 From the SiliconANGLE Media office in Boston, Massachusetts, it's theCUBE. Now, here's your host, Stu Miniman. Hi, I'm Stu Miniman with theCUBE and welcome to a special presentation from our Boston area studio. Happy to welcome back to the program. Mike Gersten is part of the executive team at Software One, works on innovation and strategy. Good to see you. Thanks for having me, Stu, appreciate it. All right, so, Mike, you know, this year, last couple of years, I feel like we've been getting some clarity as to this whole, this cloud stuff we've been talking about for more than a decade. The conferences I go to, the customers I speak with, whether they call it hybrid cloud or multi-cloud, they're getting their strategy in shape. It is not a singular, you know, one solution, you know, one cloud to rule them all type thing. They've got their data center. We've all been figuring out, you know, SaaS since, you know, Salesforce and others, you know, rolled that out now, got like 20 years ago. And, you know, public cloud, of course, is growing, you talk infrastructure service, the platform's on top of it. But, you know, customers, it's their data, it's their applications, and there's just operational models that are changing, you know, pricing models, you know, some things are the same and some things change drastically. But, you know, before we get into it, why don't you, for people that don't know Software One, you guys, say, you're one of those hipster cloud people. You were doing a lot of these things to set up for the cloud world before we were in talking about cloud. So give us kind of the thumbnail on the company. Yeah, I mean, we're a 30 year old company, you know, we're in 85 different countries and so this is not a new space for us. Certainly, software portfolio management is our domain. We look at that cloud world and we're amazed at the speed with which it's growing and how many new entrants there are in it. Do we have the born in the cloud, as you will call them. We kind of see ourselves as born again in the cloud. We've been managing software portfolios for our customers for decades. Yeah, so, last time I spoke with you is back at Amazon re-invent, last November, you know, Microsoft, VMware, you know, Oracle, big software companies, been around a long time, all have either rejuvenated or, you know, new pieces as to how they fit into that software world. We were recently at VMworld. It was like VMworld's pushing to be more of a SaaS provider, not just an infrastructure provider. You talked to your customers, how are those relationships with their software providers? How sticky are they with a company versus a product? Or, you know, take us inside a little bit how that dynamic works. It's more complex than it's ever been. I mean, the promise of SaaS in particular or cloud in general was that, you know, customers would have more flexibility, more agility. They would be able to, you know, shift the financial management of their software portfolio from a capital expense to an operating expense. And this was appealing to them. And it still is appealing to them. And it's certainly appealing to the software publishers as well because, you know, they move from having to renew a contract every year, every three years, whatever the terms of those license agreements are, to having an essence of relationship and perpetuity with these customers. That's the good news. So it's mutually beneficial, I think, for the publisher and the customer. The bad news is it's introduced a new set of complexities that I think were unforeseen by many of our customers. They, you know, have now empowered Shadow IT in ways that they had never imagined they would before. People are buying countless SaaS in our customers. They're buying countless SaaS applications with credit cards, you know, in HR, in marketing. And the procurement officer has no idea it's happening. The CIO has no idea it's happening. So they're having a harder time really understanding what are they truly spending on software. Yeah, it's a, you know, we're a relatively small company and even for us, we're like, oh, well, SaaS should make it easy. I can grow as I need. If I'm not happy with the provider, I can change. You know, I've got flexibility in there. The reality is once you're using something, you're probably going to keep using it. Whether you're actually getting full utility of what you're spending, how do I manage all of those? Something I hear from the practitioners I talk to all the time is right. We used to have, you know, we talked about server sprawl and now it's like, well, I, you know, everything is sprawl. I keeps adding more and more. I don't audit it well. I don't keep track of it. You know, how do I get financial guidance around there? So that's where you guys, you know, help come in some. Yeah, I would say that, you know, our Forte as a company is really around what, you know, that vendor management, the asset management and what you're mentioning now, the financial management aspects. Whereas, you know, many of the folks that are focused just on the cloud pieces are focused more maybe on the resource management. How much disk am I using? How much memory am I using? For us, it's about, are you spending the right amount? Have you right-sized your investment? Do you have compliance risk? And on the right-sizing investment, we could use, say, I as consumption analytics as an example, I was with a customer last week and, you know, they're using one of our tools to analyze how much spend they have with Azure, with a Microsoft IaaS solution. Now that's an upfront commit for them. So they have hundreds of thousands of dollars of upfront commit in Azure spend. When they ran the consumption analytics and looked at the predictive, you know, the telemetry and the predictive analytics, what they determined was that they were gonna well overspend relative to their commitment. Well, it turned out that they also had workloads that just during off hours were consuming a tons of IaaS resources. They didn't need to be. So they just needed to right-size that investment. They were gaining the visibility into that. But most of our customers aren't even looking at that. They don't have that visibility. Yeah, it was interesting. We used to talk, you know, in the data center, it was, oh, you know, 70, 80, 90% of your budget