 Live from Bellevue Washington, it's theCUBE. Covering Smartsheet Engage ATG, brought to you by Smartsheet. Welcome back to theCUBE. We are continuing our coverage live from Bellevue Washington. We're at Smartsheet Engage 2018. I'm with Jeff Rick here. This is the second annual Engage event, huge, doubled from last year. We've had a great day so far, Jeff of execs from Smartsheet, customers. We're now excited to welcome an analyst from the 401 Group, Chris Marsh, the research director of workforce productivity and compliance. Welcome to theCUBE. Thank you very much. So we have, as I was saying, and this is the second annual event. Some of the stats that Mark made are their CEO shared in the keynote this morning. There are over 1,100 companies represented here at the event, a couple thousand people, 20 countries. We've had some very enthusiastic Smartsheet customers, Smartsheeters themselves. Talking about this tool that's designed for the business user, that's not designed for the citizen developer, people that don't even need to know what API stands for. So talk to us about your role at 401 Group and then we'll kind of get into project management, program management and some of the trends and the changes that you're seeing there. Sure, yeah. So I had the workforce productivity, compliance research practice in 401. So as a team of analysts, we cover essentially productivity software, right? So the different tools that members of the workforce are using to get work done. So in addition to work management, companies like Smartsheet, we also look at collaboration tools, digital workspaces. We cover the content management landscape and we cover content creation, asset creation tools as well. So really the focus for my team is to give perspectives on how the future of work is evolving, but really what those technology underpinnings of that are. Such a busy space. You picked a good area to specialize in. So how should people think of it? How should they categorize? Because from the outside looking in, a lot of the tools look very similar. You know, there's some overlap, there's some not overlap, there's some places where they can work together. You know, how should leaders be thinking about approaching this opportunity? Because you talk a lot about, you know, that's a great place to find untapped competitive advantage, but it seems to be very kind of confusing to the outsider. Yeah, it's a super interesting space. I think it's probably more interesting than it's ever been. I think for many years it was, to be frank, kind of not interesting, right? There's lots of kind of legacy tools that people were struggling to figure out how to do new kinds of work with. Beyond email. Was there anything beyond email 10 years ago? Yikes. I mean, we, I think a research team find ourselves looking as much at the intersections of those five areas that we cover as much as we go deep in them for the very fact that, you know, it's a space that's going through a lot of innovation, a lot of disruption. Vendors and segments are learning from one another. Then of course we have, you know, broad kind of transversal trends brought by technologies like AI and machine learning. Beginnings have more conversations around things like blockchain, people beginning to talk about what maybe some of the use cases are around AR, VR and other kind of mixed reality type technologies. So, you know, lots of innovation, lots of disruption. In terms of what like business leaders should be looking for, it obviously depends on what they're trying to do in their workforce. I think one of the big shifts that we're seeing is, you know, the sort of decentralization of ownership over more complex types of work to business users, right? Whereas I think in a lot of companies, traditionally there are centralized teams of process specialists or project management folks. And, you know, tools have kind of mediated the relationship between those centralized, you know, teams and business users where increasingly the tools are appealing to those business users. So in the panel moderation I did this morning, I showed some statistics around, you know, users of tools like Smartsheets and it's not the type of people we would have seen using this type of tool four or five years ago. Right, it's leaders within legal teams, finance teams, HR teams, marketing teams, operations teams. And that's sort of reflective of a broad shift in productivity software of, you know, virality in terms of how these tools enter businesses, right? Lots of organic adoption kind of runs contrary to how a lot of enterprise technology gets sold into enterprises which is kind of a little bit more top down or into specific buying centers. Increasingly it's going in sort of the grass roots. People are finding new use cases for the technology and it sort of spreads from there. So, yeah, it's a super hot space right now. So one of the things we talk about every place we go, right? Digital transformation and innovation, right? Everybody wants more. And it seems pretty simple to say, but hard to do, that if you give more people more data, the tools to process it, and then the power to do something, that that just can unlock tremendous amount of untapped innovation and execution and efficiency out of a company. That's said, that's easier said sitting here than done. So are you seeing, you know, kind of a continual trend towards pushing down, pushing down the data, pushing down the tools, pushing down the authority to execute decisions? Yeah, I think so. And actually the work management space is a very good example of that, right? So, you know, for some companies, culturally, that's not going to come very easy because they just culturally may have a more sort of top down kind of culture. But I think digital transformation for everyone essentially means more agility, more speed, you know, more quickness in how work is executed and how it's designed. And that almost inevitably means that those closest to the delivery of the work are the ones that actually have the power to design the work in the first place. Again, rather than sort of relying on IT for everything and or central teams somewhere. So it is a broad shift, but again, it comes to your point, it comes more easily for some companies and some industries than others. And we talked about that with a number of the people from Smartsheet as well as