 And Keith, hi how are you, Dave Vellante. Hey, nice to see you. Pleasure to see you, how's it going? Great. All right, Keith is the EVP of the business analytics solutions side of the house. Yes I am. Good to have you, analytics is pretty hot, you guys are focused on. Growing fast, yeah. Yeah, so, well let's start with Sapphire, I mean, big show, we were here last year broadcasting live at theCUBE and the themes last year were kind of new for SAP, first of all, there was a lot of talk about the co-CEOs. Right, that was sort of. That was new. That was new and then CyBase was, the ink was just flying on that deal. So, people like CyBase, Mobile really? And then, so you guys are showing some proof points there today, had an announcement today around that. That's correct. Had an announcement yesterday on EPM, you've got a lot of talk on analytics. Bill McDermott today used the term big data. Right. In many ways you guys, you are a data company, I mean, you're a software company but you have a lot of data running around this firm. So, talk about the role of analytics, your role at the company and we're seeing a real transformation of SAP and a real emphasis on analytics and business intelligence. Right. Let's talk about that a little bit. So, first of all, what's your primary function? What's your area of focus? So, I have responsibility for a set of analytic applications that we've been building out for about the last year and a half. And as you may recall, last September, Bill McDermott and I announced this new, our new foray into analytic applications. And we started out by focusing on a set of industries that we targeted to build very specific use cases that our customers have to normally build with the analytic tools that we sell on their own. So, we had this idea that we could build analytic applications, co-innovating with customers and getting those to market as products that they could buy instead of having to buy all the tools. Now, our customers end up buying both because the analytic apps that we build only deal with a specific use case that could be enterprise risk and reporting for banks or supplier, you know, suspended analytics, these kinds of things. So, and we've seen great success in a growing pipeline and this sort of thing and I've been very happy with the traction that we get because it gives us another angle, another way to interact with our customers and add value. We had Stephanie on yesterday and she was talking about the spectrum of analytics from kind of reporting all the way to predictive analytics is, and where do you fit on that spectrum? Is you span the whole spectrum? The whole spectrum. So, what we do is we use in our architecture all of the capabilities that SAP brings to the table and we combine those in unique ways and pre-configure those if you will for a specific use case, either a line of business use case or a vertical use case. And, you know, some of the demonstrations or prototypes that you're seeing here at Sapphire that leverage some of the new and advanced technologies that we're building, whether that's the mobile viewer technology that we're bringing to the marketplace that's built on top of the CyBase OnWire platform or HANA even, those are all analytic opportunities for us to build something specific for our customers. Let's talk some of these use cases, Keith. Can you give us some examples? An example would be one of the ones that we showed at our launch which is for retail companies which helps them optimize the space that they have, the shelf space that they're trying to rearrange in such a way that they optimize throughput and that they make sure that they've got the right inventory on hand and so forth. And so we built the retail sales analysis analytic application to deal with that specific case that our customers have. Now, how about mobile? We're hearing a lot of talk about mobile. I presume that's a big part of what we're hearing a lot about analytics on mobile devices. So where does that fit within your purview and the initiative? Yeah, well, in order for analytics to be impactful, they need to be wherever the business user is in their daily working life. And in many cases, the business users that we're targeting aren't at a desk. So just being on a laptop or a desktop isn't sufficient and we're making our analytic gaps wherever there is a mobile use case to be defined that our co-innovation customers say is necessary, whether that's a claims agent that's out in the, out with customers looking at various claims that they need to make in an insurance company or any other kind of use case where the user is really out and about. You need a mobile angle to that and you probably aren't providing the full range of analytic capabilities on the mobile device. You want to pair that down for the very specific needs of that person that's out in the field. So I want to talk a little bit about complexity and simplicity. It's a big topic. You see the consumerization of IT, driving trends, trends toward simplicity. And then you've got this base of software, rich customer base, demanding a lot of functions. Analytics are very complicated to look at your business and slice it and dice it a zillion different ways is a complicated task. At the same time, you know, a lot of enterprise software has functioned that may or may not be