(upbeat funky music) >> From our studios, in the heart of Silicon Valley, Palo Alto, California. This is a CUBE conversation. >> Okay, welcome back everyone, we're here at theCUBE studios in Palo Alto for a special CUBE conversation. Talking security, talking about the internet and cloud computing. Martin Bosshardt is the CEO of Open Systems. Martin, great to see you. Last time we chatted was in December you were in Vegas, we had a little on the ground, great to meet your team. Welcome back to theCUBE. >> Thank you so much. It's great to be here. >> So exciting things going on, I want to get a state of the Open Systems and the industry, obviously security's a really big big thing, a lot stuff going on in the industry. Black Hat. Defcon. Amazon had a big event called re:Inforce, which was really kind of the first cloud securities show. Which brings the whole, your kind of value proposition to the table but, you guys have a new office here in Silicon Valley. I saw a video on the internet, trending. >> Yeah. >> Pretty nice place work. Give us the update on the current office and Silicon Valley presence. >> Yeah we are, you know, we are really happy to be now here in the U.S. headquarters in Redwood City and Silicon Valley. So, this really helps us also to be closer to the talents, to be closer to all the going to market activities and also to understand the market better. So, it's really exciting to be here and obviously also our, I mean the people love to work here in Silicon Valley. Weather is always great. >> Yeah, weathers always great and the office has got that good working vibe there. Take a minute to explain Open Systems real quick for the folks not familiar with the video 'cause we did last December in Vegas with your team. Tell them what your companies value propositions is and some of the growth you're experiencing. >> Right, so, Open Systems really is, you know, we operate SD-WAN in a secure way for our customer, so it's really focusing on making a relatively complicated technology, from operational point of view, very easy to consume for our customers. So this is, I think, something we started more than 15 years ago in Europe and I would say Open Systems is very much comparable, or at least the going to market part, is very much comparable to an organic farms. We have a wonderful ecosystems in Switzerland, especially in the financial services industry and our customers just love the way we provided those services and told their neighbors and friends and this is really how we grew on a global scale. Currently Open Systems is operating in more than 180 countries, SD-WAN and security infrastructure for customers and protect approximately 2.5 to three million in users globally. And when we started to enter the U.S. market, we learned that the way we provide SD-WAN in a secure way, really resonates a lot with the U.S. market because we can make complex infrastructures, especially projects going to the cloud, very easy to consume for our customers. So, we are really exciting on the growth side right now, we grow super fast in the U.S., we have been very successful in latest customers, we won Chemers, we won Chemit... >> So you're winning a lot of business. >> We are winning a lot of business and what's exciting about it is those customers give us really very valuable feedback on the difference how we provided services is really exciting... >> You know Martin, I was observing and talking to your team in December when we first met you guys for the first time and you just briefly touched on it on your description of the company success. A lot of the early success and continued success has been word of mouth. >> Right. >> With the organic, not like big marketing splash in the pool, kind of like, you know, banging the drum hard, although you are doing some marketing now but and being in the U.S. That word of mouth has been really a testament to the quality of the product, so I got to ask you, what are they happy about? What's the problem that you're solving? What's the big buzz? Why are they so excited to share, to their peers and colleagues about Open Systems? What's the big revelation? >> Thank you for the credit. I think, you know, everybody goes to the cloud and what you really need is an SD-WAN to access the cloud. What that also means for all those companies, they have to rethink their security posture. So if you add now all those products and then you try to operate those products, it turns out it's relatively complicated compared to an old school MPLS Network we used to operate in the past. So, this is really where Open Systems comes in and helps customers to operate that in very easy ways. So we integrate, all those products needed, to operate the global SD-WAN in a secure way, on a single delivery platform and that allows customers to consume that entire suite in a very very easy way. >> I want to get your vision on the future of Open Systems. I know you guys call it secure SD-WAN. I'm a little bit more radical and controversial in the sense. I think SD-WAN is kind of passe term, I think, it's really cloud connectivity work anywhere, people are working at home more than ever, cloud computing has brought in essentially enterprise cloud. We're calling it cloud 2.0, where, it's not just public cloud and having workloads in there, taking advantage of the greatest of cloud 1.0. It's enterprises, this is hybrid, it's multi-cloud, you seeing a, really a distributed computing, a networking problem and a security problem being at the center of this new work environment. >> Yeah. >> Essentially, people connected to something. >> Right. >> It's cloud right, I mean. We can call it SD-WAN because it used to be an office, campus, remote office, very static dynamic. What's your vision? >> You're absolutely right. I mean, this is really where it all goes. Let's say, a network was a network and it was very clear what a network does, right now it's more like, we want to just connect users to cloud services and it's not so clear where those services are coming from and it's not so clear where those users are sitting, where you consume from. And, it results in a phenomenal opportunity to be much more agile, much more, much faster, also to set-up new services, but it also is a challenge for IT operations. Because