 From the CUBE studios in Palo Alto in Boston, connecting with thought leaders all around the world, this is a CUBE conversation. As you may recall, coming into the second part of 2019, we reported based on ETR survey data that there was a narrowing of spending on emerging tech and an unplugging of a lot of legacy systems. This was really because people were going from experimentation into operationalizing their digital initiatives. When COVID hit, conventional wisdom suggested that there would be a flight to safety. Now interestingly, we reported with Eric Bradley, based on one of the Venns, that a lot of CIOs were still experimenting with emerging vendors, but this was very anecdotal. Today, we have more data, fresh data from the ETR Emerging Technology Study on private companies, which really does suggest that there's a notable decline in experimentation and that's affecting emerging technology vendors. Hi everybody, this is Dave Vellante and welcome to this week's Wikibon CUBE Insights, powered by ETR. Once again, Sagar Kadakia is joining us. Sagar is the director of research at ETR. Sagar, good to see you. Thanks for coming on. Good to see you again. Thanks for having me, Dave. So it's really important to point out this emerging tech study that you guys do, it's different from your quarterly technology spending intention survey. Take us through the methodology. Guys, maybe you could bring up the first chart and Sagar walk us through how you guys approach this. No problem. So a lot of the viewers are used to seeing a lot of the results from the technology spending intention survey or the TSIS as we call it. That study, as the title says, it really tracks spending intentions on more pervasive vendors, right? Microsoft, AWS as an example. What we're going to look at today is our emerging technology study, which we conduct bi-annually in May and November. This study is a little bit different. We asked CIOs around evaluations, awareness, planned evaluations. So kind of think of this as free spend, right? So that's a major differentiator from the TSIS. That and this study really focuses on private emerging providers, right? We're really only focused on those really emerging private companies, say like your series B to series G or H, whatever it may be. So kind of two big differences within those studies. And then today, what we're really going to look at is the results from the emerging technology study. Just a couple of quick things here. We had 811 CIOs participate, which represents about 380 billion in annual IT spend. So the results from this study matter, we had almost 75 Fortune 100s taken. So again, we're really measuring how private emerging providers are doing in the largest organizations. And so today we're going to be reviewing a few notable sectors, but largely this survey tracks roughly 356 private technologies and frameworks. All right guys, bring up the pie chart, the next slide. Now, Sagar, this is sort of a snapshot here. And it basically says that 44% of CIOs agree that COVID has decreased the organization's evaluation and utilization of emerging tech, despite what I mentioned, Eric Bradley's Venn, which suggested one CIO in particular said, hey, I always pick somebody in the lower left of the magic quadrant. But again, this is a static view. I know we have some other data, but take us through this and how this compares to other surveys that you've done. No problem. So yeah, so let's start with the high level takeaways. And I'll actually kind of get into the point that Eric was making, because that point is true. It's just really how you kind of slice and dice the data to kind of get to that. So what you're looking at here and what the overall takeaway from the emerging technology study was is, you are going to see notable declines in POC, so proof of concepts and evaluations because of COVID-19. Even though we have been communicating for quite some time, the last few months that there's increasing pressure for companies to further digitize with COVID-19, there are IT budget constraints. There's a huge pivot in IT resources towards supporting remote employees, a decrease in risk tolerance. And so that's why what you're seeing here is a rather notable number of CIOs, right? 44% that said that they are decreasing their organization's evaluation and utilization of kind of private emerging providers. So that is notable. Now, as you pointed out, you guys run this survey a couple of times a year. So now let's look at the time series. Guys, if you bring up the next chart, we can see how the sentiment has changed since last year. And of course, we're isolating here on some of the larger companies. So take us through what this data means. No problem. So how do we quantify what we just saw in the prior slide, right? So we saw 44% of CIOs indicating that they're going to be decreasing their evaluations, but what exactly does that mean? We can pretty much determine that by looking at a lot of the data that we captured through our emerging technology study. So there's a lot going on this slide, but I'll kind of walk you through it. What you're looking at here is Fortune 1000 organizations. Okay, so we really isolated the data to those organizations that matter. So let's start with the teal kind of green line first because I think it's a little bit easier to understand. What you're looking at, Fortune 1000 evaluations both planned and current, okay? And