 From around the globe, it's theCUBE, presenting, Cube on Cloud, brought to you by SiliconANGLE. Everybody welcome back to the live portion of Cube on Cloud. My name is Dave Vellante and I'm here with John Furrier and we're really pleased to welcome in Holger Mueller. He's a principal analyst and vice president at Constellation Research. Holger, great to see you. Thanks so much for spending some time with us. Hey, thanks for having me. It's great to be here, I have to say I'm slightly irritated because normally I can oscillate between two ties. I mean, David, you're stepping up, but John, no tie, I'm shocked, right? So like... That's his beach attire, quarantine attire. Quarantine attire, yes. We won't show the shoes, right? Flip flops, John? California, it's all about being laid back and chilling out, you know? San Diego, San Diego, I'm all for California. No ties, no ties for us. So I'm back here in the East Coast. So Holger, let's get into it. I mean, one of the things we really haven't talked much about is that sort of intersection between Cloud and the SaaS world. Sometimes they look at AWS and say they're infrastructure as a service and they're IaaS plus. Look at Salesforce, they're a kind of SaaS minus. They kind of meet in the middle of the PaaS layer, but so what are you seeing out there? We're entering this new decade. We've got this, what I've often called a SaaS model, which is showing some cracks in the armor, not so much financially, you know? Salesforce killing it, service now, work day, but the models are beginning to shift, the pricing models. What are you seeing out there in the world of SaaS and Cloud? Great question. And it's a huge challenge, right? The Cloud is the big winner, no question out of COVID, right? Because COVID creates these roller coasters, right? Normally we talk about seven economic cycles all planning and investment things are tuned to seven years, right? And now you operate on a seven day cycle, right? You're to open or close shop in certain places, distance employees and so on, regulations changing so much faster. So much more capex flexibility and moving of that and not having too much of that capex is a key requirement right now. And all the shiny office buildings right now, think of Apple or Salesforce, right? They look like a big capex, I'm saying. The change of that is that the whole boards have a sensibility to capex all of a sudden, right? It's not just the IT guy talking about capex to objects and moving to the cloud. No, all of a sudden it's like everything, where have you sunk capital in? How can we extricate that office lease? How can we rid of our own delivery fleet of vehicles? Do we really have to own our shops, our factories and so on? So that's the big question. Now back to the Cloud, the real question is like, how does my Cloud winner deal with my elasticity? Not from a technical perspective because I all do this pretty well, but from a commercial perspective. If you look at the companies which are out there, I do them in three segments. Are there the super busy ones? The essential companies which are running like crazy and they figured out, oh, wow, this is not a 400 meter race. This might be more of a marathon. You have to think about investing something in IT and so on too, right? We can't just run crazy the whole time because it's not over quickly. Then there are the stutterers, the on-off ones, right? The ones who buy zip code can open, can close. Where all of a sudden, it's no longer command control from the headquarter. This is how we do our brand. No, it's local managers to figure out what is local city is saying, how far distance employees or if customers can come in, can sit out, can't sit out, if you can have a sugar, sugar dispenser on the table or not and so on. And then there are the sidelined ones, right? The airlines, terrible, right? Highly, highly affected from that. And red example that we have an airline customer who still was using a mainframe and was very happy with the TCO of that mainframe. And the mainframe was only 2, 3% of their IT spend. Now it's 20, 30% of their IT spend because it's just sitting there and not being used. And so the commercialisticity, the ability of a SaaS vendor to reduce costs for customers who are using less is very, very important. Well, what do you see on the consumption side right now? Obviously the big trend is hybrid, multi-cloud. That's the big industry story. But when you start to get into capabilities, which you do a lot of focus on, where is the state of the buyer as they look at re-architecting and coming out of COVID with the growth strategy? Because that's what we hear is like the number one thing, like I want to come out of this COVID pandemic with a growth strategy, whether it's refactoring, re-platforming, whatever they do, where are they, where are customers at right now in your perspective? Yeah, so there's two things where the buyer has is worried about what one part is standard software and the other part is they're individually built. I call next generation applications there, that big investment where I think they can differentiate themselves, they can do digital transformation or maybe even digital disruption. But all of these have to move to the cloud. But anything you've done before, which was localized, I was on the chat earlier here around Microsoft talking about synaptics and we talked