database middleware application in industry specific products, which our customers use for cloud-based, on-premise and other IT environments. So you tell me, "is that cloud? I don't know." In the early days of Oracle cloud, the company used to break out, IaaS, PaaS and SaaS revenue separately, but it changed its mind, which really makes it difficult to determine what's happening in true cloud. Look I have no problem including same same hardware software control plane, et cetera. The hybrid if it's on-prem in a true hybrid environment like exadata cloud@customer or AWS outposts. But you have to question what's really cloud in these numbers. And Larry in the earnings call mentioned that Salesforce licenses the Oracle database, to run its cloud and Oracle doesn't count that in its cloud number, rather it counts it in license revenue, but as you can see it varies that into a line item that starts with the word cloud. So I guess I would say that Oracle's reporting is maybe somewhat better than IBM's cloud reporting, which is the worst, but I can't really say what is and isn't cloud, in these numbers. Nonetheless, Oracle is getting it done for investors. Here's a chart comparing the five-year performance of Oracle to some of its legacy peers. We excluded Microsoft because it skews the numbers. Microsoft would really crush all these names including Oracle. But look at Oracle. It's wedged in between the performance of the NASDAQ and the S&P 500, it's up over 160% in that five-year timeframe, well ahead of SAP which is up 59% in that time, and way ahead of the dismal -22% performance of IBM. Well, it's a shame. The tech tide is rising, it's lifting all boats but, IBM has unfortunately not been able to capitalize. That's a story for another day. As a market watcher, you can't help but love Larry Ellison. I only met him once at an IDC conference in Paris where I got to interview Scott McNealy, CEO at the time. Ellison is great for analysts because, he's not afraid to talk about the competition. He'll brag, he'll insult, he'll explain, and he'll pitch his stories. Now on the earnings call last night, he went off. Educating the analyst community, on the upside in the fusion ERP business, making the case that because only a thousand of the 7,500 legacy on-prem ERP customers from Oracle, JD Edwards and PeopleSoft have moved Oracle's fusion cloud ERP, and he predicted that Oracle's cloud ERP business will surpass 20 billion in five years. In fact, he said it's going to bigger than that. He slammed the hybrid cloud washing. You can see one of the quotes here in this chart, that's going on when companies have customers running in the cloud and they claim whatever they have on premise hybrid, he called that ridiculous. I would agree. And then he took an opportunity to slam the hyperscale cloud vendors, citing a telco customer that said Oracle's cloud never goes down, and of course, he chose the same week, that AWS had a major outage. And so to these points, I would say that Oracle really was the first tech company, to announce a true hybrid cloud strategy, where you have an entirely identical experience on prem and in the cloud. This was announced with cloud@customer, two years, before AWS announced outposts. Now it probably took Oracle two years to get it working as advertised, but they were first. And to the second point, this is where Oracle differentiates itself. Oracle is number one for mission critical applications. No other vendor really can come close to Oracle in this regard. And I would say that Oracle is recent quarterly performance to a large extent, is due to this differentiated approach. Over the past 10 years, we've talked to hundreds literally. Hundreds and hundreds of Oracle customers. And while they may not always like the tactics and licensing policies of Oracle in their contracting, they will tell you, that business case for investing and staying with Oracle are very strong. And yes, a big part of that is lock-in but R&D investments innovation and a keen sense of market direction, are just as important to these customers. When you're chairman and founder is a technologist and also the CTO, and has the cash on hand to invest, the results are a highly competitive story. Now that's not to say Oracle is not without its challenges. That's not to say Oracle is without its challenges. Those who follow this program know that when it comes to ETR survey data, the story is not always pretty for Oracle. So let's take a look. This chart shows the breakdown of ETR is net score methodology, Net score measures spending momentum and works ETR. Each quarter asks customers, are you adding in the platform, That's the lime green. Increasing spend by 6% or more, that's the fourth green. Is you're spending E+ or minus 5%, that's the gray. You're spending climbing by 6%, that's the pinkish. Or are you leaving the platform, that's the bright red retiring. You subtract the reds from the greens, and that yields a net score, which an Oracle's overall case, is an uninspiring -4%. This is one of the anomalies in the ETR dataset. The net score doesn't track absolute actual levels, of spending the dollars. Remember, as the leader in mission critical workloads, Oracle commands a premium price. And so what happens here is the gray, is still spending a large amount of money, enough to offset the declines, and the greens are spending more than they would on other platforms because Oracle could command higher prices. And so that's how Oracle is able to grow its overall revenue by 6% for example, whereas the ETR methodology, doesn't capture that trend. So you have to dig into the data a bit deeper. We're not going to go too deep today, but let's take a look at how some of Oracle's businesses are performing relative to its competitors. This is a popular view that we like to share. It shows net score or spending momentum on the vertical axis, and market share. Market share is a measure of pervasiveness in the survey. Think of it as mentioned share. That's on the x-axis. And we've broken down and circled Oracle overall, Oracle on prem, which is declining on the vertical axis, Oracle fusion and NetSuite, which are much higher than Oracle overall. And in the case of fusion, much closer to that 40% magic red horizontal line, remember anything above that line, we consider to be elevated. Now we've added SAP overall which has, momentum comparable to fusion in the survey, using this methodology and IBM, which is in between fusion and Oracle, overall on the y-axis. Oracle as you can see on the horizontal axis, has a larger presence than any of these firms that are below the 40% line. Now, above that 40% line, you see companies with a smaller presence in the survey like Workday, salesforce.com, pretty big presence still, Google cloud also, and Snowflake. Smaller presence but much much higher net score than anybody else on this chart. And AWS and Microsoft overall with both a strong presence, and impressive momentum, especially for their respective sizes. Now that view that we just showed you excluded on purpose Oracle specific cloud offering. So let's now take a look at that relative to other cloud providers. This chart shows the same XY view, but it cuts the data by cloud only. And you can see Oracle while still well below the 40% line, has a net score of +15 compared to a -4 overall that we showed you earlier. So here we see two key points. One, despite the convoluted reporting that we talked about earlier, the ETR data supports that Oracle's cloud business has significantly more momentum than Oracle's overall average momentum. And two, while Oracle is smaller and doesn't have the growth of the hyperscale giants, it's cloud is performing noticeably better than IBM's within the ETR survey data. Now a key point Ellison emphasized on the earnings call, was the importance of ERP, and the work that Oracle has done in this space. It lives by this notion of a cloud first mentality. It builds stuff for the cloud and then, would bring it on-prem. And it's been attracting new customers according to the company. He said Oracle has 8,500 fusion ERP customers, and 28,000 NetSuite customers in the cloud. And unlike Microsoft, it hasn't migrated its on-prem install base, to the cloud yet. Meaning these are largely new customers. Now this chart isolates fusion and NetSuite, within a sector ETR calls GPP. The very giant, public and private companies. And this is a bellwether of spending in the ETR dataset. They've gone back and it correlates to performance. So think large public companies, the biggest ones, and also privates big privates like Mars or Cargo or Fidelity. The chart shows the net score breakdown over time for fusion and NetSuite going back to 2019. And you can see, a big uptick as shown in the blue line from the October, 2020 survey. So Oracle has done a good job building and now marketing its cloud ERP to these important customers. Now, the last thing we want to show you is Oracle's performance within industry sectors. On the earnings call, Oracle said that it had a very strong momentum for fusion in financial services and healthcare. And this chart shows the net score for fusion, across each industry sector that ETR tracks, for three survey points. October, 2020, that's the gray bars, July 21, that's the blue bars and October, 2021, the yellow bars. So look it confirms Oracles assertions across the board that they're seeing fusion perform very well including the two verticals that are called out healthcare and banking slash financial services. Now the big question is where does Oracle go from here? Oracle has had a history of looking like it's going to break out, only to hit some bumps in the road. And so investors are likely going to remain a bit cautious and take profits off the table along the way. But since the Barron's article came out, we reported on that earlier this year in February, declaring Oracle a cloud giant, the stock is up more than 50% of course. 16 of those points were from Friday's move upward, but still, Oracle's highly differentiated strategy of integrating hardware and software together, investing in a modern cloud platform and selectively offering services that cater to the hardcore mission critical buyer, these have served the company, its customers and investors as well. From a cloud standpoint, we'd like to see Oracle be more inclusive, and aggressively expand its marketplace and its ecosystem. This would provide both greater optionality for customers, and further establish Oracle as a major cloud player. Indeed, one of the hallmarks of both AWS and Azure is the momentum being created, by their respective ecosystems. As well, we'd like to see more clear confirmation that Oracle's performance is being driven by its investments in technology IE cloud, same same hybrid, and industry features these modern investments, versus a legacy licensed cycles. We are generally encouraged and are reminded, of years ago when Sam Palmisano, he was retiring and leaving as the CEO of IBM. At the time, HP under the direction ironically of Mark Hurd, was the now company, Palmisano was asked, "do you worry about HP?" And he said in fact, "I don't worry about HP. I worry about Oracle because Oracle invests in R&D." And that statement has proven present. What do you think? Has Oracle hit the next inflection point? Let me know. Don't forget these episodes they're all available as podcasts wherever you listen, all you do is search it. Breaking Analysis podcast, check out ETR website at etr.plus. We also publish a full report every week on wikibon.com and siliconANGLE.com. You can get in touch with me on email David.vellante@siliconangle.com, you can DM me @dvellante on Twitter or, comment on our LinkedIn posts. This is Dave Vellante for theCUBE Insights. Powered by ETR. Have a great week everybody. Stay safe, be well, and we'll see you next time. (upbeat music)

>>Welcome back to the cubes coverage of splunk.com 21. Finally, some Arten twenty-nine next word Holloway, the director of technology alliances at Z scaler ward. Welcome to the program. >>Thanks for having me great to be here. >>Talk to me a little bit about Zscaler and Splunk working together. How are you helping companies to improve their security posture? >>Yeah, I think, um, you know, we're each, uh, market leaders in our respective areas as these scale are the market leader for cloud delivered security as a service and Splunk is really the market leader in log monitoring and correlation across the entire security environment, uh, really providing their customers deeper insights through zero trust analytics and orchestration, and together our integrated solution protects enterprises from threat campaigns, reduces security operations burdens through automation, and really provides our customers with actionable data much faster than they could do, uh, on their own. >>That actionable data at speed is, is incredibly important. You mentioned zero trust. That's a hot topic right now. Let's dig more into how Z scaler and Splunk handle zero trust. >>Yeah, well, I think first and foremost, um, our integration is cloud native. Um, so you're getting that data in real time and not requiring any on-premise appliances or infrastructure. Um, and that's a real key thing in this cloud enabled cloud-first world that we're all operating in. And by getting that data in quickly to Splunk really enabled, uh, our customers to do some interesting things. Um, we have some prebuilt dashboards, VRR Splunk application, uh, that allows customers to very quickly leverage our data and logs on and give insights into what exactly is going on. And they can view usage, uh, applications threats all immediately. And that data that we're sending to Splunk is, uh, natively configured in splints SIM, uh, logging, uh, protocol. So it natively and easily is, um, leveraged by our users, uh, when they deploy out the Splunk app from Zscaler. >>So what are some of the things that differentiate how's the scalar delivers zero trust network access compared to some of the