you know, you might have a group of users saying, well this and this service doesn't work well and now you have to debug. Why is not performing, why isn't Germany maybe, a service coming from the U.S., not performing well? Or you have an IoT device suddenly not really collecting data in a right way and this is really where SD-WAN becomes an orchestration layer. SD-WAN really helps you to orchestrate all those services and make sure you have the SLA available, at all times, everywhere. And also, understand if it's not delivering right and this is really rare where I believe... Ya, we need new solutions to make these easy because... >> You know, a lot of companies talk about digital transformation, that becomes the office, you know, the top CEO, board conversation, let's transform and be digital. But the underlying infrastructure, which is very complex, you can talk about distributing computing, you got networking, all these things in place and old, new, all kind of mashed together with cloud. It's easy to say digital transformation but you're talking about digital transformation of the business on top of existing complex hardware, which comes out the networking, moving packets from A to B, storing it on drives and now you have people working at home, so you have people working globally. >> Right. >> It's not that simple. >> No. >> It's complicated. >> It is really... >> It's not just a U.S. problem, it's like a have a team in, an engineering team in the U.K. and Germany, wherever, business... So it's a global problem. >> Exactly and also it's about, you know, how do you process all the data in an efficient way. And where we see a lot of iteration power released is right now in the Cloud. It's really exciting how easy it gets to consume all that computing power out of the cloud but you need to make sure it is available and you need to understand what is happening if it's not available and how to fix that. And this is really where, I think networking became more demanding, more challenging but also, obviously offers a tremendous opportunity for innovation. >> And I think the security industry has gotten much broader scope to it, used to be, hey you know, I'm a nerd, I'm Black Hat, I'm a blue team, red team, secure the environment, get a perimeter and okay that's gone, we'll take care of threats, malware, all this stuff's going on. But when you think about like cloud 2.0, cloud 1.0 is compute storage, great applications can load up at the cloud, all this great stuffs happening, hooray, yeah, rah-rah. Now cloud 2.0 is networking and security. >> Right. >> Independent of everything right so, what's your take on that? How is Open Systems, you know, helping companies? And what do you say to your customers when you say, hey, you know, compute networking, the storage is good, the cloud on premise no problem, there's operating models for that but you got networking and you got security to deal with on top of all the complexity. What's your story? >> I think the most important thing is, you know, we have to live with the fact that some device system tools are not secure. So I think IoT's a very good example. If you want to have all those sensors out there and be close to the customer, be close to some business processes, you need IoT. But, it's just not possible to have these very cheap devices built in a secure way. So, it's a lot about how do you design a network, to design it in a resilient secure way and that means that you have to think in cells, you have to think in compartments and that makes it relatively easy, secure again, but, it is from operational point of view, quite a challenge because you do not operate any more one network, you suddenly operate maybe any networks. >> On that point, just to kind of wrap up here. The the security challenges around IoT, Machine Learning and AI, which is clearly becoming part of the fabric of, a company's going to leverage that... >> Right. What are some of the big challenges that companies are having and what do you do to solve it? >> You know, in the old network world, you had a network where everything was connected based on one network. So, when you introduce SD-WAN and you introduce all these capabilities, it is very dangerous if you think just, in the old school of one network because suddenly you have IoT working on the same network as maybe your finance department. Or you have productivity facilities working the same network as your network department. So, it just doesn't make sense to have those very different functionalities on exactly the same network because if you have a compromised situation, you suddenly have your entire company compromised and this is really where compartments become very very important. I think this also something you in every industry, historically as well. Security and safety starts also with compartments. So, if you think fire, fire security, it has a lot to do with fire compartments. In case you have a fire, you don't lose the entire building or the same goes with ship building. I mean, Titanic was the last very big ship that sunk but the reason was the compartments haven't been pressurized. A modern ship doesn't sink anymore. And I think this really what we have to do now also in IT. We have to think in compartments. We have to think in layers and that's easy to do with SD-WAN but it's not so easy to operate. >> Final question for you real quick, you know, people talk about hybrid cloud, multi-clouds, the big conversation in this cloud 2.0. But you guys as being successful in outside the United States and now in the U.S., there's also multi-geo work environment. >> Right. What should people think about when they kind of want to frame that debate or conversation? I'm a multinational, I'm operating in the U.S., now I have regions, clouds have regions. There's also all kind of of now regulatory pressure coming across those areas. >> I would say around 2,000 companies really started to globalize their value chains. You know, in the past, maybe you had a production facility in one country and then you sold your products globally but if you want to be competitive, you have to globalize your value chain. So it doesn't make sense to produce everything in one place. Your product usually, or your service, is produced on a global scale and that means that networks also have to help you to really produce that global value chain. But, it means also that you are operating in different jurisdictions, in different regions and you have to respect those different regulations and laws. And this is, obviously then and also a challenge for network operators because privacy in Germany is different than in the U.S., access rights are different, China's again very different, but all those multinationals, we operate in all those countries and we have to respect the local law. >> And the provide the security they need. >> Exactly. >> Martin, thanks for coming in and sharing your insights. Appreciate, good to see you, we'll follow up with and keep of the progress. Thanks for coming in. >> Thank so much. >> I'm John Furrier for CUBE Conversation in Palo Alto, at theCUBE Studios, thanks for watching. (upbeat funky music)

