(upbeat music)
>> Hello and welcome to the "Analyst Angle."
I'm Rob Strechay and I'm so excited to be here.
This is a topic that is near and dear to my heart.
We're going to really dive into cloud-native applications,
how they are deployed, where they're being deployed,
and what is coming next for companies
and what they should really consider.
And I think this is one of those things,
like I said on the last "Analyst Angle,"
you know, you can't do this yourself,
so you got to bring some others in.
And we're going to dive into this with a friend
and we're really going to discuss, you know,
where digital transformation is going.
'Cause kind of the word is coming, you know,
digital transformation has kind of
fallen out of favor a bit,
but we really want to see that organizations
are really weighing the cost benefit
of modernizing these applications.
And they're also looking at where to modernize them.
I think a big piece of that is
is it on-premise or in cloud or is it both?
Additionally they're looking at
what specific cloud services, if any, they're going to use.
And I think that's a big key to this,
because that has some ability to lock people
into particular clouds.
For today's discussion, like I was foreboding there
a little bit, is that fact
that I'm thrilled to have a friend
and former colleague in Paul Nashawaty joining.
He's a principal analyst over at Enterprise Strategy Group,
which is a tech target company.
He's recently completed a whole bunch of research
that I think is going to be very compelling
to the audience.
And we're going to kind of go in and unpack this a bit.
What's going on in cloud-native
and how that's going to impact what you are planning
over the next year or two or three even.
So welcome Paul, you know, glad to have you here.
>> Thanks Rob, you know, really excited to be here.
It's really an exciting time in this space.
you know, as a, this is my main focus area,
this is what I live and breathe every day,
cloud-native modernization, application modernization
and the growth of what organizations are doing.
It's really definitely an exciting time
and very exciting for organizations
to kind of take on that journey.
>> Yeah, no, I mean, both of us have been in and out
of this for a number of years and I think that it's,
you bring a very unique perspective,
which is why I love just getting
on with you and riffing on this stuff.
But let's kind of jump into the deep end a little bit here
and try to get a understanding of what's going on
in cloud-native and what's the state of cloud-native apps
and development in your mind and what you're seeing.
>> Yeah, definitely Rob.
I mean, you know, it is an exciting time as I was saying,
and you know, we have been kind of going through this
for many years, as you mentioned,
digital transformation.
A lot of organizations kind of view
that either as a noun or a verb.
I like to kind of equate that to modernization,
but let's jump right into the research.
There's a lot of data that kind of goes along
with what organizations are looking at today, right?
And when we start jumping right in
the microservices is a big part
of that cloud-native journey, right?
And we look at research, we see
that 64% of organizations are looking to build
and deploy cloud-native applications
based on microservices architecture.
So it's pretty exciting to think about that.
It, you know,
but organizations also need to overcome the challenges,
because when you look at it, I like to tell the narrative
of a past, present and future, right?
For application modernization.
You have organizations that are working
with their traditional or heritage applications,
which may be a virtual machine.
Then you look at today in the future, today's set,
which is basically looking at containerization,
microservices, orchestration and such.
And as I was stating that 64% are delivering,
of the respondents that our survey,
are delivering cloud-native applications
based on microservices.
And we see that 33% are using multi-tier
or traditional based cloud-native applications approaches.
And that's largely due to the heritage
or siloed applications that are being deployed.
The interesting thing about this though
is not just today, what we see today,
but what's interesting is what's we're seeing
in the next two years of growth.
So when we look at the percentage of production applications
and microservices and cloud-native architectures,
we see that, basically we see
that 46% of organizations today responded
are running 26 to 50% of their production applications
on microservices.
In contrast, what we asked was what is happening
over the next two years?
We see that 39% of respondents indicate
that they're running 51 to 74%
of their production applications on microservices,
and 29% are going to be running 75% or more
of their applications on microservices architecture.
So Rob, really exciting times here.
It's a new world, a new technology stack.
A lot of organizations are still getting
their heads around it, but yeah, it's definitely exciting.
>> Yeah no, I think that's key
and in the conversations I'm having with companies
and we're seeing the same thing where it's,
hey, we're still trying to get our heads wrapped
around this new modern architecture
and which apps we're actually going to modernize.
'Cause that there is that cost benefit analysis
and I think especially in this type of economy
they're tying it back to revenue
for more and more of what they're trying to achieve.
And I think that's a huge piece of this.
But I also think that, you know,
we've both been around the space again for quite a while
and organizations really aren't using one cloud.
And I think that to me, you know,
even back, multiple years ago
when I was at AWS was very clear
that people are not going to use just one cloud.
They don't want to be locked in
and they're going to really look into using several clouds.
It doesn't mean the same app lives in multiple clouds.
It can be pieces of apps
or different apps that are in different clouds
for different services and things like that.
