 Live from the Sands Convention Center in Las Vegas, Nevada, it's The Cube at AWS ReInvent 2014. Brought to you by headline sponsors, Amazon, and Trend Micro. Welcome back everybody. We're here live at AWS ReInvent 2014 in Las Vegas. You're watching The Cube. My name is Jeff Kelly from Wikibon. I'm joining the segment by Ryan Virabutla. He's the VP of strategic partnerships and business development at SAP. Ryan, thanks so much for joining us. You're welcome, Jeff. Glad to be here. So, I've been looking forward to this segment. SAP, obviously a huge player in the enterprise application space, the data analytics, the big data space. Tell us a little bit about what SAP is doing here and what you guys are doing with AWS. Absolutely. So, as you rightly pointed out, we've been the leader in the application space for a long time. Our stated goal is to transform and become a cloud company. And we've started on this journey about a year back and we've kind of seen the cloud growth and uptake. And AWS is a natural partner for us as we go down this cloud journey, given their leadership position in cloud combined with our leadership position in applications makes it a very interesting partnership for us. The way I describe it to customers is the power of SAP HANA when combined with the flexibility of AWS makes a compelling value proposition for customers. So, take us back, give us a little bit of a history lesson. How did the relationship with AWS start? And then maybe put it into context and we'll get into talking a little bit about SAP's larger ambitions relative to cloud. I know it's a little bit different but maybe specifically now just talk a little bit about the AWS relationship, how that started and kind of where it stands today. Absolutely. So, AWS has been a strategic partner for us for the last five years. So, it's an ongoing journey. But it really picked up steam in the last few years. We launched a couple of HANA-specific offerings on AWS. One particular offering is HANA 1. We've launched a couple of HANA-specific offerings and one particular offering is HANA 1 aimed at startup companies, ISVs, mid-market companies where AWS is actually selling HANA on the marketplace and also provisioning it on the marketplace and giving customer a single pricing for their entire package. So, that's one example of where we're doing work with AWS. We are running a number of trial programs, POCs on AWS for HANA. The advantage for us is AWS is able to get a HANA environment up and running in minutes, not days, and that's a huge value proposition when you're starting a new engagement. Yeah, absolutely. How do you envision it playing out longer terms in terms of customer usage of things like HANA on the cloud? You mentioned with AWS, famously it's very easy to spin up a new service. You can try HANA pretty quickly. What are you seeing in terms of your customers? Once they spin up that initial database, are they moving that when they go to production back in-house, are they leaving that in AWS? What are some of the patterns you're seeing? Absolutely. Maybe I should step back and talk about the overall market trend. Traditionally, SAP customers are very conservative. You're talking about mission critical loads, customer ship, I mean, 60 to 70% of all commerce happens on SAP platform, and it's mission critical to the core. So traditionally, most of the SAP workloads have been on-premise. What we have seen in the last six months is a tremendous shift in market momentum. Now SAP customers, even from mission critical workloads, are looking at cloud. So the adoption of cloud has just taken off in 2014 like it has never done before. And that's what making us kind of ramp up our cloud offerings and kind of create those choices for customers and be through our own cloud offering on enterprise cloud. So when we look at cloud, we look at cloud in three different facets. We have our own private cloud offering called HANA Enterprise Cloud, which is really customers who are running business suite on-premise today, moving to the cloud in a private cloud environment. The second one is public cloud. We have SaaS applications like SuccessFactors that we acquired, Ariba Network, which is their 190 countries, 1.4 million different businesses running their transactions through Ariba. So that's the second category where we have public cloud solutions. And the third category is what I call HANA Cloud Platform, which we introduced recently. More targeted at ISVs, industry specific applications, SIs to build extensions on top of... That third use case is really interesting. And I imagine that's where AWS comes in very handy to make it accessible to developers. What are you doing to attract developers to the platform? And how is cloud making that a job easier? Absolutely. And to answer the first question, AWS can play a role in all three. What we are trying to do is expand our global presence in every country. Because of the scale at which we are growing, we need to grow our infrastructure at the same rate as our cloud revenues. We have a stated ambition to triple our cloud revenues in the next two years, which means our infrastructure has to grow along with that. So we're looking at partners to supplement our infrastructure capability. We'll continue to have a few data centers run by SAP, but it is not practical for us to have data centers everywhere. Given the data sovereignty, given the local processing needs, given the scale at which these infrastructures have to come on, it absolutely makes sense for us to partner with key cloud players. And that's where we are evaluating a number of cloud partnerships. So they could be a play with all the hyperscalers, if you will, along with AWS in that space. Going back to your second question, which is very interesting, the platform, we have a specific developer program that we are driving with AWS where developers can get HANA licenses at no cost, so they can go to SAP Marketplace, acquire a HANA license, and then automatically get pushed out to AWS for deploying the license so that the developer can be up and running in minutes. So there are a number of dedicated programs, and this is a key core, I guess, focus area for SAP, developing the ecosystem, the developer network around it, and we are going to have big partnerships with AWS, with other players. HANA cloud platform is going to encompass other technologies as well. This is definitely a great focus area for us. Yeah, it's definitely a great platform for