>> Announcer: Coverage DataWorks Summit Europe 2017 brought to you by Hortonworks. >> Welcome back everyone. Live here in Munich, Germany for theCUBE'S special presentation of Hortonworks Hadoop Summit now called DataWorks 2017. I'm John Furrier, my co-host Dave Vellante, our next guest is Shaun Connolly, Vice President of Corporate Strategy, Chief Strategy Officer. Shaun great to see you again. >> Thanks for having me guys. Always a pleasure. >> Super exciting. Obviously we always pontificating on the status of Hadoop and Hadoop is dead, long live Hadoop, but runs in demise is greatly over-exaggerated, but reality is is that no major shifts in the trends other than the fact that the amplification with AI and machine learning has upleveled the narrative to mainstream around data, big data has been written on on gen one on Hadoop, DevOps, culture, open-source. Starting with Hadoop you guys certainly have been way out in front of all the trends. How you guys have been rolling out the products. But it's now with IoT and AI as that sizzle, the future self driving cars, smart cities, you're starting to really see demand for comprehensive solutions that involve data-centric thinking. Okay, said one. Two, open-source continues to dominate MuleSoft went public, you guys went public years ago, Cloudera filed their S-1. A crop of public companies that are open-source, haven't seen that since Red Hat. >> Exactly. 99 is when Red Hat went public. >> Data-centric, big megatrend with open-source powering it, you couldn't be happier for the stars lining up. >> Yeah, well we definitely placed our bets on that. We went public in 2014 and it's nice to see that graduating class of Taal and MuleSoft, Cloudera coming out. That just I think helps socializes movement that enterprise open-source, whether it's for on-prem or powering cloud solutions pushed out to the edge, and technologies that are relevant in IoT. That's the wave. We had a panel earlier today where Dahl Jeppe from Centric of British Gas, was talking about his ... The digitization of energy and virtual power plant notions. He can't achieve that without open-source powering and fueling that. >> And the thing about it is is just kind of ... For me personally being my age in this generation of computer industry since I was 19, to see the open-source go mainstream the way it is, is even gets better every time, but it really is the thousandth flower bloom strategy. Throwing the seeds out there of innovation. I want to ask you as a strategy question, you guys from a performance standpoint, I would say kind of got hammered in the public market. Cloudera's valuation privately is 4.1 billion, you guys are close to 700 million. Certainly Cloudera's going to get a haircut looks like. The public market is based on the multiples from Dave and I's intro, but there's so much value being created. Where's the value for you guys as you look at the horizon? You're talking about white spaces that are really developing with use cases that are creating value. The practitioners in the field creating value, real value for customers. >> So you covered some of the trends, but I'll translate em into how the customers are deploying. Cloud computing and IoT are somewhat related. One is a centralization, the other is decentralization, so it actually calls for a connected data architecture as we refer to it. We're working with a variety of IoT-related use cases. Coca-Cola, East Japan spoke at Tokyo Summit about beverage replenishment analytics. Getting vending machine analytics from vending machines even on Mount Fuji. And optimizing their flow-through of inventory in just-in-time delivery. That's an IoT-related to run on Azure. It's a cloud-related story and it's a big data analytics story that's actually driving better margins for the business and actually better revenues cuz they're getting the inventory where it needs to be so people can buy it. Those are really interesting use cases that we're seeing being deployed and it's at this convergence of IoT cloud and big data. Ultimately that leads to AI, but I think that's what we're seeing the rise of. >> Can you help us understand that sort of value chain. You've got the edge, you got the cloud, you need something in-between, you're calling it connected data platform. How do you guys participate in that value chain? >> When we went public our primary workhorse platform was Hortonworks Data Platform. We had first class cloud services with Azure HDInsight and Hortonworks Data Cloud for AWS, curated cloud services pay-as-you-go, and Hortonworks DataFlow, I call as our connective tissue, it manages all of your data motion, it's a data logistics platform, it's like FedEx for data delivery. It goes all the way out to the edge. There's a little component called Minify, mini and ify, which does secure intelligent analytics at the edge and transmission. These smart manufacturing lines, you're gathering the data, you're doing analytics on the manufacturing lines, and then you're bringing the historical stuff into the data center where you can do historical analytics across manufacturing lines. Those are the use cases that are connect the data archives-- >> Dave: A subset of that data comes back, right? >> A subset of the data, yep. The key events of that data it may not be full of-- >> 10%, half, 90%? >> It depends if you have operational events that you want to store, sometimes