 Live from Orlando, Florida, it's theCUBE. Covering Sapphire Now. Headlines sponsored by SAP HANA Cloud, the leader in platform as a service. With support from Consolink, the cloud internet company. Now, here are your hosts, John Furrier at Peter Burris. We are here live at SAP Sapphire. We are on the ground live, this is theCUBE. Our flagship program, we're out to the events, expect a signal from the noise. I'm John Furrier, my co-host Peter Burris, for three days of wall-to-wall coverage, and we would not be here without our sponsors. SAP, the HANA Cloud platform, and Consolink. Connect in the clouds at Consol Cloud, check them out. Peter kicking off day one of SAP Sapphire. Really, it's about how to do business in this new digital transformation. Big news up there, Satya Nutella, CEO of Microsoft, talking about the partnership. Broad support, joint plans to run SAP HANA Cloud on Azure Office 365. This is certainly the new Microsoft. This is the new SAP, but not a lot of new SAP. SAP's always been open, they've been very ecosystem-driven. What do they have to do? What's your take on SAP in this new era of cloud enterprise software with cloud and data? Well, SAP for the past few years, John, has been very focused on usability, and so they have initiated a number of different initiatives to try to have SAP appear like a modern platform, so that when people moved to the cloud with SAP, they got there with a technology, with a graphical user interface and an experience that was reminiscent of the cloud. And so this notion of integrating Office 360, which is a cloud-based version of Microsoft Office, is a natural extension of that, and it just makes perfect sense, because Microsoft Office is, without question, the broadest, most adopted Office suite in the cloud and having SAP integrate into it so that you can from office utilize certain classes of SAP services makes an enormous amount of sense, and it's part of SAP's overall mission to, as I said, present that notion of a modern application set, not just a migrated application set. And this is the big theme we're seeing across all enterprise, but when we go to these shows from these companies, SAP, IBM, Oracle, EMC, HP, Enterprise, we always talk about their customer's customer. So I want to get your take. That ultimately is the person they're selling to and the value proposition of simplicity, data, cloud. It seems like all these vendor shows are all cloud shows, all data shows. What is in the mind of their customer's customer? Because at the end of the day, they're the ones who are buying software. They're the ones who are trying to run things simply. What's in the mind of those customers? Well, the first thing to note is that increasingly, customers in all parts of society are seeking out digital interfaces to either directly engage brands or compliment the way that they engage brands. So you walk into a retail store with your phone and you do comparison shopping while you're in the store, or you go online and you skip the retail store. But also that's the case in small businesses. We're increasingly small businesses are able to use very, very powerful software to run the same types of procurement processes that companies that have historically been four, five, eight, 20 billion dollars. And so software is flattening dramatically many of the distinctions that are, many of the things that you used to distinguish how customers behave, how small businesses behave, and how big businesses behave. And SAP wants to be at the center of that process so that the experience you gain as a consumer is transferable to the experience that has a small business owner or as a large enterprise so that the whole thing is bought together by the experiences you have with the class of software that does the work for you or you work with. I just wrote a post on Forbes over the weekend, I interviewed Weta Digital, it's an Oracle customer, and they're running high performance storage on premise because they're doing all the computer animation for these movies like Avatar, Independence Day, all the Spielberg movies. Yeah, Lord of the Rings came out of it. And amazing, but it's no cloud because they're on premise. There's still hardware, I mean it's an Oracle example, but SAP has partners that run storage, there's still a lot of stuff under the hood. So making the stuff under the hood seamless seems to be the mission. Same time, there are advances in flash, there are advances in compute, and cloud and on-prem pay a big role. What's your take on that from a practitioner standpoint, from a doer standpoint, how do they look at this new landscape? They still got to have the engine of innovation, technology, that's going to enable some of that business model innovation. Well a lot of folks talk about new platforms over the past 50 years in computing. We went from mainframe to mini computer and there's all this talk about the fourth platform or whatever some other analyst firms talk about. I think the better way to talk about it is the characteristics of the problems that you can solve as technology advances. And the problems that we're now able to solve with some of the new technologies are the problems of doing business right now. Doing a better job of serving customers, presenting options better, doing a better job of what we call managing the