you're looking at a time series one year ago and six months ago. So two of the answer options that we provide CIOs in this survey, right? Think about the survey as a grid where you have seven answer options going horizontally and then 300 plus vendors and technologies going vertically. For any given vendor, they can essentially indicate one of these options, two of them being I'm currently evaluating them or I plan to evaluate them in six months. So what you're looking at here is effectively the aggregate number or the average number of Fortune 1000 evaluation. So if you look into May 2019, right? All the way on the left of that chart, that 24% roughly means that a quarter of selections made by Fortune 1000 survey, they selected plan to evaluate or currently evaluating, okay? If you fast forward six months to the middle of the chart, November 19, right? It's roughly the same, right? One in four technologies that a Fortune 1000 selected, they indicated that I plan or I'm currently evaluating them. But now look at that big drop off going into May 2020, right? The 17%, right? So now one out of every six technologies or one out of every six selections that they made was an evaluation. So a very notable drop. And then if you look at the blue line, this is another answer option that we provided CIOs. I'm aware of the technology but I have no plans to evaluate, right? So this answer option essentially tracks awareness levels. If you look at the last six months, look at that big uptick from 44% to over 50%, right? So now essentially one out of every two technologies or private technologies that a CIO is aware of, they have no plans to evaluate. So this is going to have an impact on the general landscape when we kind of think about those private emerging providers, but there is one caveat. And Dave, this is what you mentioned earlier. This is what Eric was talking about. The providers that are doing well are the ones that are work from home aligned. And so just like a few years ago, we were really analyzing results based on are you cloud native, are you cloud aligned? Because those technologies are gonna do the best. What we're seeing in the emerging space is now the same thing. Those emerging providers that enable organizations to maintain productivity for their employees, right? Essentially allowing their employees to work remotely. Those emerging providers are still doing well and that is probably the second biggest takeaway from this study. Well, so now what we're seeing here is this flight to perceive safety, which to your point, Sagar, doesn't necessarily mean good news for all, you know, enterprise tech vendors, but certainly for those that are positioned for the work from home pivot. So now let's take a look at a couple of sectors. We'll start with information security. We've reported for years about how the perimeter is being broken down and that more spend was gonna shift from, you know, inside the moat to a distributed sort of network. And that's clearly what's happened as a result of COVID. Guys, if you bring up the next chart, Sagar, you take us through this. No problem. And as you mentioned, I think that the big theme here is zero trust. So a couple of things here, and let me just kind of explain this chart a little bit because we're gonna be kind of going through a couple of these. What you're seeing on the X axis here is this is effectively what we're classifying as near term growth opportunity from all customers. The way we measure that effectively is we look at all the evaluations, current evaluations, planned evaluations. If you look at people who have evaluated and planned to utilize these vendors, the more indications you get on that, the more to the top right you're gonna be, the more indications you get around, I'm aware of, but I don't plan to evaluate or I'm replacing this early stage vendor, the further down and on the left you're gonna be. So on the X axis, you have near term growth opportunity from all customers. And on the Y axis, you have near term growth opportunity from really the biggest shops in the world, your global 2000, your Forbes private 225, like Cargill as an example, and then of course your federal agency. So you really wanna be positioned up into the right here. So the big takeaway here is zero trust. So just a couple of things on this slide when we kind of think about zero trust, right? As organizations accelerate their cloud and SaaS spend because of COVID-19 and what we were talking about earlier, Dave, remote work becomes a new normal, that perimeter security approach is losing appeal, right? Because the perimeter is less defined, right? Apps and data are increasingly being stored on the cloud and that and employees are working remotely from everywhere and they're accessing all of these items. And so what we're seeing now is a big move into zero trust. So if we look at that chart again, what you're gonna see kind of in that upper right quadrant are a lot of identity and access management players. And look at the bifurcation in general. This is what we were talking about earlier in terms of the landscape not doing well. Most security vendors are kind of in that red area in the middle to the bottom. But if you look at the top right, what are you seeing here? Unify ID, Auth0, WSO2, right? All identity and access management players, right? These are critical in your kind of zero trust approach and this is one of the few