“What’s interesting is that IoT has been around for a long time but as companies start to enable it and start to leverage it more and more there’s just huge volumes of data that have to be managed and be able to analyze and be able to execute from,” says John Barcus, Vice President Manufacturing Industries at Oracle. “One of the technologies that is really exciting is this whole concept of AI. It really allows you to use that information and correlate it with a lot of different pieces of information.”
John Barcus, Vice President Manufacturing Industries at Oracle, discusses how technologies such as AI and blockchain are now helping companies manage huge volumes of IoT data in an interview with technology influencerRonald van Loon:
Companies Are Moving Toward Selling Products as a Service
I think that (manufacturers connecting all the processes digitally) is the way that will differentiate them. It’s really the only way the companies will be able to survive into the future. There are all these business models and it has become significantly more competitive than it has been in the past. Companies have to work faster and they have to be more responsive to what their customer needs are. The only way really of doing that is to connect the various aspects of the business. They can’t work in silos anymore. That really will give you the whole value of the business.
One area that companies are moving away from is selling products. They’re going into selling more services which we’ve actually seen for some time. But what they’re now getting into is these new models where they might be selling products as a service. If you think about how do you sell a product as a service and the ability to support that it is a lot different than it was before. Connecting to that product and being able to anticipate activities, anticipate needs, anticipate failures, and to be able to monitor how it’s performing, how the customers use it and are able to expand on that to be able to provide a better outcome for the customer are important components.
Huge Volume of IoT Data Managed via AI Creates Real Value
What’s interesting is that IoT has been around for a long time but as companies start to enable it and start to leverage it more and more there’s just huge volumes of data that have to be managed and be able to analyze and be able to execute from. One of the technologies that is really exciting is this whole concept of AI. It really allows you to use that information and correlate it with a lot of different pieces of information. You can correlate with the data that might be in your ERP and your MES and other sources of information and actually provide some real value and provide the real outcomes. It can now do some predictions where it would be actually physically impossible for people to do the same type of calculations that they’ve been doing in the past with this huge volume today.
The second area where there seems to be a little hesitation at the moment is around blockchain. But the technology is there and people have been trying to identify how best to use it. Some of the use cases that are coming out now are going to be quite impressive. I think the little bit of a lull was deserved. People who looked at it anticipate a little bit more than what was possible and now they’re really starting to develop some good use cases. I think there’s a lot of opportunities in that area.
Huge Volume of IoT Data Managed via AI Creates Real Value, Says Oracle VP John Barcus
“We open 15 to 20 buildings a month,” says WeWork CTO Shiva Rajaraman. “Anything we can use to automate or augment a person through machine learning we’re taking all that data in one central place and starting to create an engine around that. That’s key to successful scaling today. When we think about enterprise we sort of step back and say what’s our Google Analytics for commercial space?”
Shiva Rajaraman, Chief Technology Officer of WeWork, discusses how WeWork is using technology to revolutionize office space worldwide in an interview on Bloomberg:
How Do We Offer Space As a Service?
There are three capabilities when we think about WeWork. One is how do we offer space as a service? If you just think about it’s really basic. Are you looking for what location do you need? Where do you need it? How long do you need it? Are there different pricing models for it? One of the things we’ve done is effectively taken all of this space and put it into a big database and we start to shape it based on what we see out there in the market. Some of that is just pricing automation at the end of the day. Some of it is how do we automate that supply chain of delivering a building?
We open 15 to 20 buildings a month. Anything we can use to automate or augment a person through machine learning we’re taking all that data in one central place and starting to create an engine around that. That’s key to successful scaling today. The biggest technically challenging thing is operational scale. If you step back you don’t want a lot of variability. You want to step back and say, “Hey, can I deliver this building on time at quality as people need it?” That’s where you need operational technology that really works in a way that normally construction has not worked in the past.
What’s Our Google Analytics for Commercial Space?
One of the key things on the strategy side is that as we see this demand and we start to get critical mass in different areas can we disrupt the business model a little bit? Let me give you an example. If you take someone like GE Health in Seoul, South Korea, they had underutilized real estate. We redesigned that so they can use it in a more flexible way. We also created a new membership called the City Pass which gives all of their employee’s access to WeWork throughout Seoul. Now they can go where they’re more productive. One of the key things we’re looking at right now is what’s a density that translates to interesting memberships that allow people to be more productive?
Let’s talk about the M&A that’s created a fabric that we can start to offer to enterprises. When we think about enterprise we sort of step back and say, “What’s our Google Analytics for commercial space?” Can we help these enterprises create a good workplace experience through things like room booking (service) all the way to understand how they use space so they can come and use WeWork on demand if they need it. We can also help them grow in the future if they’re looking at new markets to expand into.
How WeWork is Using Technology to Revolutionize Office Space Worldwide
“Customers need in a lot of ways, I hate to say it, but almost an easy button for cloud,” says Matt Liebowitz of Dell Technologies Consulting. “Often when they try to build it themselves, they bring the components together themselves, but it’s really difficult to do that integration work. But this product, Dell Technologies Cloud, is going to help accelerate for us in consulting so that they can quickly get to a state where they have a functional cloud that they can start consuming.”
The most common thing we see from customers when they say I’m doing multi-cloud is they’re actually using more than one cloud. That’s not multi-cloud. You really need to tie it together with a cloud management platform, something that can bring all the pieces together that’s API enabled so that they can programmatically access resources. When customers tell us they’ve got multi-cloud but they’re really consuming something in Azure and something in AWS they’ve just created more IT silos. We’re trying to get away from that. They can use all those clouds but wrap it together in that common control plane so you can understand your estate and actually manage it and consume it.
I think most customers are responding. The needs of the business are changing and they need to respond more quickly so they just consume cloud resources as they can. That often leads to the sprawl. We try to just wrap it together, do an analysis, figure out what’s out there, and help them not only understand where the applications should live but wrap an operating model around it so they can start consuming it properly. They can then understand what they’re going to advertise in their service catalog.
Are You a Digital Laggard or a Digital Leader?
We take what analysts do and we also have our own studies and indexes all the way starting from what we call digital laggards all the way to the digital leaders. What we found is actually most of the customers are either laggards or they’re just starting out. Maybe they’ve made some loose investments but they haven’t walked the path that far. There’s stuff kind of everywhere. Customers don’t often know where to start but I think they’re responding to the needs of the business. I don’t think it’s anything that they’re doing that’s wrong but it’s a little bit of the Wild West for sure.
It’s all about business value and business outcome. The customers who are the most successful have a business reason for what they’re trying to do. They’re not going to public cloud because Gartner said they should, they’re doing it because they know they’re going to get an outcome. They’re going to be able to go into new markets or operate faster and deploy applications faster. Those are the ones that are further down the line. I would say the ones that are the laggards are the ones that are just sort of peeking under the covers of what they should do. They’re just starting out there. They’ve got some workloads in multiple clouds and they need to get a handle on it but they’re just starting.
Customers Need an Easy Button for Cloud
Customers need in a lot of ways, I hate to say it, but almost an easy button for cloud. Often when they try to build it themselves, they bring the components together themselves, but it’s really difficult to do that integration work. I’m in consulting so we’re all about the outcome. But this product, Dell Technologies Cloud, is going to help accelerate for us in consulting so that they can quickly get to a state where they have a functional cloud that they can start consuming. Then we can help them with the day two to actually drive business value, consumption of the cloud and that sort of thing.
We have a framework on how we approach things for multi-cloud and for lots of other things. We use a methodology that we call as-is-to-be where we determine their current state, project where they’re going to be in the future and build a roadmap that’s actually actionable. Then I think what differentiates the methodology is we tie it to a business case. We tie it to an outcome and a financial outcome so that executives and IT leaders can see that this is not just another IT project. They’re going to get true value out of it. We build a roadmap pretty quick, within three to six weeks, that’s actually actionable. We build consensus and that’s how we get started.