other guys? >>Well, I think first and foremost, um, zero trust has to enable zero network access. It requires zero access to the network. So you only connect to a particular application, really eliminating the possibility for lateral movement. It's really, uh, like the difference between letting a guest in your office wander around your headquarters on escorted, uh, versus escorting a guest to a meeting room, and then it's scoring them out once the meeting is over. I think the second key really is then also having a zero attack surface. Anything that resolves on the open internet today can be discovered exploited, um, denial of service. This means traditional solutions like firewalls, VPNs, uh, any web portal will that are visible on the internet are ultimately an attack surface, which is really a security risk. Um, if they can find it, if they can discover it, they can attack it. >>If they can't find your application, they can attack it. So that's really the key about a zero trust approach. That's Zscaler takes a, we don't expose anything on the internet and finally we have zero pass-through. So our zero trust exchange, doesn't go through a pass through connection, if utilize as a proxy architecture, which allows you to hold the data, inspect it, and then making a verdict before allowing it to pass. This is really a fundamental key for zero trust, ensure that all connections are secure from threats and data loss, and only allowing things in based on the context of the actual data itself. >>We've seen a massive change in the threat landscape in the last 18, 19 months. I'm wondering what, if you can kind of elaborate on some of the trends from a security perspective, a threat perspective that Zscaler has seen? >>Yeah, I think, um, you know, with the pandemic, obviously, um, it's greatly accelerated, uh, work from home work from anywhere. Um, so users are no longer on their company's corporate networks. Uh, they're working from their homes, they're working from traveling around wherever they might be, uh, in the country. And I think that really has increased, um, the threat attack surface. Um, it's not protected by the traditional security infrastructure that companies have spent years putting in place in their networks because everyone is remote. And we think things like a 500 and 500% increase in ransomware delivered over encrypted channels, for example, uh, and 30% of malware delivered through trusted apps, such as file sharing and collaboration tools. Um, and so ultimately the largest risk is really lateral movement inside of the corporate networks. Uh, once these things get in because traditional approaches such as VPNs are placing the users on the network, uh, and ultimately exposing them to risk. >>You said a 500% increase in ransomware delivered over encrypted channels. That's huge. And that is what, one of the things that we've seen just this year alone is ransomware becoming a household word, everyone understanding what happened with the colonial pipeline, the executive order, that's a huge threat there. And of course, ransomware is also getting more personal. Are you seeing that as well? >>Yeah, definitely. Um, I think again with all of the remote workforce being distributed, um, and no longer protected by the traditional security approaches, um, it's exposing them to this ransomware and it's what attackers are really kind of leaning on to go after, um, these remote users in order to gain access into the corporate infrastructures and ultimately deploy ransomware within those infrastructures. And that's really why zero trust is so important. Zero trust is really the idea of kind of putting an exchange, uh, in the, the cloud itself, so that security is buy all of your users wherever they may be. So regardless of where those users are working, whether it's remotely from home, whether it's traveling at a hotel, uh, whether they've decided to sell everything and get an RV and travel around the country, uh, by placing a zero trust cloud exchange, uh, in place to secure your assets and secure the connections, uh, you're protecting those users wherever they are, and ultimately protecting against that ransomware threat. >>And that's going to be key as this work from anywhere persist for a while. And then eventually there'll be probably some hybrid environment with a good amount of people working remotely and that the need to secure that landscape and deliver that zero trust. Is this going to be table stakes for businesses in any industry? Talk to me about, uh, about digital transformation. We've been talking about that for years now, but what are, how are some of the ways that Z scaler helps your customers? And then what are some of the things that you've seen perhaps accelerate in the last 18, 19 months? >>Yeah, I think we touched on it already. Obviously the pandemic really accelerated the work from anywhere work from our remote, um, dynamic. Um, and I think, uh, you know, that combined with, um, most corporations moving towards embracing the cloud and, uh, software as a service has really accelerated this whole digital transformation movement. Um, and the pandemic has just made it, you know, come to us exceptionally faster. So now that, um, users are working remotely anywhere, and now that your assets are no longer in data centers, but sitting in the cloud, whether it's things like, you know, Workday or Microsoft office 365 or Salesforce or whatever application that you're using, you know, the traditional castle and moat approach to security that we used to take, doesn't really work in this cloud first world. Um, you know, corporations spend a lot of years deploying firewalls, VPNs. DLPs things of that nature in all of the data centers that they physically controlled. >>Uh, and that was great when all of the users were physically at the office and going through that physical infrastructure. But now that the pandemic has accelerated this remote work from anywhere, uh, dynamic, uh, that old castle and load approach doesn't work anymore. So you have these users scattered around, not connecting through your data centers, not connecting through your infrastructure. And the pandemic also really explodes, um, the weakness of that, that model as well. Uh, when everybody got sent home, initially, they were leveraging those VPNs to try to connect back through those legacy data centers and then out the cloud. And we're really experiencing a terrible, uh, experience working in that environment. Uh, the VPNs were overwhelmed. They fell over and a lot of users started just going directly to the cloud themselves. And that's really where you risk this exposure. And this problem with ransomware as they were bypassing traditional security measures, if you had in place and exposing you to a much greater risk. And that's why the zero trust approach that Zscaler takes was much more effective and combined with what we're doing with Splunk really needed to do to get full visibility across that deployed disparate infrastructure, that you have an insight into what those users are doing and the ability to automatically react to it with the integration that we have with Splunk, sor >>That insight is absolutely critical. You talked about that rapid scatter to work from home that occurred 18, 19 months ago. And of course we all, all of us workers that were remote and are still remote we're are reliant on SAS tools, collaboration tools, video conferencing. And of course you mentioned a step now 30% of malware is delivered through trusted apps, like collaboration tools. Talk to me about how Zscaler and Splunk are helping customers combat challenges like that as they still are in this dynamic work from anywhere environment. >>Yeah, I think, um, we've got a couple of interesting integrations. Again, first we're automatically sitting the data from, uh, all of our ZScaler's zero trust infrastructure to Splunk, uh, automatically normalized and their SIM format. So it is natively and easily ingested into Splunk. And you start getting actionable insight from that. Uh, once that data is in Splunk and start doing an analysis, um, and seeing what is going on with those users, looking at things like, uh, most hits sites sites that are blocked, uh, any suspicious information that they're starting to see through their analysis and correlation engine. Uh, and they can even take action on that. If they suddenly see users going to known bad malware sites, for example, they can use the Splunk soar integration that we have to call the endpoint detection and response system that they may have in place and block that user from connecting it. So we're giving users full insight into what their user base is doing and the ability to automatically react to that and even block and prevent a bad actions that can ultimately expose them to risk >>The customer example that you can share of how you guys are doing this together. >>Uh, I mean, we have many examples through multiple verticals, be it financial healthcare, uh, manufacturing, uh, there's one insurance company in particular that I can think of that, uh, has integrated the solutions together. And really, as soon as they put the two integrations in place, we're able to identify a number of users that were hitting malicious sites and automatically block and protect those users from going to those sites and eliminating that risk from their environment. >>Excellent. Talk to me about some of the key, uh, pain points that you're solving for and some of the business outcomes that customers can expect working with Zscaler and Splunk. >>Uh, great question. Uh, I think one of the first is the zero trust exchange. The vScaler Habs enables really the much needed modern workplace, um, that COVID is further accelerated. Um, users really can work anywhere, uh, so that they can safely access any application from any network. Uh, whether that location is external, internal on any device. And the exchange really provides consistent security by being the inline policy enforcement point between all devices and services. The other thing that I think is key is users really require a great experience. And so if something goes wrong, you need to be able to quickly figure out what that is. Um, so we're constantly collecting a huge amount of telemetry, uh, to really understand and see exactly what that user experience is like, uh, and what issues they may be having, and really giving you the ability to see those issues before they arise and cause a problem. >>So you can proactively identify them and eliminate them. So they don't cause a problem. Uh, we've been able to allow our customers to roll the solution out and days and even over the weekend in order to get started. And this really allows them to accelerate, implementing zero trust for their organization by ensuring that all traffic for the internet goes through the zero trust exchange first, where it's fully did prepped it in inspected for any threats or data loss. And that's really key. Uh, I think one of the things that's so important in differentiating about what ZScaler's does is we're able to inspect traffic at scale. Uh, we have over 150 points of presence around the world that allows us to inspect all traffic, including SSL, encrypted traffic. So I think that's really a key point to focus on is that, you know, most of the threats that you and I were talking about earlier, especially around ransomware, tend to try to hide themselves, uh, and SSL, encrypted traffic. So whatever solution you want to deploy for CR trust it's imperative, that it has the ability to fully expect SSL traffic at scale, not just a limited subset of that traffic, but all of it, because so much of the threats today are coming, uh, in an encrypted format. >>And that's probably something that I I'm wondering if you, if you're seeing that those threats in terms of the increase and the, and the significance is only going to persist as this work from any more environment does. So how can customers get started with these scaler and Splunk? Where would, where would they start? >>Well, I think, uh, the great thing is, um, if they are a Z scaler customer or a Splunk customer, uh, it's very easy for them just to go to the Splunk app store and download the Zscaler app, uh, to allow them to very quickly and easily integrate the two solutions together. Uh, once they've made that connection, uh, we start automatically sending all of our logging and telemetry data into Splunk, and then they're able to leverage to the Splunk, the infrastructure and the dashboards that we've created to automatically start getting that insight into what's going on within their user community to see what threats are spooling up and to leverage Splunk, soar, to take automated action, to protect and eliminate those threats from their environment. So it's very easy for our users and our customers to get the application up and running quickly and start realizing value from the deployment itself. >>Yeah. You mentioned a stat a minute ago in terms of being able to deploy over the weekend, not fast time to value in this dynamic, uh, landscape where the threats are constantly changing, that that fast time to value is critical for businesses in any industry. >>Yeah, absolutely. Uh, I think that's the key again in this cloud world where you no longer have, uh, everything in your data center, and it's not a very simple and easy process. Just someone down to the data center to deploy a new solution, the solutions that you do choose need to be able to spin up quickly and easily. And that's really what we've built together with our integration with Splunk. Um, it was designed to be easy, quick to deploy and quick to re leverage value from. >>Excellent. Thank you for joining me talking about what Z scaler and Splunk are doing together, how you're helping customers to solve key pain points and that fast time to value that you're delivering. We appreciate your insights and your time. >>Thank you >>For ward Holloway. I'm Lisa Martin. You're watching the cubes coverage of splunk.com 21.