you may want to bring full fidelity of that data so you can do ... As you manufacture stuff and when it got deployed and you're seeing issues in the field, like Western Digital Hard Drives, that failure's in the field, they want that data full fidelity to connect the data architecture and analytics around that data. You need to ... One of the terms I use is in the new world, you need to play it where it lies. If it's out at the edge, you need to play it there. If it makes a stop in the cloud, you need to play it there. If it comes into the data center, you also need to play it there. >> So a couple years ago, you and I were doing a panel at our Big Data NYC event and I used the term "profitless prosperity," I got the hairy eyeball from you, but nonetheless, we talked about you guys as a steward of the industry, you have to invest in open-source projects. And it's expensive. I mean HDFS itself, YARN, Tez, you guys lead a lot of those initiatives. >> Shaun: With the community, yeah, but we-- >> With the community yeah, but you provided contributions and co-leadership let's say. You're there at the front of the pack. How do we project it forward without making forward-looking statements, but how does this industry become a cashflow positive industry? >> Public companies since end of 2014, the markets turned beginning at 2016 towards, prior to that high growth with some losses was palatable, losses were not palatable. That his us, Splunk, Tableau most of the IT sector. That's just the nature of the public markets. As more public open-source, data-driven companies will come in I think it will better educate the market of the value. There's only so much I can do to control the stock price. What I can from a business perspective is hit key measures from a path to profitability. The end of Q4 2016, we hit what we call the just-to-even or breakeven, which is a stepping stone. On our earnings call at the end of 2016 we ended with 185 million in revenue for the year. Only five years into this journey, so that's a hard revenue growth pace and we basically stated in Q3 or Q4 of 17, we will hit operating cashflow neutrality. So we are operating business-- >> John: But you guys also hit a 100 million at record pace too, I believe. >> Yeah, in four years. So revenue is one thing, but operating margins, like if you look at our margins on our subscription business for instance, we've got 84% margin on that. It's a really nice margin business. We can make that better margins, but that's a software margin. >> You know what's ironic, we were talking about Red Hat off camera. Here's Red Hat kicking butt, really hitting all cylinders, three billion dollars in bookings, one would think, okay hey I can maybe project forth some of these open-source companies. Maybe the flip side of this, oh wow we want it now. To your point, the market kind of flipped, but you would think that Red Hat is an indicator of how an open-source model can work. >> By the way Red Hat went public in 99, so it was a different trajectory, like you know I charted their trajectory out. Oracle's trajectory was different. They didn't even in inflation adjusted dollars they didn't hit a 100 million in four years, I think it was seven or eight years or what have you. Salesforce did it in five. So these SaaS models and these subscription models and the cloud services, which is an area that's near and dear to my heart. >> John: Goes faster. >> You get multiple revenue streams across different products. We're a multi-products cloud service company. Not just a single platform. >> So we were actually teasing this out on our-- >> And that's how you grow the business, and that's how Red Hat did it. >> Well I want to get your thoughts on this while we're just kind of ripping live here because Dave and I were talking on our intro segment about the business model and how there's some camouflage out there, at least from my standpoint. One of the main areas that I was kind of pointing at and trying to poke at and want to get your reaction to is in the classic enterprise go-to-market, you have sales force expansive, you guys pay handsomely for that today. Incubating that market, getting the profitability for it is a good thing, but there's also channels, VARs, ISVs, and so on. You guys have an open-source channel that kind of not as a VAR or an ISV, these are entrepreneurs and or businesses themselves. There's got to be a monetization shift there for you guys in the subscription business certainly. When you look at these partners, they're co-developing, they're in open-source, you can almost see the dots connecting. Is this new ecosystem, there's always been an ecosystem, but now that you have kind of a monetization inherently in a pure open distribution model. >> It forces you to collaborate. IBM was on stage talking about our system certified on the Power Systems. Many may look at IBM as competitive, we view them as a partner. Amazon, some may view them as a competitor with us, they've been a great partner in our for AWS. So it forces you to think about how do you collaborate around deeply engineered systems and value and we get great revenue streams that are pulled through that they can sell into the market to their ecosystems. >> How do you vision monetizing the partners? Let's just say Dave and I start this epic idea and we create some connective tissue with your orchestrator called the Data Platform you have and we start making some serious bang. We make a billion dollars. Do you get paid on that if it's open-source? I mean would we be more subscriptions? I'm trying to see how the tide comes in, whose boats float on the rising tide of the innovation in these white spaces. >> Platform thinking is you provide the platform. You provide the platform for 10x value that rides atop that platform. That's how the model works. So if you're riding atop the platform, I expect you and that ecosystem to drive at least 10x above and beyond what I would make as a platform provider in that space. >> So you expect some contributions? >> That's how it works. You need a thousand flowers to be running on the platform. >> You saw that with VMware. They hit 10x and ultimately got to 15 or 16, 17x. >> Shaun: Exactly. >> I think they don't talk about it anymore. I think it's probably trading