users, that this is a massive cultural shift. I think Mark Mater, the CEO this morning was telling us a quick anecdote of a 125 year old oil and gas company that is talking about, you know, probably really married to a lot of legacy processes and ways of thinking, not just tools and how Smartsheet probably started in, you know, one function within the organization, probably, you know, quite low. And it started to your point before go viral and we started to hear a number of stories, PayPal, Sodexo, how this virality that you talk about is really kind of transforming from the bottom up. But that cultural change is essential. The cultural change is essential. I mean, in some cases, it's just being led by the fact that that's happening anyway, right? Because, you know, gone are the days when IT chooses the tools, provisions them and, you know, there was awareness of what's going on in the environment, you know, there are, and it's not just the work management space, we also look at sort of workflow automation tools. A lot of these tools are, you know, going into a company, grassroots, there are then, you know, potentially hundreds if not thousands of work processes or workflows that are created on these tools before IT even figures that out, right? Which is not necessarily an ideal scenario, but it's increasingly, you know, one of the patterns that we're seeing in enterprises. So it's a big cultural shift, but there's a certain amount of push and pull here. Some companies who realize that are looking proactively to give effect to it, other people are going to be pulled to be frank by the fact that there are tools that enable new kind of work patterns, new styles to happen, and they almost have to get on board with that. So obviously you want to fight, you want to strike a balance, I think, somewhere in between of being the catalyst for those kind of new things to happen, whilst making sure there is still the kind of centralized oversight that's required for you to maintain control over your overall technology estate, but also so that you can make sure that technology's aligning to your strategic goals. So it's a delicate balance. And there's these pretty big forces at play here. There's a term that that 4051 group has recently coined called a liquid enterprise. And liquid, I think, of fluidity. You mentioned agility. We've heard nimbleness today. Talk to us about what, by definition, is the liquid enterprise and how are you helping customers to embrace it, and maybe not fight the force because the forces of pull are stronger and better, but what does that mean? Yeah, so liquid enterprise, I mean, you encapsulated it very well, right? So it's all about, when we speak digital transformation, you almost always end up talking about business agility. So in some ways, liquid enterprise is just our way of giving a little bit more flavor to what business agility looks like in the kind of digital age. So our kind of view is that a lot of the companies that we kind of laud now is those really interesting companies like the Airbnb's and the Uber's, those with kind of massively scalable infrastructure and then a very simple UI. We think that whole pattern of what the kind of optimal digital enterprise will look like is one that's much more able to fluidly marshal its different resources in a way that allows them to respond much more rapidly to changes in their own market conditions, right? Because one of the things, obviously, that digital is doing is changing user behaviors, user requirements. So your ability as a company to respond very quickly to that is becoming a primacy in most companies. And a big part of how we think about the liquid enterprise is the fact that companies will actually be able to change their own organizational structure, right? Not just what they offer to a market, not just the tools that enable them to do that, but actually they'll begin to sort of retacillate their own organizational design to enable that to happen. So we see early indicators of technologies that are beginning to allow companies to think in that way. Hence, I think for most companies, liquid enterprise is aspirational right now but I think certainly it's a pattern that a lot of the companies are trying to tackle us. I'm just curious, you talk about culture as a competitive advantage. And how much of these tools are culture enablers to make that possible? How much of it are just critical? Because if you don't have that culture, you're going to lose. How much of it's tied to kind of the consumerization of IT where again your new workforce has an expectation of the way apps work based on their interaction with Amazon and their interaction with Google and those types of things. Very much driven by the consumerization of IT trend. I mean often, increasingly what we see happen in the consumer realm ends up happening in some kind of expression in the enterprise realm sooner or later. So yeah, I mean that's very much it. I mean one of the other things we talk about in our research is the kind of hierarchy of employee motivation, right? So we kind of have this way of thinking about what companies need to do and what technologies need to enable to really satisfy that end user experience. I think in the productivity software space, it's probably not hyperbolic to say that most tools really only satisfy end users, right? We have lots of tools, including lots of modern SaaS tools that actually may have good usability, but aren't particularly flexible, right? They're sort of better, more scalable versions of a lot of legacy tools. So we see this kind of passage towards tools actually doing things like decentralizing the ability to create workflow so that business users, including non-managerial folks can actually design work and how that work actually happens, right? So there's a big element there in terms of motivation in your role, actually making an impact, having that recognized and all of those kind of things which is driving a more sort of engaged relationship between people and technology. So we only see that continuing and the work management space and smartsheets are very good examples of that. There's lots of conversations you can hear at Engage where people are discussing what they've done with their tool that they've created themselves. Some kind of local business team that has redesigned a certain process that has allowed