>>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 >>UI path has always been an unconventional company. You know, it started with humble beginnings. It was essentially a software development shop. And then it caught lightning in a bottle with its computer vision technology. And it's really it's simplification mantra. And it created a very easy to deploy software robot system for bespoke departments. So they could automate mundane tasks. You know, you know, the story, the company grew rapidly was able to go public early this year. Now consistent with its out of the ordinary approach. While other firms are shutting down travel and physical events, UI path is moving ahead with forward for its annual user conference next week with a live audience there at the Bellagio in Las Vegas, it's also fast-forwarding as a company determined to lead the charge beyond RPA and execute on a more all encompassing enterprise automation agenda. Hello everyone. And welcome to this week's Wiki bond Cuban sites powered by ETR in this breaking analysis and a head of forward four we'll update you in the RPA market. >>The progress that UI path has made since its IPO and bringing some ETR customer survey data to contextualize the company's position in the overall market and relative to the competition. Here's a quick rundown of today's agenda. First, I want to tell you the cube is going to be at forward for, at the Bellagio next week, UI paths. This is their big customer event. It's live. It's a physical event. It's primarily outdoors. You have to be vaccinated to attend. Now it's not completely out of the ordinary John furrier and the cube. We're at AWS public sector this past week. And we were at mobile world Congress and one of the first big hybrid events of the year at Barcelona. And we thought that event would kick off the fall event season live event in earnest, but the COVID crisis has caused many tech firms. Most tech firms actually to hit the pause button, not UI path. >>They're moving ahead, they're going forward. And we see a growing trend for smaller VIP events with a virtual component topic, maybe for another day. Now we've talked extensively about the productivity challenges and the automation mandate. The pandemic has thrust upon us. Now we've seen pretty dramatic productivity improvements as remote work kicked in, but it's brought new stresses. For example, according to Qualtrics, 32% of working moms said their mental health has declined since the pandemic hit. 15% of working dads said the same by the way. So one has to question the sustainability of this perpetual Workday, and we're seeing a continuum of automation solutions emerging. And we'll talk about that today. We're seeing tons of MNA, M and a as well, but now in that continuum on the left side of the spectrum, there's Microsoft who in some ways they stand alone and that Azure is becoming ubiquitous as a SAS cloud collaboration and productivity platform. >>Microsoft is everywhere and in virtually every market with their video conferencing security database, cloud CRM, analytics, you name it, Microsoft is pretty much there. And RPA is no different with the acquisition of soft emotive. Last year, Microsoft entered the RTA market in earnest and is penetrating very deeply into the space, particularly as it pertains to personal approach, personal productivity building on its software state. Now in the middle of that spectrum, if you will, we're seeing more M and a, and that's defined really by the big software giants. Think of this domain as integrated software plays SAP, they acquired contexture, uh, uh, they also acquired a company called process insight service now acquired Intella bought Salesforce service trace. We see in for entering the fray. And I, I would put even Pega Pega systems in this camp, software companies focused on integrating RPA into their broader workflows into their software platforms. >>And this is important because these platforms are entrenched. They're walled gardens of sorts and complicated with lots of touchpoints and integration points. And frankly, they're much harder to automate because of their entrenched legacy. Now on the far side of that, spectrum are the horizontal automation players and that's being led by UI path with automate automation anywhere as the number two player in this domain. And I didn't even put blue prism prism in there more M and a recently announced, uh, that Vista is going to acquire them. Vista also owns TIBCO. They're going to merge those two companies, you know, tip goes kind of an integration play. And so again, I'm, I might, I would put them in that, you know, horizontal piece of the spectrum. So with that as background, we're going to look at how UI path has performed since we last covered them at IPO. >>And then we'll bring in some ETR survey data to get the spending view from customers. And then we'll wrap up now just to emphasize the importance of, of automation and the automation mandate mandate. We talk about it all the time in this program, we use this ETR chart. It's a two dimensional view with net score, which is a measure of spending momentum on the vertical axis and market share, which is a proxy for pervasiveness in the dataset. That's on the horizontal axis. Now note that red dotted line at signifies companies with an elevated position on the net score, vertical axis, anything over that is considered pretty good, very good. Now this shows every spending segment within the ETR taxonomy and the four spending categories with the greatest velocity are AI cloud containers and RPA. And they've topped the charts for quite a while. Now they're the only four categories which have sustained above that 40% line consistently throughout the pandemic. >>And even before now, the impressive thing about cloud of course, is it has a spending has both spending momentum on the vertical axis at a very large share of the, of the market share of presence in the dataset. The point is RPA is nascent still. It has an affinity with AI as a means of more intelligently identifying and streamlining process improvements. And so we expect those to, to remain elevated and grow to the right together, UI path pegs it's Tam, total available market at 60 billion. And the reality is that could be understated. Okay. As we reported from the UI path S one analysis, we did pre IPO. The company at that time had an AR annual recurring revenue of $580 million and was growing at 65% annually at nearly 8,000 customers at the time, a thousand of which had an ARR in excess of a hundred K and a net revenue retention, the company had with 145%. >>So let's take a look at the picture six months forward. We mentioned the $60 billion Tam ARR now up over 725 million on its way to a billion ARR holding pretty steady at 60% growth as is an RR net revenue retention, and more than a thousand new customers in 200 more with over a hundred thousand in ARR and a small operating profit, which by the way, exceeded the consensus pretty substantially. Profitability is not shown here and no one seems to care anyway, these days it's all about growing into that Tam. Well, that's a pretty good looking picture. Isn't it? The company had a beat and a raise for the quarter early this month. So looking good, right? Well, you ask how come the stock's not doing better. That's an interesting question. So let's first look at the stocks performance on a relative basis. Here, we show you I pass performance against Pega systems and blue prism. >>The other two publicly traded automation, pure plays, you know, sort of in the case of Pega. So UI path outperformed post its IPO, but since the early summer Pega has been the big winner. Well, UI path slowly decelerated, you see blue prism was the laggard until it was announced. It was in an acquisition talks with a couple of PE firms and the prospects of a bidding war sent that yellow line up. As you can see UI path, as you can see on the inset has a much higher valuation than Pega and way higher than blue prison. Pega. Interestingly is growing revenues nicely at around 40%. And I think what's happening is the street simply wants more, even though UI path beat and raised wall street, still getting comfortable with which is new to the public market game. And the company just needs to demonstrate a track record and build trust. >>There's also some education around billings and multi-year contracts that the company addressed on its last earnings call, but the street was concerned about ARR from new logos. It appears to be slowing down sequentially in a notable decline in billings momentum, which UI pass CEO, CFO addressed on the earnings call saying, look, they don't need to trade margin for prepaid multi-year deals, given the strong cash position while I give anything up. And even though I said, nobody cares about profitability. Well, I guess that's true until you guide for an operating loss. When you've been showing a small profit in recent recent quarters, which you AIPAC did, then all of a sudden people care. So UI path, isn't a bit of an unknown territory to the street and it has a valuation that's pretty rich, very rich, actually at 30 times, a revenue multiple greater than 30 times revenue, multiple. >>So that's why in, in my view, investors are being cautious, but I want to address a dynamic that we've seen with these high growth rocket ship companies, something we talked about with snowflake. And I think you're seeing some of that here with UI paths, different model in the sense that snowflake is pure cloud, but I'm talking about concerns around ARR from new logos and in that growth on a sequential basis. And here's what's happening in my view with UI path, you have a company that started within departments with a small average contract size in ACV, maybe 25,000, maybe 50,000, but not deep six figure deals that wasn't UI paths play it because the company focused so heavily on simplicity and made it really easy to adopt customer saw really fast ROI. I mean breakeven in months. So you very quickly saw expansion into other departments. >>So when ACV started to rise and installations expanded within each customer UI path realized it had to move beyond being a point product. And it started thinking about a platform and making acquisitions like process gold and others, and this marked a much deeper expansion into the customer base. And you can see that here in this UI path, a chart that they shared at their investor deck customers that bought in 2016 and 2017 expanded their they've expanded their spend 15, 13, 15, 18 20 X. So the LTV, the lifetime value of the customer is growing dramatically. And because UI path has focused on simplicity, it has a very facile freemium model, much easier to try before you buy than its competitors. It's CAC, it's customer acquisition costs are likely much lower than some of its peers. And that's a key dynamic. So don't get freaked out by some of those concerns that we raised earlier, because just like snowflake what's happening is the company for sure is gaining new customers. >>Maybe just not at the same rate, but don't miss the forest through the trees. I E they're getting more money from their existing customers, which means retention, loyalty and growth. Speaking of forests, this chart is the dynamic I'm talking about. It's an ETR graphic that shows the components of net score or against spending momentum net score breaks down into five areas that lime green at the top is new additions. Okay? So that's only 11% of the customer mentions by the way, we're talking about more than 125 responses for UI path. So it's meaningful. It's, it's actually larger in this survey, uh, or certainly comparable to Microsoft. So that says something right there. The next bar is the forest green forest. Green is where I want you to focus. That's customer spending 6% or more in the second half of the year, relative to the first half. >>The gray is flat spending, which is quite large, the pink or light red that's spending customer spending 6% or worse. That's a 4% number, but look at the bottom bar. There is no bar that's churn. 