areas where we are seeing upticks, right? You also see here Bitsite Lucidius. So that's gonna be security assessment. You're seeing Vectra and NetScope and Dark Trace and a few others here in cloud security and IDPS, Intrusion Detection Prevention System. So very few sectors are seeing an uptick. Very few security sectors actually look pretty good based on opportunities are coming. But essentially all of them are kind of in that work-from-home aligned kind of security stack, so to speak. Right, and of course, as we know, as we've been reporting, buyers have options from both established companies and these sort of emerging companies that are public, Octa, CrowdStrike, Zscaler, we've seen the work-from-home pivot benefit those guys, but even Palo Alto Networks, even Cisco, I asked you last week, I said, hey, what about this pivot to work-from-home? What about this zero trust? He said, look, the reality is, yes, a big part of our portfolio is sort of exposed to that traditional infrastructure, but we have options for zero trust as well. So from a buyer standpoint, that perceived flight to safety, you have a lot of established vendors and that clearly is showing up in your data. Now the other sector that we want to talk about is database. We've been reporting a lot on database, data warehouse. So why don't you take us through the next graphic here, if you would? No problem. So our kind of theme here is that Snowflake is really separating itself from the pack. And again, you can kind of see that here. Private database and data warehousing vendors really continue to impact a lot of their public peers and Snowflake is leading the way. We expect Snowflake to gain momentum in the next few years and look, there's some rumors that they're IPOing soon. And so when we kind of think about that setup, we like it because as organizations transition away from hybrid cloud architectures to 100% or near 100% public cloud, Snowflake is really going to benefit. So they look good there, data stacks looks pretty good, that's resiliency, redundancy across data centers. So we kind of like them as well. Redis Labs, MariaDB, they look pretty good here on the opportunity side, but we are seeing a little bit of churn. So I think probably Snowflake and data stacks are probably our two favorites here. And again, when you just kind of think about Snowflake, you know, we continue to think more pervasive vendors like Paradata and Cloudera and some of the other larger database firms, they're going to continue seeing wallet and market share losses due to some of these emerging providers. Yeah, if you could just keep that slide up for a second, I would point out, in many ways, Snowflake is kind of a safer bet. You know, we talk about flight to safety because they're well-funded, they're established. You can go from zero to Snowflake very quickly, that's sort of their mantra, if you will. But I want to point out that we, and recognize that this is somewhat, you know, oranges and tangerines here. Snowflake being an analytical database. You take MariaDB, for instance. It's really kind of, I look at that anyway, as relational and operational. And then you mentioned data stacks. I would say couch base, Redis Labs, Aerospike, Cockroach is really a key value store. So sort of you've got some non-relational databases in there. But we're sort of looking at the entire sector of databases, which has become a really interesting market. But again, some of those established players are going to do very well. And I would put Snowflake in that, sort of on that cusp, as you pointed out, Bloomberg broke the story, I think last week, that they were contemplating an IPO, which we've known for a while. Yeah, and we like some of the, just one last thing on that. We do like some of the more pervasive players, they're obviously AWS, right? All their products, Gredshift and DynamoDB, Microsoft looks really good. It's just really some of the other legacy ones, like the pair of datas, the Oracles, the Hadoops that we think are going to be impacted. And so the cloud providers look really good. So the last decade has really brought forth this whole notion of DevOps, infrastructure as code, the whole API economy. And that's the piece we want to jump into now. And there are some real standouts here. Despite the early data that we showed you where CIOs are less prone to look at emerging vendors, there are some, for instance, if you bring up the next chart guys like Hashi, that really are standing out, aren't they? That's right, Dave. So again, what you're seeing here is, you're seeing that bifurcation that we were talking about earlier. There are a lot of infrastructure software vendors that are not positioned well, but if you look at the ones at the top right that are positioned well, are kind of, we have two kind of things on here starting with infrastructure automation. We think a winner here is emerging with Terraform. Look all the way up to the right, how well positioned they are, how many opportunities they're getting. And for the second straight survey now, Terraform is leading a lot of their peers, Chef, Puppet, Saltstack, and they're leading their peers in so many different categories. Notably, I'm allocating more spend, which is obviously very important. For Chef, Puppet and Saltstack, which you can kind of see a little bit below, probably not a little bit higher than the middle, we are seeing some elevated churn