about in the chat together with Robert Hoffman and another colleague about like how the elasticity is really crucial and how that was done wrong by Cloudera and Hortonworks because they had so many customers on premises and you need to have this elasticity for big data lake because you cannot size a big data lake, right? But this comes, this was a lesson learned before with COVID now if I build something strategic internally and I run it internally with all the ups and downs depending on which of the three segments I'm, I have to be very flexible. I also have to be super careful what kind of cloud is my SAS vendor on, right? Not every cloud is the same. And if you see some of the first generation SAS vendors most prominent in Salesforce and Workday, they sit on a cloud which they operate themselves. That means they bring up the capex for the data center, they mend the person, or they buy the hardware and so on. And they cannot have that elasticity commercially to companies which are in the Studdera segments on of only operating at 30, 40, 50% can't even tell you how much of us are working in the second quarter and so on. And the sideline ones who are like, I don't know if I'm going to be in this business in half a year from now. And so very, very hard from a commercial perspective. So the buyers are learning for standard software. I need to understand that my application provider is sitting on somebody else's public cloud. So they can hear the commercialisticity for me to give me the rates and give me only the consumption I need. Sorry, David. So you had your point about, you know SAS vendors keeping the cost down. So your point, you're right about Salesforce they started what in the late 90s where there was no public cloud. Maybe they're moving some of their analytics to the public cloud, but they're still stuck with service now with multi-instance, they're building out their own data centers. And so that's a real challenge. And then the other thing I wanted to ask you about is pricing models. So you're seeing what I would call a flawed SAS pricing model, not flawed from the vendor's perspective. They love it, but from a customer's perspective, you're getting locked into terms maybe one year, two year, three year, you're paying in advance or maybe if you're paying quarterly. You know, I think about when United Technologies sold the helicopter, the Sikorsky, they've orphaned like 15,000 Oracle licenses. The customer had to eat, Lockheed Martin had to eat all the downside. The vendor, he's got the upside. And so you're seeing companies like Datadog and Snowflake with true cloud consumption pricing models. Do you see that as really disrupting SAS vendors in the coming decade? Well, that is the value proposition of software as a service. The more service you use, the more you pay, the less service you, the less you pay it. Ideally, your service is tied in into your business success, which pays for the cost of that, right? The problem in the past has been that you said correctly, said there was no public cloud architecture. There was no way for the CapEx to be flexible when Salesforce and Workday started as an example. And the interesting aspect is that you have to find a way to tie your consumption, your IT footprint to what you're doing in your business. Why this is why gig workers are so successful in this part because I don't have to have an employee that can scale. Companies, as they don't scale on the hardware side and servers, they don't scale in FDEs anymore on the people side. And that's where you need the flexibility to be able to scale as your business need from a scale and from a capacity perspective. What about in for? I mean, in for, Charles is not there anymore, but friends don't let friends build data centers. It was kind of his mantra. And I see them there. So they're on AWS. They actually now Koch Industries of course bought in for. So they're in it for the long game. I actually see them moving more to our consumption model because we know what do they got to lose, right? They got to disrupt. So that consumption pricing is... Oh, it's Koch, right? I have to bring it in. Oh, it's Koch, right? How do you say it? Koch, Koch, Koch means Koch in German. So yeah. Okay. So, I mean, that to me is something to watch. Infor did everything right. I mean, Charles' famous statement that AWS Summit in San Francisco, 2014, I was there. I never assumed to so many people who in for us like at that conference because it was all developers and Charles was presenting there. But they have the option to run AWS since 2013-14 right from the get go, right? They provided both. And what you see it in for is a massive interest of info customers to get rid of their own premise to install which was something they offered and to move to the cloud version. Yeah, their problem is this huge loss in install base that's slow to move. But for the new stuff, the ACM stuff looks good. And if they can come up with a disruptive consumption pricing model, again, it's working for Snowflake. It's working for Datadog. You know, I think that's an exciting prospect. The challenge for the salesman is do you want to really go down to the cost plus model? Which many of the infrastructure past companies are doing, right? Because they just say, I'm going to charge 20, 30, 40% premium years, your Amazon bill. And I'm going to charge that on top, right? The