the technology, but also a platform for attracting developers and finding entrepreneurs who are doing new interesting things and can leverage SAP HANA to do that. I wonder if we could talk a little bit about the relationship with AWS, as in your role overseeing strategic partnerships, and you know as well as anyone that partnerships, there's often a lot of co-op petitions. Your partners with, for example, IBM, your partners on some levels, but you're competing on others, and the same seems to be true with AWS. Obviously we've talked about the things that they allow you to do, but of course they've also got their own data warehouse capabilities. They just announced a relational database. How do you view that relationship, and how do you balance the co-op petition with somebody like AWS? It's a great question. It's a great question. An example that you gave, and I'll answer the AWS question, but the example that you gave IBM, great partner of SAP, at the same time they have a competitive database, DD2. So, co-opetition is here to stay. It's a fact of the business. But with Amazon, the advantage we have is HANA is in a different class compared to any other relational database. It is the only platform that can combine OLTP with OLAP on the same database and simplify your processing by eliminating all those data warehouse tiers. So given the unique positioning of HANA, the RDS services that AWS offers, we don't think play in the same space. So the co-opetition is not big an issue, but in general in the industry it's a fact of life, and you learn to live with it. Yeah, I mean it's interesting. You look at AWS's model, they seem to, you know, they offer a great platform, and then they kind of step back and look at what's taking off, what's really driving a lot of revenue, and then they look internally, can we do something competitive, and then you'll see things like Aurora being released or Kinesis in the streaming space. It's really fascinating. So I wonder if you know, for our audience out there who's not here at the event, talk a little bit about the vibe here and just your impressions from the show itself. It's a great show. The way this show has grown is tremendous. I understand last year the number of people here are a fraction of what it is today. To me it kind of mirrors the growth of cloud or the acceptance of the cloud. A few years back, cloud was not mainstream in the enterprise space. The big difference this year is a lot of the customers that I'm finding here. In fact, I just came out of a CIO meeting, CIO session, where there are a number of key CIOs here. The Kellogg use case got presented where Kellogg is using HANA on AWS infrastructure and getting tremendous CIO benefits. So there's a quantum change this year. You see a lot more interest from enterprises. So even if you look at our journey, in the last two years it was more about dev test environments initially, which is a low hanging fruit. Now you have a lot of customers running production workloads in cloud. What do you think accounts for that tipping point? It's the cloud economics and also the rate of change, the rate of absorption of innovation has become so fast that your chance to go acquire hardware, build a data center, build infrastructure, configure it, you don't have time to do that. You're in every CIO situation where they have 90 day development cycles. In the olden days one year project was acceptable, not anymore. You have to produce ROI within 90 days. That's what forcing, I would believe, more than economics, but the flexibility and the need to adopt innovation at a much faster pace is what is driving this transformation. So it sounds like you do buy into the premise that AWS puts forth that you as a business don't want to be doing all this undifferentiated heavy lifting in the IT space, as they call it. Is that what you're hearing from your customers? Absolutely, absolutely. Customers should be focusing on things that add value to them and it is increasingly becoming clear that infrastructure management is not necessarily one of them. That said, how do you see this, AWS obviously would love everyone to come on to AWS, but the future is clearly hybrid. How do you look at that in your role overseeing strategic partnerships? How does that maybe complicate your job? How does that add some complexity to managing the different partnerships that you have? It's a great question. First of all, I agree with you, the future is hybrid. At least the foreseeable future. And from SAP perspective, we have all three classes, but we do think that a lot of customers using hybrid and private clouds in the near term for their mission critical applications. Ultimately, maybe the move is towards public cloud, but that's ways off. So for now it is, now and here that you're talking about specialized services that cater to hybrid environments and also managing the complexity for customers. And that is where we're working with these strategic partners. From my personal job perspective, what it does for us is it opens up new partnership opportunities, new ways to collaborate. As I said, AWS partnership while it existed in the last five years, it really caught fire in the two years given the cloud explosion. And that's how I see this as kind of changing my day-to-day life and in general changing the day-to-day life of a customer. Yeah, so we're almost out of time. I want to give you the final word. So when we're back here next year, how do you see things playing out? Do you just see this pace of adoption in terms of not just test and dev, but moving to production? Do you see that just accelerating over the next year? What's your predictions for the next 12 months? I'm stuck. We are clear that cloud is the way to go. SAP wants to be the cloud company. And as you go to the next year, there's much more ubiquitous expansion of cloud, both in the private cloud space and hybrid and public cloud space. And I expect much more interest even then there's this growth is going to continue for a few years. And we would love to be part of it, working with team partners such as AWS and ultimately providing value to the customers. Fantastic. Well, looking forward to next year and hopefully we'll see you there as well. We'll see you along the way before then as well. Thank you. Ryan, thanks so much for coming in. Ryan from SAP. Guys, thanks for watching. Stay tuned. We're going to be right back with continuing live coverage here at AWS Reinvent Live on the Cube. Stay tuned.