 Live from San Francisco, extracting the signal from the noise, it's the Cube, covering Oracle OpenWorld 2015, brought to you by Oracle. Now your hosts, John Furrier and Brian Grace Lee. Hey, welcome back everyone. We are live here in San Francisco, Silicon Angles, the Cube, our flagship program where we go out to the events and extract the signal from the noise. I'm John Furrier with my co-host, Brian Grace Lee, analyst at wikibon.com and we are kicking off day two, actually technically day one, but for day two for us yesterday was the opening, Tim Jennings, chief research officer is here with us from OVM IT. Welcome to the Cube. Thank you very much. Thanks for having me on. I love the analyst segment because we get to dig into the critical analysis because there's lots. And there's lots to talk about, obviously. So the first thing I want to get your take on is Mark Herzquino just came off the stage. We did a little bit of an intro there. Your take on his performance and his predictions. I mean, he's talking about some pretty bold things. He's actually pegging some numbers to these predictions 2025, among others. Your thoughts? It was interesting. I think he opened by setting what was a pretty grim picture in some ways, saying, look, things are tough out there. So I think that message was interesting. I'm really setting the context for how is this whole cloud thing going to play out? I think with the predictions, some of them are quite bold. So I think talking about 80% of those production apps moving to the cloud in the next 10 years. I mean, I think that broadly mirrors our view. So our latest cloud forecast sort of shows, you know, 21% growth over through to 2020. So I think that's a reasonable sort of number. All the vendors love to have their shows. They need to have a horse to ride it on. Yeah, yeah, we're going to do that. It's referencing over the world. What are you number one and everything? What's your data show? You guys have an independent research firm. What's your take on this? Does his story hang together? Yeah, I think it does hang together. I think if you look at that sort of cloud growth and say, I think our forecasts, we're looking five years forward, but I think it shows that we're going to see that sort of move. I think then if you think about how those different segments are going to move, Larry Ellison last night talked about that sort of generational shift, being in the early days of it. But I think we are at that stage, and certainly when I talk to both the CIOs and to line a business execs, we're seeing, I think, particularly through digital transformation, that shift's happening and quite fast. Larry, the yesterday said on the keynote, hey, we're Oracle, we're in the app business, we're in the SaaS business, we learned that we needed to have past platform as a service. And we got into platform as a service business and we realized we had to be in the infrastructure as a service business. And then hell, why not just re-engineer everything, rewrite the code to go across infrastructure, platform and software as a service? So I got to ask you a question. That being said, which by the way, I like that message. I think that's solid. I think they're in a very good fortified position, but they have competitive pressure from both fronts. They have the SaaS vendors like Oracle, Workday, SAP, Salesforce, I mean, sorry, Salesforce. And then infrastructure pressure from Amazon and others. So how do you make of their past platform? The new middleware model is the cloud. It's one big middleware cloud, integrated cloud, what's your take on it? Absolutely. Well, I think it's been very interesting this week, I think. So for a few years, Larry and Oracle have talked about that huge fusion project to move the apps to the cloud. I think they've suddenly realized that the scale of moving the whole middleware to the cloud is a big project, but an absolutely necessary one. I think what's interesting this year is, you could take the easy option and say, okay, you know what? We've got this huge middleware portfolio. We're a leader in middleware. We're going to start moving things to the cloud. I think this year it's clear that they've gone more all in. So I think they've been pretty aggressive with that middleware portfolio and saying, we've got to go cloud first. And I think that's the big change this year. Yeah, you talked a minute ago about digital transformation driving a lot of these enterprises. Who's driving it within the enterprise, though? I mean, for a long time, we've heard about shadow IT. IT was afraid of the cloud. Is shadow IT driving these digital transformations or is IT retooling themselves? What are you hearing from your clients? Yeah, I mean, I think shadow IT was a little bit of a red herring. I think in the early days, you certainly saw the CMOs, some of the other line of business execs were sort of going solo almost. But actually, I think that happens less now. I think we're seeing a more collaborative approach. So they understand that they can't actually do it all alone. I think you need the whole business, really, working together on that digital transformation. So