levels. And so really Terraform looks like they're kind of separating themselves. And we got this great quote from this CIO just a few months ago on, why Terraform is likely pulling away, and I'll kind of read it out here quickly. The Terraform tool creates an entire infrastructure in a box. Unlike vendors that use procedural languages like Ansible and Chef, it will show you the infrastructure in the way you want it to be. You don't have to worry about the things that happen underneath. I know some companies where you can put your entire Amazon infrastructure through Terraform. If Amazon disappears, if your availability drops, load balancers, RDS, everything, you just run Terraform, and everything will be created in 10 to 15 minutes. So that kind of shows you the power of Terraform and why we think it's kind of ranked better than some of the other vendors. Yeah, I mean, I think that really does sum it up. And actually guys, if you don't mind bringing that chart back up again. So I'll point out. So Mitchell Hashimoto, really, I believe I'm correct in talking to Stu about this a little bit. He sort of led the Terraform project, which is an open source project, and to your point, very easy to deploy. Chef Puppet Salt, they were largely were distributed or disrupted by cloud because, you know, they're designed to automate deployment largely on Pram and DevOps. And now Terraform sort of packages everything up into a platform. So Hashi actually makes money, and you see it on this slide in things vault, which is kind of their security play. You see GitLab on here. That's really application tooling, you know, to deploy code. You see Docker containers, you know, Docker really all about open source, and they've had, you know, great adoption. Docker's challenge has always been monetization. You see Turbonomic on here, which is kind of application performance management, application resource management. So again, where these, you can't go too deep on these things, but it's pretty deep within this sector, but we are comparing, you know, different types of companies, but just to give you a sense as to where the momentum is. All right, let's wrap here. Just maybe some final thoughts, Sagar, on the emerging technology study, and then what we can expect, you know, in the coming month here on the update in the technology spending intention study, please. Yeah, no problem. So one last thing on the zero trust side that this has been a big issue that we didn't get to cover is VPN spend. You know, our data is pointing that, yes, even though VPN spend did increase the last few months because of remote work, we actually think that people are gonna move away from that as they move on to zero trust. So just one last point on that, just in terms of overall thoughts, you know, again, as we kind of covered, you can see how bifurcated all these spaces are. Really, if we were to go sector by sector by sector right storage and blockchain and MLAI and all that stuff, you would see there's a few or maybe one or two vendors doing well and the majority of vendors are not seeing as many opportunities. And so again, are you work from home aligned? Are you the best vendor of all the other emerging providers? And if you kind of fit those two criteria, then you will continue seeing POCs and evaluations. And if you don't fit that criteria, unfortunately you're gonna see less opportunity. So I think that's really kind of the big takeaway on that. And then just in terms of, you know, next steps, you know, we're already transitioning now to our next technology spending and pension survey that launched last week. And so again, we're gonna start getting a feel for how CIOs are spending in two H20, right? So for the back half of the year and our question changes a little bit, we ask them, how do you plan on spending in the back half year versus how you actually spent in the first half of the year or one H20, right? So we're kind of, you know, tighten the screw, you know, so to speak and really getting idea what spend gonna look like in the back half. And we're also gonna get some updates as it relates to budget impacts from COVID-19 as well as, you know, how vendor relationships have changed as well as business impacts like layoffs and furloughs and all that stuff. So we have a tremendous amount of data that's gonna be coming in the next few weeks. And it should really kind of prepare us for what to see over the summer and into the fall. Yeah, very excited, Sagar, to see that. I just want to double down on what you said about changes in networking. I mean, we've reported with you guys on MPLS networks shifting to SD-WAN. But even VPN and SD-WAN are being called into question as the internet becomes the new private network. And so lots of changes there. And again, very excited to see updated data kind of post COVID as we exit this isolation economy. Really want to point out to folks that this is just not a snapshot survey, right? This is an ongoing, you know, exercise that ETR runs. And, you know, grateful for our partnership with you guys. Check out ETR.plus, that's the ETR website. I publish weekly on wikibon.com and siliconangle.com. Sagar, thanks so much for coming on. It's once again, great to have you. Thank you so much for having me, Dave. I really appreciate it as always. And thank you for watching this episode of theCUBE Insights powered by ETR. This is Dave Vellante. We'll see you next time.