 Live from San Francisco, it's theCUBE. Covering Red Hat Summit 2016. Brought to you by Red Hat. Now, here are your hosts, Stu Miniman and Brian Gracely. Welcome back to Red Hat Summit 2016. This is theCUBE, getting to the end of day one. Happy to have on the program the third of the afternoon keynotes. Nayaki Nayir, who is the general manager and global head of IoT and innovation go to market. Thank you so much for joining us. Thank you, Stu. Great, can you give our audience just a little bit about your background and your role at SAP? So I had IoT go to market division at SAP and I've been with SAP over four and a half years now and have gone through a full journey with SAP all the way from the cloud journey and now into the whole IoT space. Great, so we've actually covered Sapphire a few years with theCUBE. Mobile transformation, something we've documented quite well. Bring us up to speed with IoT. What's kind of a continuation of the journey that SAP's been doing and some of the major differences? So what we have done is as a part of the overall IoT strategy we have defined what we call things to outcome as a framework because it's such a big, wide topic and we have very clearly come out and identified what is the key focus for SAP while we partner with the rest of the ecosystem to give us a connectivity layer and across multiple, four different industry clusters that we are raised and focused on, manufacturing, high tech, profession services, the various industries that we are very raised and focused on and building solutions for each one of those solutions right now. Yeah, we've been having this sort of ongoing debate amongst ourselves and within our colleagues about IoT specifically about is IoT going to be an edge technology? Is it going to be a core technology for where data is? Where do you see, where does SAP see that? Maybe we're the use cases that might align to either one of those. Yeah, you know, that's a great question. I always get this question every time I visit a customer, they say, Naikki, where is money in IoT? Is it really the connectivity layer or is it really the value and the outcomes it generates? And what we fundamentally believe is the outcome layer is where customers are really getting value but you need the connectivity to get to those outcomes. You need the edge computing, we need to make that intelligent and as we bring the data in and the value can derive from this data is what really the customers are looking for. So it is not either or, it is an edge plus the applications that generate outcomes out of it. Yeah, can you give us some examples? You know, IoT, we hear these enormous numbers, 40 trillion dollars in new revenue for the economy. Give us some sense of where are we today? Are we in the first inning? Are we in the second inning? How far are we? What are some great examples? I would say we are in the very early stages but let me give you some examples of customers, right? And I was talking about Under Armour this morning. If you look at Under Armour as a brand, it was barely even known 10, 15 years back, right? Today they're not only competing with all the majors, the likes of Naikis and Raybox of the world but they have transitioned their business model of not just selling fitness products but selling fitness as a service. Which means they have to be monitoring the fitness levels of all their consumers, millions and millions of consumers around the world and from them and nudge them to exercise more so they can stay fit. So here is a great story, a company that was just selling fitness products because of IoT, now they can get very connected with their consumers, the health of the consumers and provide that service to them. So I see this evolution of business models for large manufacturers, it's the same thing, Gs of the world, Siemens, all of them going through a big transformation of not just selling equipment but selling it as a service, the outcome that the customer is looking for. And this is where I see a big transformation going on. Yeah, I mean there's some very industry specific things. I think everybody with mobility, there were some pretty straightforward ways that people understood to unlock the power of mobility. With IoT, I think we kind of dig into every use case. It's like, oh, here's some key finding they have and how they connected their customers more. But how does SAP, do you have the experts to go in on each kind of vertical, any more stories you can share? Yes, very much. We have what we call design thinking workshops where we do with the customers to identify what are the key scenarios that the customers can get value, like for example, Trinitalia. I was talking about Trinitalia, one of the largest operator of trains in Italy. And we do a full workshop up front to identify what is the right use case for them to get value. And then we start implementing the solution end to end. You know, in Trinitalia's case, they actually collect 700 terabytes of data coming from their trains. I mean, that is the amount of data that gets collected from all the trains. So what do you do with that data? It's all about how you analyze the data and make some decisions and get some outcomes. So that's where the reality really comes in. And we have to start from identifying what the right use case is, and we go about implementing that for the customer. Yeah, SAP is extremely well known for, you know, technology around supply chains, around business process. How much of that is reusable for IoT? I mean, conceptually, can