 Live from Boston, Massachusetts, it's theCUBE, covering IFS World Conference 2019, brought to you by IFS. Welcome back to Boston, everybody. You're watching theCUBE, the leader in live tech coverage. This is day one of the IFS World Conference. I'm Dave Vellante with my co-host Paul Gillin. Melissa DiDonato is here. She's the CEO of SUSE and John Roscoe is the CEO of Acumatica. Folks, welcome to theCUBE. Thank you so much. You guys had the power panel today talking about digital transformation. I got a question for you. What's the difference between a business and a digital business? Melissa, I'll give you first crack. You've got a regular old business and a digital business. Everyone's digital these days, aren't they? I mean, when we think about, I was interviewing one of the leaders in Expedia. And I said, are you a travel company or are you a digital company? Like, where do you lead with? And she said to me, no, no, we're a travel company, but we use digital. So it seems like the more and more we think about what the future means, how we service our customers, customers being at the core, everyone's a digital business. The way you service, the way you communicate, the way you support. So whether you're a business or none, you're always going to be a digital business. You better be a digital business. You better be a digital business. So John, take a slightly different act on that, which is we talk about digital and analog businesses. And analog businesses are ones that are data silos, they have a lot of systems so they think they're digital, but they're disconnected. And part of the transformation is connecting all the systems together and getting them to work like one. And I think the other comment thread is data. Digital business maybe puts data at the core and that's how they get competitive advantage. But I want to ask you guys about your respective businesses. So Suze, obviously you compete with the big whale, Red Hat, the big news last year, IBM $34 billion. How did that, or will that in your view, affect your business? It's already affecting our business. We've seen a big, big uptake in interest in Suze and what we're doing. They say that a big part of the install-based customers that Red Hat and IBM currently have are unhappy about the decision to be acquired by IBM, whether they're in conflict because we're a very big, heavily channeled business. So a lot of the channel partners are not quite happy about having one of their closest competitors now be part of the inner circle, if you will. And other customers are just not happy. I mean Red Hat had fast innovation, fast pace and thought leadership and now all of a sudden they're going to be buried inside of a large conglomerate and they're not happy about that. So when we look at what's been happening for us, particularly since March, we became an independent company, now one of the world's largest independent open source company in the world since IBM has been taken over from Red Hat. And big, big upticks. Since March we became independent. We've been getting a lot of questioning, where are we, where are we going? What are we doing? And hey, I haven't heard about Suze in a while. What are you doing now? So it's been really good news for us. Really really good news. I mean, we're huge fans of Red Hat. We do a lot of their events. I'm a huge fan myself. But I tell you, I mean, we know from first hand, IBM has this nasty habit of buying companies, tripling the price. Now they say they're going to leave Red Hat alone. We'll see. And then yeah, like they said, they leave Lotus alone and all the others. SPSS, you saw that, you stream. You know, we are one of our players. What's your view? How do you think it's going to go? I think it's a, I don't think it's about cloud. I think it's about services. And I think that's the piece that we don't really have great visibility on. Can IBM kind of jam open shift into its customers, you know, businesses without them even really knowing it. And that's the near term cash flow play that they're trying to, you know, affect. Yeah, but it's not working for them, isn't it? Because when you look at the install base, 90% of their business sits in the Linux open source environment and open shift is a tag along. I don't know if that's a real enabler for the future rather than, you know, an afterthought from the past. Well, for 34 billion, it better be. I want to ask you about the cost of shifting because historically, you know, if you were IBM, you were stuck with IBM forever. What is involved in customers moving from Red Hat to Sousa? Presumably you're doing some of those migrations now. We are, we're doing them more and more. In fact, we're even offering migration services ourselves in some applications. It depends on the application layer. How simple is that? It depends on the application. So we've got some telco companies with very, very complex 24 by seven, you know, high-paste, big-fat enterprise applications around billing, for example. They're harder to move. A lot of custom code, really deep, really rich. They need, you know, constant operation because it's billing, right? Big fat transactions. Those are a little bit more complex than, say, the other applications are. Nonetheless, there is a migration path and in fact, we're one of the only open-source companies in the world that provide support for not just Sousa, but actually for Red Hat. So if you're a Red Hat 4 rel customer that want to get off an unsupported version of Red