The “Golden Ticket” for Cloud-Native Modernization

Hi, everyone. Welcome back to our day two coverage of SUSECON in Prague. What a great city for a conference.

A great city to visit. I hope you've been enjoying the coverage of last... Well, actually, this is the third day of coverage.

We started on Monday. My next guests, with an S, we're going to have a nice discussion. Let me introduce you to them.

First of all, on my far right, I've had the pleasure of interviewing before. It's Peter Smails. Peter is the SVP and GM for Cloud Native.

Correct. Yes, sir. All right, I got that right.

You nailed it. Peter, welcome. Thank you.

The title's kind of self-explanatory, but give people a little bit of a sense of what it really entails. Yeah. To your point, it's pretty self-descriptive, but I'm the GM, general manager, of Cloud Native for SUSE, which essentially means that I'm the one who wakes up every day worrying about our cloud native business from a product strategy, product direction, customer engagement, go to market, all that type of stuff.

So that would mean practically technologies and platforms like SUSE Virtualization, SUSE Rancher Prime, SUSE Suite, and all of the supporting components, security, observability, application collection, et cetera. So all of that stuff. And so where that plays contextually for anyone who's not familiar, SUSE's overall infra stack, the bottom is our OS layer.

So we have SLAS, right? So that's one core component. Then we've got our cloud native sort of orchestration layer.

That's kind of our universal orchestration layer. That's where Prime and Virtualization, all that stuff comes into play. And then we have solutions, like you probably will be talking to our AI team or our telco team or et cetera.

These are solution sets we build on top of our- On top of the stack ... pieces. So I'm the middle piece of the...

The team is the middle piece of the sandwich. Yeah, I was talking to Basil- Oh, cool ... " Yeah.

That's cloud native, and that's all it is. But cloud native itself, even before AI got a hold of it, cloud native has really grown. You hit it.

You got SUSE Virtualization. Yeah. You got Rancher Prime.

You got Rancher on the Edge, which is kind of a form of cloud native too, right? It's on that stack. Oh, absolutely.

You've got all the pieces that go into this now, including observability and security- Yeah ... and the GitOps. I mean, all, cloud native- Now it's making them all work in harmony to enable these solutions like SUSE AI.

That sit yet on top of that. That sit on top. Exactly right.

Exactly. Absolutely. Yep.

Let me introduce you to our next guest here. His name is Manuel. It's fine.

Close. We're going to call him Mano anyway. Yes.

But I wanted to get it right the first time. It's fine with that, too. Yeah.

And your last name? Samet. Samet.

Samet, yes. Mano, welcome. Tell us a little bit about yourself.

I am managing director of FIS ASP. We are a managed service provider with three own data centers in Germany, and we are part of the FIS group, which consistently drives SAP systems, where everything we do is about SAP systems, AI, hosting, strategy, and yeah, we are 900 employees in the company group. It's a nice size data center.

One of the interesting things we're finding about all of these AI data centers they're building is they don't have a lot of employees. The whole thing's automated, and they don't have a lot of people, and I'm sure we'll talk maybe about that a little bit. Before we jump into what I want to talk to, talk about your relationship, not your relationship personally, but your company's relationship with SUSE.

I think I know SUSE, our company knows SUSE even longer than I know the company. Really? Because, we are doing business with SUSE, I think for 23 years now.

Wow. And, we started using SLES. Really?

SUSE Linux Enterprise Server for SAP applications. Good. And that's where we came from.

And we are hosting about 1,500 SAP server systems based on SLES. Really? Yes.

That's quite a number of systems and complicated systems to be running. So we look at, you talked about layers, Peter, right? Yeah.

We have that operating system layer. Now, traditionally, before we even got into cloud native- Mm-hmm ... there was the virtualization layer.

And for, if you are on public cloud, you had a little more choice. Mm-hmm. Though that 90% of the people probably took what the default was.

Yeah. But for not in a public cloud, virtualization meant VMware. Check.

90 plus percent. For 20 years. 90 plus percent market share.

Yeah. And I'm not here to knock VMware or Broadcom or any of that, but what's happened is, as I think most of our audience knows is, as a result of licensing changes and so forth, people aren't necessarily changing because of money. Mm-hmm.

But it's giving them a pause to say, "Wait a second. Before I sign on for this, maybe now's a good time- Mm ... to look at options.

I don't want to be locked in to a kind of walled garden. I want to see if maybe there are cheaper options or less expensive options, more efficient options. " Mm.

" Right? All of these kinds of things. Peter- Yeah ...

I'm sure you, I know SUSE's senior because I just spoke to Werner. Yeah. But on top of this, though-They're also saying maybe this is a good time to modernize.

Yeah. Not just migrate from one virtualization to another, but maybe transform, modernize to a cloud native. Yeah, absolutely.

Right? And that's got to be the golden ticket for you. Golden ticket, I like that.

I was chatting with somebody earlier. Yeah, I'll put a finer point on what you said. People are moving more aggressively than that even.

" It's visceral. " This is why at the CFO, CEO level, this is a business critical imperative because it's just not like creep. This is let's go from perpetual to subscription licensing.

