 Live from Las Vegas, it's theCUBE, covering AWS re-invent 2017 presented by AWS, Intel and our ecosystem of partners. Hey, welcome back to theCUBE's continuing coverage of AWS re-invent 2017. We're hearing upwards of 45,000 attendees across, I think five hotels here in Las Vegas. Incredible announcements, incredible buzz. I'm Lisa Martin with my co-host Keith Townsend and we're very excited to welcome Paul Young to theCUBE. First time, you are the global vice president of customer strategy, SAP database and data management. Welcome to theCUBE. Thank you, good to be here. Paul, first question. How can businesses accelerate their digital transformation by running SAP in the AWS cloud? It's a good question and there's a really great but incredibly long answer to this. Simply, I think you have to put the context of what SAP does first, right? I mean, we have a huge number of customers globally. Depending on how you count the numbers, we probably run about 85% of the global economy, right? So at that point, when you work for SAP and you wake up in the morning, there's a pretty serious responsibility that comes with that and then equally, a lot of our customers have now been with us 25 years, but customers have been with us 40 years. And so in that context, when you say how can we change digitally, customers constantly innovate, but we operate on a much longer timeline than I think most of the startups and everybody else do, right? There's a responsibility in what we do in terms of running companies and supply chains where you have to think longer term. And so it's not necessarily about doing new things in the cloud, it's about doing things, but there is an ability to unlock a speed and capacity that our customers have never had before. And I think that's where we get value out of this. So that's, I think, interesting statement. When I think of SAP, I think of ECC, SRM, all of the business weeks that come along, all the apps that come along with powering that 85% of the economy. And that's, I've worked in the SAP environment and you don't make changes to SAP. I mean, you make changes very slowly, very determined. We're at a cloud convention where we think about breaking things fast. Those things don't meld very well. How does SAP bringing that stayed true reliability to AWS? So I'll give you a really quick example. When you break down our business, on the one hand you have our pure cloud properties, right? The success factors that can occur, everything else. So those are really common things that most companies run the same. So historically, you run those inside an ECC and every time an HR rule changes somewhere in the world, we have to upgrade the system and cut it down, right? So to the extent we can take travel experiences in HR and purchasing things that run just commonly and move it out to native cloud applications, then you get the benefit of native cloud infrastructure for those things and you reduce the cost and you can decrease the restrictions on customers, right? On the other hand, you have the pure HANA stuff that we do where we do very cool, very exciting projects that have just never been done before. The bit in the middle when you come back to that is the bit that you would define as not changing fast. Yeah, if I pull out an industry in specific, right? Pharmaceuticals. So we make high 90s percentile of all the pharmaceuticals on the planet, heavily regulated world, right? You can't just upgrade your system because the FDA needs to know that it's all compliant and all kinds too. So it's not that we can't move fast, it's just there are restrictions, there are rules that make that happen and that's why customers come to us, is because we have that compliance. Below that, however, customers still want to innovate, they still want to change and part of a little bit of the challenge historically is a point where a customer comes to us and says, right, I want to do the next thing. Historically, we have a very rigid change control process, you're aware of, right? I'll tell you to go to a consultant, I'll tell you to start your dev environment, I'll tell you to go buy new hardware, I'll tell you to start doing the migration across and then once you've done that, the answer is, well that kind of worked but I haven't yet seen the volume so now I'm going to do it for QA and you spend a lot of time burning a lot of cycles before you get to the point of belief that is possible. Yeah, so from time, from the ask to delivery and a lot of SAP, especially in pharmaceuticals can be a couple of years, realistically going through that entire cycle. At the meantime, you have commercial groups inside of pharmaceuticals saying, that's valuable data, I want to get at that data and innovate from a digital transformation perspective. How does that happen? So I'll give you an example of where we're at with AWS right now. So what we introduced in, actually we introduced to customers secretly a little bit over a year ago, when we meet public in June, with AWS and actually now with the other cloud providers as well, is what AWS calls fast, what we call rapid data