 Live from Austin, Texas, it's theCUBE, covering Dell EMC World 2016, brought to you by Dell EMC. Now, here are your hosts, Dave Vellante and Stu Miniman. Welcome back to Austin, Texas, everybody. This is Dell World 2016, Dell EMC World 2016. It's only the third time I've done that this week, Stu. And this is theCUBE, the worldwide leader in live tech coverage. The other Michael is here, Michael Cotay, who's the director of technical marketing at Pivotal Software. Good to see you again, Michael. Yeah, you guys too. I was just saying, I think last time we talked, we were back in the corner of this same room. Yeah, and you were Dell then, you're Pivotal now, and Pivotal's now part of the family. So it's almost like a homecoming for you, right? And we're in your home neighborhood. Yeah, it's great. I'll have a lot of office space that I can lord over my colleagues here in Austin since they're headquarters. It'll be wonderful. So what's new with you these days? What are you working on? What's exciting you? So nowadays I work on what we call the advocate team, which the rest of the world will know that as evangelism, but we like to call ourselves advocates. So most of the people on my team, they actually can do real work, but I just know how to make PowerPoint slides. So other people on the team, they talk about programming and sysadminning and all the stuff that you would need to worry about with Pivotal Cloud Foundry and work on. But I mostly go and talk with, I would say management and enterprise architects and above about, maybe if you guys have a better phrase about digital transformation how they change the way they think and organize their companies and operate so that they can do their digital transforming and all of that. So- I'm not sure we have a better term and everybody talks about it. And I guess it means different things to be different people, but everybody, the themes are, everybody's afraid of getting disrupted. Michael Dell talked about that today. Okay, of course. Digital means data. Yeah, yeah. I mean, really if it's digital, it's data, data's growing at a ridiculous rate. So it's all about, well, how do I transform and how do I support making money with data? Yeah, yeah. As opposed to monetizing the data, which everybody sort of mistakenly got wrong. Oh yeah, yeah. Well, I think that was back in the era where like Facebook was IPO-ing and people like, why is this worse so much? They've got all this data. It must be the data that fits into a spreadsheet and then you can start doing all sorts of ratios and then you get obsessed with the data. And I remember, you know, there used to be the digital, what was it, the number of storage in the world and it was just like ballooning all the time. So yeah, it was like a fast moving big elephant thing, which I'm sure it still is, just like, you know, lemonade's still popular. But I think what I see a lot of large organizations figuring out is, I mean, I think it's good to think, if you're defining digital transformation, it's good to ask what analog transformation is, right? And like, essentially when you kind of run through the imagination of that trap, it sounds really hokey, but it's basically like, what if we were just much better at doing software and we had software for all parts of our business and we could release it like once a week and our software was as good as like Facebook's and Google and Apple and people interacted through software internally and externally. And I mean, I think it, to us in the tech world here up on a stage, like that sounds sort of like, I'm even kind of motioning how absurd it is, but for most people, like, that's not the way businesses run. Like, there's not a software-first approach to solving business problems. Yeah, I mean, you bring up a lot of good points there, but I think one of the opportunities we have is, while everybody's not a Facebook or an Apple, you're wearing a smartwatch, you're carrying around a smartphone, and every company needs to be able to reach you there and the tools and the things that are available, I can get down to a smaller company and reach people using my big data, cloud, all those type of things. I don't have to be a 100,000 person company to be able to create something that can reach either the B2B or the B2C where they are. Right, and I think that's one of the major drivers as you were talking about, the fear of disruption, right? Which is always, at this point, people like to say, oh, that's the wrong definition of it, but it's just like words change definition. It's the fear of a little company taking over a big company's turf. And I think that's one of the major drivers, as you were saying, is genuinely, like, new technological advances, like, make it possible. It basically removes this asymmetric advantage that larger companies used to have, and now the playing field's much more leveled, right? And granted, these small companies that get an advantage through using your mobile phone and software, they grow big, but they can basically compete with more or less anyone they want. They can more compete on the quality of the product versus on a traditional sense of competitive advantage of high barriers to entry and things like that. There's probably still not going to be a lot of upstart telco companies, right? But that kind of gets to the point of like, that's an analog industry, a three-dimensional world where you're like actual laying cable and managing it. But if the business that you do is all digital, right, there's no physical manifestation of it, then it's a lot easier, like, it doesn't matter what size you are, as long as you've got a good idea and execution, you can be on a level playing field with everyone. But even at telco companies, look at WhatsApp. Yeah, sure, sure. I mean, at Bitcoin, everybody's talking about, it makes a blockchain crazy over this open source, you know, tool that was developed. Sure, sure, yeah, I mean, maybe that's a bad, it's sort of like, you know, bulldozers, right? Like