necessary. People really trying to optimize their business around just a couple of metrics. So how do you balance the need for rich function and all that complexity that you're designing with them drive to mobile and simplicity? Yeah. Well, first of all, we get very focused on what it is that the specific co-innovation customers need. So we don't build an analytic app unless customers tell us that it's a need. We have these roadmaps to find. They can look at the roadmaps and we pick a specific point where there's an inflection of need and we build it out with them and they advise us, we're building an analytic application that needs to apply to many customers in that industry even though it could be a relatively narrow use case. What we consider narrow, a solvency to compliance in the European Union for insurance companies is a big topic and they need to comply with this legislation and the European Union in a couple of years. So they're getting very smart about whether they've got capital in place to underwrite specific insurance policies that they've written. And so you may say, well, that's narrow. Well, it applies to every insurance company in Europe and that will become pervasive in other parts of the globe. So even this is more of a statutory requirement. There's lots of complexity in there and many consultancies are advising them and we're working with our partners and customers to define that set of requirements. Now what they may do is for different departments within the insurer, they'll break that down into those KPIs and measures that are relevant to that department. Right, okay. So there's still a fair amount of customization that you're able to do there. We can. And or the ecosystem can do it. Yes, exactly. How about this notion of data? Bill McDermott talked about big data today and where do you see data fitting in to your product strategy? Well, it's fundamental. Without data, you can't do analytics. And without analytics, I don't know that the data makes a whole lot of sense, right? Do you see a day when you can actually develop products around data? Is that something that's just in the mid to near to mid term? Or is that just something that really is going to be left to other companies? You know, a lot of these web 2.0 companies, Google, Facebook, et cetera. Is that something that, can you see the day where SAP actually packages and monetizes data? Data as a product itself? Or is that something you're going to just enable your customers to do? Well, you know, we're seeing forms of that in our incubator. We have an incubator team that does very, you know, sort of far out looking projects, if you will, but they're looking to build a product that we can actually bring to market. And they're working with co-innovation customers too. And what they're doing in essence is they're looking at data that's within, I'll call it within the SAP ERP framework. And they're looking at data that, for example, here's the use case that I've seen where they've gone to a number of clients in the aerospace and defense industry. They share 50 to 60% of the same suppliers. And if they basically call that data and aggregate it and anonymize it, they can actually do analytics on top of it to help these companies, these aerospace and defense companies understand where there might be a risk in their supply chain with one of their suppliers or whether there's something that they might want to optimize. And so those are the types of services which become a product that we can offer to our customers because we know our data, what's stored in ERP so well. I think those kinds of services that become products I think we could get into. And with HANA, it makes it a heck of a lot easier because we can essentially replicate the data, although we're not really replicating it. We're just instantiating it in another form in another environment. And we can analyze that data very, very quickly. But selling the data that's not from within SAP becomes challenging because of all the concerns you have about privacy. And customers own the data. Yes, exactly. So do you ever have customers saying, hey, we want you to help us do that, help us monetize our own data? Is that something that you can see in the next five years? Occasionally there are customers who broach that topic with us, but that's not our core business, right? And so, yeah, I mean, there are customers out there who have all kinds of business models where they're deriving tremendous amounts of data from their client base. You can think of something like satellite TV, these TV networks, and the data they're getting about what you choose, what movies you choose, what channels you watch, et cetera, et cetera. There's lots of data there, but that's not our core business to take that data and create a product from it. Yeah, although it may be increasingly their core business to do that, and they'll be relying on your software to do so. One of the things that we talk about, Keith, in the Wikibon community is, when we talk to companies using analytic systems, there's a tension between the line of business wanting functionality, wanting it now, wanting to do what they want to do in their narrow stovepipe, and the IT department wanting to standardize our own systems. And so, you know, we're seeing this sort of, interesting tension between IT and the