is spent keeping the lights on. I got people running around trying to manage that. I talked to plenty of companies that like, I dedicated engineer to figuring out how to architect and manage that financial spend. Because there are those architectural differences and right, do I get, you know, Amazon? Is it reserved instances and I'm gonna lock in for three years, wait, do I have flexibility if the new instance comes out? Am I actually using what I spent? Do I have to worry about the resale market? I mean, it's a really, cloud is supposed to be simple. It was supposed to be easier. Yeah, how do we get here? Yeah, that's right. And it's funny you said earlier that, you know, most of these companies now have their cloud strategy. I'd argue that it isn't a cloud strategy they have. What they have is a document that acknowledges they're consuming cloud app. And they truly are, they're consuming a ton. They're just not really sure how much. And that's a challenge for them. You know, in the old world and the on-premises world, I shouldn't even say the old world. 85% of our customers' software portfolios is still on-premises today. So we're really talking about the migration to cloud which makes up maybe somewhere in the range of 15% of that portfolio. But in the old world, we used to look at what is a customer entitled to use? What is their license agreement with the vendor? And we would compare that to what they've installed or consumed. You know, their inventory or the use of the applications on the on-premises world. In the cloud world, it's the same formula. It hasn't changed. But now the entitlement is a subscription. And on the other side of the equation, there's no inventory. It's just all consumption. So we're just comparing consumption to subscription. Yeah, Mike, I love your discussion of the strategy there. It's like forecasting. If we look backwards, we're always really good at kind of justifying what we have. Maybe strategy is just like, yeah, I've kind of figured out where I am today. And at least that's the base point. So it's a good first piece. But right, yeah, where do I figure out going forward? I want to pick up on the application discussion because yeah, absolutely. Look, my data center or my hosted environment where really I own and manage a large part of the stack. It's where a lot of stuff is today. Wikibon, we've been writing for the last couple of years what we call true private cloud, which is how do I get the operational model and efficiencies that I'm promised in the public cloud. We can argue whether or not it's true or not. In my own environments, and a lot of that is that application management. And any great trends that you're seeing, I mean, everything from, we say what gravity is there around certain public clouds? Of course, Amazon was really good at the start with developers. Microsoft, of course, has a huge application portfolio. Oracle doesn't get discussed as much in kind of the cloud world, but they have a huge cloud push. They're satisfying much of what they have and they've got some of the stickiest applications in the world. I'm sure your customers talk to you lots about Oracle licensing and the like. So what trends are you seeing? We've looked at, this year we've been arguing a little bit, lift and shift. Is it a waste of time? Is it super sexy because it gets me to move on to something different? What are you hearing from your customers? How do they look at their application portfolio and try to manage that? Where does that get your team involved? Yeah, I think in the on-premises world that they were always tools to manage that. You think of operations management tools or software distribution tools. Those tools just change. There's a need for software management tools in the cloud space, but they're not distribution. They're now things like what you were mentioning, telemetry to ensure that I've matched my subscription to what I'm actually consuming. Or for that matter, compliance. Now you mentioned workload lift and shift and I do think it's sexy for what it's worth. I think there's a great opportunity there because many of these workloads do belong in the cloud. What I'm a little dubious of still is whether or not it's just a tool's play. I don't think that we're going to be able to just go out and say I can use this tool to evaluate my applications and say this application belongs in this cloud environment and I can press this button and it will move. I think you need people to help with that. I think you need really intelligent consultants to help with that and it's a combination of the tool set and the intellectual capital that you bring to it. No, Mike, and I'm with you and I'm a little torn on lift and shift because the one hand, I'm worried about taking something old, putting it in the new place and not doing something different with it because as we know, I want to be able to take advantage of those flexibilities but if I get it on the new platform, there's the opportunity to leverage new services. Maybe I can start pulling apart pieces of it and it gives me options to make updates. I've talked to people that work on research of let's just not talk about the application, let's talk about the productivity of the people behind that and I know lots of people you talk healthcare. I'm running on software systems that are 20 or 30 years old sometimes. It takes a long time to change. There's so many interdependencies. One of those things, IT is really tough and if you talk enterprise, SimpliVity, I say is really an oxymoron. So we need to make steps in the right direction. Re-platforming is a first way to get in that direction. I agree. Yeah, all right. We've been talking to software one since launch of a product called PureCloud. So why don't you give us the update on this? What's the latest with it? Before you get into it, I know there's some new features from when the product was first announced today. What learnings have you had? What's been the kind of embrace by customers and how things baked out over the last year or so? Yeah, we look at PureCloud. I'm trying to think of the best analogy. Maybe if you look at the expense management systems that are out there like a Concur or an Expensify. For the category of expenses, what they do is they capture all that data, all of your expenses, and it's one place where now