there's a lot of like capital investment it takes to make bulldozers. Yeah, Negra Ponzi. And even, you know, there's always a slide in these presentations that will have like Uber, Airbnb, and Tesla. And then Tesla is like, well, that's really expensive, right? Like that took a lot of money and they got a factory. So like, the closer you get to three-dimensionality, like I think the harder it is to be disruptive up and down the stack. To your point, you know, whether it's like WhatsApp or car companies who are doing software on the upper ends, like there can be interesting disruption there, but like, you still need the robots to build the things, which is a little pricey. But anyways, I think of, you know, the Amazon line is, you know, your margin is our opportunities. So, you know, we used to say, you know, for a while, it was like, whoever thought that you could make a lot of money on coffee or like water is like two areas that totally got transformed there, but not in the software space. But, you know, let's switch to, I mean, you focus a lot on kind of agile development, you know, the DevOps chase. You know, what do you see happening organizationally inside companies that allow them to move fast? I mean, I was listening to a podcast recently where it was like, even inside like Docker, they have a hard time keeping up with their release trains. And you know, you take the average IT person, there's so much getting thrown at them constantly. You know, how do we help organizations? Yeah, I mean, I think organizationally, there's someone who's reminded me that you should never list out three things you're going to say earlier today. So we'll see what happens. But I mean, there's sort of three things that fit into what you're saying. One is the worst, which is do nothing, right? And so a lot of companies have organized themselves into I guess a functional organization, right? Like here's the server people, the whatever like different silos we would say. And many companies, they, I don't know if want is the right word, but they end up staying that way to put it in the passive voice. And that's really where things don't go well because you can't move very fast and it just like, it doesn't work well. If your intention is to be constantly innovating, right? To be digital as it were. And the second one is there are companies who, and this is what we saw for many years before this, they basically go to SaaS companies. They just circumvent this whole thing. And we used to call it shadow IT or rogue IT, which I would always misspell as roge IT, which is funny. But like, you know, they basically circumvent centralized silo control to get the software that they need. So that's one way of doing it. But the companies that we work in who actually want to change the companies, what they end up having to do, and I see them struggling mightily with doing, is they have to take their organization and collapse it down into product teams, right? So on, and this is what you hear about in DevOps and everything. So on one product team, you'll have developers, a product person, the whatever operational role you need. You might even have testers and security people on that one unified team dedicated to that one product. Now, that sounds like crazy town to people who have been like optimizing how IT runs. But it turns out, if you're deploying software every week, if not every day, like those people do have to be dedicated to that thing. And then you also end up seeing the results that if you actually are dedicating people to this one task and they're fully plugged into how people are using it and they're improving the software, it's actually worth it to go through what seems like an unoptimization of unsiloing them to do that. But again, it's really hard. Like often like HR has to get involved in facilities, like all these things that you would have no idea of getting involved. It is hard. Writing great software is hard. And Benioff, I think was the first to make the quote to be many more SaaS companies coming out of non-tech companies than tech companies. Right. Okay, well a lot of non-tech companies, even tech companies have struggled to build good software. As you say, you got to find the people. You got to figure out how to organize it. You got to have the right technical chops. Sure. You got to make some bets. So first of all, do you buy that premise that companies are becoming SaaS companies? Yeah, I mean, I think about that a lot. I used to work on cloud strategy last time we talked and SaaS has become, it used to be the most definitive thing of what cloud was. And now, I mean, you're making me think it is a little squiggly now, right? Like for example, when we go to our bank and we use online bill pay, are they a SaaS company? Right? It's certainly software. Yeah, yeah. I mean, it's SaaS. They've gone through digital transformation. Yeah, it's like software delivered over the internet, right? Which I think is kind of what, I mean, you could quibble about ASPs versus SaaS, but like it is sort of like to an end user perspective, it looks the same. So yeah, I mean, I think that is kind of a lot of the people we work with, especially, they move towards wanting to provide their business software as a service and their customers and things like that. And then, but then it does get to the point you're saying is like, now you're a software company, right? Which is, there's a reason software companies are so highly valued because it's like hard work, right? It's not easy to do. Hey, we need a mobile app. Okay, great. And then they outsource that and then what? Exactly. Yeah. You see that a lot, right? Yeah, no, and that's even one anti-pattern that I see a lot is, I don't know, for lack of a better phrase, outsourcing, right? And I often liken it to like kids. Like, I often think it would be great to have a nanny, right? Like to take care of my kids and everything so I could hang out. But then I think, like, I wouldn't really be doing my