Customers Need an Easy Button for Cloud, Says Matt Liebowitz of Dell Technologies
“This market is the largest market that we’ve ever seen,” says Intel CEO Bob Swan. “We view our market share as roughly 23-25 percent. The opportunities we have to grow in this increasingly data-centric world are fairly significant. Our expectations are that we will grow share as we go through the next several years so we’re excited about those prospects despite the current digestion period we’re going through.”
Bob Swan, CEO of Intel, discusses significant growth projections for their high-performance products in an interview on Bloomberg Technology:
Opportunities To Grow in This Data-Centric Word Are Fairly Significant
Implied in our outlook for the full year we would be roughly at a 60 percent (margin) in 2019, which is a little lower than last year, and to a certain extent, that’s a good thing. I say that because we’re accelerating our transition to our next process node technology, what we call ten nanometer. When we go through those transitions the implications in the earlier stages of high-volume manufacturing is it has a dampening effect on gross margin. So this year we will be down a little bit from last year, but that was primarily driven on the progress we’re making in migrating to next node manufacturing technology.
We look at the what we call the expanded TAM guide of roughly three $300 billion dollars of silicon TAM. That market is the largest market that we’ve ever seen. We view our market share as roughly 23-25 percent. The opportunities we have to grow in this increasingly data-centric world is fairly significant. Our expectations are that we will grow share as we go through the next several years so we’re excited about those prospects despite the current digestion period we’re going through.
Focus is On Building the Best High-Performance Technology
It’s an exciting time for the semi market. The opportunities to grow are fairly significant. In light of that, there’s increased competition intensity all over the place. Our focus is just on building the best products in the world. That’s always bringing technology, whether it’s to the data center market, whether it’s to the PC market, or whether it’s to the Internet of Things which is a growing part of our business, building the best high-performance technology in the world. That has stood the test of time. Our expectations are that we will continue to do that through 2019 and going forward.
When you look at the large cloud service providers their growth rates continue to be extremely strong. Ultimately, those growth rates need to consume the kind of technologies that we’re deploying, whether it’s TPUs or whether it’s FPGAs, they need to consume the kind of technologies that we’re building. Their end-market growth remains relatively strong. So we believe that as they go through this digestion period that demand signals will begin to pick up and we will benefit from that increased demand.
Opportunities To Grow in This Data-Centric Word Are Fairly Significant, Says Intel CEO
“We’re the fastest growing cloud company in the enterprise software space,” says SAP CEO Bill McDermott. “We grew total revenue by 16% and grew cloud 48%. Let me just put this on the line. When you grow cloud 48%, that’s 80% faster than Salesforce, that’s 30% faster than Workday. So when you have a franchise that’s growing your core business in double digits, the cloud faster than anybody out there, and you’re progressing the margin one point per year between now and 2023.”
Bill McDermott, CEO of SAP, discusses SAP’s amazing growth over the last quarter, especially in cloud, in an interview on CNBC:
Fastest Growing Cloud Company In the Enterprise Software Space
This is a good start to the year. It’s what the capital markets have been waiting for. They’ve been getting all kinds of revenue growth. We’re the fastest growing cloud company in the enterprise software space. They wanted to see the multiples on the margin. As we raised our full-year guidance we committed to improving the operating margins by one point per year for the next five years. Now after a $75 billion investment in innovation for our customers, our shareholders are saying wow, this is the moment I get the multiples on the margin and therefore the leverage in the share price.
Our cloud gross margins can improve to 75% between now and 2023. We’re hiring the absolute very best people in the world in artificial intelligence, machine learning, big data, all the areas that our customers want us to go. It’s not the number of people, it’s getting the absolute very best people. If you hire right, you manage your cloud gross margins right, and you have a highly inspired customer base where you’re growing with high renewal rates, you get tremendous leverage on the operating margin.
The Company Really Is On a Roll
What we’re doing is when we did restructure, and that was announced in Q4 and we executed it in Q1, we basically said we’re going to take about 4,400 people from areas that were not part of the new economy and hire to those tremendous standards. We’re bringing in the best data scientists in the world, best machine learning individuals out there, best enterprise application software coders around the world, and we’re developing in China, Israel, the United States, and in Europe. The company really is on a roll.
We’re almost done (with the restructuring) in the sense that we accounted for most all of it in Q1. We are finishing it up in the next quarter right now. For example, it’s being executed in Germany, but the majority of it has been handled. The stock today (is way up). We grew total revenue by 16% and grew cloud 48%. Let me just put this on the line. When you grow cloud 48%, that’s 80% faster than Salesforce.com, that’s 30% faster than Workday. So when you have a franchise that’s growing your core business in double digits, the cloud faster than anybody out there, and you’re progressing the margin one point per year between now and 2023, I think that’s why the shareholders have the stock up 8%.
What’s On My Mind is Where the Customer Needs Us To Go
All competition is on my mind. But what’s really on my mind is where the customer needs us to go. We weren’t losing to them. What the shareholders wanted, and we surveyed them, we had a capital market stay in New York and we used Qualtrics to survey them, they said we love your revenue growth we know you’re gaining share we just want more operating margin leverage out of the company. That’s what we gave them this quarter. It took us ten years and $75 billion in R&D and M&A to get to the point now where we have everything we need. We don’t need to do any more big M&A, we just need to perform well and spin-off margin and free cash flow for our shareholders and the stock goes on a run.
They (our customers) know we’ve given them so much innovation. It’s coming at them so fast that now they’re saying help me integrate it, help me fully leverage it across the enterprise and get the value from it. Interestingly, the customers and the shareholders are both in the same place. They’re saying you’ve done unreal things, now let’s dig in and drive real value from all the things that you’ve done. We bought an $8.3 billion dollar company called Qualtrics. We now took over a new category called experience management where we can actually tell the consumer experience inside or outside the company in real time. We have data now.
So think about this, if you’re running a company and you want to recruit to retire process in your company, how do my people feel when I recruit them? How did I feel when I trained them? Am I coaching them? Am I teaching them? Am I giving them everything they need in their compensation plan? We know this all now in real time with the Hana database built into the human capital management process. We do things that no other company can do.
SAP CEO: Were the Fastest Growing Cloud Company In the Enterprise Software Space
PagerDuty began trading on the New York Stock Exchange for the first time this morning and is now trading at more than 60% above their IPO price of $24. That gives the company a market capitalization of more than $2.7 billion. PagerDuty offers a SAAS platform that monitors IT performance. The company had sales of $118 million for its last fiscal year, up close to 50% over the previous year.
The company uses machine learning to inform companies in real-time about technical issues. “Our belief is that machine learning and data should be used in the service of making people better, helping people do their jobs more effectively, and delivering those great brand experiences every time,” says PagerDuty CEO Jennifer Tejada. “PagerDuty is really about making sure that our users understand that this could be a good thing, being woken up in the middle of the night if it’s for the right problem. It’s a way that can help you deliver a much better experience for your customers.”
It’s Gotten Harder for Human’s to Manage the Entire IT Ecosystem
If you think about the world today, it’s an always-on world. We as consumers expect every experience to be perfect. Every time you wake up in the morning, you order your coffee online, you check Slack to communicate with your team, and maybe you take a Lyft into work. Sitting behind all of that is a lot of complexity, many digital and infrastructure based platforms, that don’t always work together the way you’d expect them to. As that complexity has proliferated over the years and because developers can deploy what they like and can use the tools that they want it’s gotten harder for human beings to really manage the entire ecosystem even as your demands increase.
You want it perfect, you want it right now and you want it the way you’d like it to be. PagerDuty is the platform that brings the right problem to the right person at the right time. We use machine learning, sitting on ten years of data, data on humans behavior and data on all these signals there that are happening through the system, and it really helps the developers that sit behind these great experiences to deliver the right experience all the time.