line of business, and of course, it's exacerbated by the fact that you've got a lot of consolidation going on in that industry, you've got a lot of point products out there. What's SAP's take on that, and are you hearing that, and how are you navigating through that tension field? Well, you know, this is something that's been going on for a long time, and as the tools become much more user-friendly, and so business analysts can actually configure the tools to do what they want, the IT departments begin to have issues with, they may not have as big a role as they used to have in the development of that solution. Well, one of our benefits, I think, is that we've actually pre-configured the solution for them so that the IT can be part of the process and work with the business users to say, here's a solution, it meets 80% of your needs. 20% of this we're going to have to modify and tailor to our specific needs, and we'll help you get the data that you need and make sure that it's in a trusted form for you, the business user, to analyze on a daily basis. And so what we're trying to do is create an environment where IT and the users come together and get something up and running, not in 12 months or 18 months, but in six weeks or eight weeks, and start to derive value from that, and that standardization is already built into the architecture and the data forms that we've shipped with the products. What's the biggest change that you've seen in the whole analytics space in the last couple of years, and what do you think that means going forward? Well, I think we may be on, and Bill and Jim have discussed this kind of concept over the last year or so, and what we're starting to see is that the switch to the line of business and decision making is becoming very real, and we spent decades doing our best to automate and to optimize business processes, and before that just transactions. And now what's happening is there's sort of a new wave of enterprise applications, I believe, that will be coming to market in great number, and those are all focused on analytics and decision making. They're decision making applications. It's the next wave of an ERP-like set of products that will be sold in the software space, and I think over time what you'll see is that many companies spring up in an ecosystem, and so one of the things that we're trying to do is to build a developer kit. You heard a little bit about that when Jim talked about the mobile piece of that, and so that we can go to market with a comprehensive developer kit where our partners can build analytic applications with mobile functionality, within memory, with other advancements that we make, and build it in a standardized way, a way that we feel confident that when delivered to our joint clients is well-conceived and is built on a set of standard technology that we support. And so that's kind of the future of really opening this up, because SAP, for all its resources, does have limited resources to build these specific products, right? We were talking to Oliver Busman, your CIO, about the notion of an app store, and I asked him, is SAP analogous to an Apple or a Zynga or both, and his answer was both. We see ourselves as the platform and also the application developer, and you're putting forth a scenario where you've got the platform, you've got your own analytic applications, maybe other business applications, and then your ecosystem partners with applications. So what do you have to do to take that role on of the analogous to Apple role, the platform vendor? What do you have to change about the way in which you deal with your ecosystem? I mean, Apple's very controlling in terms of how it adjudicates which apps go where and when they get released and the standards. I mean, are you putting those capabilities in place? Is that something that you need to learn how to do? And what are your thoughts there? I think that's where we need to go, and the reason why is because we can't do it all on our own. Our clients have, they're asking us for, we have no shortage, let me just put it this way, we have no shortage of clients coming to us and saying, we've got this idea and we've talked to five of our, our competitors, because they all talk and they all want the same thing. And so, and they used to do this to us in the industry specific solutions that they wanted in ERP. And even horizontal capabilities that they wanted, they get together, our user group is very powerful. And so we're starting to hear the same thing, which is that we, and we share with them openly our roadmaps and they say, okay, when am I getting that? Well, that's two years out. That's too far away. We need it like now. Then what we need to be able to do is approach our ecosystem and say, we've got this standard developer kit. And make that easy to use. Don't make that laborious to sign up to a program. Don't make it too expensive. You know, these, to do volume, you need to be accessible. And of course we want to make money off of it and we want to proliferate our technology in the marketplace. That's, you know, what the play is for us. Yeah, and it's a fine line, right? I mean, because you've got on the one hand, you want to be the platform vendor and maybe you can take a big on every application that's sold, for example, again, the Apple model. At the same time, you