 Hi, I'm Peter Burris and welcome to Wikibon Action Item from theCUBE Studios in Palo Alto, California. So today we've got a great conversation and what we're going to be talking about is hybrid cloud. Hybrid cloud's been in the news a lot lately. Largely it's consequences from changes made by AWS as they announced Outpost and acknowledged for the first time that there's going to be a greater distribution of data and a greater distribution of function as enterprises move to the cloud. We've been on top of this for quite some time and have actually coined what we call true hybrid cloud which is the idea that increasingly we're going to see a need for a common set of capabilities and services in multiple locations so that the cloud can move to the data and not the data automatically being presumed to move to the cloud. Now to have that conversation and to reveal some new research on what the cost and value propositions of the different options are that are available today, we've got David Foyer. David, welcome to theCUBE. Thank you. So David, let's start. When we talk about hybrid cloud, we're seeing a continuum of different options start to emerge. What are the defining characteristics? So yes, we're seeing a continuum emerging. We have what we call standalone, of course at one end of the spectrum and then we have multi-cloud and then we have loosely and tightly coupled and then we have true. And as you go up the spectrum so the dependence upon data on the data plane, dependence upon low latency, dependence on writing systems of record records, all of those increase as we're going from high latency and high bandwidth all the way up to low latency. So let me see if I got this right. So true hybrid cloud is at one end and true hybrid cloud is low latency, right-oriented workloads, simplest possible administration. That means we're typically going to have a common stack in all locations. Next to that is this notion of tightly coupled hybrid cloud which could be higher latency, right-oriented, could probably has a common set of software on all nodes that handle state. And then kind of this notion of loosely coupled, multi or hybrid cloud, which is low, a high latency, right or read-oriented, which may have just API level coordination and commonality in all nodes. That's right. And then you go down even further to just multi-cloud where you're just connecting things and each of them is independent of each other. So if I'm a CIO and I'm looking at a move to a cloud, I have to think about green field applications and the natural distribution of data for those green field applications and that's going to help me choose which class of hybrid cloud I'm going to use, but let's talk about the more challenging set of scenarios for most CIOs, which is the existing legacy applications. As I try to bring, yeah, systems of record, as I try to bring those cloud-like experience to those applications, how am I going through that thought process? So we have some choices. The choices are I could move it up to lift and shift up to one of the large clouds, many of them around. And what if I do that, what I need to be looking at is what is the cost of moving that data and what is the cost of pushing that up into the cloud and what's the conversion cost if I need to move to another database? And I think that's the biggest one. It's not just the cost of moving the data, which is just an ingress cost. It's the cost of format changes, of migration and all the other conversion changes, et cetera. So what I did in my research was focus on systems of record, the highly expensive, very, very important systems of record, which obviously are fed by a lot of other things, systems of engagement, analytics, et cetera, but those systems of record have to work. You need to know if you've taken an order. You need to have consistency about that order. You need to know always that you can recover any data. You need in your financials, et cetera. All of that is mission critical systems of record. And that's the piece that I focused on here. And I focused on- So again, these are low latency? Very low latency. Right-oriented. Very right-oriented types of applications. And I focused on Oracle because the majority of systems of record run on Oracle databases, the large-scale ones at least. So that's what we're focusing on here. So I'm looking at the different options for a CIO of how they would go. And there are three main options open at the moment. There's Oracle Cloud, Cloud Acustomer, which gives the cloud experience. There is Microsoft Azure Stack, which has a Oracle database version of it. And Outposts, but we eliminated Outposts not because it's not gonna be any good, but because it's not there yet. You can't do research on it if it doesn't exist yet. That's right. So we focused on Oracle and Azure. And we focused on what was the benefit of moving from a traditional environment where you've got best of breed essentially onsite to this cloud environment. So if we think about it, the normal way of thinking about this kind of a research is that people talk about ROI. And historically that's been done by looking, by keeping the amount of work that's performed as given constant. And then looking at how the different technology components compare from a cost standpoint. But a move to cloud, the promise of a move to cloud is not predicated on lowering costs per se. It may have other financial considerations of course, but it's really predicated on the notion of the cloud experience, which is intended to improve business results. So we think about ROI as being a numerator question where the value is the amount of work you do versus the denominator question, which is what resources are consumed to perform that work. It's not just the denominator side. We really need to think about the numerator side as well. The value created. So what kind of things are we focused on when we think about that value created as consequence of the possibilities and options of the cloud? So both are important. So obviously when you move to a cloud environment, you can simplify operations in particular. You can simplify recovery. You can simplify a whole number of things within the IT shop. And those give you extra resources. And then the question is, do you just cash in on those resources and say, okay, I've made some changes, or do you use those resources to improve the ability of your systems to work? One important characteristic of IT, all IT and systems of record in particular, is that you get depreciation of that asset. Over time, it becomes less fitted to the environment that it started with. So you have to do maintenance on it. You have to do maintenance and work. And as you know, most work done in an IT shop is on the maintenance side. Maintenance and enhancement. It's maintenance and enhancement, yes. So making more resources available and making it easier to do that maintenance and making less things that are going to interfere with that, faster time to maintenance, faster time to new applications or improvements is really fundamental to systems of record. So that is the value that you can bring to it. And