 Hey everyone, welcome to this CUBE conversation featuring ProsperOps. I'm your host, Lisa Martin, very excited to be joined by Chris Cockrum, the co-founder and CEO of ProsperOps. Chris, welcome to the CUBE, great to have you. Hey, Lisa, I'm glad to be here. Nice to meet you. Nice to meet you as well. Talk to us a little bit about ProsperOps, your vision, mission, target market segment. Give us all that backstory. Yeah, absolutely. I'm one of the co-founders, but I work together with my other two co-founders at a company called Rackspace, where we started an AWS managed service business. And Rackspace was awesome. It helped a lot of customers use the cloud more effectively and really put humans at the center of that work. And humans are great for a large part of the optimization problem set, but there are certain types of problems where you can make it a computer science problem, turn an algorithm up and solve the problem very efficiently. And so once we left and started ProsperOps, our goal was to say, how do we use technology? How do we use algorithms, automation to go solve all these problems that really give our customers great outcomes, great saving, lots of flexibility. And that's the company we started in 2018. 2018, was there a particular catalyst? Did you really kind of notice cost optimization is really hard for businesses to achieve? Any kind of one thing compelling event that just went, yeah, this is what we need to do. Yeah, you know, it's great. We follow in our part of the FinOps Foundation you might be familiar with. It's sort of the industry trade group that looks after FinOps as a discipline and FinOps is largely just how do you optimize the cloud, make it more efficient, more effective? And for many years running optimization and cost along with security have been sort of the one-two issues that have come up as people have been surveyed. And it's just a chronic issue. And that's even as different reporting tools and different technologies have been introduced to the market, et cetera. I think really the issue is that with regards to AWS and I'll speak specifically there, it is such a powerful platform. There are so many services that can be used. They're constantly adding new capabilities and it's a lot. And so one team trying to figure out an already loaded, overloaded plate, how to use all these capabilities. I think it's just a lot. And so our mission and purpose is how do we become sort of an automation platform for FinOps? How do we end up letting technology do some of the work so humans can focus on the things where they've got unique abilities, unique skills, put them where their highest invest used is. And by doing that and sort of splitting up the problem, can you get more things done? Can you make progress where you weren't making progress previously? Right, really helping kind of probably demystify a lot of the previous historical challenges with cost optimization of board customers, allowing them to really probably focus their resources a little bit more efficiently or a lot more efficiently. Talk to me a little bit about how the technology works and what some of those key benefits are that your customers are achieving. Yeah, I mean, the way to think about ProsperOps is, you know, we're an automation platform. We're sort of watching passively at all the things the engineering or DevOps teams are doing in the environment. Nothing we do actually manipulates or touches the actual infrastructure of the application, but we're watching those things and we're ingesting those changes as they happen. And then we push all of that data through an optimization algorithm that says, given all the changes that are happening in the environment, what are the discount instruments or the rate optimization opportunities that allow the customer to end up paying less? And when there is an answer to that question, we structure the commands to the AWS black box to say, secure those discounts on the customer's behalf. And so we focus very closely on rate optimization and that's sort of a new term that a lot of people, a lot of engineers, maybe folks that are watching the show, think about usage optimization, how do you use less cloud? But the compliment to that is rate optimization and that's all about how do you pay less for what you use? And that's really what our platform focuses on. We do that for AWS compute today and the goal is to obviously drive savings very high and do it in a way where engineering teams, our customers have all sorts of flexibility. We want them to use the cloud, the way the cloud should be used, very dynamically, very elastically. And we don't want them to ever to be constrained by the commitments they make to get a discount. And so our mission is to say, how do we generate those savings? How do we make the commitments very flexible so that they get the best of both worlds? In your customer conversations, Chris, is rate optimization becoming more and more, kind of rising up the ranks more and more as organizations in any industry that are using cloud always our challenge with optimization? Now, are you seeing rate optimization, kind of bubble up the stack and the C-suite and going, this is a priority that we've got to really establish to our business? Yeah, you know what's interesting? The types of discount instruments, and I'll speak specifically to AWS, have been around for many, many years. And I think actually one of the challenges is that for a lot of engineering teams, they think back to two to three years ago and they think about saying, look, I've used a reserved instance. Maybe I've used a savings plan. I've checked the box. It can only do so much onto the next thing. And our provocation is that if you're really automating the use of these discount instruments, you can achieve results much higher than you previously imagined. And the amount of savings that can be generated can really be material for the organization. And when you're getting those savings and you're seeing a big up step and the savings that are coming off the bill, that means you've got resources and dollars to go put towards other things, other problems you're trying to solve, other types of the other products in the AWS service set to get more done for your organization. So our provocation is, if you think rate optimization is sort of a page two issue that's been handled, you might want to look at it again because it can actually have sort of page one impacts. Well, and it sounds like you're helping, I mean, every business these days with the way the economy is going has to do a lot more with a lot less. And so it sounds like this is a great way to help organizations across every industry to deal with that. I mean, you know, cost efficiency is a conversation. It comes up in pretty much every cube conversation we have with customers, with partners, with vendors, et cetera. But given that FinOps is all about using the cloud efficiently, what are