 Hello everyone, welcome to this CUBE Conversation. I'm your host, John Furrier here in the Palo Alto studios of theCUBE. Today we're joined by Aptio, who's in the news for the big acquisition, multi-billion dollar acquisition by IBM. They'll be part of the AWS savings in the cloud event on July 25th, the New York City. A physical event at the AWS offices will be covering the theme of only paying for what you need with AWS cost optimization. It's a physical event. The link below if you want to check it out. The CUBE will be at the event and we'll be partnering with the folks there. And today we're joined by one of those partners, Aptio's Jonathan Straus, the director of strategic solutions for Aptio in the news with the big acquisition. Jonathan, welcome to the CUBE Conversation. Thanks for being here, appreciate it. So busy weekend for you guys over there, the big news on the acquisition all over the news. Again, validation for what we're going to talk about here, but pretty exciting stuff. You guys working in burning the midnight oil over the weekend. Absolutely busy times to be sure and super exciting. I think everybody at Aptio is just incredibly excited about the news and the opportunity to partner with our friends over at IBM. It's been a great relationship the last few years with some partnering and looking forward to taking that to the next level. Well, congratulations to you and the entire team. It really is validation of the whole cloud, financial ops management, whatever you want to call it. It's been a best practice as kind of the recession loom, but it's still a tailwind in the cloud. You guys have helped thousands of organizations on this journey. I call it right sizing, refactoring. There's a lot of stuff going on in the cloud native next-gen cloud that's looking really strong. And the maturation of FinOps as a strategy and an operational practice has been ongoing. Tell us what you guys are seeing right now. Obviously, IT, been around for a while, AI, a big part of it. What's the role of FinOps playing in this whole next-gen marketplace? Yeah, it's a great question. As engineers now have the ability to procure without having to go through IT, without having to go through procurement, it's really changed the game as far as how businesses, how fast and how quickly they can deliver value out to their internal and external stakeholders, but it's also provided some additional risk, right? For years, you had organizations with on-premise infrastructure was relatively easy to purchase. You bought it in big batches. You depreciated that over time. If you're a CFO, your costs are relatively fixed from that perspective. Now all of a sudden you're billed by the second or by the millisecond, and these workloads can spike incredibly fast. And so really having some controls in place and understanding around how the developers and how the financial aspects come together, it's really the premise of FinOps. And we're super excited how we help our customers with that, with AppDeal Cloudability. Dave Vellante and I were talking, preparing for our podcast this week. And I'll say to your company in the news, we were discussing how people are looking at this as not just a cost-cutting opportunity, because that's really kind of just more right-sizing. It's also the investment operationally because more complexity of this next gen abstraction layer called gen AI, whatever you want to call it, is showing that these next apps are coming. And the cloud is great for more capacity at any time, but the bills go up. It's like an open checkbook. So predictability is huge. Flexibility got that with the cloud. People are trying to understand this. This is kind of the role of FinOps. Could you take a minute to explain how AppDeal is intersecting in that? How are you guys helping customers? What specifically is the reason why you guys are winning so much right now? Yeah, I think to the point that you mentioned, cost-cutting is just one component there. And really the question is, it's a means to what end? If my cost is going up in the public cloud, if my services are increasing, if my spend is increasing, well, what if that's because I'm helping more customers than ever before. And so being able to take the conversation to the next level, I think is really why we're winning a lot of business. Looking at actual telemetry data, looking at the actual products and customers, what we call unit economics, right? Really being able to understand, hey, while my total spend has gone up, actually because of this cloud native architecture, I'm actually able to service my customers at a cost per unit less expensive today than it was six months ago or 12 months ago. That's a metric that the C-suite is always interested in, right? How can they be more efficient and drive those operational costs down while learning how to reinvest and invest into the business? So I think as our customers think about not just cutting costs, but really understanding where can my dollars be distributed? Where can they be invested to bring those next generation technologies to bear for the market so we can generate some revenue? One of the things I think you guys have done well on an AppTO and reason why I think you guys are getting all the value creation going on with the acquisition is you've changed the game on what cost reporting means. You kind of highlighted that, can expand on that notion because one of the things that we hear about in the cloud is operating leverage. No more CapEx, you got OPEX. So when you get that operating leverage going, but it costs something to get something, you're seeing value scale differently now. So AI is only going to make that more accelerated when you think about scaling up with some of these AI technologies to free up more people. So yeah, cost may be going up as a factor of what? Can you expand more on this change in cost reporting? Yeah, there's a couple of different aspects at play here. If you think about sort of infrastructure costs 10, 15 years ago, introducing that first virtualization layer of virtual machines, it really made it a lot more difficult for folks really to understand who's consuming what, right? And if I can't attribute costs to a product or a line of business, it's really hard to understand my profitability. It's really hard to understand where I'm going to invest in new technologies, new services or even consultants from the outside, right? So then as we start to move to the public cloud, it's not where does the data come from that becomes a challenge. It's really a challenge of scale, right? So if you rewind seven, eight years ago, as folks have started to adopt public cloud, we start seeing these bills come in with, you