there's certainly more of a role for the CMO, for the Chief HR Officer. But I think there's more now, the CIO, the CTO, maybe the Chief Digital Officer, a helping line of business collaborating on that chain. Shadow IT is interesting. I mean, shadow IT for the folks who don't know what shadow IT is, is you go around IT and the shadows to get stuff done, you go to the cloud, Amazon, for instance, great shadow IT platform to get stuff done because IT basically sucks and you go around them to go to the cloud. So, okay, but shadow IT has been the best advertising for the cloud because what it does is it gets the business case on the table very, very rapidly. And so when the guy goes out and says, hey, look what I did with Big Day, look what I did in the cloud, I went around IT. Great, let's operationalize that. Here's the ops guy. Guess what happens next, the whole thing's dead. So, I mean, are you seeing that same operationalizing because shadow IT has been a good R&D background, it's been legitimized now with cloud? I mean, so what's that operational look like? I mean, now you've got to come in and integrate security audit. Here's my security guy, there's my telecom audit. What do you make of the shadow IT trend of operationalizing the cloud from that angle? Yeah, well, yeah, I think the whole key part of that proposition is taking away as much as possible of that burden as you can. So, I think it's very clear that it's taking away headcounts that you would otherwise have in-house to do a lot of that stuff. I think the interesting thing is when you see some of the benefits from those early projects, I think it's a real kind of pathfinder effect in the organization. If you look at the contrast between, okay, we've gone with HEM or recruitment in the cloud, look at the benefits we're getting from it. When it comes up to your next project, you're kind of saying, why would I want to do all of that stuff in-house now? And by the way, it's going to take me six months a year, 18 months to do it. The guy who just did that last project delivered it in three or four months. It's a no brainer. Yeah, so obviously lots of talk about SaaS applications, people understand those, try to throw some punches in infrastructure as a service, whether they're going to play there, we'll see. What are you guys seeing around the past layer, right? There's a bunch of different options. I mean, Baroku, Amazon's doing some things, Cloud Foundry, obviously the whole fusion. What do you see in that space and how much do customers even understand that concept yet? Thanks, Mr. I don't think they understand it that well. I think what they do understand is the use cases for it. So I think the early pattern we're seeing is moving that dev test to the cloud. So the typical ratio of dev tests to production systems, you're looking at a range of three to one to 10 to one in terms of the infrastructure. So I think, again, moving as much as you can of that to the cloud. But I think now people are understanding it's not just the infrastructure, it's a much wider platform. So you need to have your integration there. You need to have your mobile development. You need to have your document services, your analytic services. So I think people are understanding it's a bigger platform. And then the next bridge, I think, is looking at sort of SaaS extension. So where people say, okay, we've taken on this particular cloud app, but we do need to perhaps build a custom extension to it. It's less. People are working much more on configuration rather than customization. But there will still be the instances where you need to do that. And I think that's where the PaaS element will come in to say, yeah, that's now the way to deliver that quickly and in a way we can manage. And again, we don't need that big cost behind it. It talks about customers maybe getting it. We're definitely seeing people realize they got to get developers. I mean, we saw GE on stage. We saw GE on stage at AWS re-invent. We saw them on stage at CloudFound. If nothing else, they're trying to recruit developers. They're trying to create this sort of sexiness around, hey, we're building new modern stuff. I think if anything, that's what PaaS is creating is businesses are going, I better start hoarding developers and hiring them any way I can. Yeah. And I think, you know, in the initial stages, it was very Java centric. And I think make no mistake, you know, for enterprise development, Java is still, you know, a key part of that. But you're right, you know, for new digital projects, people want to use their new tools, new frameworks. So I think we've seen this week that there's more of that coming into the Oracle PaaS layer. But also I think that they do need to work on that developer community. And we're seeing through some of the developer cloud services that now there's better options to do development in the cloud, to collaborate, to use, you know, non-Oracle standards-based framework. So that's good. Tim, talk about the cost savings between PaaS and infrastructure service. You know, one of the things we were teasing out yesterday and to give you some color and time to