question for SaaS is a little harder because usually they have to invest into software longer. There's this thing called support and maintenance because you have to legal complied. You have to support maybe some older versions. So their margins are generally thicker, right? And then generally it's like this all the companies give you commercialisticity up. You can always buy more, but getting less that's a really hard thing. And that's what has to be introduced and will be differentiated. But the point for me as a technologist, I cannot even offer that if I'm a first generation sales vendor because I'm still having to pay for the data center. Even if my customers are not using it, right? I might have to migrate it. Everybody gets a heart attack migrating data center. I might move quickly and have some quality issues God be there, right? So that's really the challenge behind us. The first thing for a buyer is to see can my sales vendor have commercialisticity when I need it? Look at their stock, right? Go ahead, John. Holger, I want to ask you about since you brought up Salesforce, what do you think about the Slack acquisition because that's a really good point around looking at the value that it paid a lot of cash for it. Salesforce, you know, it's a one product company and they bought a lot of people in the acquisitions. They're pulling the Cisco as Dave calls it model the old days, you know, just acquire everything. What's your take on that deal? We have to change our view on Salesforce, right? So there's two inflection points on the commercials of Salesforce in the last 12 months, right? Traditionally, Salesforce has always been about sales, right? And I myself, I sold my CRM startup to SAP last century, right? So the rule in CRM was always sales, each service and marketing, forget about that. There's not much license on doing this, right? You've seen the history of it. And Salesforce was always a sales one and Salesforce was number one. Service revenue overtook sales revenue last year and then platform revenue overtook them both. Of course, helped by the tableau and use of acquisition but Salesforce now is a platform company and this is how the view you have to be from the Slack perspective and Slack gives them just more license growth revenue to keep up their sky high valuation while they're hopefully are winning some time and saying here, shiny new objects like here with some fantasy to redefine sales and service process in chat while they hopefully move their architecture to AWS which is that a clear goal as we talked about earlier and figure out, that's the biggest challenge it might be for them. What is the future of CRM? And which you quickly don't have a responsibility to say this is the vision how CRM should be done in the 21st century. What is the future of CRM? What is your take? What's your analysis? And we've been tabloid to that because that plays in. I mean, Slack, Tableau, keep that valuation up. Yeah. So it's easy to buy and this is the other key thing it's very hard to be a standard software application when at these days because the business best practice of the 21st century have not been established. Everything that we know from closing books running, manufacturing runs, purchasing quotes are set up from the finite computing road right where you say, oh, I'm a 5,000 people company I'm gonna implement SAP somebody coming in and sizes that server for me. Please not too small, please not too big. So it's right at the right amount. But now we live in the era of our call infant computing where for the first time key compute resources, storage, networking, compute are unlimited, infinite practically, right? I always use the dump. We know that nothing is really infinite but think about the example you want to build you next to the beach John, right? You're in this weekend. You want to build the biggest, baddest sandcast on the Fourier family, right? You invite family, friends, everybody over. You go to home, they're poor. You get the backhoes, the shovels, everything, right? You plans, figure out consistency, humidity, look at the weather forecast. But the only thing you don't worry about is that you run out of sand, right? Sand is infinite for building sandcasts, right? Compute all of a sudden, computing resources have become infinite and that changes all the best practice and that means for SAP, for Oracle, for Workday and so on. You cannot rebuild business best practice because nobody's gonna tell them how they're gonna do business. You don't need to bring sand to the beach. Yeah, well, why does someone bring sand to the beach? It's already there. Yeah, well, what are you gonna build, right? So the companies are in the second mainframe era again which is running on the cloud and have to experiment how they can run better than the competition with software being an asset, running in the public cloud and running new pros which we all know about around deep learning, self-driving, autonomous software and so on. And that's really the interesting thing and that makes it so hard right now. And this is why Salesforce is thinking like, what's the future of CRM? Well, let's get a little more platform going, right? Because everybody can build a little more visualization with Tableau. Everybody can integrate a little bit better with new software. Everybody can do a little more collaboration with Slack. So