know, tens of millions of rows of data on a daily basis, right? And so now the challenge is, how do I parse that data? And folks have gotten better at that over time and they've started to solve that challenge. And so now what we're really seeing is that next level of abstraction. So especially with technologies like containerization, it's even harder to get to the data to understand who's actually using which resource, what percentage of that resource is being used. This is critical when we're trying to understand what's the cost of this product that we're bringing to market against its profitability? Is this a business I want to continue to invest in? Is this a technology or an underlying platform that I want to continue to invest in? So our ability to surface those costs, regardless of whether it's on-prem infrastructure or whether you only have one or two layers of abstraction from a virtualization perspective, I think that's really where customers need help. And that's where we're seeing a lot of value as folks continue to invest in the FDA platform. I think I like that angle better because it's cost optimization, not cost cutting. You're optimizing your infrastructure. And now with all the preparation for the next gen scale with say AI, for instance, a lot of people want to tap into that. So I have to ask you, if you had to explain Aptio's expertise in cloud cost optimization, what's the pitch? How do you describe it when you go into an engagement where someone asks you, hey, what do you guys do? What's the core competency and how does that translate into value for us as an organization? Yeah, I really think about challenges in a couple of different areas that we handle, right? And I think about the FinOps lifecycle of inform, optimize and operate. So as we just laid out here just a second ago, there's a terrible time that we're dealing with right now providing information out to the edge, out to the lines of business, out to their product owners internally and externally. And so our ability to parse through not only the cloud service provider details, but also the telemetry data, some of the other operational data to provide that visibility and actually get it out to the edge, right? Democratizing that data so that people can make a better decision. That's phase one, right? That's informed, right? As we move into that optimization layer, we really think about two different levers that folks can pull. You've articulated that a couple of times today already, right? There's the infrastructure optimization angle. There's also an angle around how you procure those resources, right? Are you committing the right levels in the right timing, right? So helping our customers not only optimize the individual resources, but also thinking about some of this purchase instruments whether it's a reserved instance or a savings plan. And then that operate phase is really doing that at scale. And that's really where integration into the other telemetry tools, day two infrastructure tools, security tools, et cetera, workflow tools. That's where a lot of our customers sort of in any run maturity state really start to get a lot of value is us integrating with their systems that they use on a day-to-day basis and automating to your point on the AI that automating a lot of those repetitive tasks. I like that angle on tapping into the telemetry from other places. This brings in the whole data, I won't say orchestration, but data integration, multiple data sets, you mentioned automation. How much of a focus is that for you guys? Cause it seems like that seems to be a secret sauce for you guys, bringing in multiple data sets in a telemetry in from different environments or systems. Can expand on that if you don't mind. Yeah, yeah, it's huge, right? As we talk to folks involved in cloud services at our customer sites, right? What three, five years ago, the vast majority of the spend was in the public cloud, right? And for them, that's still the vast majority of it, but there's an ever-growing footprint, whether it's third-party storage, whether it's third-party application portfolio management tools, whether it's security tools, whether it's ticketing and workflow and queuing tools, whether it's day-to-infrastructure, infrastructure is code, right? There's all sorts of vendors and software and applications and services that our customers have to use in addition to what they're getting from the AWS's of the world. And it's that total cost of ownership, it's really important for them to be able to communicate. And so being able to see what it actually takes to stand up a net new service, right? Because it's not just the greenfield workload in the public cloud, it's also the cost associated with all those tangential services. That's what it really requires someone to think about spending before they place a bet on a new product coming to market. And as capital has become tighter over the last, you know, 12, 18 months, like this is top of mind for everybody. We only have a limited amount of bets we can make or investments we can make. So we need all the data in front of us to make the best decision possible. Yeah, I've always remember those conversations from years ago. Data should be on the balance sheet. It's an asset. You know, in AI, the conversation today is pretty much around your data is your IP. Don't put it in the large language model. So now a new kind of variables emerging, we'll see how that goes. But this brings into the hybrid model. You brought that up. And I think what I see coming is, I hate to use the word total cost of ownership because that's kind of an old TCO has been an old definition. Total cost of ownership has been a constant. It's been around for a while, but it changes with cloud, right? You got, you know, discounted offerings, when to deploy that versus what workloads are net new, different cost structures, what you get out of margin expansion on sales versus costs. How do you look at that TCO? How do you guys in a modern way think about TCO? I'm sure customers bring it up a lot. They do. I think to your point, it's something that's been around for a long time. And it's really just the data inputs that have changed, right? The concept is still the same. It's still important to understand what it costs to operate a product, a service, an application, whatever you want to call it, right? Whatever your vernacular is individually, it's still important to understand what that cost is. What's changed is whether or not the infrastructure is on-prem or in a data center or with a public cloud provider, what's changed is what that telemetry data looks like, the availability of that data, the accessibility of that data. So the conversation is the