0% of the respondents in the survey are churning and churn is the silent killer of SAS companies, 0% defections. So you've got 46% spending, more nobody leaving. That's the dynamic that is powering UI path right now. And I would take this picture any day over a larger lime green and a smaller forest green and a bigger churn number. Okay. So it's pretty good. It's not snowflake good, but it's solid. So how does this picture compare to UI pass peers? Well, let's take a look at that. So this is ETR data, same data showing the granularity net score for Microsoft power, automate UI path automation, anywhere blue prism and Pega. >>So as we said before, Microsoft is ubiquitous. What can we say about that? But UI path is right there with a more robust platform, not to overlook Microsoft. You can't, but UI path, it'll tell you that they don't compete head to head for enterprise automation deals with Microsoft. Now, maybe they will over time. They do however, compete head to head with automation anywhere. And their picture is quite strong. As you can see here, it has this blue Prism's picture and even Pega, although blue prism, automation, anywhere UI path and power automate all have net scores on this chart. As you can see the table in the upper right over 40% Pega does not. But again, we don't see Pega as a pure play RPA vendor. It's a little bit of sort of apples and oranges there, but they do sell RPA and ETR captures in their taxonomy. >>So why not include them also note that UI path has, as I said before, more mentions in the survey than power automate, which is actually quite interesting, given the ubiquity of Microsoft. Now, one other notable notable note is the bright red that's defections and only UI path is showing zero defections. Everybody else has at least even of the slim, some defections. Okay. So take that as you will, but it's another data 0.1. That's powerful, not only for UI path, but really for the entire sector. Now, the last ETR data point that we want to share is our famous two dimensional view. Like the sector chart we showed earlier, this graphic shows net score on the vertical axis. That's against spending velocity and market share or pervasiveness on the horizontal axis. So as we said earlier, UI path actually has greater presence in the survey than the ever-present Microsoft. >>Remember, this is the July survey. We don't have full results from the September, October survey yet. And we can't release them until ETR is out of its quiet period. But I expect the entire sector, like everything is going to be slightly down because as we reported last week, tech spending is moderated slightly in the second half of this year, but we don't expect the picture to change dramatically. UI path and power automate, we think are going to lead and market presence in those two plus automation anywhere are going to show strength and spending momentum as well. Most of the sector. And we'll see who comes in above the 40% line. Okay. What to watch at forward four. So in summary, I'll be looking for a few things. One UI path has hinted toward a big platform announcement that will deepen its capabilities to go beyond being an RPA point tool into much more of an enterprise automation platform rewriting a lot of the code Linux cloud, better automation of the UI. >>You're going to hear all kinds of new product announcements that are coming. So I'll be listening for those details. I want to hear more from customers to further confirm what I've been hearing from them over the last couple of years and get more data, especially on that ROI on that land and expand. I want to understand that dynamic and that true enterprise automation. It's going to be good to get an update face to face and test some of our assumptions here and see where the gaps are and where UI path can improve. Third. I want to talk to ecosystem players to see where they are in participating in the value chain here. What kind of partner has UI path become since it's IPO? Are they investing more in the ecosystem? How to partners fit into that flywheel fourth, I want to hear from UI path management, Daniel DNAs, and other UI path leaders, they're exiting toddler Ville and coming into an adolescent phase or early adulthood. >>And what does that progression look like? How does it feel? What's the vibe at the show. And finally, I'm very excited to participate in a live in-person event to see what's working, see how a hybrid events are evolving. We got a good glimpse at mobile world Congress and this week, and, uh, in DC and public sector summit, here's, you know, the cube has been doing hybrid events for years, and we intend to continue to lead in this regard and bring you the best, real time information as possible. Okay. That's it for today. Remember, these episodes are all available as podcasts, wherever you listen. All you do is search braking analysis podcast. We publish each week on Wiki bond.com and siliconangle.com. And you can always connect on twitter@devolanteoremailmeatdaviddotvolanteatsiliconangle.com. Appreciate the comments on LinkedIn. And don't forget to check out E T r.plus for all the survey data. This is Dave Volante for the cube insights powered by ETR be well, and we'll see you next time.

>> Announcer: From around the globe, it's theCUBE. With digital coverage of IBM Think 2021. Brought to you by IBM. >> Welcome back to IBM Think 2021. This is "theCUBE's" ongoing coverage, where we go out to the events, in this case, of course, virtually, to extract the signal from the noise. And now we're going to talk about the shifts in customer employee experiences and channels. The past year, obviously, has exposed gaps in both of those areas. The shift to digital channels, something that hit every industry. If you weren't a digital business, you were out of business. So, there's huge demand for better, a.k.a. less frustrating, and hopefully superior, customer experiences. That's never been higher. It puts a lot of pressure on companies and their marketing departments to deliver. And with me to talk about these trends are two great guests. Alex Shootman, the General Manager of Adobe Workfront. Alex was CEO of Workfront, which Adobe acquired last year. And Matthew Candy, Global Managing Director of IBM iX. Gentleman, welcome. Thanks for coming on. >> Thanks for having us. >> Great to be here. >> Matt, let's start with you. Maybe you could talk to the shifts that I talked about earlier, in the past year, and customers' expectations, and how they changed, and how you guys responded. >> Yes, so, Dave, I mean, it's been, my goodness, what a year, right? If we'd gone back and thought, we never would have seen this coming. And certainly, I guess, for the clients, I run the digital customer experience business, the services business, here at IBM, and certainly, we have been very busy helping clients, across just about every industry, accelerate their digital transformation efforts. And I think what has been absolutely clear, is digital, mobile, all of these ways of engaging with customers through channels, has been an absolutely critical way in which businesses have kept going, and survived over this time. And certainly, we've seen that transformation accelerate, right? And companies shifting from face-to-face interactions from a B2B sales perspective, into a kind of online B2B commerce, et cetera. So, really it's become digital by default. And I think customers really demanding personalized experiences, and wanting to make sure that these companies really know you in how they deal with you. >> You know Matt, I mean, our business, you think about our business, it was predominantly going out to events, live events, and then overnight, our entire industry had to shift to virtual. And what it was is, you had all these physical capabilities, and people trying to shove it into virtual, and it was really hard. There was a lot of unknowns, and really different. I imagine there's some parallels within marketing organizations. And I wonder if you could talk, Matt, about what kind of barriers you saw about delivering those kind of digital interactions and experiences. >> Yes. So, I guess, we've seen kind of five core challenges that companies have been facing. So, firstly, around volume and velocity of content. So, as we're putting more demand into organizations, right, for more content at a greater pace, right, this causes challenges for companies in terms of being able to get content out there, and surface it through their digital channels, right? Whether that's kiosks, or voice, web, mobile, et cetera. And that pace is not slowing down. Second thing is this demand for personalization. So, as companies and individuals are touching through all of these touch points across marketing sales and service, the need to be able to interact in the right way, showing that you know me, using personal data to match the right offer at the right time, critically important. Thirdly, the martech stack, right. Across many of these organizations, this explosion in marketing technology over the last 10 years has been absolutely incredible. And so one of the big challenges companies have is how we tie all of these different components of the stack together, to build this seamless experience. Fourth challenge, right? Additional communication channels. So, as we need more content and personalization, and we've got to join up across all these different systems, how do we make this consistent across all of these channels, right, whether it's digital or physical, is a true test of many organizations' ability to respond. And the fifth point is the coordination needed across departments within companies. And so, how the marketing department deals with legal, with regulatory approvals, with sales. How they go out to their agency partners. And this has certainly got a lot more complex across geographies, and across boundaries, within companies and outside. And so we see, absolutely, this need to put in place, basically, the marketing system of record that helps manage this. And this is where we see huge opportunity together with Adobe. >> Yeah, so, Alex, maybe you could talk about this a little bit. I mean, you guys are well-known for deep expertise and leadership, and orchestrating marketing workflows and the like. Matt talked about the martech stack. What's your take on this? And how are IBM iX and Adobe Workfront working together? >> What has occurred in response to what Matt talked about, is that companies started realizing that work was a tier one asset inside the marketing team. You know, they looked at, if you go back in time, and you look at financials in a company, people thought, "Wow, this is really important to us. We should put a system in place to manage financials." They realized their customers were really important, so they said, "We should put a system in place to manage our customers." People are important. They bought Workday to make sure that they could manage their people. And all of this complexity that Matt talked about caused enterprises to realize that the work of marketing was as important as some of those other activities in the organization. And so they started investing in a marketing system of record, like Workfront. >> You know, that's interesting. Just a quick aside. I mean, if you think about a lot of the problems we have in data and big data, typical to talk about stovepipe. You just mentioned three examples, finance, HR, and now marketing, where we've contextualized the system. In other words, the domain experts, the people in finance, and HR, and marketing, they're the ones who know the data the best. They don't have to go, necessarily, to some big data team, and data scientist, and all this stuff. They know what they want and they know it. And that's really what you guys are serving in your streamlining. This notion, Alex, of a marketing system of record is really interesting. I mean, it's relatively new, isn't it? So, why does it matter so much to marketers? >> Yeah, if you think about it, we've been able to serve 3,000 enterprises around the globe. We serve all 10 of the top 10 brands. Half of the Fortune 100. And what has created the need for the new, if you think about it, are the challenges that start arising when you implement the concepts that Matt talked about. Consider one of the largest private credit card issuers on the planet. And you think about delivering that personalized experience all the way to an end customer. You've got a private credit card issuer. They do business with hundreds of thousands of companies. Their account managers are interacting with those companies, and all of that lands back on a marketing organization that has to jointly plan promotions with those companies to drive the private credit card business. That marketing team needs visibility to the work that's happening. Or consider a major medical manufacturer who's trying to get medical products out the door. And the marketing team is trying to coordinate with the product team, with the regulatory team, with the supply chain team, with the legal team. And they're trying to orchestrate all of that work, so that they can get products out the door more quickly. Or maybe a financial services organization that's also trying to get new products out the door, and they're trying to get all the approval about the content that goes with those products, and it's all about speed to market. That's what's creating the need for the new, as you phrased it, Dave. >> Yes. Excellent. Thank you. So, then Matt, paint a picture. A