think about it is cost of ownership. Total cost of ownership, classic shark fin, iceberg, whatever you want to call it, it's a lot under there that people need to understand. So like the numbers straight up look good on cloud, but over the life of a project, all that infrastructure and platforms of service, it gets interesting. What is the real cost savings between the two platform and infrastructure? Can you share your thoughts there? Yeah, I mean, I think it's impossible to put a figure on it. It's very dependent on the particular organization and their scenario. But I think, you know, what you do see, if you start moving some of that stuff that you're doing in-house to the cloud, you're taking away a huge chunk of that operational stuff that, you know, you've been running in-house. I think the trick to it, though, is there is going to be that interim period. So if you do move some of those workloads to the cloud, you still got to support those on-prem systems. So I think, you know, that's the trick for people to work over the next decade. But where's the sizzle mistake on the terms of the numbers? Well, I'd say sizzle mistake. Where's the attention and then where's the meat on the bone? Because when is it, is it the past or infrastructure? From a CXO standpoint, look at cloud, I see economic benefits are huge. But where is the focus? Where do people go to first? What gets people's attention? Where's the meat on the bone? Well, I think you have to come back to SAS first. So I think, you know, SAS, you're saying, OK, someone's going to do all of that for me. The PAS may be the extension piece to help you build on that. I think for me, we see that it's the PAS that's going to be the faster-growing segment. I mean, I think fundamentally, it'll be part of the transition over that next decade. But I think, you know, the principles of this, you're going to want to move as much of that stuff out of your organization as possible. Anyway, we heard it in the keynote this morning, you know, GE, Viya, ALT. GE, they were at the Amazon event, too. GE is on stage with Andy Jassy and said, Amazon's our part for the next 100 years. How do you reconcile that? Are they just shopping for, you know? Looking for developers. Here's the sexy thing is, there are lines of business managers out there who are going, I've got an idea. In the past, I had to go through IT and I had to go through this long process. And they're now going, I can cobble together three or four developers. I can either go to some platform as a service or Amazon and I can have a mobile app in three months and I can go around and go. I can change the business just like that. And I think that's the sexiness. Does that scale? They got to figure out how to scale that. But that's the sexiness. That's the thing that goes idea to execution in three months. And I look like a business changer, right? That's what people are excited about, I think. And I think, you know, that's where the sort of multimodal approach comes in. As you say, people want to do those digital projects quickly, but at some point, a lot of them need to be scaled up for enterprise grade. The excitement goes away and I don't want to do it. And now you've got to do it. And I think, you know, that's when you come in. Okay, I've got to take care of security. I've got to take care of patching this stuff. You know, I may need to scale it to a big audience. So I think, you know, for the majority in the long run, that's something they want to move out. So talk about the thing that we were addressing on the post keynote review that Brian and I were going through. We looked at Oracle as a really strong position. Right now, in their middleware, they got a nice four to five position competitively and product and also the numbers, hers, flaunting them around so that they're solid, right? So they're in a good position. Now they got competitive landscape from all different angles. And the thing that we asked, we talked about with speculating, they can actually win it all here. If they go beyond the red stack. So one of the things that we were talking about, a few events ago, was the notion of inter-clouding. Certainly Pat Gelsie from VMware will be like, oh, there'll be multiple clouds, right? So in a multi-cloud environment, not just Oracle, where does the customer get the solution? Is Oracle going to be compatible in that environment? What about that customer says, hey, I got to move stuff around different clouds. Guys, what do you think? What's the thoughts? I want to get your perspective on this open question. I would definitely, I definitely think the approach Oracle's taken to this. So it's very standard-based. I think they're aware of that issue of portability. You already see it into the Paz layer. So, yeah, I mean, I think in a multi-cloud environment, I mean, I still think there will be a trend to having a key strategic provider here. But that said, we'll still have hybrid mixer services. But I think Oracle is well-placed in that environment. So it's not a winner-take-all, it's a winner-take-most model. And that's what Herg was saying on stage. He said two vendors, I think it might be