Hat, you can come over to Sousa. We'll not just support your Red Hat system, but actually come up with a migration plan to get you into a supported version of Sousa. If it's a packaged set of apps and you don't have to freeze the code, it's actually not that bad. It's not that bad, no. All right, John, I got to ask you. So help us understand Acumatica and IFS and the relationship. You're like sister companies. You're both ERP providers. How do you work together? Yeah, so we're both owned by a private equity firm called EQT and EQT, IFS is generally focused on $500 million and above the company, so more enterprise and we're focused on core mid-market, so say 20 million to 500 million. And so very complimentary in that way. IFS is largely direct selling. We're 100% through channels. IFS is stronger in Europe. We're stronger in North America. And so they see these as very complimentary assets. And rather than do perhaps what's going on with the IBM Red Hat discussion here, slam these big things together and screw them up, they're trying to actually keep us independent. So they've put us in a holding company, but we're trying to leverage as much of each other's goodness as we can. But is there a migration path? I mean for customers who reach the top end of your market, can they smoothly get to IFS? Yeah, it's not going to be like a smooth, turn a switch and go, but it absolutely is a migration option for customers. And we do have a set of customers that are outgrowing us. We have a number of customers now over a billion dollars running on Acumatica. And for a company we've got one that we're actually talking to about this right now, operating in 41 countries, global, they need 24 by seven support. We're not the right company to be running their ERP system. Well your panel today, you guys are talking about, a lot about digital transformations, kind of lessons learned. What are the big mistakes you see companies making and kind of what's your roadmap for success? I think doing too much too fast. Everyone talks about the digital innovation, digital transformation. It's really a business transformation with digital being the underpinning, the push forward that carries the business forward, right? And I think that we make too many mistakes with regards to doing too much too fast, too soon, that's one. Doing and adopting technology for technology's sake. Oh, it's ML, it's AI, and everyone loves these big buzzwords, right? All the code words for what technology is. So they tend to bring it on, but they don't really know the outcome. Really, really important. As soon as we're absolutely obsessed with our customers. And during a digital transformation, if you remain absolutely sick of fending about your customer at the core of every decision you make and everything you do, particularly with regards to digital transformation, you want to make sure that business outcome is focused on them. Having a clear roadmap with milestones along the journey is really important and ensuring it's really collaborative. We talked this morning about digital natives. We're all young, aren't we? Me in particular. But I think the younger generation of digital natives think a little bit differently, perhaps than we were originally thinking we were their age. And I depend on that thinking. I depend on that integration of that thought leadership infused into companies to help really reach customers in different ways. Our customers are buying differently. Our customers have different expectations. They have different deliverables they require and they expect to be supported a different way. And those digital natives, that young talent can really aid in that delivery of really good thought leadership for our businesses. So John, we're seeing IT spending at the macro slow down a little bit. You know, a lot of different factors going on. It's not a disaster. It's not falling off the cliff, but definitely pre-2018 levels. One of the theories is that you had this kind of spray and pray. Kind of what Melissa was saying. Joe, we're going too fast, trying everything. And now we're seeing more of a narrow focus on things that are going to give a return. Do you see that happening out there? Definitely some. I mean, people are looking for returns even in what's been a really vibrant economy. But I agree with Melissa's point. There's a lot of ready shoot aim projects out there. And the biggest thing I see is the ones that aren't, the fail, the ones that aren't led by the leadership. They're sort of given off to some side team, often the IT team, and said, go lead digital transformation of the company. And digital transformation, you know, and Melissa said this morning, it's business transformation. You've got to bring the business part of it to the table. And you've got to think about, that's got to be led by the CEO or the entire senior leadership team has to be on board. And if not, it's not going to be successful. So pragmatism would say, okay, do get some quick hits, get some wins. And then you got kind of the, you know, Bezos, Michael Dell mindset, go big or go home. So what's your philosophy? Moonshots or, you know, quick hits? I always think starting, you know, you've got to understand your team's capabilities. So starting is something that you can get a gauge of that. You know, particularly if you're new and you're walking into an organization, you know. Melissa, I don't know how long you've been in your role now. 65 days. Right, so there you go. So it's probably