lot of people may not be familiar with IBM iX. Maybe how you guys... You got creators, you got deep expertise in this area. So, maybe talk about where you add value, and how you work with Adobe. >> Okay, so IBM iX, so, we sit within the services business at IBM. As you said, Dave, right, we have designers, experienced strategists, engineers, basically able to deliver kind of end-to-end digital and customer experience solution, right from the creative, all the way through to the technology platforms, and the operations. Adobe is one of our key strategic partners across IBM, and certainly within my part of the business. And so, we couldn't have been more delighted when Workfront joined Adobe, through the acquisition there. So, we already had a strong relationship with the Workfront team. And so now seeing that as part of the Adobe platform and family there, really opens up massive opportunities. We're working with several major airlines, automotive companies, retailers, using Adobe technology to transform the customer experiences that they have. Putting in place new digital platforms, and new ways of engaging with those customers. But what is absolutely clear, as Alex was talking about, this need for a marketing systems of record, as this landscape becomes more complex, as the velocity of change increases the need to not just focus on the customer experience, and how a customer interacts with the brand, but the need to get the workflows and the processes within the organization that sit behind that, organized, executing in the correct way, in an efficient way, in order to make sure that you can deliver on that customer promise. And so this is absolutely critical, effectively, to drive this kind of workflow improvement, the productivity improvement, and put intelligence and automation into these processes, across the organization. So there is, certainly, we believe a huge opportunity together in the market, to help clients transform, and to deliver the value in this space. >> Got it. Alex, maybe you can just, at a high level, share some examples of how Adobe, and drawing on your experiences from Workfront, how you've helped companies where they had to get content out, they had to automate the processes, and the outcomes that you saw, that you hope to share with other clients. >> You know what, what Matt's talking about is the need for intelligent workflows within a marketing organization. Because a marketing organization is trying to solve one of two challenges. Either they're trying to be more efficient because they can't get more resources to do the work that they need to do, or they're trying to operate with speed. And so what our breakthrough thinking was, Dave, in terms of solving these problems, and then I'll give an example, is the realization that while it seemed like work should be different in different enterprises, ultimately, all work has five elements to it. The first thing is, you decide to do something, or I ask you to do something. So, we have to have the strategic planning around the intake of work. Then we have to plan out the work. Then we actually have to execute the work. We have to understand who's doing what. We have to have transparency to whether or not that work is getting done, or if people need help in that work. Then that work needs to be approved by somebody. And then finally, especially in marketing, then we have to actually deliver that work to a technology like ADM, where we're going to publish it on the web. So, if you take the case of a major financial, a financial company that serves consumers, that financial company is constantly bringing new products to market. Now, if you're bringing new products to market, if you think about the United States, you have to make sure that you have supported the regulatory approval that's necessary for a product. So, that product has to be able to go to the right investor. That product, if it's in a certain state, has to have oversight to it. So, now you're a marketing team, in a financial services organization that's supporting getting new product to market, and in a particular customer, it used to take 'em 63 days to go through all of the approvals necessary to just get content out the door. Now that they are effectively intaking the work, planning the work, executing the work reviewing the work, and delivering the work digitally, that's down to eight days. >> And with the martech platform, you have the data. So, you know what content you want to get out, and you can make decisions much better. I mean, my big takeaway is, you got the art of marketing, and those with the marketing DNA, I don't have that gene, but it's intersecting with the science and automation, and the data, and the workflows, and driving efficiency, and ultimately driving results and revenue. So, that's my big takeaway from this conversation, but Alex, maybe you could give us your takeaway, and then Matt, you can bring us home. >> Yeah. I mean, my takeaway is in this new economy, marketing is a tier one corporate activity. Marketing is a peer activity to manufacturing, to distribution, to sales, and to finance. And every one of those disciplines are managed with a system. Marketing needs its own system, because it's as important as any other organization. And so to me, Dave, it's no more complicated than that. That marketing is now as important as every other function. And it needs to be managed as every other function. And Workfront is the application that marketing manages the workflows, and the business of marketing. >> All right, Matt. Give us your final thoughts, please. >> Yep, no. My final thought, building on what Alex said, so, we've put together a joint point of view with Adobe, and with Workfront, called "Intelligent Content Transformation," right. That is our strategic framework to help clients accelerate on this journey, both of delivering these amazing customer outcomes, but how we transform the processes within the marketing organization. And I think that yes, you can continue to focus on delivering amazing digital experiences for customers, and it's absolutely critical, and that's critical to revenue growth, but actually, what's also critical, is to drive efficiency in these workflows across the enterprise, right? And that is not only going to enable the revenue growth, it's going to enable you to deliver on that promise. But it's also going to result in significant cost and efficiency improvements for these companies, by focusing on marketing in the same way as we have done for procurement transformation, supply chain transformation, finance transformation, HR transformation, right? There's a lot of effort gone into the efficiency of those workflows. We've got to do the same for marketing. So, massive opportunity, Dave, massive. >> It is massive. Every company has to, in some way, shape, or form, put high-quality content in front of their customers to engage with them. Gentlemen, thanks so much for coming on "theCUBE." Really appreciate your time. >> Yeah, thanks for having us. >> All right- >> See you again. >> And thank you everybody for watching. This is Dave Vellante for "theCUBE." You're watching IBM Think 2021, the virtual edition. We'll be right back. (bright music) ♪ Da, de, de, da, da, de, da, la ♪ (bright music)

>> Narrator: From around the globe, it's theCUBE with digital coverage of IBM Think 2021, brought to you by IBM. >> Welcome back to IBM Think 2021. This is the cubes ongoing coverage, where we go out to the events, we extract the signal from the noise, of course virtually in this case, now we're going to talk about ecosystems, partnerships and the flywheel they deliver in the technology business. And with me are Jason Kelly, he's the general manager global strategic partnerships, IBM global business services and Mani Dasgupta, who's the vice president of marketing for IBM global business services. Folks it's great to see you again. I wish we were face-to-face, but this'll have to do. >> Good to see you Dave and same, I wish we were face to face, but we'll, we'll go with this. >> Soon. We're being patient. Jason, let's start with you. You, you have a partner strategy. I wonder if you could sort of summarize that and tell us more about it. >> So it's interesting that we start with the strategy because you said, we have a partner strategy Dave and I'd say that the market has dictated back to us, a partner strategy. Something that we it's not new, we didn't start it yesterday. It's something that we continue to evolve in and build even stronger. This thought of a, a partner strategy is it... Nothing's better than the thought of a partnership and people say, "Oh, well, you know you got to work together as one team and as a partner." And it sounds almost as a one to one type relationship. Our strategy is much different than that Dave and our execution is even better. And that, that execution is focused on now the requirement that the market, our clients are showing to us and our strategic partners, that one... One player, can't deliver all their needs. They can't design solution and deliver that from one place. It does take an ecosystem to the word that you called out, this thought of an ecosystem. And our strategy and execution is focused on that. And the reason why I say it evolves is because the market will continue to evolve and this thought of being able to look at a client's, let's call it a workflow, let's call it a value chain from one end to the other, wherever they start their process to wherever it ultimately hits that end user, it's going to take many players to cover that. And then we as IBM want to make sure that we are the general contractor of that capability with the ability to convene the right strategic partners, bring out the best value for that outcome, not just technology for technology's sake, but the outcome that the end client is looking for so that we bring value to our strategic partners and that end client. >> I think about when you talk about the, the value chain, you know, I'm imagining, you know the business books years ago where you see the conceptual value chain, you could certainly understand that and you could put processes together to connect them and now, you've got technology. I think of APIs. It's, it's, it really supports that everything gets accelerated and, and Mani, I wonder if you could address sort of the the go to market, how this notion of ecosystem which is so important is impacting the way in which you go to market. >> Absolutely. So modern business, you know demands a new approach to working. The ecosystem thought that Jason was just alluding to, it's a mutual benefit of all these companies working together in the market. It's a mutual halo of the brands. So as responsible, you know, for the championship of, of the IBM and the Global Business Services brand, I am very, very interested in this mutual working together. It should be a win, win, win as we say in the market. It should be a win for, our clients first and foremost, it should be a win for our partners and it should be a win for IBM, and we are working together right now on an approach to bring this go-to-market market strategy to life. >> So I wonder if we can maybe talk about, how this actually works and, and pulling some examples. You must have some favorites that we can touch on. Is that, is that fair? Can we, can we name some names? >> Sure. Names always work in debut writing. It's always in context of reality that we can talk about, as I said, this execution and not just a strategy and I'll, I'll start with probably what's right in the front of many people's minds. As we're doing this virtually because of what, because of an unfortunate pandemic. Just disastrous loss of life and things that have taken us down a path we go, whoa! (clears throat) How do we, how do we address that? Well, anytime there's a tough task IBM raises its hand first. You know, whether it was putting a person on the moon and bringing them home safely, or standing up a system behind the current social security administration, you know during the depression, you pick it. Well here we are now and why not start with that as an example because I think it calls out just what we mentioned here. First, Dave, this thought of, of an ecosystem because the first challenge, how do we create and address the biggest data puzzle of our lives which is, how do we get this vaccine created in record time? Which it was. The fastest before that was four years. This was a matter of months. So Pfizer created the first one out and then had to get it out to distribution. Behind that is a wonderful partner of ours, SAP trying to work with that. So us working with SAP, along with Pfizer in order to figure out, how to get that value chain and some would say supply chain, but I'll, I'll address that in a