Machine Learning Should Be Used to Deliver Great Brand Experiences
Going public is the right time for us right now because there’s an opportunity for us to deliver the power of our platform to users all over the world. We are a small company and we weren’t as well-known as we could be and this is a great opportunity to extend our brand and help developers and employees across teams and IT security and customer support to deliver better experiences for their end customers all the time.
At PagerDuty we take customer trust and user trust very seriously. We publish our data policy and we will not use data in a way other than what we describe online. We care deeply about the relationship between our users in our platform. Our belief is that machine learning and data should be used in the service of making people better, helping people do their jobs more effectively, and delivering those great brand experiences every time. PagerDuty is really about making sure that our users understand that this could be a good thing, being woken up in the middle of the night if it’s for the right problem. It’s a way that can help you deliver a much better experience for your customers.
“We have a big existing on-premise user base and I believe all of them will move (to the cloud),” said Oracle CEO Mark Hurd. “In fact, I was with a large group of our users just last night and they’re all going to move on their time frame. We don’t put a time frame on it, but this thing is moving at a pretty good speed. It will not move linearly, it will move geometrically. When we get to a certain point you will start to see a geometric move in the market and it will be significant.”
Mark Hurd, CEO of Oracle, discussed the huge growth in the cloud applications market and he expects Oracle to lead that market in an interview on Bloomberg:
Cloud Applications Will Become a $400 Billion Market
The apps market is about a $125 billion market. It has two pieces to it. First is back office, which is what we call ERP. This is basically your financial systems, procurement, manufacturing, supply chain, and HR. That is really 70 percent of the applications market or around $85 billion. Second is the front office market which includes marketing, sales automation, service, etc. add up to $40 billion. A very interesting phenomenon is that as the on-premise applications market moves into SAAS it actually grows exponentially. Now the applications market is doing all of the server work, all the operating systems, and all the database work. It’s the data center, it’s the people. So the market will actually grow from $125 billion and probably triple just as it moves to SAAS because it’s taking share from the other parts of the IT market. The applications market I predict will actually become more like $400 billion as it goes forward.
We think it is an amazing opportunity. We are growing our applications market over the last 8-12 quarters more than double-digit. The market itself is growing and we are gaining substantive share. We are the leader in ERP. If you go back to Gartner, IDC, and the analysts we are leading in HR now as well. These are very attractive and robust markets. Our customers want to modernize, want to spend less, want someone else doing the work, and they want someone else assuming the risk. We are extremely bullish about our position in the market.
All of Our Customers Will Move to the Cloud
We have rewritten our application base for the cloud, for SAAS. We have been doing this for years and we’ve invested a lot of capital. We are deploying our capabilities all across the globe. We are extremely excited and bullish about not just our current position. There is going to be a leader in this market and there is no one today with more than 50 percent market share. In fact, the highest application percentage of any company in any segment is sort of mid-20s. This generation will see a leader that is much more material than that and I volunteer us to do it. In most segments, the leader has 50 percent plus.
We have a big existing on-premise user base and I believe all of them will move to the cloud. In fact, I was with a large group of our users just last night and they’re all going to move. They are all going to move on their time frame. We don’t actually put an end of life. We have a competitor that does that, but we don’t do that. We want them to move at their pace and we want them to feel good about it. We don’t put a time frame on it, but this thing is moving at a pretty good speed. It will not move linearly, it will move geometrically. When we get to a certain point you will start to see a geometric move in the market and it will be significant.
“With respect to rollouts, what we expect, and there has been a lot of trials going on and a lot of demonstrations going on, but the initial trials were in-building last year,” says Alastair Williamson, CEO of Ranplan Wireless. “We expect these to accelerate in 2019 and we expect to see the peak of 5G coming through in about 2023.”
5G was the main theme in Mobile World Congress 2019. That was not just with operators, but also with vendors. Let’s put it into perspective from where we come from and look at the 5G themes with respect to wireless network planning. What’s become apparent is that all the initial deployments in 5G are going to be within buildings and in dense urban areas, which is a key focus for Ranplan.
Our tool is designed for planning and building wireless networks in conjunction with outdoor urban environments. With respect to rollouts, what we expect, and there has been a lot of trials going on and a lot of demonstrations going on, but the initial trials were in-building last year. We expect these to accelerate in 2019 and we expect to see the peak of 5G coming through in about 2023.
Complex Challenges to a 5G Rollout
Just to focus on the Japanese opportunity, we did secure a large order in Japan through our reseller early this year. The main challenges that operators are going to face when it comes to rolling out 5G networks can really be split into two different categories. The first challenge is 5G is complex. There is new feature functionality that is being brought into 5G such as beamforming and massive MIMO. These are all new capabilities that the planning tool has to cope with. We’ve invested a lot of money in 2018 to get our tool 5G ready so we’re compliant with all the 5G NR standards. We can actually demonstrate that capability now and customers are actually using our tool now to deploy trial 5G networks.
The second complexity that our customers taught us about is how to plan networks in the millimeter wave space, so 28 gigahertz and above. Radio waves interact very differently the higher spectrums compared with traditional lower spectrums that mobile networks have been deployed in, so at Ranplan we’ve developed a propagation engine and that allows you to propagate all the way up to about 60 gigahertz. We’re way into the millimeter wave space. From a propagation perspective, we can support these high frequencies. We’ve also done a lot of work on understanding how those radio waves interact with different materials such as concrete, brick, wood, trees, people, and water. We’ve done all of that investigative research and we’ve put that information into our tool to allow us to actually predict very accurate 5G planning.
More 5G Focus on Public Safety and Industrial IoT Markets
We repositioned our products a bit at Mobile World Congress to specifically fit to specific markets. Ranplan Professional is still our flagship products allows you to design in-building wireless networks in conjunction with dense urban outdoor wireless networks. But we also launched a new product called Ranplan In-Building where we’ve taken the outdoor capability away from it and it focuses solely on customers who just want to design and plan in-building. wireless networks. We also launched another product called Ranplan In-Building Light which is focusing on the public safety market. We took a lot of the feature functionality that was not required for public Safety and put in new feature functionality that the public safety market demands and we launched that product at Mobile World Congress 2019.
Our plans for 2019 I split that into two separate areas with a look at the business first and then the market. In 2018 we doubled our revenues from 2017. In 2019, we’ve already received purchase orders which are in excess of our total 2018 revenue. From a business perspective it is about keeping that momentum going. From a market perspective, a lot of our focus has been in Japan, the US, South Korea, and Asia-Pac We’re going to continue that focus but we’re also going to put a lot more focus onto public safety and a lot more focus on the Industrial Internet of Things. There’s a real pent up demand in those markets to look at a planning tool to help roll these networks out.
“The platform we have uses big data analytics and machine learning in the cloud to process and find all of the unknown malware, make it known and be able to block it,” says Scott Stevens, SVP, Global Systems Engineering at Palo Alto Networks. “We find 20-30 thousand brand new pieces of malware every day. We’re analyzing millions and millions of files every day to figure out which ones are malicious. Once we know, within five minutes we’re updating the security posture for all of our connected security devices globally.”
Scott Stevens, SVP, Global Systems Engineering at Palo Alto Networks, discusses how the company uses AI, machine learning, and big data to find and block malware for its customers in an interview with Jeff Frick of theCUBE which is covering RSA Conference 2019 in San Francisco:
We Find 20-30 Thousand New Pieces of Malware Every Day
There are two ways to think about artificial intelligence, machine learning, and big data analytics. The first is if we’re looking at how are we dealing with malware and finding unknown malware and blocking it, we’ve been doing that for years. The platform we have uses big data analytics and machine learning in the cloud to process and find all of the unknown malware, make it known and be able to block it.
We find 20-30 thousand brand new pieces of malware every day. We’re analyzing millions and millions of files every day to figure out which ones are malicious. Once we know, within five minutes we’re updating the security posture for all of our connected security devices globally.