the other way. >> You know my days at JBoss Red Hat it was somewhere between 15 to 20x. That was the value that was created on top of the platforms. >> What about the ... I want to ask you about the forking of the Hadoop distros. I mean there was a time when everybody was announcing Hadoop distros. John Furrier announced SiliconANGLE was announcing Hadoop distro. So we saw consolidation, and then you guys announced the ODP, then the ODPI initiative, but there seems to be a bit of a forking in Hadoop distros. Is that a fair statement? Unfair? >> I think if you look at how the Linux market played out. You have clearly Red Hat, you had Conicho Ubuntu, you had SUSE. You're always going to have curated platforms for different purposes. We have a strong opinion and a strong focus in the area of IoT, fast analytic data from the edge, and a centralized platform with HDP in the cloud and on-prem. Others in the market Cloudera is running sort of a different play where they're curating different elements and investing in different elements. Doesn't make either one bad or good, we are just going after the markets slightly differently. The other point I'll make there is in 2014 if you looked at the then chart diagrams, there was a lot of overlap. Now if you draw the areas of focus, there's a lot of white space that we're going after that they aren't going after, and they're going after other places and other new vendors are going after others. With the market dynamics of IoT, cloud and AI, you're going to see folks chase the market opportunities. >> Is that dispersity not a problem for customers now or is it challenging? >> There has to be a core level of interoperability and that's one of the reasons why we're collaborating with folks in the ODPI, as an example. There's still when it comes to some of the core components, there has to be a level of predictability, because if you're an ISV riding atop, you're slowed down by death by infinite certification and choices. So ultimately it has to come down to just a much more sane approach to what you can rely on. >> When you guys announced ODP, then ODPI, the extension, Mike Olson wrote a blog saying it's not necessary, people came out against it. Now we're three years in looking back. Was he right or not? >> I think ODPI take away this year, there's more than we can do above and beyond the Hadoop platform. It's expanded to include SQL and other things recently, so there's been some movement on this spec, but frankly you talk to John Mertic at ODPI, you talk to SAS and others, I think we want to be a bit more aggressive in the areas that we go after and try and drive there from a standardization perspective. >> We had Wei Wang on earlier-- >> Shaun: There's more we can do and there's more we should do. >> We had Wei on with Microsoft at our Big Data SV event a couple weeks ago. Talk about the Microsoft relationship with you guys. It seems to be doing very well. Comments on that. >> Microsoft was one of the two companies we chose to partner with early on, so and 2011, 2012 Microsoft and Teradata were the two. Microsoft was how do I democratize and make this technology easy for people. That's manifest itself as Azure Cloud Service, Azure HDInsight-- >> Which is growing like crazy. >> Which is globally deployed and we just had another update. It's fundamentally changed our engineering and delivering model. This latest release was a cloud first delivery model, so one of the things that we're proud of is the interactive SQL and the LLAP technology that's in HDP, that went out through Azure HDInsight what works data cloud first. Then it certified in HDP 2.6 and it went power at the same time. It's that cadence of delivery and cloud first delivery model. We couldn't do it without a partnership with Microsoft. I think we've really learned what it takes-- >> If you look at Microsoft at that time. I remember interviewing you on theCUBE. Microsoft was trading something like $26 a share at that time, around their low point. Now the stock is performing really well. Stockinnetel very cloud oriented-- >> Shaun: They're very open-source. >> They're very open-source and friendly they've been donating a lot to the OCP, to the data center piece. Extremely different Microsoft, so you slipped into that beautiful spot, reacted on that growth. >> I think as one of the stalwarts of enterprise software providers, I think they've done a really great job of bending the curve towards cloud and still having a mixed portfolio, but in sending a field, and sending a channel, and selling cloud and growing that revenue stream, that's nontrivial, that's hard. >> They know the enterprise sales motions too. I want to ask you how that's going over all within Hortonworks. What are some of the conversations that you're involved in with customers today? Again we were saying in our opening segment, it's on YouTube if you're not watching, but the customers is the forcing function right now. They're really putting the pressure one the suppliers, you're one of them, to get tight, reduce friction, lower costs of ownership, get into the cloud, flywheel. And so you see a lot-- >> I'll throw in another aspect some of the more late majority adopters traditionally, over and over right here by 2025 they want to power down the data center and have more things running in the public cloud, if not most everything. That's another eight years or what have you, so it's still a journey, but this journey to making that an imperative because of the operational, because of the agility, because of better predictability, ease of use. That's fundamental. >> As you get into the connected tissue, I love that example, with Kubernetes containers, you've got developers, a big open-source participant and you got all the stuff you have, you just start to see some coalescing around the cloud native. How do you guys look at that conversation? >> I view container platforms, whether they're container services that are running one on cloud or what have you, as the new lightweight rail that everything will ride atop. The cloud currently plays a key role in that, I think that's going to be the defacto way. In particularly if you go cloud first models, particularly for delivery. You need that packaging notion and you need the agility of updates