second, but there's many players there. And, and so we were in the middle of that with Pfizer committed to saying, how do we do that with SAP? So now you see players working together as one ecosystem. But then think about the ecosystem that that's happening where you have a federal government agency. You have Ms. State, Alocal, you have healthcare life science industry, you have consumer industry. Oh, wait a second Dave, this is getting very complicated, right? Well, this is the thought of convening in the ecosystem. And this is what I'm telling you is, is our execution and it, it has worked well and so it's, it's it's happening now and we see it still developing and being, being, you know very productive in real time. But then, I said there was a another example and that's with me, you, Mani, whomever. You pick the consumer. Ultimately we are that outcome of, of the value chain. That's why I said I don't want to just call it a supply chain because at the end is, is, is someone consuming and in this case we need a shot. And so we partnered with Salesforce, IBM and Salesforce saying, wait a minute that's not a small task. It's not just get, get the content there and put it in someone's arm. Instead there's scheduling that must be done. There's follow up, and entire case management like system. Salesforce is a master at this. So work.com team with IBM we said now, let's get that part done for the right type of UI UX capability, that user experience, user interaction interface and then also, in bringing another player in the ecosystem. One of ours, Watson health, along with our blockchain team, we brought together something called a digital health pass. So, I've just talked about two ecosystems where multiple ecosystems working together. So you think of an ecosystem of ecosystems. I call it out blockchain technology and obviously supply chain, but there's also AI, IOT. So you start to see where, look, this is truly an orchestration effort that has to happen with very well designed capability and so of course we master in design and tying that, that entire ecosystem together and convening it so that we get to the right outcome. You, me, Mani are all getting the shot, being healthy. That's a real-time example of us working with an ecosystem and teaming with key strategic partners. >> You know Mani, I, I, I mean, Jason you're right. I mean this pandemic's been horrible. I have to say, I'm really thankful it didn't happen 20 years ago because it would have been like, okay here's some big PCs and a modem and go ahead and figure it out. So, at least, the tech industry has saved the business. I mean, with, and earlier we mentioned AI, automation, data, you know, even things basic things like, security at the end point. I mean so many things and you're right. I mean, IBM in particular, other large companies, you mentioned, SAP who have taken the lead and it's really, I, I don't, I Mani I don't think the tech industry gets enough credit but I wonder if there's some of your favorite partnerships that you can talk about. >> Yeah. So I'm going to, I'm going to build on what you just said, Dave. IBM is in this unique position amongst this ecosystem. Not only the fact that we have the world's leading most innovative technologies to bring to bear, but we also have the consulting capabilities that go with it. Now to make any of these technologies work towards the solution that Jason was referring to in this digital health pass, it could be any other solution, you would need to connect these disparate systems sometimes make them work towards a common outcome to provide value to the clients. So I think our role as IBM within this ecosystem is pretty unique in that we are able to bring both of these capabilities to bear. In terms of, you know, you asked about favorites. There are, this is really a co-opetition market where everybody has products, everybody has services. The most important thing is how are we, how are we bringing them all together to serve the need or the need of the hour in this case? I would say one important thing in this, as you observe how these stories are panning out. In an ecosystem, in a partnership, it is about the value that we provide to our clients together. So it's almost like a "sell with" model from, from a go-to-market perspective. There is also a question of our products and services being delivered through our partners, right? So think about this, the span and scope or what we do here and so that's the sell through, and then of course we have our products running within our partner companies and our partner products for example, Salesforce, running within IBM. So this is a very interesting and a new way of doing business. I would say it's almost like the, the modern way of doing business with modern IT. >> Well, and you mentioned co-opetition. I mean, I look at it, you're, you're, you're part of IBM that will work with anybody 'cause you're your customer first. Whether it's AWS, Microsoft, I mean, Oracle is a, is a, is a really tough competitor but your customers are using Oracle and they're using IBM. So I mean, as a, those are some, you know good examples I think of your point about co-opetition. >> Absolutely. If you pick on any other client, I'll mention in this case, Delta. Delta was working with us on moving, being more agile and now this pandemic has impacted the airline sector particularly hard, right? With travel stopping and anything. So they are trying to get to a model which will help them scale up, scale down be more agile, be more secure be closer to their customers to try and understand how they can provide value to their customers and customers better. So we are working with Delta on moving them to cloud, on the journey to cloud. Now that public cloud could be anything. The, the beauty of this model in a hybrid cloud approach is that you're able to put them on red hat openshift, you're able to do and package the, the services into microservices kind of a model. You want to make sure all the applications are running on a... On a portable almost a platform agnostic kind of a model. This is the beauty of this ecosystem that we are discussing as the ability, to do what's right for the end customer at the end of the day. >> How about some of the like SaaS players? Like some of the more prominent ones. And we, we, we watched the ascendancy of ServiceNow and Workday, you mentioned Salesforce. How do you work with those guys? Obviously there's an AI opportunity but maybe you could add some color there. >> So I like the fact Dave that you call out the different hyperscalers, for example whether it's AWS, whether it's Microsoft, knowing that they have their own cloud instances, for example. And when you, when you mentioned, hey, had this happened a long time ago, you know you started talking about the, the heft of the technology. I started thinking of all the, the the truck loads of servers or whatever they, you know they'd have to pull up, we don't need that now because it can happen in the cloud. And you don't have to pick one cloud or the other. And so when people say hybrid cloud, that's what comes out. You start to think of what I call, I call, you know, a hybrid of hybrids because I told you before, you know these roles are changing. People aren't just buyers or suppliers. They're both. And then you start to say, what are, what are different people supplying? Well, in that ecosystem, we know there's not going to be one player. There's going to be multiple. So we partner by doing just what Mani called out as this thought of integrating in hybrid environments on hybrid platforms with hybrid clouds, multi-clouds. Maybe I want something on my premises, something somewhere else. So in giving that capability, that flexibility, we empower and this is what it's doing is that co-opetition. We empower our partners, our strategic partners. We want them to be better with us and this is just the thought of, you know, being able to actually bring more together and move faster. Which is almost counter-intuitive. You're like, wait a minute, you're adding more players but you're moving faster. Exactly. Because we have the capability to integrate those, those technologies and get that outcome that Mani mentioned. >> I would add to one Jason, you mentioned something very, very interesting. I think if you want to go just fast, you go alone. But if you want to go further, you go together. And that is the core of our point of view, in this case is that we want to go further and we want to create value that is long lasting. >> What about like, so I get the technology players and there's maybe things that you do, that others don't or vice versa so the gap fillers, et cetera. But what about, how, maybe customers do they get involved? Perhaps government agencies, maybe they be, they they be customer or an NGO as another example. Are they part of this value chain part of this ecosystem? >> Absolutely. I'll give you... I'll stick with the same example when I mentioned a digital health pass. That digital health pass, is something that we have as IBM and it's a credential. Think of it as a health credential, not a vaccine passport cause it could be used for a test for, a negative test on COVID, it could be used for antibodies. So if you have this credential it's something that we as IBM created years back and we were using it for learning. When you think of, you know getting people certifications versus a four-year diploma. How do we get people into the workforce? That was what was original. That was a Jenny Rometty thought. Let's focus on new collar workers. So we had this asset that we'd already created and then said wait, here's a place for it to work with, with health, with validation verification on someone's option, it's optional. They choose it. Hey, I want to do it this way. Well, the state of New York said that they want it to do it that way and they said, listen we are going to have a digital health pass for all of our, all of our New York citizens and we want to make sure that it's equitable. It could be printed or on a screen and we want it to be designed in this way and we want it to work on this platform and we want to be able to, to work with these strategic partners, like Salesforce and SAP, Alocal. I mean, I can just keep going. And we said, "Okay, let's do this." And this is this thought of collaboration and doing it by design. So we haven't lost that Dave. This only brings it to the forefront just as you said. Yes, that is what we want. We want to make sure that in this ecosystem, we have a way to ensure that we are bringing together, convening not just point products or different service providers but taking them together and getting the best outcomes so that that end user can have it configured in the way that they, they want it. >> Guys, we've got to leave it there but it's clear you're helping your customers and your partners on this, this digital transformation journey that we already, we all talk about. You get this massive portfolio of capabilities, deep, deep expertise. I love the hybrid cloud and AI focus. Jason and Mani, really appreciate you coming back in the cubes. Great to see you both. >> Thank you so much, Dave. Fantastic. >> Thank you Dave. Great to be with you. >> All right, and thank you for watching everybody. Dave Vellante, for the cube and in continuous coverage of IBM Think 2021, the virtual edition. Keep it right there. (poignant music) (bright uplifting music)