migration for SAP. But what we did is we looked at this world where you can provision a HANA server inside AWS in 30 minutes, right? So you can provision a half, a one, a two, or a four terabyte HANA server right now in 30 minutes. AWS is on record the next year, the launch use eight and 16 terabyte servers. That's with very few exceptions, basically almost all of our customer base can provision a new box in 30 minutes. The challenge then is on our side, how do we change process to allow customers to unlock that? So what we did is in June, we announced publicly a new program where we have a bit of software where you can provision a server in the cloud and we have a client that runs on your production box and we'll replicate all the data code and everything that's running in your production box out to AWS while the box is still running. It'll actually do all the patches, all the upgrades, everything else and you'll get a complete replica of your production box upgraded to whatever version you choose within about 40 hours, generally. There's customers that take longer. We actually, but we just did a 25 terabyte SAP BW system in 44 hours start to finish. Completely agreed in November. So is that going from a legacy Oracle BW base system to SAP HANA running in AWS? And 44 hours start to finish. I've done some in as little as 29 hours and actually even less than that for some customers. And so that just opens up a huge potential here, right? Where historically that timeline that says you want to start an upgrade, so six months from now we'll be able to try. You can literally come in on Monday morning and the software's free from us. The support comes from us if you're currently on your support contract. So all you do is you pay Amazon by the hour for the server and by Tuesday night, Wednesday morning you can see your system running in the cloud which is secondary to in the latest version at speed. You know all the things you're concerned about about code performance, everything are answered because it's a full production system. And at that point now we can make a plan to accelerate, right? That's a huge jump for our customer base. Huge opportunity. Speaking of opportunities. So you know one of the great things that we hear from Amazon all the time not just at the annual reinventures but during the summits as well as this accelerated pace of innovation while managing operational efficiency at massive scale and building this great ecosystem of partners. Looking at, you mentioned SAP also works with the other cloud providers. How does Amazon's accelerated pace of innovation that they've maintained for a very long time now how does that inspire what SAP is doing and how does that message translate to the farmers all the way down to some of me maybe the newer customers of SAPs? Yeah, there's a little bit of tension here obviously, right? Because again, it's funny, I was at the customer advisory board on Monday and we're discussing some of this about how do we innovate quickly but also how do we cover the risks of them for them? And at the end of the day I had a conversation with several customers where I basically said, look, you know as much as we're asking for the stuff and I agree we could also all agree at this point that 10 years from now everyone in this room could agree to meet back here and I guarantee you're probably also going to be SAP customers, right? And no one disagreed with me. And so it is a little bit different because we do have to think longer timelines on this and so there's always a little bit of a conflict I have to say with the as much as everyone says fast innovation part of why you buy from SAP is that you get a guarantee that three years from now we won't drop support, right? If you're running your business and three years from now we say, you know we won't come to you and say, I'm sorry you've got to turn off your system in six months because it doesn't work. And so if you're a startup company you can take that risk, right? Generally my customers can't. So to a certain extent we have to work on a controlled environment for that section of our customer base where we know that it'll be successful and we know we have a future guarantee going forwards but at the same time we want to unlock the potential for them to try, right? And that's a large part of what we see again with the, if we just go back to the core of the SAP customer base, historically you can try, right? You have to, the customers you know you have to go buy a new server, right? And so you've got to be pretty certain that project is going to work to go out and buy the hardware and install it on your own yourself. If I come to you and say, hey look you can provision a new box we can do a quick test for you and if it doesn't work four days from now we can burn it again, that really unlocks that. So it's less for me about all the additional features and functions and just the basic blocking and tackling of that ability to provision and drop servers is just something that our customer base has never had before and they will take advantage of all this running stuff but just unlocking that thought process that says you know I can run a test for a week and if it doesn't work I can drop it again opens up a huge amount of potential, right? It's incredibly exciting. So as a former SAP customer running HP UX boxes I can attest to SAP to continue to support legacy solutions going into the future. One conversation on the transition from a traditional on-premises environment to cloud, specifically you guys have been pushing HANA and AWS pretty hard. HANA itself can be a hard argument. 