Bam. Let's completely change our bundling where it's bloated packages that are way too expensive and organizations lose any agency over component-level decision making. Right.

" They're not happy. They're angry about it. And so they've tightened up on compliance, so they're coming after you more aggressively on the compliance front, and they're locking you in.

On the one hand, you can admire, investors may love that strategy. Customers, not so much. So now to your second point.

So the first one, to your point about golden ticket, there is no amount of marketing in the universe that SUSE or any other vendor on the planet could do to create the tailwind and the opportunity that's being presented than what's happened from... It's an existential market shift. Which is cool, and certainly we're a player there.

To your second point about maybe this is a good time, it's interesting because we've been very transparent about this. Our objective isn't to be a like for like replacement V- Right. It's not a one for one.

" But if you have, if, to your point about modernization, if you're already in the process of modernizing, if you're thinking about modernizing, if you had a dream about modernizing, because everybody, 90% of organizations are already using containers and Kubernetes, so it's effectively everybody. So if you're doing that, if you're anywhere on that path, you got to talk to us, is kind of the mindset. And so there are multiple tips of the spear, if you will.

So some it's like, "I'm already doing some cloud native stuff. " Got it. Let's have that conversation.

For some people, it's they're not on a cloud native journey yet, but they desperately need to get off of VMware. And so what they'll do is phase one of their modernization will simply be eliminating dual licensing costs. Because if you think about what we can do, the financial implications are so significant.

You can migrate large numbers of VMs from the old way to the new way and eliminate your dual licensing costs and now have a simplified single control plane for VMs and containers. And I'll stop after this, but the other piece of this that's so fascinating is that even if you were saying, "I'll just stick with what I've got," because it's all bundled, what you end up getting is one thing that's going to help you with your VMs, the old way. You're getting another thing that's going to help you with your containers, the new way.

That's not a recipe for efficiency. No. So we're talking common control plane, eliminate your dual licensing costs, reduce your overall costs.

It's incredibly compelling. So I could talk all day. I'll shut up because I know you've got some thoughts, too, but that's my response to your question.

No, I know. Look, this is exactly what we've heard from multiple people. It's very much a you're going to take it and you're going to like it.

Right. And the proper response- You can speak to that like the- Is thank you, sir. May I have another?

Can I add something? Yeah, go. Because what you lost is that if you talk about innovation- Yeah ...

you don't talk about VMware at this time. Right. True.

They are the cozy hypervisor. Yeah. But they are not the innovator in the cloud native stack.

True. Very true. Excellent point.

And that made our decision easy that we could lose. You don't stay in the past. No.

You go forward. Well, you know what they say in the tech world, if you're standing still, you're dying. Yeah.

Right? So if you're not innovating, you're dying. That's the truth.

But look, we could get into the finances of the company that bought VMware. Right. And I will tell you, the hardware business has very cyclical revenue.

Software gave a nice even keel to even that out, and if they ride that revenue stream out, that evens out- Yeah ... their hardware cycles, and that might make Wall Street, as you said, very happy. It's a perfectly legitimate strategy.

It's not for us to question the strategy. No. It's not even our business.

He's crazy like a fox, that guy. Absolutely. It's created an opportunity.

It's created a problem for customers, and we're in the business of helping customers solve problems, so let's- Absolutely ... rock and roll. But Mano, I want to come back to you because from what you're saying, it sounds like you were on VMware and you have now, or are in the process of, or help me, tell me, you're migrating?

We are on VMware right now. Yes. But we're also on, Rancher Prime and SUSE Virtualization.

We are using Harvester, we are using SUSE AI, we are using KVM for SAP systems, but our main stack is still VMware, but we will get rid of it in the next year. So you're in the middle of that migration then. Migration and transition.

You're not running virtualization on top of... Now, let me ask you a question. Your VMware installsYou're running VMware on bare metal right to your app.

You're not running Kubernetes or containers or microservices. No microservices on VMware No. We're already running that on- So you're already running that on Ranch.

You didn't do it. What is it? Tanzu?

No, we did take a look into it, but it felt- Not ready for prime time ... not ready, not- Yeah ... the right way.

Yeah. Less innovative. No, because quite frankly, to your point, Peter, the only way you're going to have a unified thing over there is if you somehow integrated Tanzu into their- Right ...

into their virtualization. And again, not for us to- Ah, whatever ... who knows what they're doing?

Let's stop talking about- ... that company, though, and talk about this company. So you're looking...

Well, you're already moving to virtualization in Rancher. Makes Peter very happy. Let's look at the next piece of this, though.

What about AI? Oh, we're already hosting AI on Rancher AI. So you're using the AI?

Yes. We built a medical solution on it, where the doctor talks to the patient, we record this, send this to the AI, transcribe this, and send red or yellow flags back to the doctor. " It's fascinating.

And we help the doctor to ensure that the patient goes well again. Yeah. What about HIPAA?

Well, we don't have HIPAA in Germany . No. Hello.

That's hitting the blank stare look. But you have privacy. ISO 27001.

Right. Oh, right. Oh, yes.

So how- We did that ... how does that... You passed it.

Yes. You must have a really tight setup to do that. First of all, how do you get the doctors to work with computers?

