 From the CUBE studios in Palo Alto in Boston, connecting with thought leaders all around the world, this is a CUBE conversation. Hello everyone and welcome to this week's CUBE Insights powered by ETR. In this breaking analysis, we want to accomplish three things. First thing I'll do is we'll recap the current IT spending outlook. Next, we want to share some of the priorities and sentiments and the outlook that we're hearing from leading tech execs that we've been interviewing in the past couple of weeks on the remote CUBE. And finally, we'll take a look at really what's going on in the marketplace, a little bit of a look forward and what we expect in the coming weeks and months ahead. Now as you know, ETR was really the first to quantify with real survey data the impact of COVID-19 on IT spend. So I just want to review that for a moment. This ETR graphic right here shows results from more than 1200 CIOs and IT practitioners. It shows that they expect their IT spending, how their spending's going to change in 2020. Now look at the gray bar. It shows a very large number of organizations they're plowing ahead without any change in overall IT spend, about 35%. Now as shown in the green bars, a full 21% of respondents will actually increase their budgets this year and the red bars of course, they show the carnage. Really, 28% of customers are expecting a decrease of more than 10% year on year. Now as we've reported, the picture would look a lot worse were it not for the work from home infrastructure offset, i.e. spending on collaboration tools and related networking, security, VPN, VDI infrastructure, et cetera. Now remember, ETR launched this survey on March 11th and ran it through early April. So it caught the change in sentiment literally in real time on a daily basis. And that's what I'm showing here in this graphic. What it does is it overlays key events that occurred during that timeframe. And what ETR did was they modeled and re-ran the data excluding the responses prior to each event. So of course, the forecast got progressively worse over time, but as you can see on the purple line, there was a little bit of an uptick in sentiment from the stimulus package. And it looks like there's another economic cash injection coming soon. Now, as we've reported, the current forecast calls for around a 4% decline in IT spend from 2020. That's down from plus 4% prior to coronavirus. ETR has now entered its self-imposed quiet period for two weeks. But what we're doing here is showing some of the sectors that we're watching closely for big changes. We're going to drill into these over the next several weeks. Now, of course, as we've reported, we're seeing a substantial cut in IT spend across the board. CapEx will be down. We would expect sectors like IT consulting and outsourcing to be way, way down as organizations put a lot of projects in the back burner. But there are bright spots as shown here in the green. One that we really haven't highlighted to date is cloud, really haven't dug into that. And also data center related services around cloud. Cloud we think is definitely going to remain strong. And these related services to connect clouds via Colo services and really reducing latency across clouds and to on-prem, we think will remain strong. Now, I want to shift gears a little bit and talk about some of the learnings and takeaways from our conversations with CXOs over the past couple of weeks. One of the great things about theCUBE is we get to build relationships with many, many people. Over the past 10 years, I've probably personally interviewed close to 5,000 people. So we've reached out to a number of those execs over the last couple of weeks to really try and understand how they're managing through this COVID-19 crisis. So let me summarize just some of the things that we heard and then I'll let the exec speak to you directly. First, of course, look, tech execs, they're half full people. Perpetual optimists, if you will. Now it was interesting to hear how many of the people that I spoke with that they actually had early visibility on this crisis? Why? Because a lot of their operations are actually in China and other parts of Asia. So they saw this coming to an extent and they saw it coming to the US. And so they were somewhat ready. And as you'll hear, they all had a air of confidence about their long-term viability and they put their employees ahead of profits. But at the same time, once they see that their employees are okay, they want to get them focused and productive. Now what they've also done is they've increased the cadence and the frequency of their communications. And most, if not all, are trying to give back with either free, no strings attached software and other similar programs. But the bottom line is they really don't know what's coming. They don't know when this thing will end. They don't know what a recovery really is going to look like, when people are going to feel safe traveling again, what the overall economic impact is going to be. So I think it's best summarized to say they're hoping for the best, but planning for the worst. But let's listen to this highlight clip that we put together of five execs that I talked to along with John Furrier. Melissa DiDonato of SUSE, Frank