What are you seeing?
I think again, from what I know
I'm sure you're seeing something similar
to this in the data as well.
>> Yeah, it is.
It's very, again, another kind
of point that organizations are looking at
and very intensely looking at,
because it does add a level of complexity.
But let's kind of take a step back
and we will look at production applications.
We find in our distributed cloud series,
cloud-native research,
that's a Enterprise Strategy Group
that does this annual study.
In our 2022 study, we found
that 88% of respondents indicated
that they're running their production application workloads
on a public cloud infrastructure.
In 2023, we found that the same number,
88% are running those,
the production applications in the public cloud.
The difference, the change that had occurred
year over year was when we asked how many
cloud service providers organizations are running on,
in 2022 11% of respondents indicated
that they are running on a single cloud service provider.
So that means 89% of respondents
were running on two or more clouds,
to your point, Rob.
But the other piece that comes up is, in 2023's research,
so the trending data that we're seeing,
only 6% indicated that they're running
on a single cloud service provider
and 94% indicated that they're running
on two or more clouds.
So very interesting there.
We also, another data point is 65% are running
on four or more clouds.
So lots of consideration around this,
but also adds that level of complexity
to organizations, right?
So do you have the skill gap that the,
or the skill set to kind of manage
those individual technology stacks
across different clouds?
Do you have, you know, the resources
that can actually accommodate these different things?
Are you managing these clouds holistically
or are you looking at, it's more siloed?
So there's a lot of questions and challenges,
Rob, when I think about this.
And Rob I think there's another piece
that we could talk about
and it goes into that portability aspect.
>> Absolutely, I think to your,
the manageability part of it is a huge thing.
And I mean you have the announcement
where Terraform, where Hashi, the parent of Terraform,
is changing some of the licensing to BSL
on some of their applications.
And what the impact is is not clear necessarily
for everybody yet, but you have all of these folks
trying to have these multi-cloud management systems.
There's also Morpheus out there
and a number of others that are really aimed
at this and making it simple to have that.
But like you said,
I think a big piece of it has been, you know,
what we've been talking about for a while is
that making things portable,
not because you're going to have
the application span those multiple clouds,
but you may want to repatriate and redeploy.
I think that's what we've been seeing is that, you know,
it's something around the data we see,
I think it was just out of Intel recently was that
about 14, 10 to 14% of companies have repatriated,
but most of them are taking it out to another cloud.
They're not running it necessarily on-prem.
Where do you stand in this whole debate
around repatriation, multi clouds, and portability?
'Cause I think you, you definitely
have a different angle on it as well.
>> Yeah, yeah.
You know, I wouldn't be in IT if I didn't say,
it depends, right?
Because it always it's a it depends scenario.
I will kind of touch on it from this perspective.
Portability is a key factor.
And when we think about portability, it's,
you touched on the point about not running applications
across different clouds and that could,
may or may not be a situation or may not be an idea.
I typically think of reducing complexity
in the context of harmonization across these clouds.
So having a cloud operating system,
and I kind of would put that in air quotes,
you know, like a cloud operating system
that allows you to do management and monitoring
and functionality across different cloud providers
and harmonize it across basically public cloud,
private cloud, as well as on-prem.
The interesting point about portability is,
we asked this question in this cloud-native research,
and what we found is 20% of respondents indicated
that it is critical that their applications
are portable and they can have the ability
to move those cloud-native applications
across different cloud architectures or ecosystems.
We find that 67% indicate it's very important
to their organization.
The interesting thing is, and again on trending data
when you look at cloud-native deployment environments,
we see that 48% of organizations today indicate
that they're running their cloud-native architecture
and applications deployed in the public cloud.
And 42% today indicate that they're running
their cloud-native applications
running across public clouds and private clouds,
including edge locations in private data centers.
Now what's interesting is we asked
about trending information where they think they're going
in the next two years.
Today only 11% of respondents indicated
that they're running their cloud-native applications
on-prem, in an on-prem data center.
But yet in two years, 30% of the respondents indicate
that they're running those cloud-native applications
on-prem, going to your repatriation comment
on where it's going.
So we also see in the next two years
a drop off, going from 48% running on public clouds to 43%.
So a slight drop there and we see going
from 42% to 28% on a combination of a hybrid public cloud
and private cloud and edge locations.
But we see a significant jump
in on-prem data centers hosting cloud-native applications.
So Rob, I think it comes down to, you know,
organizations are thinking about what's best for themselves.
Repatriation is not just about cost,
but it's about compliance, regulations,
latency, performance you name it.
There's a whole number of reasons why organizations do it.
But yeah, it's an interesting kind of paradigm shift
that organizations are going through.
>> Yeah no, I think it is, and I think to your point,
it's a lot of the cloud-native operating systems
or in the manageability and all of that can be done on-prem
or in the cloud or incolo for that matter.