that that's going to provide. I think Red Hat as a partner has been doing great things on hardening that, making it secure. There's others in the ecosystem as well as the cloud providers. All three cloud providers actually are investing in it. >> John: So it's good for your business? >> It removes friction of deployment ... And I ride atop that new rail. It can't get here soon enough from my perspective. >> So I want to ask about clouds. You were talking about the Microsoft shift, personally I think Microsoft realized holy cow, we could actaully make a lot of money if we're selling hardware services. We can make more money if we're selling the full stack. It was sort of an epiphany and so Amazon seems to be doing the same thing. You mentioned earlier you know Amazon is a great partner, even though a lot of people look at them as a competitor, it seems like Amazon, Azure etc., they're building out their own big data stack and offering it as a service. People say that's a threat to you guys, is it a threat or is it a tailwind, is it it is what it is? >> This is why I bring up industry-wide we always have waves of centralization, decentralization. They're playing out simultaneously right now with cloud and IoT. The fact of the matter is that you're going to have multiple clouds on-prem data and data at the edge. That's the problem I am looking to facilitate and solve. I don't view them as competitors, I view them as partners because we need to collaborate because there's a value chain of the flow of the data and some of it's going to be running through and on those platforms. >> The cloud's not going to solve the edge problem. Too expensive. It's just physics. >> So I think that's where things need to go. I think that's why we talk about this notion of connected data. I don't talk hybrid cloud computing, that's for compute. I talk about how do you connect to your data, how do you know where your data is and are you getting the right value out of the data by playing it where it lies. >> I think IoT has been a great sweet trend for the big data industry. It really accelerates the value proposition of the cloud too because now you have a connected network, you can have your cake and eat it too. Central and distributed. >> There's different dynamics in the US versus Europe, as an example. US definitely we're seeing a cloud adoption that's independent of IoT. Here in Europe, I would argue the smart mobility initiatives, the smart manufacturing initiatives, and the connected grid initiatives are bringing cloud in, so it's IoT and cloud and that's opening up the cloud opportunity here. >> Interesting. So on a prospects for Hortonworks cashflow positive Q4 you guys have made a public statement, any other thoughts you want to share. >> Just continue to grow the business, focus on these customer use cases, get them to talk about them at things like DataWorks Summit, and then the more the merrier, the more data-oriented open-source driven companies that can graduate in the public markets, I think is awesome. I think it will just help the industry. >> Operating in the open, with full transparency-- >> Shaun: On the business and the code. (laughter) >> Welcome to the party baby. This is theCUBE here at DataWorks 2017 in Munich, Germany. Live coverage, I'm John Furrier with Dave Vellante. Stay with us. More great coverage coming after this short break. (upbeat music)

>> Voiceover: Live, from Orlando, Florida, it's theCUBE. Covering SapphireNow. Headlines sponsored by SAP Hana Cloud, the leader in platform as a service, with support from Console, Inc., the Cloud internet company. Now, here are your hosts, John Furrier, and Peter Burris. >> Okay, welcome back everyone. We are here live in Orlando, Florida, for SAP Sapphire coverage from SiliconANGLE Media, theCUBE, our flagship program. We go out to the events, and extract the signal for the noise. Want to give a shout out to our sponsors, who allow us to get here, SAP Hana Cloud platform, Console, Inc., EMC, Cap Gemini, thanks for supporting us. We appreciate it. Our next guest is Mitch Kick, Global Vice President, Head of Strategy and Programs for SAP Global Ecosystem. We love strategy guys because, they get the chess board. And they look like they're always playing chess, 3-D chess. Been looking at the landscape, looking at the horse on the track. Welcome to The Cube. >> Thank you very much. Good to be here. >> It's an evolving ecosystem. It's fluid, but yet, active. The Apple announcement, certainly notable news for SAP. Certainly, the Cloud, mobile, social data trend, the confluence of those things, causing massive innovation surge. So you, got a lot going on. >> Absolutely. >> What is the current ecosystem? >> Well, you know, when you think about the way SAP looks at it's ecosystem, I mean certainly we have those traditional types of partners, who resell our product. But, when we talk about our global ecosystem, we're really talking about those partners who are either strategic service partners, technology partners, some emerging partners and names that you mentioned, like Apple, Uber, Facebook, some of these, they're not your grandfathers, SAP partners. And so, we're really moving to partner in new ways. To co-innovate new types of solutions, that take advantage of the trends in the digital landscape. >> John: Like what are you doing with Facebook? >> Well, Facebook is an example, it's something where we said, "Look, there's all this social data," "that's out there. How do we put that together with" "our Hybris, CEC, types of solutions," "our commerce solutions?". To basically allow marketers to do one-to-one marketing, that leverages the power of Facebook data, and your enterprise data, brings it together in a very manageable tool. >> That must've been a very hard deal, because they're very controlled about their data. And also, each person has their profile settings. So, that's awesome. >> Yeah, and it's something that allows for marketers to just do much more targeting, much more insightful targeting. You know, we announced that last year and over the course of the last year had a number of really interesting pilot examples. >> Can developers get involved in that Or is this more of SAP directly, kind of thing? >> Well that, is an example of where we are