Whether it’s endpoint software or it’s our inline next gen firewalls we’re updating all of our signatures so that the unknown is now known and the known can be blocked. That’s whether we’re watching to block the malware coming in or the command-and-control that’s using via DNS and URL to communicate and start whatever it’s going to do. You mentioned crypto lockers and there are all kinds of things that can happen. That’s one vector of using AI NML to prevent the ability for these attacks to succeed.
Machine Learning Uses Data Lake to Discover Malware
The other side of it is how do we then take some of the knowledge and the lessons we’ve learned for what we’ve been doing now for many years in discovering malware and apply that same AI NML locally to that customer so that they can detect very creative attacks very and evasive attacks or that insider threat that employee who’s behaving inappropriately but quietly.
We’ve announced over the last week what we call the cortex XDR set of offerings. That involves allowing the customer to build an aggregated data lake which uses the Zero Trust framework which tells us how to segment and also puts sensors in all the places of the network. This includes both network sensors an endpoint as we look at security the endpoint as well as the network links. Using those together we’re able to stitch those logs together in a data lake that machine learning can now be applied to on a customer by customer basis.
Maybe somebody was able to evade because they’re very creative or that insider threat again who isn’t breaking security rules but they’re being evasive. We can now find them through machine learning. The cool thing about Zero Trust is the prevention architecture that we needed for Zero Trust becomes the sensor architecture for this machine learning engine. You get dual purpose use out of the architecture of Zero Trust to solve both the in-line prevention and the response architecture that you need.
How Palo Alto Networks Blocks 30,000 New Pieces of Malware Daily
“It’s still really early days,” says Amazon Web Services CEO Andy Jassy speaking about the cloud. “Sometimes we remind ourselves that even though it’s a $30 billion revenue run rate business growing 45 percent year-over-year, it’s the early stages of enterprise and public sector adoption in the US. Outside the US they’re 12 to 36 months behind depending on the country and industry.”
Jassy says that although price is the conversation starter, speed and agility are the primary reasons that enterprises are moving to the cloud. He says that most startups have built their businesses from scratch on top of AWS. Some of the big examples, he notes, are Lyft, Airbnb, Pinterest, Slack, Tomo, and Robinhood.
Andy Jassy, CEO of Amazon Web Services (AWS), discusses how the cloud is still really in the early days in an interview with Jim Cramer on CNBC:
Cloud is Still Really Early Days
Sometimes we remind ourselves that even though it’s a $30 billion revenue run rate business growing 45 percent year-over-year, it’s the early stages of enterprise and public sector adoption in the US. Outside the US they’re 12 to 36 months behind depending on the country and industry. It’s still really early days. The conversation starter when people move to the cloud is always cost. Instead of laying out all that capital for data centers and servers and instead only spend what you consume that’s usually very advantageous.
Capital expense turns to variable expense and variable expense is much lower than what most companies can do on their own because we have such a large scale that we pass on to customers in the form of lower prices. We’ve lowered our prices on 70 different occasions in the last ten years. You get real elasticity. You provision what you need and if it turns out you need more, you provision more. If you don’t need anymore because you’re at the peak you just give it back and stop paying for it.
Primary Reason Enterprises Move to Cloud is Speed and Agility
Price always is the conversation starter but the number one reason that enterprises are moving is speed and agility. Usually, if you want to try an experiment in your company it takes 10 to 12 weeks to get a server and then you have got to build all the infrastructure software around it. In the cloud, you can provision thousands of servers and minutes. Then because we have 165 services that you can use in whatever combination you want you can get from an idea to implementation in several orders of magnitude faster. You can innovate much quicker.
As an example, what Lyft is doing in the space is pretty amazing and the piece that they’re growing at is really amazing. To be able to scale the way they have, first as a start-up and then a fast growing business, and then what they would tell you is that they’re able to invent and change the customer experience so quickly, several orders of magnitude faster than they could if they were doing on premise that it’s really helped build their business.
The Cloud Encourages Innovation
The vast majority of applications in the next five to ten years will be infused with some sort of machine learning. We are in kind of a golden age of computing. Almost every company that we speak with is interested most importantly in being able to take their own data. Most companies have gobs of data. Even startups today have gobs of data. But it’s so hard to know what’s in there and it’s so hard to know what the gems are and it’s so hard to know what’s going to be the predictive pieces that change the customer experience. Our machine learning capabilities are going to solve that for a lot of customers.
If you are building technology applications and trying to build consumer experiences, you want to do as much as you can for as little money as possible. Then when you have ideas you want to be able to move fast. One of the things that happen at companies that build on the cloud is it used to be so hard to get anything done that none of your employees spent any time outside of work thinking about new ideas, because why bother. It was so demoralizing that you never get to try it.
With the cloud, you can provision instances and servers in minutes so people spend their free time thinking about new customer experiences. They know that if they come up with something over the weekend they can come in Monday and try it for a dollar. It changes how many people in your company think about innovation and where you get new ideas from throughout the company.
Most Startups Have Built Their Businesses on Top of AWS
Most startups have built their businesses from scratch on top of AWS. Some of the big examples are companies like Lyft, Airbnb, Pinterest, Slack, Tomo, and Robinhood. There is a very large number of them. But there are a lot of businesses that either haven’t gotten big yet or are just trying to build a business. One of the interesting things that happened I remember in 2007-2008 when we had the recession. There were all these very gloomy emails sent from a lot of venture capitalists saying don’t expect to get funded, but the number of startups kept growing.
As opposed to having to go raise money to pay for data centers and servers people can try several instantiations of their idea on top of AWS and if it isn’t getting traction you paid something like 80 cents a month or a $1.50 a month, whatever your usage is. We have loads of companies that are trying to build businesses on top of us that really only pay anything meaningful when they have traction.
Amazon More Focused on Long Term Than Most Companies
It’s always hard for me to measure the impact we have on the overall world. The way we think about it at Amazon is that in every single one of our businesses we have never met customers who don’t want prices to go down. If the center of your gravity is customers, which it is in every single one of Amazon’s businesses, you’re always working relentlessly to find ways to take cost out of your structure so you can give it back to customers in the form of lower prices. It’s actually really easy to lower prices. It’s much harder to be able to afford to lower prices.
We’re much more focused on the long term than most companies. We are trying to build a business and a set of customer relationships that outlasts all of us. As such, we think if we help our customers get more done and are successful on their own, even if it means lower margin percentages, over time we’ll drive more absolute margin dollars. They’ll be more successful and we will ultimately be more relevant.
It Takes Work to Actually Move Away From Oracle
I think Larry (Ellison of Oracle) has a certain view of the world that isn’t always steeped in what the facts are. If you look at Amazon, we started the company at a very early stage and we had Oracle. It takes work to actually move away from Oracle. Lots of customers are learning this as so many people are trying to move away from the commercial-grade legacy database providers like Oracle or SQL server to newer engines like Aurora.
We now are 88 percent of the way through moving all of our Oracle databases and will be at 100 percent by mid this year. We turned off our Oracle data warehouse in November of last year and moved it to Redshift. We learned some very interesting patterns that customers are very excited about copying. We don’t really meet a lot of customers who aren’t looking to move away from those databases to Aurora.
We believe the Edge is the next frontier, says HPE CEO Antonio Neri. “When we talk about the enterprise of the future, we see an edge-centric, cloud-enabled, data-driven, enterprise,” notes Neri. “What that means is the cloud is moving closer to where the data is created. That’s driven by the use cases we see around us.”
Neri adds: “Whether it is healthcare, manufacturing, or transportation, everything is being connected. It started with connectivity and then soon after that is the security aspect. One thing is connecting devices and apps and one thing is connecting things to the network. That’s why our Aruba platform is such a unique asset because it provides connectivity and security with AI built-in at the core.”