it buys them time. But there's no time forever if you're the market leader. They have to come up with the future vision of CRM. What's your take on Oracle? Bob Evans just put out a little post on Twitter talking about SAFRCATS and their 10 predictions and of course they were all very self-serving for Oracle. What's your take? Unfortunately Mark Hurt is no longer there to do those, right? We all miss him because he would always come with his 10 predictions, right? I think Oracle always had a shot to stay in the game as long as they don't lose the database customers, right? That's the secret sauce of the company. But as long as Oracle keeps transactional critical systems load running on Oracle, they have a shot to do it right. And I think they're shot with OCI2O which if you count in details, really 4.5 and all their attempts has a shot to do this really well. Like customers who do not like Oracle want to get rid of Oracle, stay on Oracle because it runs significantly better on the exadata architectures. And what is really interesting is they give you the biggest flexibility that enterprise want to run exactly the same stack on-premise like the same stack on cloud. But nobody else is doing this, right? We know the whole trend was from since two years with outposts of Azure Stack and so on and the competitors are slowly bringing up same similar features which gives every CTO CX always if my team pick up a dependency I can't use this thing to local, right? Because I need to have data residency in Europe I need to have performance because the cloud is not there. There's no cloud data center in that country where I have to be and so on. And so that's the interesting development of Oracle. And Oracle is doing really good job on the database. If you look at 21C they launched it last week. Now they're pushing more into developer habits and to analytics habits. So it's positive things happening at Oracle. Yeah, autonomous. I mean, we had Dan Sheehan earlier and he basically said, I don't like Oracle's pricing but long-term Oracle customer as a CIO, no choice and it's reliable, it's recoverable. I mean, it's the gold standard for mission critical applications. And the thing I always say about Oracle holders, you know, they got a technical visionary at the leadership and they invest in R&D. But the thing is why I've worked for Oracle for eight years wasn't the weekly Larry meetings, right? I think when I see him the few times I see him now this 75 year old has the best time of his life. So what I mean, good for you. He could be president. What does it say to our industry, right? Where are the great builders out there? The 75 year old. And this is the fascinating thing to me, right? I mean, autonomous makes tremendous sense. Every CIO CTO says, yes, I want to have this, right? And why is there no answer even from the traditional database competitors like IBM and Microsoft who don't come up with the same similar thing? It's a fascinating, it's one of the mysteries of my analyst life. Well, it's interesting to see how Amazon is approaching database much different than Oracle. Oracle's got the God database and kind of all in one and converge database. Everything converges in the Oracle database, right? And Amazon is on the specialized route. There's pros and cons in both. You could do a whole segment on that. The interesting thing to me is in the past no matter at which level the stack or the infrastructure, the platform, software applications, suites have always won, right? That's kind of like golden rule no matter what platform it was. Oh, that's interesting. So you're right, it's an age old debate. Best of breed or integrated suites and your premises suites, I think you're saying always eventually win. You get the quick shot, right? It's very important symbiotic relationship. The sweet guys get lazy, get slower, slow down, get more customers, do more maintenance. They need the pressure from the best of breed guys to expand the suite and some suites of course die, right? But companies want to have something which is integrated where they don't become the system integrator of different products, right? Which can always break and always move. And with the cloud, this has gotten even more complex, right? Because you're not only playing in your data centers, you're also playing different clouds. So all of a sudden you're in a multi-dimensional Tetris games of integrating different parts. So what does that say about workday who's kind of, was best of breed trying to become, you know, because you see all the ads for the best financial system. Are they acquisition proof? Because their evaluation is too high. Can they remain independent? Do they have to? They want to sell. No, right. It's privately controlled enough for people. Of course, but they want to sell or not, right? But they are sweet, right? It's a SAS suite workday. Dave, I'm getting some chats, the chat on my phone's blowing up here. So we want to get, if anyone has chats for older, any questions for this lunch live, special guest, really wanted to bring Holger in because he's got a unique perspective on the cloud. He's also quoted heavily with Silicon Angles editorial team. He's on the ground. He's digging into all the cloud, but also on the app side. So it's not just cloud infrastructure in the past, but also SAS and everything in between. So feel free to throw some