creating a solution that sort of packages it turnkey. But, you know when you think something like in Apple, the beauty of that one is, not only are we developing these beautiful industry applications, that are going to be in targeted industries, and I don't know if you saw them, they were out on the floor here. >> Yeah, impressive. >> With regard to retail, or with regard to.. >> Well start-ups will come out of the woodwork just in a short time, have hundreds of employees, with this ecosystem. >> Well, exactly. I guess the point I was making with the Apple deal, is not only are we working with to design some really incredible industry apps, but then we're also creating the software developer kit, making that into the Hana Cloud platform, so that if you're developing on Hana Cloud platform, it now becomes another compelling reason you can leverage these beautiful interfaces, and these beautiful tools, that take full advantage of native capabilities on the Apple devices. And so it's a way that our partnership not only delivers, kind of near-term solutions that matter for us, but enables our broader ecosystem of solution partners to capitalize. >> It's fastest to innovation. I mean, you're going to get more R and D, and then real production apps faster that way. >> Absolutely. >> From the developer. So that's Core. David Valente and I always talk about courses for horses, which is, you know, certain things fit certain ways. There seems to be now, with the Cloud platform, an opportunity for developers to come in. So I want you to explain how Hana fits in. 'Cause this, Hana Cloud and then this Hana Cloud platform. What's the difference between the two? Can you just quickly share what that means to the ecosystem? >> Well, Hana as a database, I mean, the thing about the Hana Cloud Platform is that, that creates platform for our solution partners to extend, and integrate, as well as build and develop on it. And you'd say, "Well, as a platform as a service," "are you guys using HCP, to go out there and win" "the past wars?" In the generic sense of the past, that's really not the intention. The intention is, we've got this huge installed base. We've got these service partners, who are working very closely with their customers to innovate on top of, so that once our customers move to that digital core of S4 Hana, they can use HCP as that extension and integration platform, to tie together a number of different things. And a lot of the things that are, you know, when you think about digital transformation, there is so much activity, and discussion around the customer experience, and architecting a beautiful customer experience, with mobile devices, with you know, targeted types of commerce on the front end. But, what people are coming to realize, I think, is the importance of having that end-to-end. Because, you aren't going to be able to deliver the beautiful experience. And so, the example with, you know I was on a panel yesterday with Uber and Tumi. As an example, Tumi, luxury retailer that wants to create, not only a compelling customer experience that embodies the best of its luxury brand, but also is facing the threat of Amazon Prime Same-Day delivery, in metropolitan areas. And the beauty is, by partnering with Uber, and SAP, we are able to incorporate that seamlessly, as an option for Same-Day delivery. They can deliver in 30 minutes, for seven dollars, it's game-changing. That's an example of where we provide, here at this event, an early window into the type of co-innovation that we are doing. It's sort of like, in the past where you'd think, "Well, SAP has a certain solution footprint," "and we're going to partner with other software companies," "who can plug-in to that footprint.". Now you have, in the new world, where there are industry ecosystems like Uber, platforms that you can capitalize on, it's the business network. You can plug-in business networks to, an overall solution to customers, that's really compelling and that delivers opportunities in ways that we couldn't have imagined a few years ago. >> I want to build on that. So, historically, strategy has been three to five years, tied to asset values, mainly fixed asset values, and how are we going to generate a return in those fixed asset, over an extended period of time. You're describing a world where, whereas especially as those assets become more programmable, they can be applied to a broader array of activities, and opportunities, where the horizon starts to shrink pretty dramatically, the strategic horizon. And it becomes more, "What capabilities do we have?", and "How do we improve those capabilities," "and drive them forward?". And that's a crucial way of thinking about partnerships, is partnerships, as capabilities. I think that's where you were going. >> Absolutely. >> Are you thinking now about partnerships in the ecosystem as crucial capabilities, not only for SAP, but for SAP customers? >> They've always been, in many ways, when you think about, customers need a whole solution. In the past, even when the on-prem software world, you didn't get the whole solution by just buying the software package, it required a lot of additional service. With the Cloud model's that are emerging, it's much more easy to consume the software functionality, but there still is a tremendous amount of on-going innovation, differentiation, customization. And that's why when you look at, a lot of where we're going with our solution, you can hear Mike Getlin talking about our success factors product, and the fact that, "Well, how do partners help us?", "Do our service partners help us in the same way" "of just implementing software?". No. There role is really in integrating and extending it, and creating micro-services on top of it, that then say, "This is a really unique capability" "that's essential for delivering value" "to this particular customer or client.". So, you're now finding that because of our ecosystem, that is getting plugged into these new ways of contributing, we can now have a broad array of contribution. People understand how they can plug-in and capitalize on that, and deliver real innovation and benefit to the end customer. >> So you look a lot at industry trends. As you walk the floor here, what trends are starting to emerge, for