Driving the Acceleration of the Digital Transformation
I would like to characterize that we had another strong quarter for the company. That’s further evidence that our strategy is working to accelerate the Intelligent Edge and to drive profitable growth in the core segment of the market called Hybrid IT. Because we are continuing to build our portfolio and we see the demand steady, we’re actually very confident to raise our guidance that we obviously beat in Q1. We see the rest of fiscal year 2019 as strong for us and give us the confidence to raise the guidance driven by the portfolio and the innovation we have and in the feedback we get from customers.
We see the demand steady. We have not seen any evidence of a downturn (due to tariffs, shutdown, etc.). Obviously, we are continuing to monitor the uncertainties around the globe, but the reality is that customers are making critical investment to drive that acceleration of the digital transformation. That’s all driven by the fact that the data around us has continued to grow. They need to extract the value of that data much faster than ever before. That’s why we see growth in segments like high performance compute, which for us grew 50 percent. Software around infrastructure grew 70 percent. Also, the connectivity in the Edge grew 20 percent in the wireless business. We see that as a continued trend.
When people ask me what’s going on around the globe with Brexit, for example, our UK business actually grew double digits. When you think about the government shutdown, actually one of the key products we sell in the government is high-performance compute, and it actually grew triple digits. So it has not had the impact, but obviously, we continue to monitor what’s going on around the globe.
Next Frontier: Edge Centric, Cloud-Enabled, Data-Driven
We believe the Edge is the next frontier. When we talk about the enterprise of the future, we see an Edge centric cloud-enabled data-driven enterprise. What that means is the cloud is moving closer to where the data is created. That’s driven by the use cases we see around us. Whether it is healthcare, manufacturing, or transportation, everything is being connected. It started with connectivity and then soon after that is the security aspect. One thing is connecting devices and apps and one thing is connecting things to the network. That’s why our Aruba platform is such a unique asset because it provides connectivity and security with AI built-in at the core.
3 Cs of the Intelligent Edge
Ultimately, it brings that cloud computing closer to actually where the data is created. We think about it as an integrated solution. Obviously, we need to provide customers the tools to be able to protect themselves and be compliant with the new regulatory policies being put in place, like for example, GPI in Europe. We are really focused on that and we actually believe we have one of the best solutions at the Edge today. The data continues to outpace the compute capacity and actually, 75 percent of that data is created at the Edge. That’s very exciting and that’s why I’m bullish about these Edge compute capabilities that the customers need going forward. It’s just physics.
AI is a Big Opportunity for Us
Two years from now we’re going to create twice the amount of data that we created in our entire human history. That data needs to be stored, it needs to be managed, it needs to be compliant, and most importantly, business outcome has to be derived. That’s why we see the need to bring that cloud compute closer to where the data is in a different form factor. We see AI as a big opportunity for us and all integrated with connectivity and security.
Customers are telling us that they are accelerating the digital transformation. We have a saying that the future belongs to the fast. People who can extract insights from the data faster are going to continue to win. We are very bullish about it because we have one of the best portfolios we ever had and our innovation is second to none.
The US is Ahead with 5G
5G is going to be an exciting opportunity for us. The US is ahead and is going to be one of the first countries, if not the first country together with Japan and others, to roll out 5G. We already see evidence of that. Our opportunity with 5G is to provide customers an integrated experience. 5G is a type of connectivity, but it is not the only type of connectivity. You are talking about 5G, talking about wire connectivity, you talk about wired network connectivity or wireless connectivity.
What customers are asking us is give me one integrated experience with one security control play. That’s where Aruba fits perfectly in that we’re going to provide a cloud-based solution that integrates 5G into that experience.
Our business on the enterprise side is in hyper-growth mode, says SurveyMonkey CEO Zander Lurie. “We grew our new bookings 80 percent year-over-year,” says Lurie. “We booked our first $10 million quarter, our first million-dollar customer, and we signed up 11 percent more customers in the last quarter alone than we had over all these years. We’re a super disruptive survey software for the enterprise.”
Zander Lurie, CEO of SurveyMonkey, discussed the company’s Q4 earnings and their massive growth in enterprise bookings in an interview on CNBC and during their earnings announcement:
Our Enterprise Business is in Hyper-Growth Mode
We were thrilled with our earnings report for Q4. 2018 was a transformational year for the company where we reaccelerated revenue, generated really robust cash flow, and went public. We’re a 19-year-old company. We have had a lot of private shareholders for a long time and the lock-up expiration could well contribute to some of the selling supply today. But I’m super confident in our in our long term focus. If we deliver results, I know shareholders will profit as well.
We have a beloved brand and one of the largest footprints of users around the world with over 17.5 million active users. If you look at our business today, we have over 647,000 paying customers who sit inside of 345,000 different organizations, including paying user in 98% of the Fortune 500. Our business on the enterprise side is in hyper-growth mode. We grew our new bookings 80 percent year-over-year. We booked our first $10 million quarter, our first million-dollar customer, and we signed up 11 percent more customers in the last quarter alone than we had over all these years. We’ve got a lot of traction with a really world-class leadership team.
We’re a Super Disruptive Survey Software for the Enterprise
We’re a super disruptive survey software for the enterprise. We have a large footprint inside of so many companies where we have not been bought at a corporate IT level. These organizations in this environment need that secure collaborative software that we offer. Our open integration strategy has proven to be a winner. It’s a really competitive market, but it’s a huge multi-billion dollar global market.
Critical to Understand the Sentiment of Your Constituents
It’s so critical to understand the sentiment and voices of the people who are your constituents. Whether it’s your employees or your customers or you are doing market research, trying to understand these really dynamic environments, understanding the voices and opinions of the people who matter to your business, is critical.
I too am surprised about Amazon pulling out there. I think the reaction and how quickly that’s changed in several months has been very surprising. Your gut instinct is helpful, but what’s really helpful is actually collecting the opinion data of the people who matter to you if you’re trying to launch a new product or doing a campaign test or to understand where to expand and what the reaction will be like from the community or government.
Organizations need to collect feedback from their most important constituents, so they can drive innovation and growth. In the internet economy, businesses must be data-driven and responsive to their customers. Companies must test campaign messages and pricing to renew customers. In an increasingly competitive war for talent, organizations are investing more in their employee culture. Understanding how to measure, benchmark, and act on the sentiment data define today’s agile and successful companies.
SurveyMonkey CEO: Our Enterprise Business is in Hyper-Growth Mode
Rakuten CEO Mickey Mikitani says he’s happy he didn’t choose to use Huawei and ZTE. “I kind of sensed the potential risk even if it’s only one percent” said Mikitani. “I told myself actually I cannot take a one percent risk that something may happen to prohibit Chinese network equiptment to be used for the Japanese mobile network. So I decided not to use Huawei or ZTE because of the risk.”
Mikitani added, “I don’t know what is going to happen to be very honest as far as the telecom industry is concerned, but it is very difficult to use Chinese vendors for a while.”
Mickey Mikitani, founder, chairman, and CEO of Rakuten, Inc., talks about his fortunate decision not to use Chinese vendors in an interview with Bloomberg Technology:
Decided Not to Use Huawei or ZTE Because of the Risks
One thing I can tell you is when we were deciding what kind of network equipment we are going to use I talked with the Japanese government and asked about whether I should use Chinese network equipment or not. They said no problem, use it. But I kind of sensed the potential risk even if it’s only one percent. I told myself actually I cannot take a one percent risk that something may happen to prohibit Chinese network equipment to be used for the Japanese mobile network. So I decided not to use Huawei or ZTE because of the risk.
Happy I Didn’t Choose Huawei and ZTE
I don’t know what’s true or not but I’m very happy I didn’t choose them. If I had chosen them that would mean I would need to go back one year and I cannot rush my service. We chose Nokia, but basically we are building our own hardware. We just buy certain hardware from Nokia but maybe in the next generation we’re going to build our own. So it’s a totally different concept.