three, but three or four. I would go for three. Yeah, I meant three, maybe four. Brian, what's your take on inter-clouding trend? Obviously, Oracle is in a good position to be one of the top three to your vendors in the cloud. I'm not sure I'm convinced there's going to be two or three. I think there's probably going to be at least a half a dozen. I mean, we've got, mobile is a huge trend, IoT is a huge trend, you know, some of the SaaS applications are taking off. I think it's, the great position for Oracle, for a few of these, is it's a huge investment. So you've got to look at the guys that have the dollars to be able to keep making those investments. But you look at how different Asia and Asia Pacific is, their requirements are going to be different. Nobody's talking about Baidu and Tencent and all those kind of companies. There's a lot of economics that go on around those things that isn't mentioned here, isn't even mentioned at AWS. So, to say there's going to be two, I mean, we haven't seen that since back in the 60s with IBM. Well, the interesting thing that came up yesterday, about to give you Tim's thoughts on as well, is there is an app cloud and there's a platform cloud. So, you know, one of the things that came up is IoT is more of an app environment. It's hard to be an IoT platform. Do you build your own or do you go to an Oracle and all the big moves from the big vendors right now is saying, hey, ingest through us. And then run your apps on top of standards-based apps. So, it's interesting, there could be an app cloud market and there could be a platform cloud market. I mean, hey, we're riffing in real time. Your thoughts? Well, I think, yeah, there's that struggle. That's on the reader's agenda. Well, indeed. Oh, that's where networks start coming into play. You've got to have bandwidth between them. Makes sense, right? I mean, that's plausible. I mean, you can't have all these platforms. There's a platform war out there right now. No, but I don't think you can separate the two. So, I think you've still got that very strong synergy between the apps and the platform. So, the extension play is key part of that. But there are some areas and IoT is a good example. I think that will be very high-pitched, you know? If you look at the whole space of things... We'll call them tool clouds then. There's going to be a lot of tooling for sure. I mean, there'll be tons of tools. Calling that a tool or... I think we'll see a second-order thing here. Where are the automotive manufacturers going to build their platform? Where's GE going to build their platform? Where's the people that build ships and boats and oil companies? Where's going to be the oil and gas platform built? Is it going to be built on Oracle? Is it going to be built on Amazon? That's the second-order stuff that we've seen in every other big platform, whether it's PC or mainframe or something. And that's still the play out. But I think if you're the ultimate end-user organization of that, you're going to be taking some of your infrastructure from one provider. I'm not talking IT infrastructure here, I'm talking physical infrastructure. So, that's going to come from multiple providers. One of them may have chosen Oracle as their key partner. Another may have chosen AWS. So, you've got to integrate those two. Well, and we're talking about some people here who don't own network, Google loans network, AT&T owns network, Oracle doesn't own network, Amazon doesn't own network. There's going to be some interesting interplay with those things as well that we won't really talk about here. Yeah, I mean, I think it's interesting if you look at the telco service providers, they certainly see a big opportunity still, both in M2M as they would refer to it and also in the overall cloud services play. But I think fundamentally, I think Oracle's hand is strong because they're playing across all three tiers. And I think with that solid play, I think they're well placed to provide a solution, whereas perhaps others can only provide one slice or one tier. Tim, we've got to wrap here, but I want to get you to the final word on future scenario for Oracle. Also, user experience simplicity seems to be obviously the key automation. They have a lot of stuff pre-built into Oracle from years of experience, so they can bring that to the table. How important is the notion of simplicity and standing up across-prem and on-public cloud capabilities for Oracle? Is that a critical factor for them? Yeah, I think it's critical in two ways. It's critical from an IT perspective, so you need to make that as simple to stand up, as simple to manage as possible. But I think even more importantly, it's critical from a business perspective. If you're taking a lot of that operations out of the business, you want to be using that really for your business people to build solutions. All right, CrowdChat is jamming right now. Go to crowdchat.net slash OW15. Join the conversation, this is theCUBE. We'll be right back more from Oracle OpenWorld, live on Howard Street in San Francisco, this is theCUBE. I'm John Furrier, Bryan Gracie. We'll be right back after this short break.