They hate computers. They hate computers. Yes.

I know. I know. I know.

But the AI is totally integrated into the system. Okay. So they don't realize it.

So they just do- Do their thing ... what the doctors do, and it gets recorded. It's verbal, right?

It's just verbal. They talk. It's verbal.

They talk, right? Yeah, it's verbal. They kind of dictate, like in- You know, it's funny, I had a good friend of mine once...

Not once. He was a good friend of mine, owned a company, healthcare cybersecurity. Huh.

And he said this is the interesting thing, most hospitals have three networks. One is the regular IT network, like we know IT. One is more of an IoT network for the insulin pumps, the- Yeah, all the device stuff ...

all the devices. And then one's for the doctors, because they pay no attention to security, they do what the heck they want, they don't like working with it. You can't tell them what devices.

So you're saying this company sold cups and string. Well, no. Basically.

Basically, whatever the doctor wanted to use- Yeah ... was good. Right.

Yeah. All done white. Yeah.

Yeah. That's a hard way to lock down a system, though. I got to be honest with you.

Yeah. That's why we go software as a service with this application. So the doctor has just opened his browser and ready, steady, go.

Yeah. Talking, good. They're getting better.

That's beautiful. They're getting better. That's beautiful.

So look, I'm assuming, Peter, you were recently at Amsterdam for- For KubeCon ... or your team was for KubeCon. Yeah.

Yep. Big event for us, for sure. There's so much going on, as I indicated earlier.

It's more than just Kubernetes. Hmm. It's the service mesh.

It's observability. It's a lot of different pieces of this puzzle that we just don't see anymore, right? Hmm.

Or not that we don't see, we're seeing more of. Manu, what about in your business? As part of this cloud native, are you moving beyond just, let's say, Kubernetes to the other pieces of the stack?

We use every piece of the stack. Every piece. Every piece.

Every team in my company, every technical team, will use Kubernetes and the stack about it. My security team uses Susa security, the networking team uses observability, and everything. Yeah.

Oh, Riff, when you're done, I'll add to that. Because if you think about it, it speaks directly to the maturation or sort of the role that containers and Kubernetes now play. So, for example, let's use a Susa virtual example.

We talk about how, if they're on a modernization journey, great, we're perfect. Do this thing. We have customers that are like, "I just have to get off of VMware.

" Ready for that move. They're using Susa virtualization, and they barely even know they're using Kubernetes and containers. So the point is, cloud native is basically the control plane substrate for modern infrastructure.

Yeah. You have an OS layer, which is ubiquitous, and then you have a control plane substrate, which is, in our case, that's ultimately Susa. We are open infra for modern workloads.

And that control plane is almost exclusively driven by containers and Kubernetes. It's fun. It's cool.

Yeah, look, in my mind, it's the de facto standard, right? Whether- You and virtually everybody else. That's the cool thing.

Yeah. That's the world we're living in now. In your experience, Manu, and then I'll come back to you, Peter.

Cool. When shouldn't a customer modernize? When should they say, "Nope, that cloud native's not for me.

" If he wants to lose his business. Okay. Mohammed?

Good answer. Good answer. Then he should do this.

Ditto. I'm with him. You're with him.

Everyone should do it. Well, and truth is that, just looking at market data, like I said, north of 90% of organizations today are running Kubernetes and container-based workloads in production. Yeah.

So that doesn't equate to every single customer, but I think to put a slightly finer point, I don't think it's if. There is a when, though. And a very specific example of that is SAP, I think is interesting because you guys are big in the SAP space.

Yeah. So for example, we also, from a SUSE standpoint, we offer migration and modernization around just traditional SAP. SAP, workloads everywhere, one of the most dominant pieces of software in the history of software, does not certify on Kubernetes- Really?

containers. So what you do is, so therefore for those customers modern-- they're still technically modernizing, but what they're doing is they're just using KVM, SLAS and KVM. Right.

Not because of anything that we're talking about, but simply because that's where, as SAP, as an organization, paces their modernization overall. So the larger context picture there is you could have organizations where you have particular workloads that are highly regulated or something, or it's a legacy workload where the people that built the application are retired or not around anymore. We could have a whole discussion on sort of modernization strategy, which is a lot of our professional services business and that type of stuff, because it's not an if, it really is more of a when.

Right. And when could be five years, it could be 10 years, who knows? But- And I think one of the things that I think, like this SAP example, that's a perfect example of, well, Mohammed comes to the mountain or the mountain comes to Mohammed.

You got SAP, I'm too invested in SAP. I'm locked in. Yeah.

Which is not where you want to be, frankly. But if you're already locked in, sometimes it's hard to see your way out of that tunnel, right? Yep.

Anyway, guys, I'm looking at the people standing around here. I'm thinking we're about out of time. Yep.

You can't go home, but you can't stay here. Can't stay here. Exactly.

Got it. All right. You can check out- That's our hook ...

but you can never leave. Mano, first of all, congratulations. Thank you for coming on here.

Thank you very much. Good best of luck with FIS. Peter, man, always a pleasure.

Always fun chatting. Thank you. Hope to see you soon.