We are an IT company integrating and building core network, radio station network, all the technology by ourselves. Versus other telcos which are asking system integrators to integrate everything. I don’t know what is going to happen to be very honest as far as the telecom industry is concerned, but it is very difficult to use Chinese vendors for a while.
SAPannounced the completion of its $8 billion acquisition of Qualtrics which brings critical real-time customer experience data to its customers. SAP CEO Bill McDermott explains how the combination of Qualtrics’ Experience Management (XM) Platform with SAP’s enterprise software and cloud services is not only a game changer for companies, but solidifies SAP as the world’s business software leader:
“Where did we leave them in the dust? We basically out innovated everybody in terms of how you run your business better. Now the idea is how you create an unbelievable human experience so you inspire your people to take care of your customer and create a loyalty effect that’s unlike any other company in the industry. That’s what we do.”
Bill McDermott, CEO of SAP, talks about how the integration of Qualtrics into SAPs enterprise solutions will help businesses know their customers with real-time sentiment analysis, in an interview with Fox Business at Davos 2019:
With Qualtrics Your Brand Will Become a Religion
I think it’s really important that you focus on the business of your customer and stay obsessed with that and not get caught up in a lot of tech jargon. That’s why I’m glad we’re the business software market leader.
There is a huge trust deficit in the economy. Customers aren’t necessarily getting what they paid for which is why there is a $1.6 trillion deficit from customers that defect from companies that are out there in the marketplace today. So how do you keep a loyal customer? Today’s systems create operating data. You know your customers, you know your people, you know your suppliers. But we need to know what are consumers saying in real time, in the moment? We need that sentiment analysis.
Qualtrics is the number one experience management company in the world. From now on, your customers, if you are CEO, will love your products. In fact, they will be obsessed with them. Your brand will become a religion because every employee is an ambassador that’s connected inextricably to the customer experience. That’s Qualtrics.
If you are a customer of SAP, now you have all the experience data. I call this X-data. This is data from all the consumers that are experiencing your product and your brand. You combine that with the O-data which is all the operational aspects of how you run your company, from your demand all the way through to your supply. You know everything. You take X plus O and you have the winning formula.
The Enterprise Has Been Redefined by SAP
We surveyed, with Qualtrics and SAP, along with the World Economic Forum here, we surveyed 10,000 individuals on a random sample in 29 different countries. Once of the questions was, “What are you really worried about out there?” Most humans said we are worried about being replaced by robots. We said, “Is tech for good or is tech for bad?” What’s happening in your world with the perception of technology? They said, “A little bit better than negative, but somewhat ambivalent.” That’s a concern.
They said that they are basically trusting the people that run their companies, even more than the people that run government. There is a trust deficit out there. It’s really important that we close that trust deficit at the leadership level. It’s also important that companies get the human experience going with their own employees and their customers. That’s why I think that this experience management positioning for SAP is fundamentally going to be a moment in time where the enterprise has been redefined by SAP.
Over 77 percent of the world’s transactions run through an SAP system. We manage everything from the customer relationship to how you manage your people to how you build great products and how you ship on time and deliver. Now we have experience management which is the ultimate touchpoint for customers, and we put it all in the cloud. So you can be nimble, you can be agile, and you can upgrade quickly. You don’t need a whole lot of resources to maintain these systems. We are moving faster than anyone in 25 industries and in 193 countries around the world.
About the S/4HANA Upgrade
S/4HANA is now the system from the demand signal of your consumer in any channel including ecommerce. We know your consumer. We align the product in the proper configuration, at the proper price based on the customers history and all the loyalty that they should earn in their business with you. We ship. We take care of the whole supply chain. You get what you want at the price you procured for anyplace in real-time in the world. That whole value chain is SAP.
4HANA is now in a cloud. So you can run your entire company from end-to-end on top of SAP’s 4HANA platform in the cloud. Game change. Again, I go back to, that’s all the operational data and all the operational processes. Now, if you can add experiences to this with Qualtrics you’ve got an unbeatable competitive advantage.
I’m signing up customers left and right on this idea in Davos because this has been the number one thing that businesses have forgotten. You have to have the experience under control with your consumer and it has to be real-time sentiment analysis. Just think, it’s five times more expensive to get a new customer than to keep the one you have. Don’t you want to know how they’re doing?
No Signs That There is This Global Slowdown
We have a very strong business. There are no signs in our business that there is this global slowdown. Because we serve the best run businesses in the world we are usually an early indicator of what’s going on out there. We see a very optimistic future. Our pipelines and our business model have not changed one iota. I think there is this disjoint between the consumer companies and the consumer world and the enterprise.
SAP CEO Bill McDermott: “We out innovated everybody.”
SAP Bill McDermott: “No signs that there is this global slowdown.”
New Relic provides deep performance analytics for every part of a business software environment. It enables companies to easily view and analyze massive amounts of data, and gain actionable insights in real-time. Whether it’s for a popular mobile app, an online video game with millions of users, or a huge ecommerce platform, they all rely on critical New Relic insights to keep revenue flowing.
Lew Cirne, founder and CEO of New Relic, talks about how critical real-time insights from New Relic are to a companies revenue stream in an interview with Jim Cramer on CNBC:
When It’s Game Time for Retail New Relic is There
For retail obviously, so much of their business, particularly their web business depends on a very small number of days; Black Friday, Cyber Monday, etc. That’s game time. That’s the moment of truth. That’s when we’re working our hardest to make sure our software is there to make sure our customers can see what’s going on in real-time. Our customers were thrilled with the performance and availability that they delivered which turns into business results.
If your site is slower or down on Cyber Monday, forget it, you’re going to miss your quarter. You may never recover from that because you also have a brand hit. So it’s so vital. This is not nice to have software. Anybody who is competing on their software needs New Relic’s platform in order to succeed.
We’re a Massive Cloud Operation
We’re a massive cloud operation. We’re collecting millions of data points every second from mobile applications and from cloud infrastructure every time somebody’s pressing a button to buy something and every time someone’s watching this video on the CNBC app. We’re measuring the health of that and we do that on a massive scale. That’s one of the things our customers love.
When Fortnite said, “Hey we’ve got this huge app. It’s the biggest in the world and we want to monitor on New Relic.” We’re like great. Your biggest day is just another day for us. We collect so much data and we can do it for you.
New Relic Monitors Fortnite to Keep it Running for Millions of People
Epic Games is the company that created Fortnite and if you have kids or you’re into games this game has taken the world by storm. It’s the most popular game in the world. If that game is not working millions of people know about it and the company is affected.
So they rely on the New Relic platform to see everything in real-time on how that game is performing. It’s a very complex piece of software that has to work flawlessly in real-time. We measure everything going on in that game so that the builders of Fortnite can keep it running for millions of people 24/7.
There are different companies that do different things around observing what’s going on in this space but were the applications-centric company. What does that mean? It means that when you’re playing Fortnite what you’re doing is you’re using software.
We’re measuring the software in real-time. We do it in a cloud platform that integrates what’s going on in the software with the infrastructure and with the end-user experience, like the mobile app. We see all that together and do it in one unified platform and our customers love us for that.
New Relic Helps CNBC Scale Mobile App in Real-Time
At CNBC, you just launched an incredible new revenue app in the fall and it’s amazing. I use it a lot and I love it and again this is an app that’s getting a lot of uptake. I was talking to the team and they said customers love what the app is doing for them and they want to use it more and more. That means they have to scale.
When more and more people are using that app how are you able to handle the scale when people want to see the news in real time and want to see the stock quotes in real time? We provide them the visibility that gives them the confidence to move faster and scale to this amazing demand that the CNBC app is generating.