you also bring value with lower, better availability, higher availability as well. So those are the things that we put into the model to see how the different approaches. And we were looking at really a total one supplier being responsible for everything, which was the Oracle environment at Oracle Cloud Customer, to a sort of hybrid environment, more hybrid environment, where you had the equipment or mixed environment. Yes, where you had the equipment coming from different places. One render. The service, the Azure service coming from Microsoft, and of course the database coming then from Oracle itself. And we found tremendous improvement in the value that you could get because of the single source. We found that a better model. So the common source led to efficiencies that then allowed a business to generate new classes of value. Because as you said, 70 plus percent of an IT organ or a business is spent on technology is associated with maintaining what's there or enhancing what's there. And a very limited amount is focused on new greenfield or new types of applications. So if you can reduce the amount of time and energy that goes into that heritage set of applications, those systems of record, then that opens up that freezer for sources to do some other things. And having the flexibility now with things like Azure Stack and in the future AWS of putting that resource either on-premise or in the cloud means that you can make decisions about where you process things, about where the data is, about where the data needs to be, the best placement of the data for what you're trying to do. And that decision is predicated on things like latency, but also regulatory environment, intellectual property control. And the cost of moving data up and down. The three laws of the cloud. So having that flexibility of keeping it where you want to is a tremendous value again in terms of the speed of deployment and the speed of improvement. So we'll get to the issues surrounding the denominator side of this. I want to come back to that numerator side. So the denominator again is the resource is consumed to deliver the work to the business. But when we talk about that denominator side, perhaps opening up additional monies to do new types of development, new types of work, but take us through some of the issues like, what is a cloud experience associated with? Single vendor, faster development, give us some of the issues that are really driving the value proposition above the line. I mean, the whole issue about cloud is that you take away all of the requirements to deal with the hardware, deal with the orchestration of the storage, deal with all of these things. So instead of taking weeks, months to put in extra resources, you say, I want them, and it's there. So you're taking administrative tasks out of the flow. Out of the flow. And as a consequence, things happen faster. So time value is one of the first ones. Give us another one. So obviously the ability to have, it's a cloud environment. So if you're a vendor of that cloud, what you want to be able to do is to make incremental changes quickly, as opposed to waiting for a new release and work on a release basis. So that fundamental speed to change, speed to improve, bring in new features, bring in new services, a cloud first type model. That is a very powerful way for the vendor to push out new things and for the consumer to absorb them. Right. So the first one is time to value, but also it's lower cost to innovation. Yes, faster innovation ability to innovate. And then the third most important part is if you reinvest those resources that you've saved into new services, new capabilities of doing that. To me, the most important thing long-term for systems of record is to be able to make them go faster and use that extra latency time there to bring in systems of analytics, AI systems, other systems and provide automation of individual business processes, increased automation. That is going to happen over time. That's a slow adding to it, but it means that you can use those cloud mechanisms, those additional resources, wherever they are. You can use those to provide a clear path to improving the current systems of record. And that is a much faster and more cost-effective way than going in for a conversion or moving the data up to the cloud or shift and lift and shift for these types of applications. So they're all kind of related. So I get superior innovation speeds because I'm taking new technology in faster. I get faster time to value because I'm not having to perform all much of tasks and I can imbue additional types of work in support of automation without dramatically expanding the transactional latency and arrival rate of transactions within the system of record. Okay, so how did Oracle and Azure with Oracle stack up in your analysis? So first of all, important is both are viable solutions. They both would work. But the impact in terms of the total business value, including obviously any savings on people and things like that, was $290 million, nearly $300 million additional. This was for a fortune 2000 customer. So it was around $2 billion. So a lot of money over five years, a lot of money. Either way, you would save $200 million if you were with the Azure, but $300 with the Oracle. So that to me is far, far higher than the costs of IT for that particular company. It's a strategic decision to be able to get more value out quicker. And for this class of workload on Oracle, then Oracle at Cloud was the best decision. To be absolutely fair, if you were on Microsoft's database and you wanted to go to Microsoft Azure, that would be the better bet. You would get back a lot of those benefits. So stay within the stack if you can. Correct. So $2 billion a year, five years, $10 billion in revenue roughly between $200 million in saving for one Microsoft Azure plus Oracle, $300 million. So a 1% swing. Talk to us about speed, value, what happens in the numerator side of that equation. So it is lower in cost, but you have a higher, the cost of the actual cloud is a little higher. So overall, the pure hardware equipment cost is a wash. It's not going to change much. Got it. It might be a little bit more expensive. You make the savings as well because of the people, less operators, simpler environment. Those are the savings you're going to make, and then you're going to push those back into the organization as increased value that can be given to the line of business. So the conclusion of the research is if you're a CIO, you look at your legacy applications, it's going to be difficult to move, and you go with the stack that's best for those legacy applications. And since a vast majority of systems of record are running on Oracle, large scale, then that means Oracle Cloud of Customers is a superior fit for most circumstances. If you're not there though, then you look at other options. Absolutely. All right, David Floyer. Thank you. Thanks very much for being on theCUBE today. And you've been watching another Wikibon Action Item from theCUBE Studios in Palo Alto, California. I'm Peter Burris. Thanks very much for watching.