25 terabyte BW database to a HANA instance in memory. In memory databases are much more expensive. How do you sell that to a customer? Ooh, that's a good question. I'll answer it slightly differently. If you look at the, again, one of the things that the cloud providers in general and AWS has done specifically is just modify the price curve in a huge way, right? So HANA runs on stock Intel boxes, right? They're especially configured. They have high back lanes. They have specific memory ratios but they're stock Intel boxes. Candidly, they don't seem to have been priced like they were stock Intel boxes for customers who've bought them in the past. The thing I love about the cloud providers and AWS specifically is they price them as if they were stock Intel boxes, right? So two terabyte HANA box, if you're on a three-year flex agreement with AWS at this point is $80,000 a year effectively. That's a tenth of what it would cost if you're buying it from a hardware provider, right? So at that point, the cost curve just fades massively. SAP came out with HANA, initially that what was, you know, you're looking at $150,000 for a similar solution and that's without support. And so you've just massively bent that price curve. I've got customers right now who, again, because of the way HANA fails over inside AWS, you don't need a permanently running HA box to burn your environment, right? If you can take 15-minute failover, you just shut down in provision on your server and continue on. So you've just half the cost of that. So there's cloud economics here. Yeah, that price curve that may have been the objection before is disassembling really quickly. The 25 terabyte Oracle box, by the way, fitted on a 10 terabyte cluster, AWS. So it's five, two terabyte boxes clustered together. Provision in 30 minutes, you're looking at $800,000 a year. Tell me where you can get a 25 terabyte Oracle cluster for that price right now. Never mind the speed performance attribute, you should also then getting to run your business, right? I mean, there's, yeah, we're at a point where the economics have changed dramatically, right? I'm going to bring you guys back up. We've got about one minute left. So Paul, just coming up from the technology bits, from an industry perspective, where are you seeing, you mentioned Pharma a little bit ago, where are you seeing the biggest opportunity for industries to successfully run SAP in the AWS Cloud? There's interest from all over. There's some specifically stand out. I think the Pharma guys specifically stand out. AWS is a great job, I'll give them credit here. Part of the challenge with Pharma is, it's not just running a system, you have to be fully FDA regulated and compliant, and AWS is able to do that. And it's not cheap to run a data center that's fully FDA regulated. And so AWS offers some really compelling cost advantages on top of that. Right now, I'm sure the other guys will step up and match them, but they're doing that. Oil and gas has been a big one. Again, the oil and gas guys, the price of oils come back up, but I think they're looking at long-term economics of how they run their environments and what they can do. Consumer products, is that right? There's, well, it's really interesting. I'll tell you just one note is, historically there's normally an adoption curve of industries, you can predict leader industries, like high-tech normally leads, right? And there's industries that follow. One of the huge breakouts as we've been through this initially with HANA is warehouse distribution logistics. Normally they're slightly trailing because they live on very small margins, very upfront in this process because the power of HANA unlocks huge advantages to them and their ability to run their business much better and much more efficiently. It's getting to get stuff done that you couldn't do before. Yeah, it answers quicker and then the cloud stuff allows them to do it cheaper. So it affects everyone. It's, however, the adoption curve doesn't look like the historic adoption curve for industries. It's a better question for another day, but there is, we have more time, but yeah, the adoption rate has changed in the customer base by industry. It's a very interesting question. Very interesting. Well, if only we had more time. Paul, thank you so much for joining Keith and me on the program today and sharing your insights. Thank you. For my co-host, Keith Townsend, I'm Lisa Martin. You've been watching theCUBE live on day two of our continuing coverage of AWS re-invent 2017. Stick around, we have more great content coming up next.