New Relic Helps Companies Move Fast in a Multi-Cloud World
This is so important to our customers. It’s clear that we’re entering a multi-cloud world. Obviously, Microsoft’s doing well and Amazon doing very well. We had a great show at re:INVENT. And there’s some hybrid cloud as well. What our customers are saying no matter where my software is running I want to see it all in one place. I’m sick of moving from one tool to another to see a complete picture. They turn to the New Relic platform to see it all in one place. That enables them to move fast with confidence.
Anywhere there are systems that need to perform well and scale well, those are systems that need New Relic. What we say to our customers is building great software is not easy, but it is the foundation upon which companies can build great competitive advantage. We want to partner with our customers to deliver amazing software that delights our customers and grows their business.
The future of fintech is cloud, AI, blockchain, IoT, 6G and quantum computing, says Anton Ruddenklau, Global Co‐leader of FinTech at KPMG. Those are the technologies that are fueling the digital transformation and will be central to financial services in the UK and the world going forward.
Anton Ruddenklau, Global Co‐leader of FinTech at KPMG discusses the future of fintech in an interview by Charlie Barrett, who is the FinTech Lead at AWS:
By 2027 Large UK Banks Will Go Cloud Native
The first tipping point is 2027. That is the date that IDC predicted when large UK corporate banks go cloud-native. They base it on spend analysis they get from CIOs across the industry. They say that 75 percent of the industry would have gone cloud native, the other 25 percent would have gone bust. There is an interesting thing.
Just as a sidebar, we’ve seen one CEO who has already been fired in the last couple of weeks because they didn’t actually adhere to their cloud strategy, and that’s Sage. So it’s starting. People are getting serious about cloud.
If you move back from those dates, what do the CIOs say? By 2020 they will spend more money on cloud services and data than they will on legacy technology. That’s a big tipping point for us and the cloud providers in the industry full stop. By 2022 the analysis shows that people will spend more money and resources on digital propositions and products supported by data and cloud than they will on legacy. We are moving to really a digital economy on financial services.
Blockchain, IoT, 6G, and Quantum Computing
The other one is blockchain which we think which is roughly between 2022 and 2024. That will be predicated on a number of things. Our tipping point analysis shows that ten percent of consumers and SMEs will have adopted distributed ledger cryptocurrency and that whole gamut of tokenization.
Then the internet of things (IoT). The new 6G is coming down from the mobile operators which is specifically for sensor technology and location based services. That’s sort of early 2020s. That will really fuel up the connection of machine to machine and all the things we want to see as consumers coming through.
Quantum computing is also a big one that is a big question mark for people. It’s super nascent right now. If we believe what people are saying to us, by 2024 or 2025 the quantum will arrive and that will just change the bandwidth for everything including the distributed ledger which really needs a lot of power to really make it work at scale.
Machine Learning Baked Into Cloud Services
More nearterm, I think for us is machine learning being baked into cloud services and cloud data warehouses? We see the likes of Amazon really moving hard on that and bringing machine learning to the masses. You don’t need to be a data scientist to do it. I think that is a fundamental change that’s coming. The small and medium sized fintech firms can adopt that a lot quicker.
However, they don’t have the distribution in scale. The opportunity for us is to get the large banks to understand that. It comes back to new types of skills and moving IT from the back office to the front office.
Every business has been disrupted by the digital transformation, says Hewlett Packard Enterprise President and CEO Antonio Neri. With that disruption is an explosion of valuable data. “That data has value,” says Neri. “Enterprises are looking to extract that value much faster than ever before because people who can get inside faster will win. We see that as a massive opportunity.”
Antonio Neri, President and CEO of Hewlett Packard Enterprise, discussed how the explosion of data, especially with the advent of 5G, is causing companies to invest in new technologies like AI and machine learning in order to extract maximum value from their data. Neri was interviewed by Fox Business at Davos 2019:
Extracting Value From Data is a Massive Opportunity
We live in an incredible time. Every business has been disrupted by the digital transformation. Occuring with that disruption is the explosion of the data we are creating. You just made a comment that data is the new oil. We say that data is the new currency. That data has value. Enterprises are looking to extract that value much faster than ever before because people who can get inside faster will win. We see that as a massive opportunity.
We are coming out of 2018 which was very strong. We saw an increase in spend in IT which was driven by security, more compute capacity, as well as storage capacity around this data. Also, we see the spend moving in a different direction. For example, new technologies like AI and machine learning to extract the value of the data. We see good momentum. Obviously, we see some signals for a little bit of slowdown. However, a little bit of slowdown doesn’t mean everything is going to stop. It’s actually still very strong.
Companies Are Digitizing Their Enterprises
I see companies putting more money into deploying new architectures like cloud and mobility. We live in a mobile-first approach. Companies are digitizing their enterprises making their enterprises much more efficient with this new technology.
Basically, they are moving faster than ever before. So we are actually very optimistic about the future. That data will continue to outpace the compute power which means that money will be spent in catching up with that need to process all of that data in real-time.
5G Accelerating the Digital Transformation of Every Industry
There’s obviously going to be a big investment in the telecommunications space to lay all this infrastructure. 5G actually favors the movement of data which means it is going to accelerate this transition and digital transformation of every industry. Last year at this event we talked about the Industrial Revolution 4.0. 5G will enable that because everything will be connected, everything will ingest data, and everything will process data.
We are very optimistic about the future of spending and the transformation of the business using this new technology. We think we are well positioned for the future and I think we have the portfolio to compete and win.
Extracting Value From Data is a Massive Opportunity, Says HPE President
Cloud is just getting started says Okta CEO, Todd McKinnon. He says that everyone talks about the how cloud has come of age, but it’s really at only 20 percent of $1 trillion in IT spend. “We’re still in the early days of cloud adoption,” says McKinnon. “We’re very excited about the runway ahead and the value we can provide, in that context of really… cloud taking over the world.”
Todd McKinnon, CEO & Co-Founder of Okta, recently talked to Jim Cramer on CNBC about the massive future still ahead for cloud computing and Okta:
We’re the Plumbing, We’re the Infrastructure
We’re changing their world. We’re making it incredibly easy for them to connect to all their technology. Whether they’re logging into their business applications at work or they’re a customer of one of our customers, logging into a website, making their customer experience more enjoyable and more secure. They’re big fans of Okta.
We help our customers both directly, where their end users can see what we do in some cases. But in many cases, we’re behind the scenes, we’re the plumbing, we’re the infrastructure, that’s making their technology secure and making the end user experience super enjoyable. We’re happy to place to play both roles because at the end of the day it’s about making customers successful with any technology they want to use. Whatever they choose to use we will fit in with it and will make their lives productive.
Cloud is Taking Over the World
This is our ten-year anniversary. We’re incredibly excited about ten years. and during those 10 years, we’ve benefited from several trends that are really lifting us to these new heights. The main one is cloud computing. Cloud has progressed tremendously over the last ten years, but the most exciting thing is it’s really just getting started.
If you look at the overall IT spending market, it’s over a trillion dollars of IT spend. Everyone talks about the how cloud they think the cloud has come of age, but it’s still only 20 percent of that. It’s about $200 billion. We’re still in the early days of cloud adoption. We’re very excited about the runway ahead and the value we can provide in that context of really… cloud taking over the world.
Adobe Has Done Something Amazing
We help Adobe in a couple of really important ways. They’ve been a longtime customer of ours. The first way is that we help their business customers connect into the Creative Cloud. The second way we help them is we help their 20,000 employees connect into all the applications they need to do their job at Adobe.
Adobe is an interesting story, not just because it’s an Okta customer, but they’ve done something very amazing. They’ve transitioned their business from a package software business to a cloud business. You’ve seen the results in their business and in their strategic position in the market. We were lucky enough to play a helping role as we helped that login securely to that new Creative Cloud product they’ve had in the market for the last four or five years.