questions out there. There was one question in here. Let's go to our comment. I was thinking Salesforce, why don't they have a CSP for infrastructure? Since they have all that capex. CSP being cloud service provider? Yeah. They should have, right? Look great. Salesforce could be the study of the typical problem of the very successful SaaS company, where to build their own infrastructure first, grows on that, gets maybe a little complacent, can't innovate, has to expand globally, right? It's very successful globally. It's the number one. Everybody gets a pack on the bed. And then you miss to move on, right? Bakht Banyov announced project Sayonara, which was buy-buy to the Oracle database 10 plus years ago. They have not got rid of Oracle. That was from Ronald Faggini. So Ronald, thanks for that. Tom, Poole has a question. He says Holger's great, but that's dumplings of over great, great. Tom Poole, Holger, how do you see AWS Outposts today and next year? Oh, great, great topic. It's great. I just finished a research report on Outposts, which is an editing. So stay tuned for that. But Amazon is catching up on the whole, what I call the next generation compute platform, which allows CXOs to move workloads seamlessly between the public cloud and on-premises, right? And makes sense that they're late because they're the market leader. Of course, the market leader, I want to keep the motors up around that going, which is public cloud, public cloud, public cloud. But they fell on their sword last, last two years ago at re-invent, right? They built out the scope of that, but it's only a small portion of what I can run on-premises with Amazon. Very interesting because we talk databases, right? Effectively, Amazon gives me Amazon database as a service, right? For the two, for RDS and for, name escapes me for the second service they support on Outposts, right? So for the data business service and Amazon became a hardware competitor because you also could just run VM, and run on whatever you want, right? So Amazon is in the hardware business. Can you get, can you get, is it Aurora? Can you get Aurora on Outposts? No, I think it's not Aurora. I had a minute to pull it up. It's RDS. It might be Dynamo, it might be Dynamo, but you're right. Your point is it's very limited in terms of your optionality on Outposts. We came later, S3 is available. So it's dramatically better what Amazon had in the previous offering overview on them two years ago where there was pretty much nothing from Edge, Snowboard. I think the big question there is, okay, how does Amazon support Outposts? I mean, what's their distribution channel? You saw recently they had a bunch of companies that support Outposts like Infinidad, I think. I'm not sure if Pure was in some of the storage companies, the backup companies. So they're going to have to rely on that channel. I mean, that's not Amazon's wheelhouse Holger and John is doing on-prem infrastructure. You buy directly from Amazon, right? Well, right, but then what? Amazon's following the original Microsoft approach. When Microsoft wants Azure Stack, they said it's going to be on Microsoft machines. We're doing it ourselves. Then the whole partners made a big stink about it. It cost them a year to be on partners. And now they're humbled by being on partners. So that's the advantage of AWS coming late. I didn't see, that's definitely not the right approach. You don't want to shoot the hot. I buy direct and then when a blue van shows up and drops off Outposts, am I loading dog? Right, I mean. They have the blue planes, David. Yeah, that's right. No, but Amazon's catching up and they're carefully figuring out how much of the cloud can they run? Do they want to run? Do they have to run working with their customers on Outposts? The really interesting thing is that they put another twist in that with the regions. Right, everybody big data centers. They launched Amazon regions. They have not said that Outposts is running there, but we know technically could run there. And that could be a different tier layer for CIOs to bring the workloads closer to their users, which the other clouds are not operating. Olga, it's kind of like Oracle Cloud, a customer in reverse. Exactly, everybody's doing the same thing. But I'm managing your on-premise infrastructure as if it was part of my cloud. We're back at autonomous writing the scripts to automate something one and by itself. And then Google, you talked about Google a lot today, right? The interesting is Google has challenged them because Google is now putting software on the other clouds. Yes. Big query running being supported by Google on AWS on Azure gives you a different infrastructure and we'll see if Google comes up with more of these things. So Google becomes a software vendor. AWS become a software vendor, right? Because I said they're Kubernetes distribution. They put it on a disk. If you want to put it on Google by yourself, you can do that, right? So it's very interesting how AWS last year, two years ago, it became a hardware vendor with Outpost. And now it's a software vendor by saying, hey, this stuff is downloadable. You can put it where you want, which they would never allow it or cloud vendor would never, software, right? John, you know, you never say never with AWS. Well, I know. It's a thing, a competitive strategy. It's fascinating because it's like, they're all