you go to companies and say, look, we've got expertise in thinking about things end to end and thinking about what information means to process. Does that really help you get in the door? Yeah, so our entire technology stack, the core of it is SAP HANA, which is our platform. And what we have done is to make it reusable from implementation to implementation, we have released key IoT services that customers can get started. These are not specific to any one scenario, but they're generic enough. What we call the intelligent edge that customers can deploy at the edge that filters the noise out. And then as it comes into our core platform, our HANA platform, we have various services like remote data sync, we have dynamic tiering so customers can use other data lakes for warm and cold storage, end to end device management. So there are a lot of out-of-the-box services that come with our platform, which are not customer specific or implementation specific, that customers can reuse over and over again across multiple implementations. Great, can you tell us a little bit about the Red Hat partnership? Any new announcements this week that would you know about? So I was talking about how we are working with Red Hat, especially that intelligent edge that we mentioned. It is to make sure those gateways, I mean we have all of these Dell gateways, Cisco gateways, all the gateways that are out there. Today, those gateways are what I call the dumb gateways. They're just moving data around. They don't have the intelligence to filter the noise out. So we actually work with Red Hat to put the intelligence. We have our software called SQL anywhere. We merged it with MQ. That was a message broker between the devices and our SQL anywhere database. And we also leveraged BRMS tool to filter the noise on. And on the HANA Cloud platform side, we do use JBoss data virtualization for us to federate the data and have some cool mobile apps. So this implementation is available in our booth that customers can see end to end, what it looks like from a consumer perspective and also from a retailer perspective. And customers and developers can get their hands dirty on the whole thing. When we spoke to Jim Whitehurst earlier today, he said that when he talks to customers, they equate open source with innovation. What are you hearing from customers? Is there a real pull from them on the open source side? So yeah, we are very committed. We totally believe that open source is adding a lot of value and innovation to the entire, I would say, IoT journey and also all the new technologies that are coming out. So it is, I would say, a good balance between open source and also other software providers how we bring the data together and really help customers through the innovation cycles. We've seen in the past, we've talked a little about supply chain. We've seen companies that are in same areas. Sometimes work very closely together. They're going to go solve a problem. They may be competitors in the market. Do you see that with IoT? They're kind of, what does the marketplace look like in terms of learning from trains to automobiles to airplanes? Are they working together? And where do you see that happening? It is very amazing that the customers or companies that we never thought were our competitors are becoming our competitors and partners. Now, I always refer to Jeff Emmelt. He said today they're an industrial manufacturing company and in the future they will be a software and analytics company. So we would have never expected them to become a software company in the future. So it's, I would say a great evolution as we see. Some of our partners are becoming competitors or vice versa and we'll have to have the right ecosystem to work with and bring the right value to our customers. Okay, as we look down the road, what should users be looking for when it comes to the adoption of IoT? Any first steps you recommend for them or milestones they should be looking at from either the ecosystem or their peers? You know, I always say think big but start small. IoT is a very, very big, deep and a wide topic. It is very important for customers going through this journey to identify a use case that will give them immediate value. And start with those use case, get value, get benefit and then move on to additional use cases. Versus trying to boil the ocean. It can become very daunting if you try to boil the ocean. So it's always important for them to identify a use case and get started. You know, I will give you an example, especially in the pharma industry, I see this, where the number one requirement for pharma companies is to track and trace. Just track and trace. They need to track and trace every pharma product that gets manufactured from the manufacturing plan to it being in the warehouse when it is in the truck sort of vessels till it reaches a consumer. They just have to track and trace. It's a very simple use case, but it's required mandatory and regulatory for a lot of pharma companies to do it. And they're all in that journey now. So similar use cases are very relevant for every company, every customer in multiple industries. And they can get big value out of it. All right, well SAP has been out of central, many of these business transformations we've been watching. So really look forward to watching the progression of IoT. Thanks so much for sharing your updates and Brian and I will be back with our wrap up from day one here at Red Hat Summit 2016. 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