a good person to ask what, you know, what you're finding out there. But I think, you know, getting a gauge of what your resources are. I mean, one of the things you see around here is there are, you know, dozens of partner firms that can be brought in to, you know, supplement the resources you have in your own team. So being thoughtful in that as part of the approach. And then having a roadmap for what you're trying to do. Like we talked this morning about a customer that Linda had been talking about, had been working on for six or seven years. Right, and you're saying for an enterprise, a very large enterprise company, taking six or seven years to turn the battleship, maybe isn't that long. Okay, so you got the sister company going on. Do you have a commercial relationship with IFS? Or are you just here as kind of an outside speaker and thought leader? I'm here as an outside speaker thought leader. There is talk that perhaps we can, you know, work together in the future. We're trying to work that out right now. Oh, okay. I want to ask you about open source business models. We still see companies sort of struggling to come up with not profitable, but, you know, insanely profitable business models based on open source software. What do you see coming out of all this? Is there a model that you think is going to work in the long term? I think the future's open source for sure. And this is coming from a person who spent 25 years in proprietary software, having worked for the large year, PCRM vendors, 100% of my life has been dedicated to proprietary software. So whilst that's true, I came at SUSE and the open source environment in a very different way as a customer, running my proprietary applications on open source Linux based systems. So I come a little bit different of an approach, I would say. The future's open source for sure. The way that we collaborate, the innovation, the borderless means of which we deliver, thought leadership within our business is much, much different than proprietary software. You would think as well that the wall that we hide behind an open source being able to access software anywhere in a community and be able to provide thought leadership masks and hides who the developers and engineers are and instead exacerbates the thought leadership that comes out of them. So it provides for a naturally inclusive and diverse environment, which leads to really good business results. We all know the importance of diversity and inclusion. I think there is definitely a place for open source in the world. It's a matter of providing it in such a way that creates business value, that does enable and foster that growth of the community because nothing is better than having two or three or four or five million developers hacking away at my software to deliver better business value to my customers. The commercial side is going to be around the support. The enterprise customers want to know that when bump goes in the night, I've got someone I can pay to support my systems. And that's really what SUSE is about, protecting our install base, ensuring that we get them live all of the time every day and keep them running frictionlessly across their IT department. Now there's another model, the so-called open core model that holds that the future is actually proprietary on top of an open base. Are you saying that you don't think that's a good model? I don't know. Jury's out. Next time that you come to our event, which is going to be in March in Dublin, we're doing our SUSEcon conference, leave that question for me and I'll have an answer for you. I'm pontificating. Well, I did. It's a date. But I'll add it. The 12th of March. It's certainly working for Amazon. I mean, Amazon's criticized for bow guarding open source but Redshift is built on open source. I think Aurora is built on open source. They're obviously making a lot of money. Your open core model failed for Cloudera. Hortonworks was pure. Hortonworks had a model like you guys in Red Hat and that didn't work. Now that was kind of a profitless prosperity of Hadoop and maybe that was sort of an overhand. I think our model, I mean, the future's open source, no question. It's just what level of open source within the stack? Do we keep proprietary or not is the case maybe, right? Do we allow open source from the bottom to the top or do we put some proprietary components on top to preserve and protect like an umbrella, the core of which is open source? I don't know. We're thinking about that right now. We're trying to think what our future looks like, what the model should look like in the future for the industry. How can we service our customers best? At the end of the day, it's satisfying customer needs and solving business problems because that's going to be pure open source or open source with a little bit of proprietary to service the customer best. That's what we're all going to be after, aren't we? There's no question that the innovation model is open source. I mean, I hope that's a debate. The hard part is, okay, how do you make money? A little bit of open source for you guys. I mean, are you using open source technologies? Presumably you are, everybody is. So we're very open APIs. We joined, three years ago, we joined openAPI.org and so we've been one of the leading ERP companies in the industry on publishing open APIs. And then we do a lot of customization work with our community and all of that's going on in GitHub. And so it's all open source, it's all out there