same. It's really just a matter of updating the systems, understanding where that's coming from, and then thinking about how you plug that back into the technology that is essentially customer facing. Because really, you think about 20, 30 years ago, while technology spend was certainly growing, it wasn't necessarily ever present and part of every single part of every single transaction that every company does with one of their customers. And today, it's totally different, regardless of what vertical you're in, technology is completely at the forefront of how you are interfacing with your customers today. And you're only going to be as relevant as your most recent technology investment. I love this conversation because it reminds me of, you know, the changes in the history of how we are in the evolution of computing. When cloud came out, such a step function difference in cost of value that people didn't really inspect. Oh, I left the lights on, so to speak, left my EC2 open, you'd ever keep processing. The costs were there, but now as you reign it in, as you go next level, cost optimization is critical. You mentioned inputs. You know, the famous Bill Walsh football coach for the 49ers once said, you know, what's your secret to success? He goes, I take care of the inputs and let the scoreboard take care of itself. That's a different, that brings up your inputs piece. What are the key inputs right now? Because if you take care of the inputs, the scoreboard, so to speak, or costs or the spreadsheets will take care of itself from a scale standpoint. Can you share your thoughts on best practices, strategies for managing those inputs, identifying the right ones? Is there a playbook or best practice? Yeah, I think there's a host. I think just a couple that come to mind, right? I would say would start off with your, your tagging and labeling strategy, depending on sort of dedicated workloads versus your containerized workloads, right? So having a consistent strategy across the board that is enforceable to some extent, what we see with our customers, there are five or seven really key elements that everybody needs to have visibility into, whether that's the project, whether that's the product, whether it's the cost center, whether it's the application owner, service owner. You know, there's really just a handful that are really critical. A lot of the rest of that can be articulated through the metadata. So I think just having a good governance strategy in place as far as data quality is really step one. And really where this ends, whether you want to call this step two, three, four, 17, it doesn't matter, is having an accountability structure. So at the end of the day, somebody has to own the cost, right? And frankly, a lot of technologists over time have really been concerned about availability, uptime, SLAs, output, et cetera, right? That's sort of what they're measured on. And that's obviously super critical from a business perspective, right? Making sure the website is still operating or the application is still operating. But at the end of the day, is everyone has to diversify their product portfolio and they have to be intentional on what bets they place. Everybody's responsibility at every organization to be a good steward of that organization's funds. And so having a culture of accountability and having a way to measure that and hold people accountable for how they're spending that money is really critical. And when that process and that people portion, I'm sorry, it comes together, that's where the technology is really able to shine and really show people for the first time many times, hey, did you know this is how much it costs for these types of workloads? And the analogy I use, first time I went out to dinner with my in-laws, I was not expecting to necessarily pay, but it didn't mean I was going to order the most expensive thing on the menu, right? Simply by them publishing the price of the surf and turf was enough for me not necessarily to order it, knowing that maybe my future in father-in-law was going to be paying the bill, right? So just even socializing that information is really a critical first step. Yeah, and you got to have those that control. I love that. Jonathan Strauss, chief customer officer at FDO, congratulations on the success. Final question, take us through the journey and the learnings, where you guys have come from, what, where you are now, and the key learnings and what you guys have done with customers. You got a lot of customers you've helped in IT and automation. What's the key learnings and take us through a little bit of the history? Yeah, I think from a key learnings perspective, I think a lot of what we've learned through our involvement, right? So we started off 15 years ago as a single product, single portfolio company, as we've made acquisitions and grown both organically and inorganically, we've learned a lot about how our business from a software perspective and a technology perspective has evolved. And so I think that direct experience has been really valuable working with our customers as well as we've been able to sort of help them evolve. I think in addition to that, our partnership from the very beginning with the FinOps Foundation from a culture of accountability perspective, from a best practice perspective, bringing that relationship to bear, I think has been incredibly valuable as well. And then understanding the data challenges that folks were facing 10, 15 years ago, while those have evolved and changed over time, our ability to tackle that from a consulting perspective with our customers and then automate a lot of those tasks from a software perspective, I think that comes to mind first and foremost with some of the big key learnings that we've had over the last 15 years and how our customers are taking advantage of that experience today. That's awesome. And the foundation is there and you got a lot more workloads evolving, changing across multiple environments. Again, managing the inputs, cost optimization, understanding how to report that, super important and valuable. Jonathan, thank you for taking the time with this CUBE conversation. We'll see you in New York City for the event, for Avis putting on cost optimization, paying, only paying for what you need with Avis cost optimization. Thanks for coming on theCUBE conversation. Thank you, John. It was a pleasure. Thanks, Jonathan, really appreciate it. This is theCUBE conversation here at Palo Alto. I'm John Furrier, your host here with Apdeos, Jonathan Strauss. Check out our big event coming up on the 25th in New York City. We'll be there in person at the New York City's eight of its offices. Looking forward to seeing you there.