kids and the analogy here is to your software. Like I should probably be present all throughout their life, like good or bad. And I'll kind of lose track of what's going on if I'm not involved and if I outsource that. And I think, similarly, you see that with, I mean, we can all identify software who's in the tech industry and you're like, yep, they outsource that, right? Like it's not evolving, it's not continuing. So you really have to, if you want software to be core part of your business, then you have to treat it like that, which is difficult and expensive and it takes a lot of attention. But you don't outsource that part. And so coming back to the digital transformation discussion that we're having, a lot of times customers feel like they need it. We talked about the paranoia factor, but there's not necessarily an ROI there or at least a clear path to a business justification. How do they fund it? It's a lot of trial and error. A lot of mistakes are being made, probably more mistakes, more failures than successes, which maybe isn't necessarily such a bad thing. But it's not always lucrative. Yeah, I mean, there's a, as they say, boy, you set a mouthful there, right? I think there's two things. One, there's this orientation that we in the software business have. And it sounds absurd, but it's sort of like you embrace failure, right? Let's make bigger mistakes tomorrow. And the way to think about that is that hopefully us three still learn things. But if you think about it, when you're learning stuff, it's basically constant failure. Like you're learning by failing at something until you get it right. And so once you reorient yourself that obviously catastrophic failure of like the whole business goes under is that's not a good lesson to learn. But like you learn by failing, right? And so as one example, there's a good example that everyone loves the IRS. They were following this process where they thought we should present how much money people owe who are delinquent and we'll give them all of their financial history, right, because we're accountants and that sounds awesome. So they tested this out and they failed to have people figure out how much money they owe because it's confusing. You're like, I just want to know how much money I owed. But because they were sort of embracing this failure way of doing it, they actually got that feedback and very quickly deployed a new way of doing it that just showed you how much money you owe. And all of that sounds obvious and easy, but unless they kind of had this idea of failure being okay, they wouldn't have discovered that. So I mean, that's really how the sort of learning process goes in and the lesson that you take from a software company is obviously burning down the building is not good, but failure is how you get new data and you learn new things. Okay, got a question for you about Cloud Foundry. Just to get back to some of the pivotal stuff. When I think back to when Cloud Foundry was inside of VMware, the discussion was when we were figuring out what this whole past thing was and everything, it was like, okay, in my data center, I virtualize, when I go to the cloud, I want microservices, I want like a lighter layer and therefore like Cloud Foundry, that was going to be how VMware extended there. Last week, VMware announced that they're going to take bare metal servers and run VMware in the cloud. And I sat back and I'm like, I don't understand. This is why we have Paz, this is why we're doing it. So I'm curious from the pivotal side, you have some thoughts as to kind of architectures, microservices, where things fit. So from a pivotal perspective, so I have at least for me, delightful thing. Like I used to cover them when I was an analyst and now I work there. And what's interesting is you, if you look at the way that our customers use Pivotal Cloud Foundry, they basically like, they think of, and this used to be a bad way of putting it, but they think of the cloud as just like the place I run stuff, right? And for various reasons, sometimes they want to run it in their own data center, sometimes they want to run it like in a proper cloud, sometimes they want to co-low it and whatever. And really all they want is like, we'll call it like multi-cloud or portability, but they really want that layer that we just write our applications to. And so I think what we on the vendor side have learned, and then you even see this from AWS and other people, is that you can't be too orthodox about which side of the firewall you run things on, right? Like once the hordes of actual users come in, they just want to run their stuff and they'll have various different places to run it. Like we announced this, I think it was today that you can run Pivotal Cloud Foundry on Google Cloud, right? And Home Depot, they're looking to run it on Google Cloud and they're a customer of both of ours. And you know, I mean they have a logical reason, right? Like they don't want to run on Amazon. You can sort of do the math on that one. But you know, whether they're running on private clouds or Google or AWS or Azure, like from our perspective and from a lot of the way our customers use it, like they don't really care about that so much. I mean they care about it, but in aggregate it doesn't matter. Like they're more focused on the parts you're raising up, like what I'm focused on is writing the right microservices so that I can more rapidly put out new applications and do things, right? Like I mean, my joke is always you sit down, the CIO sits down with the CEO for the annual review and I don't think any CEO has ever said, good job provisioning servers, right? Like that was awesome, right? Like instead- Double that next year. Instead they get rewarded for like good job enabling the business and providing the services that our business needed to make money and all of that stuff. And so you know, the more you focus exclusively down the stack, like you kind of cut off flexibility. So I guess if I summarize