you can easily create the report, submit it for reimbursement, but they also have connections into the vendors for hotels and flights, and so you can actually purchase those things through the expense management tool. And then that point of purchase is captured that data's already in the system. Huge advantage. We do the same thing, but for the category of software. So that's really what PureCloud is. You don't have to transact with us. You don't have to buy software through software one. We sell a lot of software. We sell billions of dollars worth of software, but many of our customers will use the platform and not buy one dollar worth of software from us. But the idea is if you have a place where you're capturing the data at point of purchase, so now you understand what your entitlements are, and that is on-premises and in the cloud. And entitlement is a tricky thing because just a transaction history doesn't really tell you everything. Now you have to normalize that data. How much of something do I really own? How am I allowed to use it? You need to enrich that data. Do I have upgrade, downgrade privileges? Can I use it in certain geographies and not in other geographies? Once you have all that information on the transaction ownership from the point of purchase, you can now compare it to, you can look at it against how you're using it. And that exists in the cloud and that exists on-premises. It's a new dynamic for a lot of companies in the cloud because they don't have visibility into it at all. In the on-premises world, they've been looking at it but they haven't been, many of them have been looking at it from one side of the equation backwards, which is the inventory side back to the entitlement side. So they might say, oh, I went out and I discovered all this software that I'm using in my environment, but they don't have the entitlement data. So they don't know, am I allowed to be using it this way? So I'll walk through it really quickly with you. If the entitlement is greater than the inventory in the on-premises world, then you've purchased too much, you need to right size your investment. That's an easy math for a customer. And if the inventory is greater than the entitlement, well, then they have a compliance issue and we all know that some of these big software publishers will come after them and hit them with a big bill they weren't expecting. Yeah, it's one of the things that's really exciting me about kind of the world of software these days is there's platforms like what you're talking about. Once I kind of aggregate the information, there's a lot of intelligence that can be applied to it. And can you talk to me about how much do I need people involved? How much do you have the finance people in there and how much is just the intelligence in this system? I don't know whether you call it AI or ML or whatever you have, but gosh, for years in the kind of the data world, it was like, well, I don't have the metadata. And now a lot of this can be self-finding. Once I get it in the system, they can learn a lot on themselves and enable a lot of activity. Yeah, I'm glad you mentioned the term metadata because I think that's kind of the foundation of our platform. It's really how we go about tagging resource management. So we will tag and create metadata for every resource that's in both a cloud or an on-premises environment. And that's important because if you, let's use the cloud world as an example, the cloud providers have tagging systems built in, but all of them are different. All of them use different nomenclature, some of them don't have any at all. And so you have to have some kind of overarching tagging mechanism that kind of reconciles that across everything, an aggregation layer, if you will. That's something that we do with PyroCloud. It's really important. It's the foundation of the platform. Once you have that in place, then you can apply it to what your organizational structure looks like. And you may have organizational structure set up geographically, by department, by service line. So it's important. I know what all my resources are. I know how they're tagged. I know how I'm going to apply them in my organization. And then you apply those accesses. You have time and money and that's the budgeting process. How much does Software 1 just take care of that versus does the company go in, manually do stuff? Is there an API to integrate with some of the other pieces that we're working on? It is not purely a software play. And I think anybody that tells you that it is, is blowing smoke. Because we have almost 1,000 consultants in our organization and they range from procurement, outsourcing experts to software asset management experts, to backend support. And so yeah, it is both platform and services that you need to bring to bear to solve this problem for customers. It's an astute observation on your part. Okay, Mike, so what about the updates? What's new with the product? And talk to us a little bit about where we expect things to go down the road. Yeah, so if you know the history of the product, you'll remember that we did all the transaction pieces. We were really good on the asset management side. What we had phenomenal reporting in analytics, especially in the cloud consumption analytics for IS providers, consumption analytics for different SaaS providers. But really what we've done is we've extended that much more deeply to the financial management pieces. So we've created very rich budgeting tools that are solving customer problems that we've been hearing about. Things like how do I more effectively do charge backs? Especially with cloud technologies where they're being bought in a decentralized fashion. How do I centralize that and then do some kind of charge back internally? We have customers now that are asking us how do I do markups? So I want to actually turn my purchasing group into a profit center, and they're doing that. And so we've given them a tool to be able to do things like markups within. How do I automate the invoicing process? We've gone through that with them as well. Ultimately, all we're trying to do for our customers is manage their entire portfolio across the entire lifecycle. So from acquisition through disposition across the portfolio, whether it be on-premises software, whether it be in the cloud, whether it be