know, there's competition with the ecosystem in certain ways. And in fact, you could say that about Apple. You could say that about Facebook and you can certainly say that about Google. So that's a new learning for SAP, isn't it? I think it's new, just because the players that we're looking to partner with in the ecosystem aren't the traditional SAP players. We're looking at the traditional players absolutely want to be in this space. But there's a whole range of partners who have very distinct knowledge about consumer goods companies in the Midwest of the United States and how to interact with them and get requirements from them. And they want to build an analytic application that's not only sold in the Midwest, but sold throughout the country or maybe throughout the world. And we can provide that channel for them, right? To market. But we may not have the time, the resources, the expertise to build that analytic application or another kind of application, a mobile application. And that's where we want to go with this. It was a very powerful concept. I mean, the whole notion of SAP becoming essentially the Facebook or the Apple of the enterprise app store. I mean, it's the right strategy, it's the right vision. It's just good vision, right? A lot of work to get there. Yeah, I mean, what I think we're fortunate with is that we have the fundamental components, whether it's industry expertise, line of business expertise, the channel, the board backing. The brand. Even the technology, the brand, the technology investments that we're making, et cetera. So we've got the, I'd say we've got the right vectors. Now we got to put it all together and actually deliver, which is what we've fundamentally done for 38 years. Yeah, I mean, we had Jim Hageman-Shinabe in theCUBE yesterday and you get a real sense in talking to him that you guys do a lot of serious R&D. You take it seriously. And I think that is definitely an advantage. No doubt about it. And we're seeing an interesting transformation of SAP. I mean, the majority of your revenue still comes from the maintenance base, right? But you're investing that maintenance base and trying to innovate in new ways. We're talking about simplification. What I'm hearing from you is, in a lot of cases, you'll look to the ecosystem to help provide that simplification. Maybe reach some of those new opportunities. So it's a really kind of remaking SAP, aren't you? It's a new approach to the market where we tended to build everything on our own. Now what we want to be able to do is to build certain capabilities for the ecosystem that certainly have the SAP stamp of approval and the brand, but do a much broader job of opening that funnel for innovation and content for our customers. Yeah, I think there's real opportunities. I mean, obviously a major competitor wants to basically own the whole stack. And I think that's created a vacuum from a partnership standpoint. And you're seeing, I mean, we had EMC on earlier today and they were talking about the importance of SAP as a partner, that's a company with VMware and Cisco's doing a lot of partnering. And to me, you remember the PC days, right? Where you had sort of Apple doing everything and that worked, that was effective. And then you had the Microsoft's and Intel's sort of taking that ecosystem approach and ultimately got more leverage out of that model. I don't see why it wouldn't here. We talk a lot about Android as an, clearly Apple's doing very well, but the ecosystem approach can work. I mean, they can both work, but clearly SAP is becoming sort of this new partner-friendly company. At least that's my take. Yeah, I mean, and you can see that in the investments we're making and the programs that we're bringing to market through Eric Defoe's new ecosystem team, and they're very much focused on the go-to-market aspects, the sell-through, the channels that we're creating, and you can't do that unless you're able to bring to those partners a set of value-added capabilities that they can build their own products with. Yeah, I mean, if for every dollar somebody spends on an SAP license, you can claim, well, there's five or 10 or maybe even $15 spent within the ecosystem, you know, that's money in the pocket of your partners, that's good news, and I think that's the philosophy that you're taking, is that right? Yes, it's money in their pocket, but it's also money in ours. Yeah, right, I mean, there's one guy that makes a ton of money here, and a lot of guys make a little bit of money, and they're all happy, you know, it's like the old car dealers and car makers, right? The car makers made the big bucks, and the car dealers all did pretty well, though. They all had boats and summer homes, and, you know. As far as I know they did. Yeah, right. I think they still do. Actually, a lot of the car dealers probably did better than any of the car makers, so there you go, right? The ecosystem partners could do quite well, so. Excellent, well, we're here with Keith Costello, who's the EVP of SAP's analytics business. Keith, I appreciate you coming in on short notice of theCUBE, it was great to have you. Yeah, thanks for having me. And, you know, please follow us on siliconangle.tv, we'll have this video up for you, and have at it, so thank you very much. All right, take care. All right, that was Keith Costello.