some of the things, the considerations that businesses need to be looking at to really start dialing down those costs, dialing down the risks when it comes to optimizing rates, resources and cloud usage? Yeah, I'll just answer at a very high level. I've just never met a DevOps team or an engineering team that has too little to do. Everybody's got a lot on their plate. And before starting ProsperOps, I was at a large company. We all have lived in large bureaucracies and it's always the tyranny of the now. How do I get all the things done? And because I can't, how do I prioritize? And I think our provocation, specifically with regards to rate optimization, is that if you have an automated solution that's handling this, that work comes off your plate. And what you really should think about is how do you solve some of these problems in a way where the solution doesn't add more overhead to your world? The solution has to take stuff off your plate, not to add it on. And I think that's the loop that many of us get caught in especially in large companies where there's just almost too much to do. How do I make those trade-offs? Because every time a new solution is presented to me, I've got to make the calculation. Is the juice worth the squeeze? Is this going to add more friction, more overhead into my world? Then goodness it's going to deliver. And I think that's the trade that they have to make. So my challenge to I think optimization teams is sort of divide and conquer. It's sort of a division of labor thing. Focus on the things where you have a unique ability to add value and let technology do the things that it can actually do very well. And that way you get more things done concurrently. And that's really the key to optimization, right? You just nailed it right there. What you talked about the impetus to start the company, your previous experience at Rackspace AWS. Why is it in AWS's best interest or any public cloud provider for that matter for their customers to be really mindful and utilizing their resources as efficiently as possible? Yeah, well, first of all, I think, you know, hats off to AWS if there is a, you know, a lot of customers talk about or a lot of businesses talk about being customer centric. You know, I think it's fair to say AWS has been absolutely aligned on customers for a long time. So they're definitely a company that from an ethos perspective is wired that way. But you're the way that I think about it and I certainly wouldn't want to speak to them is that, you know, the average AWS bill might have around 60 to 70% of the overall cost being consumed in compute. And you know, they have so many great products, so many great managed services. You know, I think the way AWS looks at it is if I help my customers or I use partners to help them optimize 60% of their bill on things like compute, those dollars end up flowing to other parts of the AWS portfolio, which give their customers an ability to do more. So I think they see it very much as unlocking the value of AWS, letting their customers accomplish more things and ultimately, you know, building a stronger relationship with their end customers that lasts a long time. Very symbiotic, it sounds like. I liked how you articulated it. It's really helping them to unlock more value in what they're delivering, since customers can get so overwhelmed with the vast number of services that AWS offers. And no doubt at the next re-invent, we're going to hear a ton more. Talk to me a little bit, there's a FinOps metric that ProsperOps uses. I want to get your definition of this effective savings rate. This is what you guys are using to benchmark and track customer savings performance. Talk about effective savings rate or ESR. How can companies use it to measure success where optimization is concerned? Well, when it comes to rate optimization, you know, I think the challenge is how do you speak in terms of the outcomes? How do you speak in terms that, you know, a CFO's organization can understand what all of the rate optimization activities are actually producing? And there really wasn't a great metric that sort of gave you an outcome-based view, sort of return on investment equivalent metric. And so the effective savings rate is something we worked on very early. It's really how our entire model is tuned. And it effectively says, when it's all said and done, when you look at all the ways you can use discount instruments, RIs, savings plans, expertly or, you know, not well, what is the aggregate discount you get off the list price across your entire global compute estate. And, you know, we look at this and we benchmark every prospect we talk to every customer we have before they start our service. And it's given us a chance to really understand the state of rate optimization in general. And what the data will tell you is even though we're in a world with lots of great tools for telemetry and reporting, et cetera, that, you know, you have to be above the 75th percentile of AWS optimizers to be getting a 20% effective savings rate, meaning you're getting about a 20% aggregate discount off the on-demand rate. And, you know, world-class, which is sort of what we target for our customers is 98th percentile, which means that your effective savings rate goes up to greater than 40%, meaning that, you know, in aggregate you're getting a greater than 40% discount off the on-demand price. And so, you know, when I talk about our rate optimization being historically thought of as a page two issue and why it should be page one, it gets back to the impact that raising your effective savings rate, you know, 10, 20, 30 percentage points can really matter to opening up dollars in your budget that you can then use on other services. So helping customers target that 40% effective savings rate, what's the relation between effective savings rate, ESR and ROI? Because we talk about ROI all the time. What's the relation and how do you help customers achieve both? Yeah, so I sort of use them very synonymously. When I'm talking to sort of a FinOps practitioner, we'll use ESR. When I'm talking to maybe someone who's just getting introduced, I use ROI because on any other type of investment endeavor, you're making an investment in something, you want to understand how effective you are. You want to understand the financial return. And really, ESR is the same thing. When you're using an ROI and a savings plan, you're trying to understand what type of discount am I getting off less price? And ESR is a way to look at it across all the compute resources you're running, across all the global regions you're running, across all the decisions you've made on how you want to implement a rate optimization strategy. It tells you when everything is baked into the cake, this is the aggregate discounts you're getting. And so it's sort of an outcome-based metric that you can actually use to trend against yourself. How am I doing month over