dancing around, you know, being open, but trying to create maximum scale. And it's interesting. They have to kind of differentiate some to head. You can't go up against Amazon straight up, head to head. So it's really challenging. Yeah, but if you're in a game where economies of scale matter, no vendor can truly be open. All right, we've got, hey, Bailey Cobblers in the house. Hey, Bailey, good to see you. Go an old friend from way back. Not even Red Hat. Not even Red Hat, Holger. Yeah, yeah, no, no, of course not, yeah. Well, we have a question from Bailey to Holger. Talk about the cloud in five years. What are your thoughts? Can you make some predictions? I think we'll see much more, I'm hoping to see much more deep learning capabilities, right? Because I'm tired of writing my blog posts based on my tweets at an event in my bad, bad English, which shouldn't be a high burden. I want software to look at my 20 blog posts or 200 blog posts and please write this for me, right? They do this for sports stuff and so on. So it's a silly example, but really the deep learning capability, right? On the infinite capability of storing everything that enterprise have all the digital artifacts, right? The systems of record stuff, the important shiny things, your data prep, your data, the loop and so on. And the little exhaust, all the log files, all the emails, spam, whatever you have, bring that together and understand how are David, Holger, John working and how can we automate that for them? Ronald has a question for you. Is Anthos going to be a contender? Will it move the needle for Google Cloud and its enterprise aspirations? Yeah, great question. Yeah, no, absolutely, right? Anthos is a game changer in the sense that for the first time a cloud provider went on premise and then went on premise across the multiple clouds with BigQuery. So they have to have a roadmap now for 2020, Thomas Corian Co to say what else is coming, but this is the only chance I think for Google to get significantly market share apart from their two, three years lead to have on the AI side, but that's a whole different segment. Jeff brings up a question. I'll just kind of add to Jeff Smith's question about it. He says, note the legacy HPE and other people, sales execs, Amazon's hiring. I noticed that as AWS is trying to be more enterprise because they own the startups. They get that, obviously they went in the big deals. My Google's trying to be very enterprisey. Microsoft's got it in the bag. They got the enterprise down. They've been there, done that and they're evolving. They're doing that. Clearly their play is to convert everyone over. Google and Amazon are hiring a lot of EMC, Dell people, HPE, what's your take on that dynamic? Because I'm seeing a lot of resumes and CUBE alumni is in particular moving to clouds from the legacy data center guys. What's your take? Sales is a relationship game. If I know you and you trust me and you bought for me once, you might buy for me the second time or the third time, right? And if you had a hard time to sell me your old hardware things on premise because I wanted, but I like you and I sold both for you successfully in the last 20 years, now that you have the right product, it's great, right? Dr. Rob Enslin at Google, right? So same Rolodex, right? Now it's everybody around the world and all of a sudden it has a shiny, new, never been dreamed of possible SAP non-available product available at Google, right? So it's like a first round draft pack. You get to just put a new jersey on, same game, different jersey. Yeah, but new tools too, right? So this is not the same person. You're the same person, right? People like you for being the person and trusting your relationship, but you have a totally different bag of tricks, right? This is coming back with your play of choice. So we just got a few minutes left here, less than three minutes. I don't know, John, if you have any more questions, but Holger, you mentioned you're working on an outpost, Doc. What else are you working on? What should we look forward to? Yeah, so there's a lot of work about, I'm working right now on enterprise application platforms doing a market overview. So the past capability of the SaaS vendor is super important, right? To make a pop culture example, right, from Linus at Peanuts, right? His comfort blanket, right? The past system, the enterprise application platform is the comfort blanket for the SaaS vendor and something we talked about already. Business poses uncertainty. People don't know what they have to do. They don't know what to extend. They know they can't build a 30s vertical. Companies want to differentiate themselves. So the ability to use a lot of standard software, but differentiate myself is super, super interesting. That's my major focus for this quarter enterprise application platform. Great stuff, guys. Guys, thanks so much, Holger. Awesome, as always having you. John, looks like you're doing great wherever you are. Your clandestine location. We got some more great stuff coming up. Jomak Degani coming up with a new data architecture that she's proposing. We have the CTO power panel coming up later on. So stay right there. You're watching theCUBE on cloud, Dave Vellante, John Furrier, thanks again to Holger Moeller and everybody in the chat room. All right, keep it right there. Thanks for having me. Stay healthy. Thanks.