for people who want it. Not everybody wants to be messing around in the core of a transaction engine and that's where you get into sort of the core argument of which pieces should be people modifying. Do you want people in the kernel? Maybe, maybe not. And this is not my area of expertise so I'll defer to Melissa. How many people would be able to extend things in an open source model? Having people be able to find a library of customizations and components that can extend Acumatica, that's obviously a good thing. I mean, I think you hit on it with developers. I mean, that to me is the key lever. I mean, if I were VMware, I'd hire 1,000, 2,000 open source software developers and say, go build next generation apps and tools and give it away and then I'd say, okay, Michael Dell, make your hardware, run better on a software with this. That's a business model. You can make a lot of money with it. And we're going to be very acquisitive right now. We're looking for a future, right? We're looking to make a mark right now and where do we go next? How can we help predict the outcome and the next step in the marketplace when it pertains to the core of applications and the delivery mechanism in which we want to offer the ease of being able to get thousands of mainframe customers with complex enterprise applications, let's say, for example, to the cloud. And a part of that is going to be the developer network. I mean, that's a really, really important segment for us and we're looking at companies. Who can we acquire? What's the business outcome and what are the developer networks looking like? So cloud and edge are got to be two huge opportunities for you, right? And again, it's all about developers. I think that's the right strategy at the edge. You see a lot of edge activity where you somebody trying to throw a box at the edge with the top down, you know, traditional IT model. It's really the devs up that I think you're going to put in the edge. It is, it is the devs up. So you're exactly right, exactly right. Yeah, I mean, edge is fascinating. That's going to be amazing what happens during the next 10 years. And we don't even know, but we ship a construction addition. We've got a customer that we're working with that's instrumenting all of their construction machinery on something like a thousand construction sites and feeding the sensor data into Acumatica. And so it's a way to keep track of all the machines and what's going on with them. You know, obviously shipping logistics, the opportunity to start putting things like, you know, RFID tags on everything and instrument, all of that out at the edge. And then the issue is you get this huge amount of data and how do you process that and get the intelligence out of it and make the right decisions? Well, how do you, how do you, and data's plentiful insights, you know, aren't, is the sort of. Yeah, well, I think that's where the machine learning breakthroughs are going to happen. I mean, we're, we've built out a team in the last three years on machine learning. All the guys we've been talking about, Amazon, Microsoft, Google, are all putting out machine learning engines that companies can pick up and start building models around. And so we're doing ones around, you know, inventory, logistics, shipping. We just released one on expense reports. So it's going to be, you know, that really is where the innovation is happening right now. Okay, so you're not an inventor of AI, you're going to take those technologies, apply them to your business. Yeah, we don't want to be the engine builder. We want to be the guys that are building the models and putting the insight for the industry on top. That's our job. All right, Melissa, we'll give you the final word on the IFS World 2019. I think, is this your first one? It's my first one, yeah. I will go quite a- What's the bumper sticker say when your trucks are pulling away? Yeah, the bumper sticker would say, when you think about the future of open source, think about Sousa. I love it. I'd say in the event, I mean, I'm super impressed. I think it's, the group that's here is great. The customers are really enthused and, you know, I have zero bias, so I'm just giving you my perspective. Yeah, I mean, the ecosystem is robust here. I have to say, I think there's 400 partners and I was pleasantly surprised when I was walking around last time. This is your second one, isn't it? It's the huge second one, my first. Oh, you're first. All right, well done. And so what do you think? It's your event, similarly. Coming back? Yeah, it's good energy. I would love to come back, you know. Especially overseas, I know you guys do a bunch of stuff overseas. There you go. He wants to travel. Dublin and March. March the 12th. Dublin's a good place for shows. Are you doing it at the big conference center there? Yep, the big conference center. That is a great venue. And not just because the green thing, but it's actually- Green and, no, that's a really nice venue. It's modern, it's got, I don't think, three or four floors. It does, yeah, yeah. We're looking forward to it. And then evening events at the Guinness Storehouse. There you go. Exactly right. So we'll look forward to hosting you there. All right, great. See you there. We'll come with our tough questions for you. Yeah. All right, thanks you guys. Thank you. Thanks very much. All right, thank you for watching. But right back, right after this short break, you're watching theCUBE from IFS World in Boston. Right back.