and maybe comment on this, the VMware on Amazon, it solves flexibility on the data center, but does not address any change in application which is what Pivotal is usually doing. Any change in application? So you know, changing from kind of my traditional, you know, application that I had, you know, virtualized application I running versus a more micro services architecture. Yeah, I mean it depends what you're running in there, right? Like from our, from a Pivotal perspective, I forget the percentages, they're probably not public anyways, but a large percentage runs Pivotal Cloud Foundry on VMware. And then they also run it on an open stack and things like that. And so in that sense, you know, portability is always a little funny because there's various things you depend on that are hidden by networks and stuff like that. But yeah, I mean the idea that we've always had is as you go up the stack, let's see if I can do this in the air. If you're an application at the top of the stack, you should be able to be pretty ignorant about everything below you, right? Like you shouldn't really have to know about it and specialize it. So in that sense, you know, whether you're running your container, your VM, your VMware thing over in AWS or on a private cloud or wherever else, like the stacks above it don't really care. Now I'm sure the people at those levels really care about it, but you know, that's great for them. Well they care if it doesn't work, they care if it doesn't perform. Sure, sure. They care if it doesn't give them the quality of service. Otherwise they don't want to talk about it, they don't want to hear about it. Yeah, no, and that goes back to that annual performance review thing, right? I mean, another, it's fun to like be all hand wavy about culture and all this stuff, but I always like to return to what enables all this is exactly your point is that there are genuine cloud technologies, namely a lot of automation and doing a lot of compute and automation very cheaply that enables people to be not caring about those lower layers, right? Like I'm sure there were CIOs who got rewarded for provisioning, right? Back when it was expensive and costly and a critical part of it, but nowadays like it's not really like it's, it should be not a big concern that you have if you're doing modern day type of application development about it being configured and worrying about it. So yeah, I mean, that's, to me that's a lot of what ultimately cloud has enabled is that, no, now we can focus on developing good software instead of focusing on like networking config and all this like server stuff at the bottom. We don't have to read man pages as much as we used to. So bring it back to Pivotal. What's happening these days? You got, you still got the tip of the spear, which is the Pivotal data, you know, services, right? How do you guys call it? Pivotal lab. Yeah, yeah, yeah. We have basically labs, data and platform. There you go. Labs, data and then cloud platform, right? So talk about that sort of structure, what's happening, how's the business going? Yeah, yeah. So I mean, generally the types of engagements I've seen us getting into is large organizations come to us and I say organization specifically because it's, I don't know what, if you say government is the opposite of that for-profit, you got your for-profit and your non-profit. Organizations works. Yeah, yeah. And anyways, I mean, like we were talking about earlier, I mean, I was going over that IRS example. You know, there's also every large organization, they have custom written software that they want to do better at. And so they come to us and they look for Pivotal Cloud Foundry as that platform that removes all that automation stuff they need to worry about. And then the labs part. So labs is actually, I think it's maybe like six or 800 people now. And they actually work with you, paired up with you, literally pair programming and doing other things. And essentially, they don't only train you and coach you, but they do the actual work of the new applications that you're working on, things like that. So they train you up by doing actual work. And eventually they leave, you know, you can do the viral spread of that. Like once, as you do rotating pairs, you spread that knowledge. And the data part often, you know, I was actually talking with someone yesterday where if you think about a bunch of IOT cases, right? The data part is really good because there's this loop of I collect a bunch of data, I ingest it, I need to analyze it and then I need to quickly react and figure out what to do next, right? And having like the in-memory grids that we have and also the big data things that we have, you got to, that data has to be somewhere, right? And then you also need the application layer to like actually, like you were just showing me some dashboard, like that's not free, right? Like you have to have applications written around it that express all that data. And so those three things together really work well. So you've got labs helping you out with the process. Like once you've got your fingers on the keyboard, what keys do you press? And how do you do it? And how do you whiteboard things out? And then you have Pivotal Cloud Foundry that runs it all and removes that need to be rewarded for provisioning servers. And then the data part is sort of like, it's not all of it, but it's a fair amount of the blood that runs through the systems that helps you decide what to do next and how to run things and ongoing in your business. Cool. Well, Michael, thanks very much for coming on the queue. It's good to see you again. Appreciate it. Sorry I didn't get a sports jacket. I'm a little underdressed. We appreciate that. You got the developer look. You'd really look like a fish out of water if you did that. All right, well thanks for having me. It was fun. Yeah, our pleasure. All right, keep it right there, everybody. Stu and I will be back with our next guest right after this short break.