problems of demand, how much, where's it going to be needed, what's going to be needed, et cetera. And so what we're seeing is across the board a new class of business problems being coming in underneath the umbrella of what technology can actually do for you. And those business problems are going to be easiest to attack because many of them, especially the ones associated with demand, are at scale, since you're engaging customers, you're engaging partners, require a high amount of responsiveness to the market. So the whole notion of observe, orient, decide and act becomes absolutely crucial, agile. So as a consequence, everybody's looking at these new technologies and seeing new opportunities precisely because we're now able to identify new classes of problems that we can actually attend to with some of these new technologies. SAP been around 25 years, big anniversary, talk about for them and their competition too is a real battle for growth, growth, profit and a new kind of engagement. We're seeing obviously growth and profit have been around in history of business. So that's always stuff. They always want to be growing on new trend lines. But now you have social business, you have this notion of engagement, thoughts on SAP and what they need to do to get that growth engine going, to get that profitability, obviously software is very profitable, but now engagement, what's your thoughts on those three things? Well the first thing on the growth side is SAP is unlike a lot of computing companies and that their acquisition strategies thus far have been relatively successful. They haven't failed in a lot of their acquisitions. In fact, many of their acquisitions have led to significant new advances, not only in terms of growth, but in terms of what the overall suite can actually do. And as a consequence, they've shown double digit growth over the past five, six, seven years on a CAGR basis. From a profitability standpoint, not much to say there right now, except that if you watch their numbers as they move to the cloud, their costs seem to be scaling with that. So we're not seeing a lot of net new efficiencies lately. But some of the most interesting things that are happening with SAP is as they go through this transition, their customers and their customer satisfaction continues to go up and their employee engagement, the way that they measure employee engagement continues to go up. So think about that for a second, John. You're talking about a company that acknowledges that it's in significant transformation. It's been very aggressive at buying a lot of new companies, software companies especially over the course of the past few years. And yet at the same time, their employee satisfaction, customer satisfaction continues to go up. They're doing something right. Well, certainly a great opportunity for SAP. We're going to be on the ground. Obviously the Microsoft partnership is very telling. And this is really the strength of SAP. I want to get your final thoughts on the segment for the intro around ecosystem because software businesses like SAP have done very well in the past and we're seeing HP Enterprise doing the same thing, going back to their roots, partnership, the ecosystem, the big estim integrators to other partners. Now with data and social engagement, you're seeing a whole new level of partnerships. Your thoughts on this new ecosystem formula. Well, the notion of an ecosystem is very powerful because it says that if you gain experience with a set of relationships, partners, customers, and the social business, you can use that experience to drive new levels of efficiency and start incorporating or realizing some of the network effects that we like to talk about so much. And that's led to this notion of ecosystem competition. It's been a feature of computing for a long time. But one of the things that I find especially interesting here, John, and I think we need to look for as we go through Sappfires, we kind of wander through some of the interviews we have, is to what degree is SAP going to establish itself as one of the drivers of that competition? Historically, SAP, while being successful, has been, I say, defensive almost. Our technology's good. It does some good things, you know. But I have a sense now that SAP is going to go on the attack and so it's going to be interesting to see the degree to which SAP's ecosystem does a full frontal against Oracle's ecosystem and some of the other ecosystems out there as they try to bring what is working to more customers, especially customers that already have stuff installed and are relatively mature in other environments. I have a feeling that that's going to be a big question for SAP over the course of time. So you're saying use the ecosystem as a power generator for that growth, for that competitive advantage? Yeah, where the ecosystem, to answer the question simply, yes. But even more than that, to turn the ecosystem to attack other ecosystems. It's going to be an ecosystem battle. We're covering it live. This is theCUBE live at SAP Sapphire and you're watching theCUBE. I'm John Furrier with Peter Burris. We'll be right back with more after this short break. This is theCUBE. You're watching live here in Orlando. There'll be millions of people in the near future that want to be involved in their own personal well-being.