Slutman, who heads Snowflake, and he's formerly the chairman and CEO of ServiceNow. Jeremy Burton is the CEO of a company called Observe. He used to be the CMO of Dell and EMC before that and ran products. Sanjay Poonan is the COO of VMware and Srinivasan heads up Cisco's collaboration business. Roll the clip. What keeps me up at night now and how I wake up every morning is wondering about the health of my employees. We had a couple of employees, one that was quite ill in Italy. We were phoning him and calling and emailing him from his hospital bed. And that's what's really keeping me going and what's inspiring me to lead this incredible company is the people and the culture that they've built that I'm honoring and taking forward as part of the open source value system. Well, my first move is let's not overreact. Take a deep breath. Let's really examine what we know. Let's not jump to conclusions. Let's not try to project things that we're not capable of projecting. That's hard because we tend to have sort of levels of certainty about what's gonna happen in the next week in the next month and so on. And all of a sudden that's out of the window creates enormous anxiety with people. So in other words, you gotta sort of reset to, okay, what do we know? What can we do? What do we control? And not let our minds sort of go out of control. So I talked to our people all the time but maintain a sense of normalcy, focus on the work, stay in the moment. And by the way, turn the newsfeed off, right? Because the hysteria you get fed through the media is really not helpful, right? Just having been through a couple of recessions, we all went through 9-11. The world does turn around and you come out the other side. And so the key thing is you sort of very much it's a cliche but you gotta live in the moment. What can I do right now? What can I affect right now? How can I make sure that what I'm working on is a value for when we come out the other side? And when more curve balls come along, I think you've got a reason about that with the best information you have at the time. I always tell people the profits of VMware will wait. If you are not well, if your loved ones are not well, if you're gonna take care of people, take care of that first, we will be fine. This too shall pass. But if you're healthy, let's turn our attention to the other side of the world. So we're not gonna just sit at home and play games. We're gonna serve our customers. How do we do that? A lot of our customers are adjusting to this to normal and as a result, they have to either order devices with a laptop, screens, things of those kinds to allow a work from home environment to be as close to productive as their work environment. Dave, I do see some things becoming permanent, right? Do I expect the volumes of collaboration to go down? It's never going to go back to the same level. The world as we know it is gonna change forever. We are gonna have a post-COVID era and that's gonna be changed for the better. There's a number of employees who have been skeptical, reticent to working from home. We're suddenly gonna say, hmm, just work from home thing is not so bad after all. So you can hear from the execs who are all either currently or at one point have led large companies and large teams. They're pretty optimistic. Now the other thing that Slutman told me, by the way, is he approves investments in engineering with no qualms because that's the future of the company but he's much more circumspect with regard to go to market investments because he wants to see a high probability of yield from the sales teams before making investments there. Now I also want to share some perspectives that I've learned from smaller early stage companies. And we've all seen the Sequoia Black Swan memo and you might remember their onerous rest in peace, good times, the alert that they put out in 2008. It basically, they're essentially advising companies to stop spending on non-essential items. By the way, another Slutman aside, he also somewhat scoffed at this advice and he told me on theCUBE, you should always stop spending money on non-essential items. At any rate, I've talked to a number of early stage investors and portfolio companies and I'll share a little bit of their playbook that they're using during this crisis and it might add some value to the cut, cut, cut narrative that you're hearing out there. I think the summary for these early stage startups is first, focus on those customers that got you to where you are today. In other words, don't lose sight of your core. The second thing is try to hone your go to market and align it with current conditions. In other words, paint a picture of the ideal customer and the value proposition that you deliver specifically in the context of the current market. The third thing is they're updating their forecast more frequently and running sensitivity analysis much more often so that they can better predict outcomes, i.e. reset your likely best case and worst case models. The third is essentially reset your near-term and mid-term plans and those goals and rebalance your expense portfolio to reflect these new targets. And this is important, by the way, to communicate to your investors. What I've seen is those