month, as well as to benchmark against peers? Where am I relative to how other people who have optimization teams that are doing this work? How are they doing? And am I where I want to be? That's why we think it's a super powerful, sort of like one metric to sort of tell you the overall story and why it's so powerful. And that exactly what I was just going to say in terms of the metrics being very powerful. When you're in customer or conversations with prospective customers and you're talking about why prosper ops the differentiators, what are some of the things that come to mind to you? Yeah, I mean, I think in general, the goal on this is that number one, all of our customers are extremely savvy, experienced FinOps organizations. We have customers that are spending $20 million a month on AWS compute alone. These folks are extremely sophisticated. And I think obviously when they speak to a service provider and they look at whether or not they want to use a service to do this work, they're looking and their challenges say, does this provider know as much or more than what I know? And so, we put a big priority on all parts of the organization, being deep in the FinOps capability and really want to try to live up to the bar of being an expert in the space. But really at the end of the day, aside from sort of trying to show expertise, we talk about everything in terms of that in customers effective savings rate and how everything we do is about maximizing their ESR. How do you generate the most amount of savings? And how do you do that in a way that still gives that customer a lot of flexibility? Because at the end of the day, the way that people use cloud should be very elastic and they're not making sort of precise and unchangeable forecast about the future. They're living in a world where they know things change and assumptions change and they need the flexibility to say, if the assumptions change three, four, five, six months from now, I know that I've made a good rate optimization decision that is going to be flexible enough to adapt to a change that I can't forecast. And depending on the strategies you use, some strategies are more adaptable than others. And our provocation is that when you automate things, when you wrap it with the appropriate telemetry and automation, you can get a very adaptable, flexible rate optimization strategy that can change as your needs change. And it sounds like what you're also delivering to customers is a real competitive advantage for them to be able to dial things up and down as macro environments change, as new headwinds, as new waves come. You must have a favorite customer story, Chris, that you think really demonstrates the value. You talked about the metric space and that is so nice to have because you can see it. But what's your favorite customer story that really shows the value of what Prosperops is delivering to customers? I'll tell you one that's sort of like the COVID story. One of the customers we serve is sort of in the ticket resell business. And they were using our service prior to COVID, generating very high ESR. And what then happened is obviously COVID hits, a lot of their business sort of changes. Their consumption of the cloud drops precipitously because no one's doing anything. And had they not been using a rate optimization strategy or automation platform like Prosperops, they would have been sitting on commitments that would have been sort of unchangeable. And they would have been in a situation where their usage went away, but the commitment didn't. And they owed a lot of money and weren't getting a discount, but were in fact paying for usage that wasn't even there. And with our platform, when that usage changed and COVID hit, we were able to go and adapt the commitment portfolio to sort of size itself to the new much lower usage base. They still saved a lot of money on what little usage they had at that time. And then when the usage came back, COVID was over and people started buying tickets again, consumption of cloud goes up into the ride again and the commitment portfolio adjust accordingly. And so I think that's the flexibility that a lot of customers want. No one could have sort of understood what would have happened in a COVID world right up until COVID happened. But then it happened and you needed to be able to adapt and being a spot where you maintain flexibility, you're still able to be effective in your spend. And that's what I think Prosperops does for customers. And you know, that's such a great COVID success story, but really what you're talking about, there's potentially saving a business, helping it survive one when that massive weight hit that we were all so unprepared for, but to then be able to thrive in their business, optimize resource utilization, become more efficient, be able to be adaptable to your point. I just see huge competitive advantages for businesses that went that route. Yeah, that's totally, like I said, of 60% of your overall cloud cost ends up going to compute. Just think about all of the other things you could be doing, ML, AI, more complex services, if you're able to basically take that spend, unlock it, and reinvest it in other services. And that's what we see or see our goal is, how do you unlock the cloud by basically efficiently using it? Well, the value prop is crystal clear on Prosperops from my perspective. Here we are almost halfway through calendar year 23. What are some of the things, if you look in your crystal ball for Prosperops, that we should be mindful of on the watch board? Yeah, so I mean, there's a lot of things. Obviously, you know, we, our customers, our prospects have talked to us about other clouds, whether it's Google, whether it's Azure, and doing sort of the same rate optimization play on those clouds. So that is definitely very interesting. You know, there's a lot of other optimization things that can be done in an environment beyond rate optimization. You know, you talked about usage optimization, which is what everybody generally thinks about. How do I use less or use the right things? And our platform collects a lot of telemetry. We're able to understand patterns, wherever it'll see cyclicality. And it's very much we see an adjacency to expand beyond rate optimization into some of these other areas where, you know, once again, we can add value, allow humans to focus on spots where they, you know, have unique value and handle the stuff that technology can handle really well. Awesome, Chris, thank you so much for joining me on the program today, describing what ProsperOps is doing, why you're doing it and the tremendous impact that you're helping businesses across any industry achieve. We really appreciate your insights and your time and we will definitely keep our eyes on ProsperOps. Awesome, thanks Lisa, it's great to be with you. Likewise, and we want to thank you for watching. 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