hybrid or multi-cloud, they need one place where they can manage their entire portfolio. Like, how are customers doing with kind of the management of all their software assets? I think back, I've talked about the data center world. It's like, well, I'm really bad at predicting what I need. So half the customers I talk to are like three years in and I'm using 30% of what I bought. Oh my gosh, I can't believe how many millions of dollars I spent. The other half are like, wait, I'm out of budget because I really under forecasted things. Your customers, how are they doing and what's a typical customer get when they work with software one? They save in 10%, they save in 90%. Where do they fit in that ballpark? So we've done some analytics on our customer base and the average is about 33% overspend across their portfolio. So they acknowledge that they're spending more than 30% than they should on their software which is pretty significant when you consider the software represents upwards of 20% of an IT budget and IT represents upwards of 5% of overall revenue in terms of spend. So it's a big dollar amount. Interestingly enough though, I can't answer that question the way you probably want me to because some of our customers just say, you know what, we'll bury that into our costs. We'll buffer our budget and just accept the fact that we're going to spend 30% more than we should. It's a shame because if they weren't spending that 30%, they could take that money and drive it down to the bottom line. Wait, wait, wait, come on Mike. I saw the public cloud came out there and they said, remember how you have to overspend? Now you can have the little charts, what you need and I can burst and everything. Why can't I have the perfect world where I spend exactly what I need when I need it? Why isn't that worked out? Because you can't make a decision on what you can't see. And they have a very limited visibility into where that spend is happening. And so that's half the challenge. It's why you see so many of these point solutions in the cloud now are just purely consumption analytics guys. And it's because we're solving an important problem. Visibility is an important problem. You need to go past visibility though. You need to take that intelligence, make it actionable. You need to take that visibility and then turn it into control for customers. And I think that's what's missing in the industry right now. It's a problem we're trying to solve. Okay, talk to us a little bit more about the future. What should we expect to see from software one? What are some of the hot issues you're hearing from customers that you're looking to solve down the road? I think that the sprawl is going to continue at a rapid pace, particularly in the SaaS world. So it went from being dozens of SaaS providers to now being thousands of SaaS providers. And most customers are telling, we hear from our customers that they acknowledge that they have 20, 30 SaaS tools in their environment, that they have no idea who's buying them, where they exist. There's some interesting solutions out there to discover where that SaaS spend is happening, whether it be connecting to a identity store to determine if people are logging into a SaaS tool or even connecting into the general ledger to see if people are spending at the departmental level on SaaS solutions. So that's a big problem right now. The IaaS side was where a lot of the focus was in the cloud for a long time and continues to be, and justifiably so, it makes up the line share, the spend in the cloud market. But that's changing, that's changing pretty rapidly right now. Yeah, the last thing I want to ask you, but bring back software one, you deal with a lot of publishers. And while we're talking, I'm sure IBM, Oracle and Infor probably all made an acquisition. How do customers look at that consolidation in the market play? Is it good for them to have fewer companies that they can work with? Do they have less leverage? Is it so disaggregated out there that the customer doesn't really have any leverage with the suppliers anymore? You know, how does that work? It's tough to generalize on that, but I can say that we have some customers that are very dubious of some of these acquisitions, particularly in the cloud analytics space, because what's happening is now those publishers, and we work with over 10,000 publishers, so you're right, those publishers have bought cloud analytics tool providers or they've developed their own, but customers don't just use one cloud. They use dozens and dozens of clouds, and so what they need is a view over all of it, and these publishers now they're making these acquisitions are focusing on just what is the analytics they're going to provide to their customers on their solution, just a very small part of the problem. Yeah, other than of course software one, who's doing a good job helping customers across that multi-cloud world? Any companies you partner with or people, you look out and you say they're doing a good job, they're thinking of the customers, they're solving real problem, or I worry about these acquisitions right there, they're growing their base, they're growing their applications, they're not solving some of those core customer issues that you talked about, which is getting my arms around this whole multi-cloud environment. Yeah, I bounce back and forth on an opinion with that because I think at their core, the publishers are not evil, I don't believe they're evil, I do think they want to provide to customers the solutions that best meet those customers' needs, so I think they care about providing good intelligence to the customer. They just can't provide it outside of their own view. As far as outside of the publisher community, competitors of ours that do a good job, we see very strong competitors in categories. So cloud management providers that are very strong, we see good on-premises portfolio managers that are very strong, we've yet to see anybody that's managing the full portfolio strongly, we think that's our opportunity as a company. Mike Hurston, software one, really appreciate you joining us, really digging into this multi-cloud environment. It's a big issue, really happy to get the update from you and share with our community how all of this is working. Thanks so much for watching us, you're watching theCUBE.