We Are Focused on What Customers Need
We help enterprises get rid of those passwords. Our customers that use Okta for their employees, they have one single login credential that takes them into all their applications. It greatly simplifies the end-user experience and as a result, makes it way more secure and way more productive. At the end of the day, it’s about how productive you can make your people and how great you can make the experience and how attractive you are as an employer and the kind of people you can attract.
There are companies that have similar solutions. We at Okta are trying to be focused on what our customers need and not get too caught up in a platform player that’s trying to do what we’re doing or a niche upstart that’s trying to copy some of our features. We are really focused on what do the customers need? Do they need help connecting to their customers? Do they need help with certain kinds of security architectures that are emerging as they move to more of a cloud central model?
From the beginning of the company over the last ten years, we’ve been incredibly customer-centric, listening to what customers needed and having that be our North Star. That’s worked incredibly well. It’s not a coincidence (that I sound like Marc Benioff). I worked at Salesforce for six years. I basically learned the ropes of cloud computing from Marc and the entire team at Salesforce. So it’s not it’s not a shock that there are a lot of similarities there.
If you are a network person you have probably heard of BeyondCorp, but maybe you have had difficulty explaining it to others in your organization. Fortunately, Google’s Max Saltonstall does it for you in his latest video. Saltonstall says that Google has shifted to a security model without an inside or an outside, where each access request is reevaluated as it is made.
Most companies look at security as a binary, with the good folks on the inside and the bad folks kept outside. Security teams install various firewalls and VPN tools to create a strong perimeter. They are always looking for taller thicker walls to respond to the last type of attack or compromise. But this model breaks down as soon as things get more complicated.
Employees have to work outside. Contractors need access to just one or two internal systems, not all of them. Mobile devices aren’t compatible with your VPN client and attackers are sneaking into your network on previously trusted devices, hiding inside like a Trojan horse. We’ve seen the reinforced perimeter model break down in many ways exposing the highly vulnerable interior.
We Shifted to a Model Without an Inside or an Outside
At Google, we shifted to a model without an inside or an outside. We reevaluate the trust of each request as it is made and test to see if we should grant access. All access to company resources gets decided based on the context of the request. Who is it and should they see this thing? What device are they on and do I consider that safe? If the identity plus device plus access policy all check out, then they get in. If not, it’s an express bus to 403 town. Permission denied.
All access to company resources gets decided based on the context of the request.
In this model, there’s no trust inherent to any network or location. We don’t care if you’re sitting at home at a coffee shop or at the office, you get exactly the same level of access. It’s easy to start down this path on Google Cloud Platform with Identity-Aware Proxy. All you need is an app that’s using Compute Engine, App Engine or Kubernetes plus Google identities for your employees and you can start securing your apps with identity control.
Lime monitors data from their scooters and bikes in real-time in order to ensure that all bikes are charged and available to riders. In fact, in 2018 Lime monitored 26 million scooter and bike trips worldwide according to their year-end report. The average ride was just over one mile totaling 28 million miles for the year.
Not only does Lime monitor data from their scooters they also remotely slow them down depending on where they are in a city, all in real-time.
Xiuming Chen, Engineering Manager of Infrastructure at Lime, discussed how Lime uses AWS and Amazon Kinesis to ingest all of this real-time data:
Lime Sends Commands to Scooters in Real-Time
Lime is a company about urban transportation and we provide a green and affordable transportation option for the users. Our scooter is connected to our servers to ensure a higher quality of service. We need to send commands to scooters in almost real-time. Maintaining hundreds of thousands of concurrent connections is a huge engineering challenge and that number is only growing.
Lime Slows Scooters Down Depending on Geolocation
We collect all kinds of information between these vehicles. For example, GPS, location, velocity battery level, and motor information. Safety is a top priority for Lime. As an example, we have a feature that requires us to slow down vehicles when they enter certain areas of the city. To achieve that we have had to increase the frequency of data collection drastically. We have a team of data scientists and machine learning engineers. The team analyzes this data to help us understand how people use our service.
On-Demand “Juicers” Use App to Collect Scooters
Normally we see spikes from 11 a.m. to 4 p.m., depending on where you are, but sometimes we also notice a very interesting spike at 9:00 p.m. So we have a network of on-demand workers that charge our scooters. We call them Juicers. Every night at 9:00 p.m. we start to allow Juicers to collect scooters. All of them open the app at the same time which causes the traffic to flatten our servers and causes a traffic spike. In the past, the traffic came directly into a relational database and our service become slower and unusable.
Amazon Kinesis Ingests Real-Times Scooter Data
We started to use Amazon Kinesis to ingest real-time data coming from our vehicles. The speed of the growth of this industry is incredible. Scalability is one critical issue we have to deal with and we can let Kinesis do the heavy lifting behind the scene. We can spend the time to work on some more important features that users really need.
“Cloud is really the new normal,” says Scott Mullins, Head of Worldwide Financial Services Business Development at AWS. “If you look across enterprise companies and financial services today, the vast majority are considering cloud as a major part of their IT strategy going forward. It’s just picked up that much momentum. I think we’re just scratching the surface in cloud for the industry.”
Scott Mullins, Head of Worldwide Financial Services Business Development at Amazon Web Services recently discussed how cloud has become a major part of every financial organization’s IT strategy:
Financial Organizations Are Moving to the Cloud
I get to actually lead a team of financial services experts whose sole function is to help our customers both from the standpoint of FinTech startups, all the way up to the largest banks, broker-dealers, exchange companies, and insurers use our tools. That’s what we do on a daily basis and we’re having a lot of fun doing it. It’s really fun to watch.
I think the big stories in 2019 are going to probably be a couple things. The first thing is if we look historically back at the last several re:INVENT’s we’ve seen more financial institutions coming forward and talking about what they’re doing in the cloud. I think the reason for that is because we’re getting more muscle memory from these organizations.
2019 Will Bring an Accelerated Transformation
They’ve had experimentation, they’ve had some foundations they’ve been laying over the course of the last couple of years, and now they have confidence. They have confidence to do two things. Number one to move much more quickly to embrace these tools and to move more workloads over and to build net new things, but also to talk about it. Most financial institutions don’t want to talk about something until they know it well and they know it works for them and that they’ve really de-risked it for themselves.
We saw Goldman Sachs last year. This year we saw Guardian Life Insurance talking about how they’ve changed the 158-year-old company and how they made it nimble and agile. They’ve actually been able to close data centers. I think we are going to see more of that. What that means is we’re going to see a much more accelerated transformation of the industry itself. I think we’re going to see more and more of those organizations coming out and talking about how cloud is a major part of their IT strategy going forward.
Going to See a Much Richer Ecosystem of ISVs
The second thing I think we’re going to see is a much richer ecosystem of ISVs. Just look across what we have today and what’s been announced this week. Bloomberg came out talking about B-Pipe on AWS. Refinitiv a couple of weeks ago was talking about the fact that Elektron runs on AWS. We’re working very closely with Broadridge. We’re working closely with Finical and Temenos and a lot of different vendors in the industry and that’s going to continue to happen at a rapid pace.
Financial Industry Undergoing Massive Transformation
The reason for that is twofold. Number one, you’ve got a lot of those customers who are going through massive transformations and they’re saying to their ISPs, I love the relationship that we have but I’m moving to the cloud. If we’re going to continue to have a relationship you’ve got to move to the cloud with me and those vendors are responding very positively.
Or you’ve got some vendors like IHS Markit who several years ago said, you know what, the future of financial services is in the cloud and I need to start moving before even my customers are telling me so that I can be ahead of the game. Those are two things you’re going to see be very key themes in 2019.
Cloud is Really the New Normal
Cloud is really the new normal. If you look across enterprise companies and financial services today, the vast majority are considering cloud as a major part of their IT strategy going forward. It’s just picked up that much momentum. I think we’re just scratching the surface in cloud for the industry. There’s going to be a room for not just one cloud provider, but multiple cloud providers and opportunities for everyone.