And we're seeing a huge uptick in use of colo
and specific clouds or sovereign clouds in specific areas.
And I think that's contributing to this multi-cloud,
multi premise type of application.
And I think, you know,
cloud-native apps are designed for this.
So they're designed to have the data in one place
and have, you know, different layers of the stack,
like you were saying, is it traditional, you know,
app layer and, you know, visualization layer
on top of a data layer.
And I think organizations are really rethinking
and saying, "hey, that wasn't so bad, especially
if I want to keep my data in a particular place."
But I think they're also leaning pretty heavily
on open source, which I think you and I are both,
you know, big open source guys, very, very positive
on what's going on in the cloud-native foundation
and in you know, been to KubeCon and you know,
both of us will be back out there in Chicago
in a couple months now.
What are you seeing from a supportability perspective?
'Cause that's the one area around open source
that I always find very interesting.
I know a couple companies that are very heavy users
of the Hashi Stack and some of the components
they're using are really pure open source components,
with no support contracts whatsoever.
What are you seeing in your data that, you know,
jives with that or kind of-
>> Supports it, yeah. >> Plays with that, yeah.
>> Supports it as, no pun intended there,
but no, it's interesting.
It is another interesting perspective.
It would be amiss not to talk about open source
when we're talking about cloud-native development.
Especially when we led off this conversation
around microservices and the tech stack
that goes along with the ecosystem.
But open source is an interesting area.
There's a lot of reasons to go with open source.
It's community, there's tested, well-rounded testing,
you know, but there's also the perspective of
what do you do when you purchase
or you use and deploy open source within your ecosystem?
And, you know, you can kind of do it
in a number of different ways.
Organizations can look at it
and have their own bench, right?
If they have their own bench to support it
and they flex their technical muscle to say,
"hey we can do this.
We got this, we don't need any help."
That's good, right?
Organizations are paying for that bench, right?
They're paying for those resources.
Alternatively, most organizations are looking
for paid enterprise level support.
In fact, what we found in our cloud-native research
that 48% of respondents indicated
that they're looking for paid enterprise level support.
And then we also found that 24% of respondents indicate
that they're looking for some paid support,
but mostly non-paid community support.
So that means that their bench
is leveraging the community for that support.
And then we found that 18% are looking
for a pay as you go kind of support model.
Now with all that said, in my opinion,
you know, just in my assessment,
you're paying for it one way or the other.
You're either paying for it with your bench
or you're going to pay for it with, you know,
having a an organization that you, you know,
a vendor that supports you in that space.
When I talk to CIOs and I ask about their,
you know, number one challenge,
their number one challenge is modernization
and they run into the challenge of, you know,
keeping the wheels on the bus with the resources they have.
So to modernize usually brings on another set of projects
and another set of initiatives.
You mentioned digital transformation
at the beginning of the session here.
That's a big kind of push that monetization push.
The problem is you know, either they don't have resources
or they try to find or hire resources,
which is really hard to do these days.
And then the other side of it is
once you've hired those resources
it takes about nine to 12 months to come up to speed.
So the alternative is to work
with a service delivery partner in order to do that.
So many kind of directions and many approaches.
Again, I use the term it depends,
but it really does depend on the situation,
the configuration that your,
the organizations are trying to achieve here.
But research shows that they are looking for
that support and vendors to support them.
>> Definitely, and I think that it's not surprising
and I think, you know, it was OpenShift
doing over a billion in ARR last year is just crazy
and I think it shows that open has one as part of it.
And now I think, but people are looking also at how,
what's going on with the licensing
and what going on with open source licensing
and licensing in general
and trying to protect themselves from that.
And I think to your point, you're paying for it one way
or the other, either through the support contract or not.
And I think that's why it's been very, very interesting.
But, so hey, this has been great.
You know, I think we're going to do this
a couple more times at least.
You know, this is a lot of fun
and there's so much we didn't get to
and I know you have a lot of data
and we'll put the link to the data down below
to your cloud-native studies and the cloud series
that you and ESG and TechTarget do.
And everybody can go and check that out and find out.
It's always, you know, just a ton of fun to
riff with a friend and get to go into
some of this detail to help people understand
what's going on and really separate
the noise from the signal.
That's what we like to do here at "theCube"
is really help people understand that.
I really appreciate you coming on the "Analyst Angle"
and I look forward to the next time.
>> Thanks Rob.
It's been a pleasure.
>> Thank you.
And stay tuned for the next "Analyst Angle."
We'll bring you some breaking news on
and deep in-depth research that we continue to do.
Really, again, extracting the noise from the signal
and helping you understand how you can plan
your different projects in cloud-native, security,
sustainability is coming pretty soon.
Stay tuned and we'll be back.
(upbeat music)