>> From around the globe, it's theCUBE with digital coverage of IBM Think 2021, brought to you by IBM. >> Welcome to theCUBE's coverage of IBM Think 2021. I'm Lisa Martin. Terrance Wampler joins me next, General Manager at Workday Financial Management at Workday. Terrance, welcome to theCUBE. >> Well thank you for having me. It's great to be here, I appreciate it. >> Nice that we can still do these events virtually even though we were quite socially distance. So the last year has brought lots of changes, one of them being IBM Think and theCUBE being virtual, but I'm curious to get your perspectives and your observations. We've seen many finance organizations have to rapidly pivot and accelerate their digital transformation making it a priority. What are some of the key priorities that you've seen that the C-suite, the CFO are dealing with? >> Yeah, well, I think what's happening is what we've seen are new ways to work and using remote access, having to do mobile technologies. What's happening is that's actually driving more risk for companies. And so as companies get more risk that's driving the needs to have more scrutiny on those business processes and that's forcing them to want to accelerate what they're doing in terms of a digital transformation, other stuff like that. It's also forcing them to think more about the data they have and the information they have looking forward and how they're doing planning and how they can do planning in terms of bringing people back to work, in terms of new business models, in terms of what may be next, in terms of opportunity for them or even doing catastrophe planning as they work through this stuff. And as they start to look at that, they're really thinking about how to make their business profit and much more agile. And so it's kind of a complicated thread that you start to pull as people start to change how things work. >> Yeah, that risk is a big factor and that pivot was so quick for so many businesses where suddenly so many of us, and so many of us are still remote. I'm curious what some of the things are though that you're hearing with respect to organizations looking to start opening things back up and bringing some of their folks back on campus. >> Yeah, it's a very interesting dilemma because what's happening is people have learned how to work remotely now. And so they're trying to figure out how they're going to bring people back to be more collaborative. But at the end of the day the first and most important thing they've learned is that especially for a finance function, they no longer want to be transaction operators. What they want to start doing is pushing that work to more automated tools, to have that be done for them and try to promote themselves to be more like analysts or even advisors to the business or even a partner to the business. And as they go through that evolution what they're really trying to do is unlock all of the potential of the people they have, of the processes they have and of the data they have. So it has really made companies do, is look at everything in its entirety and want to change all of it, but they have to go at different paces. >> Definitely, talk to me about what Workday and IBM are doing together to help customers tackle these challenges, adjust their priorities and accelerate that transformation. >> Yeah, certainly. So one of the things that we've done is gotten together and created this go to market strategy called Enterprise Finance. And what enterprise finance does is it really tries to meet the customer wherever they are. So while all of these customers are looking to accelerate their digital transformation they come from very different places, right? And their journey to that transformation is going to be very different. And that means that some of them are going to want to be able to do a full transformation right away and do it globally and make a big change because they've just been hit very hard by this and they see it as an opportunity to grow. And others are going to come from a very complex environment and that complex environment could include complicated manufacturing components in their solution. And they need to look at something like just a corporate finance layer that has kind of an integrated planning solution and consolidation, close capabilities for them to be able to run their business and be a little bit more agile at the top line. >> So a spectrum of you said meeting them where they are. There's a lot of customers in different places. I'm curious what some of the things are that you've observed over the last year, that really are kind of unique ways that finance leaders are approaching this new way of working. >> Yeah, so there's probably two examples I can give you. One is a generic example where we have customers that have participated in merger or acquisition activity over the past year, as it happens to be or customers that have even spun up new divisions with new business models, trying to introduce new services or think about things that they can take advantage of or even shifting away from old this months that have been impacted by what's happening. And as they do that, they will look to do a transformation around finance in that function only or for that subsidiary or for that division. And so that's probably the first example. The second example that I'll give you is companies having to do something they never thought they would do before. I'll give you a simple example. We have a large number of insurance companies here in the United States as customers. And we all probably got our rebate check from the insurance company for our automobiles, right? So what happened is most of the large insurance companies identified that, hey, we actually don't have much risk because people aren't driving and they're paying us these big premiums. And so the insurance regulatory bodies put pressure on those insurance companies. So they had to figure out it business process model and a mechanism by which to go out, forecast what the premium reduction should be, what the business should look like, what that risk should be, do all of that planning and then think about it for their future actually and all the old stuff and then figure out a process by which to get those rebates delivered out to customers. So there's interesting things like that happening in process. And if somebody wasn't running a remote system that didn't have good agility, they wouldn't be able to make that quick pivot and get us all those rebate checks that we were so happy to have. >> Yes, very happy to have that. It sounds like that was done in a pretty fast turnaround time. So I imagine you're also dealing with customers who have sort of a TBD time schedule where there's still so much dynamics going on in the market today. >> Well, that's exactly right. I mean, because you're looking at different business models in different industries, I picked insurance there, but you can pick other extremes like how are retailers reopening? What are they thinking? You can look at hospitality places, how are they going to reopen? How are they going to generate revenue? How are they going to do planning? How are they going to account for things, right? So it's a range. So what's happened is everybody's looked at this as it's now an opportunity to not think in terms of years or even longer range plans. It's really an opportunity to be much more agile and think about being able to dynamically move in quarters or half year kind of increments. >> Yeah, we've been having a lot of conversations about how that time table has shifted and it's getting smaller and smaller because there's been so much flux and so much change that these organizations are really figuring out how do we actually shift and not just organizationally, but culturally as well to be able to adapt to these changes, that can be pretty sudden and pretty significant. I am curious too, Workday has historically focused its financial management solutions on really very much people intensive industries but you do have customers that are outside of that in the services. You talked about insurance getting value from Workday. Talk to me about some of those other expansion of opportunities there are in the more services oriented industries. >> No, that makes a lot of sense. And so I'll call it product based industries but you can think about it as manufacturing your other components, but is people that have systems around product. And while they might have complex supply chains that Workday isn't able to support for them right now they are looking at doing either that corporate transformation layer or they're looking at a solution we have around the Accounting Center. What Accounting Center allows them to do is bring in high volume of data from those source transaction systems and then generate accounting from it. But it gives them the ability to mix that operational data with that accounting data to do exactly what you're describing, be able to pivot more quickly and do more planning because they have a better foundation from their data accuracy and the consistency of that data. So they may be running multiple ERP systems and as they're running those they can bring that data together through Accounting Center kind of in a federated way and get better insight into what they need to do to plan more rapidly to roll things out. So they can kind of keep that execution system of record system, and then they can basically promote this to more of a operational, planning and analysis type function. >> Have you noticed in your conversations with customers the financial management changing in terms of being elevated up to the C-suite or a board level conversation with businesses now suddenly being very laser focused on understanding that reducing risk. Did any of that change and shift in terms of visibility in the last year? >> Yes it did. And the primary reason is because finance has always been the stewards of that information, and they curate the data, they do all of that work and then other people take it and do analysis. The finance department has taken more control of not only being the curator of that information but also being the team that does more of the analysis and has engaged more with corporate strategy or the chief revenue officers and trying to bring forward the ability to do analysis and have a voice in terms of what are the business models we should be doing, what are the strategic growth initiatives we should be doing? How should we be looking at running the business? Not just doing a finance function but really doing that advisory role. And it really has become because the data is so important to make those decisions, everyone wants these data driven decisions. And they are the curator of that data or the steward of that data. So they've kind of helped promote themselves to do that. >> What are some of the things that if you look out into your crystal ball for the rest of 2021, what are some of the things that you think we're going to see in some of the key industries that are working hard to return retail, manufacturing, the supply chain. We just had that big traffic jam in the Suez Canal, and a lot of challenges there. What are some of the things that you think are opportunities that we're going to see unfolding this year? >> Yeah, so I think it's going to be first, around getting back to work. So it's back to office stuff, which we'll start on the HR side, but it's going to lead to facility costs. It's going to lead to worker safety stuff and reporting, and it's going to lead to how you manage a healthcare or other tracking of things, is going to lead to how you engage with customers remotely. It's going to be a number of factors that are related to how do we transition back into real life? Because what we've started to see is in different parts of the country or the world even, parts of retail open up but we haven't seen mass return to lots of offices like here in the United States. And I think that will drive a lot of different processes in terms of about how people do working shifts, how they do meetings, how they do analysis, and there will be a desire then to have those business processes automated, right? The results of the transaction that comes from that, et cetera. >> That's a good point that you bring up that there's so many things that I hadn't really considered in terms of what it's going to take for businesses to return and have folks come back to campus. The extrovert in me just wants to go back but you bring up a great point and there's so many other facets that they had to deal with rapidly last year that have to be reconsidered. And so it makes sense that automation is something that they're looking at as coming in and really helping to automate certain processes to help reduce risk, reduce costs. Last question for you, Terrance, where can customers go if they are looking to get back on the track? How could they engage IBM and Workday together to help transform? >> Yeah, so the best and easiest way is we have some joint blogs that we've worked together, but first there's this CUBE. And then there is the joint blogs that we've worked together to talk about Enterprise Finance and how we're going to market. And then Enterprise Finance talks about the spectrum of a full finance transformation to a division to a corporate layer. >> Excellent, and I did see your blog. It sounds like you've been very busy in the last year which is excellent. But thanks so much Terrance for coming by and sharing with us all the dynamics that are going on in financial management and beyond, and the acceleration of elements of transformation that organizations have to look at now. It's very interesting. We appreciate your time. >> Yeah, thank you for having me. >> For Terrance Wampler, I'm Lisa Martin. You're watching theCUBE. (bright ambient music)