companies with annual recurring revenue, they're actually in pretty good shape, believe it or not. In almost all cases, I've seen targets lowered, but there are some examples of startups that are actually increasing their outlook. You don't think Zoom, even though Zoom's not a startup anymore. But generally, I've seen resets of between five to 10% downward, which you know what often isn't pretty much in line with the board-level goals. And I've seen more drastic reductions as well of up to 50%. Now, so we've heard some pretty good stories from larger tech companies and some of these VC-funded startups. Now I want to talk about small business broadly and what we're hearing from small business owners and also the banks that serve them. Look, I'm not going to sugarcoat this. Many small businesses, as you well know, are in deep trouble. They're going to go out of business. They're laying off people and they're a number of unemployed. The aid package that the government is putting forth to small businesses, it's not working its way through the banking system, not nearly fast enough. Despite the Treasury Secretary's efforts, the bottom line is banks don't want to make these loans to small businesses right now. There's too much that they don't understand. They're making no money on these loans. They're being overwhelmed with volume. I'll give you some examples. Bank of America, when the small business payroll program first hit, signaled that would only help companies with both a banking relationship and an existing lending relationship with the bank. UBS is another example, said it was only going to directly help companies with over 500 employees and for small businesses, it was outsourcing that relationship to another firm, which of course meant you had to go through a new rectal exam, if you will, with that new firm. In a way, you can't blame the banks. They're being asked to execute on these programs without clear guidance on how they're supposed to enforce guidelines and what happens if they make a mistake? Is the federal government going to pull their guaranteed backing? What are those guidelines? They seem to be changing all the time. And what's the bank's liability and authority to enforce them? And why do I spend time talking about this? Well, nearly half of U.S. employees work for small businesses. And nearly 17 million workers as of this date have filed for unemployment. And I'll say the banks got bailed out in the financial crisis of 2008, and they need to step up, period, and the government needs to help them. All right, the other buzzkill data that I want to bring up is our national debt. Now, many have invoked that there's no such thing as a free lunch, including the famous Milton Friedman, the economist who I'm going to credit. Others have said it, but I'll give it to him. Why? Because he espoused controlling the money supply and letting the markets fix themselves. Bailouts to banks, airlines, Boeing, automakers, et cetera, those are antithetical to his underlying philosophy. Currently, the U.S. national debt is $24 trillion. That's $194,000 per taxpayer. Americans' personal debt is now $20 trillion. Our unfunded liabilities, like Social Security, Medicare, et cetera, now stands at a whopping $139 trillion. And that equates to about 422,000 per citizen. Think about this, the average liquid savings per U.S. family is 15K. And the U.S. debt is now 111% of GDP. So we've been applying Keynesian economics for a while now. And I gotta say, it seems to have been working. Think about the predictions of inflation after the 2008, 2009 crisis. They proved to be wrong. But my concern is I don't see how we grow our way out of this debt. And I worry about that. And I've worried about this for a long time. But look, we're knee-deep into it and it looks like there's no turning back. So I'll try to keep my rhetoric to a minimum and stay positive here, because I think there is light at the end of the tunnel. We're starting to see some good opportunities emerging here, just in terms of flattening the curve and the like. And one of the things I'm pretty positive about is there gonna be some permanent changes from COVID. It's kind of ironic that this thing hit as we're entering a new decade. And as I said before, I expect digital transformations to be accelerated because of this crisis and the many companies that have talked digital from the corner office, but haven't necessarily really walked the walk, I think will now. I think it's gonna be more cloud, more subscription, less wasted labor, more automation, more work from home, and less big physical events at least in the next couple of years. So that's kind of the new expectation. As always, we're gonna continue to report from our studios in Palo Alto and Boston, and we really welcome and appreciate your feedback. Remember, these segments are all available as podcasts, and we're publishing regularly on siliconangle.com and on wikibon.com. Check out ETR.plus for all the spending action, and you can feel free to comment on my LinkedIn post or DM me at D.Valante, or email me at David.Valante at wiki, sorry, David.Valante, it's siliconangle.com. This is Dave Valante for theCUBE Insights, powered by ETR. Thanks for watching, everyone. We'll see you next time.