better business value to be created and they're the ones that are going to take credit for that. So I think that trend is only going to accelerate. So again, from an enterprise perspective, embracing that, helping catalyze that, but again, having the ability to have central oversight over that kind of local team-based execution is obviously very important. Right. And then what about just kind of the competition from my desktop? You know, what apps are open while I'm working all day? And we all wish if you're driving an app company that's your app that's on top, but the reality is we have many, many apps open all the time. So do you see that evolving? Do you see that aggregating? Do you see a couple of kind of Uber apps over the top using the integration that you'll become your primary workplace? Or is it just kind of horses for courses depending on the types of things that you do in your day-to-day job? Really good question. I think one of the background trends we've seen, especially with SaaS, is just the sort of growth in the overall enterprise application estate, right? So just more apps. And obviously catalyzed also by end users having positive experiences in consumer apps and then being used to choosing the way that they do things, right? That is transitioning into the enterprise environment as well. So I don't envisage that the total number of apps is going to decrease. But a very good question is to, you know, whether we get consolidation, you know, time will tell. But I think, you know, to my point earlier, we spend a lot of time looking at intersections across existing segments because each segment really is transforming. And you see lots of examples of customers here at Engage using Smartsheet as a displacement tool for other ones that they previously were using. They find the automation in Smartsheet a way to sort of disintermediate other tools that they were using. So we're certainly seeing some of that, whether that means the total number of applications decreases. I don't know because we're still yet to see play out lots of cool new innovative technologies that will obviously give rise to new kind of applications. So questions out as to whether it will mean fewer apps, but we're certainly seeing a sort of changing in the, you know, in the sort of preference for tools based on what new ones are enabling. And I would imagine in very short order the application of AI and machine learning behind the scenes in all these apps is also going to change the UI experience dramatically as more and more and more of the processes are automated on the back end. There's more kind of smart suggestions as to what do or completely automated processes. So even the face of even the most popular apps today, I would imagine you see significant change with the application of AI and machine learning. Yeah, I think so. I mean, you know, one of the sort of big trends here listening to customers and listening to some of the keynotes is, you know, the shift that companies kind of make from low value work to high value work, right? So all of that kind of granular manual work we're having to do with some of those existing applications, people just want to abstract their way. They don't want to be doing that anymore. They want to focus on sort of resource management, team coordination, creative ideation. They want to focus on strategy execution. They want to focus on things like, you know, risks to the business, actions they need to take, decisions that they need to make. They don't want to be doing the whole, who did this, when did they do it, what do I need to do now? They don't want to be sort of manually moving information from application to application. They don't want to be doing sort of manual reconciliations of data and that kind of thing. Right. So yeah, the kind of low value to high value work is only going to be accelerated by AI and ML to the point where we're beginning to see much more contextual work, right? So the ML is the basis on which work can be surfaced contextually to end users. So that is sort of automating the abstraction of that low value work and that's hugely exciting because that offers a whole new paradigm for how we interact with applications, what that end user experience is. You know, imagine sort of, you know, going into your office, loading up your computer, opening up an application and it surfaces to you what you need to focus on that day. Right, right. That's where a lot of productivity application vendors are trying to get to. That's the dream, right? Not the, here is the application, you decide where you need to focus. It's the kind of, these are the things you really need to put your time in. I mean, that's pretty exciting, right? I think that's what a lot of companies would want. A certain CRM company that's got a large tower in San Francisco, why do I have to put the city and the state and the zip code? I mean, we have so far to go, can you just put the zip code in and it fills in the city and the state? It's those little, you know, simple things that take a lot of time and these are the kind of date entry tasks that just drive people bananas and discount the value, the fundamental value of the tool could you just get stuck in in a data entry mode or a double entry mode and it's just crazy opportunity that we still have in front of us to make improvements. I think huge opportunity, obviously, but it's not quite so easy as that, I think really is kind of how I would talk about it. AI and ML will inevitably have a transformative impact on enterprise software. I don't think anybody would dispute that, but it does rely on large data sets against which you have to train your algorithms and your models and that takes time for individual companies to build that data set. They need enough work in there, they need enough people, enough workflows in there to generate those data sets to the point at which they would actually be useful, right? So it's going to take a bit of time to play out, but yeah, it's going to be very impactful in the longer term. Well, Chris, thanks so much for stopping by theCUBE and sharing your insights and this new emerging term of the liquid enterprise. We appreciate that. Pleasure. Thanks very much. For Jeff, Rick, I'm Lisa Martin. You're watching theCUBE live from Smart Sheet Engaged 2018. Stick around, Jeff and I will be right back with our next guest.