>>From around the globe with digital coverage of IBM, think 2021 brought to you by IBM. Welcome to the cubes coverage of IBM. Think 2021. I am Lisa Martin today. I have Savio and Rodriguez here with me, the VP of integration and application platform Savio. It's great to have you on the program, >>Lisa, really great to be here. Thanks for having me >>Talk about automation integration. But one of the things that we're going to kind of break down versus is hyper automation. Gardner announced that about a year and a half ago was one of the top 10 things. It was the top 10 strategic technology trends of 2020. Well, here we are in 2021. Before we talk about automating integrations, getting IBM's perspective on hyper automation and what did we see in 2020? Like reality? >>Yeah, no great, great question. So, and IBM, we believe that the next tidal wave to hit organizations will be really the task, but frankly, the opportunity to automate the entire enterprise. And by that, I really do mean everything in the enterprise. So Gartner, when they talk about hyper automation, they're absolutely right, because they're focusing on automating business tasks, but IBM's point of view is broader than that. And so we want to think about the work that business professionals, it developers that it staff security, focus, administrators, all of that work. And we think that the real differentiation is going to come to organizations that attack the task of automating work for all three labor types, business developers, and it, so hyper automation focuses on the first labor type IBM's approach is looking at all three labor types. Now you should pick automation projects that are specific to one labor type to begin, right. Instead of saying let's automate everything, but the latter is the strategic statement. The former is tactical. Um, and, and w w we're seeing clients automating specific business processes, like order to cash, and then others are automating work of, uh, it had been such as reducing the number of security vulnerabilities found in production, and then others are automating the work of developers by automating the approach that they take to the integration life cycle. And that's what I'd like to talk to the audience about today. >>All right. So look how you talked about it in terms of prioritization. Cause that's one thing I think that businesses can struggle with in terms of making automation and eventually hyper automation successful is where do we start? Let's talk though about this application sprawl that every organization pretty much is living in. We saw this massive adoption of SAS applications and 2020, which we, a lot of businesses were dependent on to even facilitate just collaboration, but talk to us about the relationship between integration automation, applications. >>Another great question. So I spend most of my day thinking about integration, um, but I also know that most of my clients and probably the audience here thinks about automation first and then thinks about integration as a means, not the ends. The ultimate goal is digital transformation. I E delivering new apps faster with higher quality, if that's the case. And you think about what's an application today versus what will an application 20 years ago. So today there's definitely some business logic and code that you're writing, but the majority is actually integration logic. So you have to connect to a SAS service like Workday to get data, connect to an app that's running on AWS, get other data that's running on IBM cloud to transform it, put it into a different database that's running on Azure. So there's a little bit of application logic and a ton of integration logic. So if you're a line of business owner that controls 50% or more of it budgets, or you're a CIO, that's beholden to that line of business, um, and you want applications faster than ever before, and you don't want to sacrifice quality. How are you going to do that? Well, the way you do that is by focusing on the integration tier, because applications are really driven by integration today. So if you want a faster applications with higher quality, you really need to think about delivering integrations faster with higher quality. >>An integration is absolutely critical as we look at the hybrid cloud, the advance of AI organizations that are in this multi-hybrid cloud world, what are some of the challenges that they face with respect to integrating those applications? So to your point, you know, they can pull down data for Workday, align it with data in AWS, for example, to make business decisions in real time, >>One of the biggest challenges is manual effort, right? So we started the conversation thinking about automation and when we're coming back to it, because we believe that you have to automate your integrations and the way you do so is through AI. So you can of course use rules-based, um, automations. And that helps to some degree, but things get really interesting when you apply AI and the automation is driven by real world data. That's specific to your organization in a continuous feedback loop. We like to call closed loop and that's continuously driving efficiency. So if you think about the integration life cycle, you've got to create an integration, test it, socialize, it operated governance. That's what we mean by automating integrations, that whole life cycle. So for instance, if you can create an integration flow and do a field mapping based on AI, best practices, you reduce manual effort, you reduce coding, you reduce the need for integration experts, or if you're a business user, and you're able to describe your intent and you have your integration software handle, um, converting that intent into university that's required. >>So for instance, if you could say, generate a lead score and wrote the leads based on location, um, to your sales team, well, you know, what, what you're trying to achieve, why not get the software to do that for you based on AI, under the covers, or if you're doing testing, um, how about letting the AI generate hundreds of new tests for your integrations that reflect real world usage behavior at your specific company. And these tests are based on other APIs that are running at your company. So we take the operational data. We know what's, uh, which parts of the APR are being exercised. We know what data is going through your system. So things that are, for instance, personally, identifiable shouldn't be used as test data, right. Or if you're operating your integrations and wouldn't it be great if your AI could uncover optimizations in the integration flow, such as adding, adding in, um, maybe buffering to a message queue so that it prevents you from, uh, overages on your Salesforce account and having that happen without needing a human in front of a dashboard. I E the AI under the covers is doing this for you. So for AI to really drive that integration automation, you need the operational data, um, from your specific company and using that in a closed loop fashion. So you're continuously improving, not just your current integrations, but your future integration. >>I can only imagine how much more important this has been become in the last year as businesses and industry we're pivoting multiple times to survive. And then ultimately thriving. When I think of integrations, I think of customers that I've spoken to, who you get the right example with perspective sales, they've got a CRM, they're got an ERP and they're not in sync and not integrated so that I can't, there's no one system of record. I can only imagine how much more important having that system of record has been in the last year for supply chains, even for demanding consumers going, can I get some toilet paper? And if so, where can I find it? >>I absolutely. And this is where that notion of a closed loop, um, approach to integration and the automation via AI comes in, right? So we strongly feel that today, this is the time the clients need to rethink their integration strategy. And we do agree with some of the other analysts and vendors that are talking about automating the integration work, and that's part of what we've discussed earlier. And that's definitely necessary, but it's not sufficient. Right. Go ahead. Sorry. Sorry. Well, yeah. So our feeling here is that you also have to be thinking about evolving those integrations in a closed loop fashion. So you're continuously making those integrations better, uh, with AI that's powered by your operational data, that's specific to your company. And then finally that the, you know, the old approach that integration vendors used to have in terms of this style of integration fits all problems, is the wrong approach. And instead, what we start seeing today is that customers are using multiple forms of integration to solve a specific business problems. So they're using CAFCA API APIs messaging iPad. So from an IBM standpoint, we feel that every integration must be automated closed loop. And Multistyle with AI, that's informed by your company specific data to continue to improve so that you end up getting integrations faster, but that, they're also better >>When, when companies have that spectrum of different integration processes, as you just mentioned, one of the things that I kind of think is as we look forward, and you mentioned this a minute ago, wanting to have the foundation so that not only are applications integrated today and communicating well and sharing data, but in the future. So talk to me about this closed loop system that you mentioned, and how does that enable an organization to establish that now, but be able to take on applications that are not even created yet, >>But that's really a foundational aspect that clients need to be thinking about, right? Because the closed loop nature of thinking of your integrations means that you're always looking at operational data and using that operational data and feeding it into your AI to improve your business processes, your integrations today, but also the ones that you're going to be delivering in the future. Right? So I'm sure your listeners are sitting here thinking, you know, where should I get started? Um, and frankly for me, I turn it around and say, you probably should ask your integration vendor of choice, how effectively their solutions can provide an automated closed loop and multi-step approach to integration. And if the answer that they give you, isn't very detailed, but I hope you'll ask IBM. And when you ask us this question, what you're going to hear about is IBM's cloud pack for integration, which is our, uh, our complete platform for automated closed loop. >>And multicell integrations. It's optimized for deployment across clouds, with red hat OpenShift. And with IBM, you'll be able to use natural language powered integration flows, uh, AI powered flow and field mapping, RPA conductivity, things that really take the manual effort of integration out and replace it with AI driven, um, automation. Um, second, you want to think about the data that's feeding the AI, right? So this is where the operational, um, closed loop aspect comes into play. Sometimes the other vendors in the space are taking, um, operation data from hundreds of, of, um, customers and putting it together and coming out with the average and using that to train the AI. We don't think that's the right approach because your most important, uh, integration processes are shared by no other customer, right? So you want your operational data to feed the AI. That's providing things like field mapping, flow creation, creating the API tests automatically, or the uncovering, the inefficiencies that are running in your, um, your production environment. >>Um, and then finally, would I be able to tell you is we've got the broadest set of integration capabilities of a Multistyle integration capabilities, all delivered with a common UI and shared reuse and governance with unified management across clouds. And that's exactly what clients need, because if you think about where are you deploying applications today, the composers are running on multiple clouds, so you have to integrate across clouds. And then finally, what you hear from us is that IBM provides a proven hybrid and DMC ready security gateway. That's never been hacked in 15 years, over 30,000 TPS for second, but the performance and security that frankly clients need for their applications today. So automated closed loop. Multistyle, you'll hear me repeat those over and over because we feel that's absolutely necessary for, for, um, listeners when they think about their next generation applications and the integrations that we required for them. >>Excellent. Well, Sophia, I wish we had more time, but thank you for sharing. What's going on with audit, uh, in automating integrations, AI, what hyper automation means kind of where it is. Now we look forward to hearing more about this and I'm sure the guests will be excited to see what comes at IBM. Think we thank you for your time. >>Thank you very much >>For Savio Rodriguez. I'm Lisa Martin. You're watching the cubes coverage by IBM. Think 2021.