you, and what is getting you excited, as a strategist? >> From my standpoint, when you think about digital transformation, and honestly, we were joking a lot about this whole term, because when it first game out, it was sort of like, "I'm not familiar with anyone who's actually" "doing analogue transformation.". All IT is digital. We've been doing digital things for years. And transformation, I mean, I was involved in the early '90s and the big re-engineering wave. Right? Where you're re-engineering, using technology and what not, so what is really different here? And I think what we see, is that, through all these trends, there's sort of confluence of them, and people map out a dozen, two dozen different trends that are going to change the world, they speak breathlessly about all these things. But in the end, what difference does it really make? From my standpoint, it's really three. One is you're starting to see all these things change the customer experience, fundamentally. Right? To the real-time, mobile devices, one-to-one. That's being enabled now. You're also seeing the difference in how value is delivered, in terms of IOT, instrumenting the broader landscape, etc. And you're seeing a difference in business models, in terms of how value is captured. You can think about it as, "Well, how is value consumed?", "How is value being delivered?", "How is value being captured?". The real, so what, is that all these different individual technology trends are combining to make those differences happen, that enable completely different ways of making money, of growing of opportunity. >> It changes the analogue, where, the analogue piece used to be the transactional, digital then hands off to analogue, or vice versa. That whole thing, end-to-end you just talked about, is an end-to-end digital. But the analogue role of the person, is augmented differently. So what you said is interesting because, I think people look at it differently and say, "Hey, if it's digital end-to-end," "where does analogue fit in?". Well still, people walking around here at the show, we're face-to-face, so I think it's interesting when you look at the optimization of digital. I'll take sales leads, for instance or marketing automation. You know, get the form, pass the leads to the sales people, they go knock on the door, call, email, that's analogue transaction. That's now digital. >> Mitch: Right. >> But the still, analogue components. What's your thoughts on that? How do you look at it? 'Cause you still got to do business, the people still are going to be involved. >> That really hit home when we were talking about this Uber example, because everybody talks about Tumi, they were talking about, "Well, its a beautiful experience." for somebody to be able to then say, "I got a one-hour delivery.". We can all identify with going to a retail outlet and they say, "Oh, I'm sorry, we don't have any more" "of those in the store, but we've got one" "that's 40 minutes away, if you want to go drive there.". Well, what if now all of the sudden you can get the product in to this store, in the next 30 minutes? Or, deliver it to wherever you happen to be, in 30 minutes? That changes the game. >> John: And that's user experience. >> Yeah. But, the thing is, so that's nifty, that's great, it's really compelling. But, when you start thinking about what it would take to work this, okay? Well now, you're going to have to have an implication for those retail store people. And so, this notion of, "How are we making this" "a beautiful experience for the retail clerk?", who now, instead of just serving the store, is going to get pinged because, "Hey, wait a minute," "we've got some deliveries that you're going to have to" "pick and pack, to get ready for some Uber driver" "to come in." That's a change to them. So, when you talk about implication, that highlights all of the, "change management", all of the, "how does it make a difference" "in individuals work?", and there's always going to be that last mile engagement that is needed. And that's really when you start talking about trends, how do we see things changing, I think about our service partners, I see their role changing to enable the real business change. >> Well that's it, that's it. The impact is clear. Totally agree, 100%. It's the confluence that magnifies that change, and its massive. It's frickin' awesome. Everyone can look at it and say, "Damn, its going to be big!". My final question to you is, given that impact, what advice are you sharing with your ecosystem, in terms of how to prepare for it? How to be ready not to go out of business, or help your customers not go out of business? And enable them to actually compete, digitally, in the transformation. >> Well, when we look at it, part of the challenge is that the ecosystem is so diverse, that you know, often your guidelines are speaking to specific people. The one thing I would say is, everybody is going out and talking a digital message, we need to be on the same song sheet. So when your solution partner, or service partner, and you've got your own offerings, your own reference architecture's, et cetera, let's work together to make sure that we are all singing from the same sheet. Second thing is, it's really imperative that we, basically migrate our installed base, to the digital core. So, S4 Hana, getting enabled around that, making that change happen, that enables all sorts of other benefits. And the third thing would be, the importance of then leveraging Hana Cloud platform. Because, the integrations that were hard coded, from yesterday, are no longer valid. So, if you leverage Hana Cloud platform from integration standpoint, you're really allowing for this much more agile, and fluid, innovation cycle to happen, in a much faster clip. And that's really what our customers are going to need, and it's going to take all of us working together to deliver that promise, of digital transformation. >> Well the Apple deal puts you guys front and center, on the user experience side, consumerization of IT. The chess board, multiple dimensions of chess, going on at the SAP ecosystem. Mitch, thanks for coming on. >> Absolutely. >> Welcome to The Cube Alumni Club. This is The Cube here live at Sapphire, we'll be right back. You're watching, The Cube.