Amazon's Vogels says 'cost awareness is a lost art' as AWS launches optimization tools

Larry Dignan

Editor in Chief of Constellation Insights
Constellation Research

Larry Dignan is Editor in Chief of Constellation Insights at Constellation Research, where he leads editorial coverage focused on enterprise technology, digital transformation, and emerging trends shaping the future of business. He oversees research-driven news, analysis, interviews, and event coverage designed to help technology buyers and vendors navigate complex markets with clarity and context. ...

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"Cost awareness is a lost art. We need to regain that art," said Amazon CTO Dr. Werner Vogels, speaking at Amazon Web Services' re:Invent conference. AWS also launched a new tool to manage application resources within the AWS Management Console as well as CloudWatch Application Signals to automatically instrument applications.

Vogels talk revolved around cost optimization of compute resources and aligning business and technology decisions. The keynote, which used multiple lessons learned from building AWS services, focused on being a frugal systems architect. By focusing on costs and continual improvement, Vogels argued enterprises can be more sustainable, evolve more quickly and pay down technical debt.

The subtext of the talk also seems to indicate that AWS is leaning into its strengths of being a low-cost cloud provider. Enterprises have been optimizing cloud spending, consolidating vendors and focusing on efficiency. This optimization of cloud spending does not appear to be a passing fad.

As Vogels spoke, AWS launched Amazon CloudWatch Applications Signals in preview. The service automatically instruments applications to monitor latency, availability and performance. Amazon CloudWatch Applications Signals aggregates metrics, traces, logs, real user monitoring and puts together telemetry.

In addition, AWS announced the general availability of myApplications, which is part of the AWS Management Console. MyApplications provides a summary that analyzes costs, usage and resource usage across AWS.

Vogels argued that enterprises should be able to track costs throughout applications, web pages and data flows.  "In AWS, each of the resources that you've been using, comes with a total associated cost of every single one of the surfaces. We know the cost of the whole system," said Vogels.

Other key cost points from Vogels chat:

• Cost is a close proxy for sustainability. "We pay for each individual resource we're using, and this is a pretty good approximation to the resources that you've used," said Vogels, who added that builders need to architect systems for sustainability. "We want to be frugal in a way that these resources are sustainable."
• Cost is a non-functional requirement. Vogels said building systems boil down to design, measure, and optimize. "The most important thing here is that cost needs to be a nonfunctional requirement. If you think about non-essential requirements, you know, there's all these sorts of classical ones: security, compliance, performance, reliability. But the ones that you have to keep in mind at all times. Sustainability should be another one.

• Align business and technology decisions as well as costs and revenue models. "Make sure that your business issues and the technology decisions are in harmony with themselves," said Vogels. If business and technology are aligned, you should be able to grow revenue while optimizing costs.
• Pay off technical debt. To design systems that can evolve you will need to pay off technical debt. Like economic debt, the interest compounds and at some point, crushes you, said Vogels. "You and I are creating technical and economic debt," added Vogels, who said enterprises have to continually retire tech debt.

Vogels argued that enterprises will need to build cost aware architectures that are continually optimized.

Werner also talked a bit about developer productivity in the age of generative AI as well as SageMaker features. He said there's a new age of developer productivity ahead, which incidentally also plays into cost optimization, and elaborated in a blog. 

Constellation Research analyst Holger Mueller said:

"Long gone are the re:Invents when the Dr. Werner Vogels keynote had half of the announcements. The Amazon CTO has pivoted to developer and architecture best practices. Last year's key theme was all about moving to an event driven architecture (EDA) -- most roadmap items did not get delivered due to the focus on GenAI -- so this year was all about a focus on cost consciousness. At the same time it was up to Vogels to show where AWS will embed Q to help developers become more productive. Vogels balances the inherent fear of developers over AI replacing them with pointing out to the upside. Three product announcements made it to his keynote. Not bad for the cloud veteran, who is a developer favorite and maybe even an idol." 

Here's the week from the Constellation Research team at re:Invent.

• Amazon's Vogels says 'cost awareness is a lost art' as AWS launches optimization tools
• AWS, ServiceNow ink 5-year collaboration pact
• These overlooked AWS re:Invent launches could solve pain points
• AWS launches Amazon Q, makes its case to be your generative AI stack
• AWS Expands Zero-ETL Options, Adds AI Recommendations for DataZone
• AWS presses custom silicon edge with Graviton4, Trainium2 and Inferentia2
• AWS bets palm reading will come to an enterprise near you
• AWS Introduces Two Important Database Upgrades at Re:Invent 2023
• AWS launches Braket Direct with dedicated quantum computing instances, access to experts
• AWS re:Invent 2023: Perspectives for the CIO | Live Blog
• AWS, Salesforce expand partnership with Amazon Bedrock, Salesforce Data Cloud, AWS Marketplace integrations

Snowflake says demand stabilizing in better than expected Q3

Larry Dignan

Editor in Chief of Constellation Insights
Constellation Research

Larry Dignan is Editor in Chief of Constellation Insights at Constellation Research, where he leads editorial coverage focused on enterprise technology, digital transformation, and emerging trends shaping the future of business. He oversees research-driven news, analysis, interviews, and event coverage designed to help technology buyers and vendors navigate complex markets with clarity and context. ...

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Snowflake reported better-than-expected third quarter earnings and CEO Frank Slootman said the company sees "a broadly stabilizing macro environment."

The company reported a third quarter net loss of $214.25 million on revenue of $734.17 million, up 31.8% from a year ago. Non-GAAP earnings for the third quarter were 25 cents a share, compared to estimates of 16 cents a share.

As for the outlook, Snowflake said product revenue would be up 29% to 30% in the fourth quarter compared to a year ago. For fiscal 2024, Snowflake sees product revenue of $2.65 billion, up 37% from a year ago.

The company said it had 436 customers with trailing 12-month revenue of more than $1 million.

• Snowflake lays out AI managed service vision with Cortex

Salesforce delivers solid Q3, focuses on operating margins

Larry Dignan

Editor in Chief of Constellation Insights
Constellation Research

Larry Dignan is Editor in Chief of Constellation Insights at Constellation Research, where he leads editorial coverage focused on enterprise technology, digital transformation, and emerging trends shaping the future of business. He oversees research-driven news, analysis, interviews, and event coverage designed to help technology buyers and vendors navigate complex markets with clarity and context. ...

Read more

Salesforce is projecting fourth-quarter revenue growth of 10% after reporting better-than-expected third quarter earnings.

The company reported third-quarter earnings of $1.25 a share on revenue of $8.72 billion, up 11% from a year ago. Non-GAAP earnings for the quarter were $2.11.

Wall Street was expecting Salesforce to report third quarter earnings of $2.06 a share on revenue of $8.72 billion.

Salesforce CEO Marc Benioff said the company is "bringing CRM, data, AI and trust together in a single, integrated platform." CFO Amy Weaver said the company is maintaining its focus on operating margins. Salesforce projected fiscal 2024 operating margins of 14.5% (30.5% non-GAAP).

As for the outlook, Salesforce projected fourth quarter revenue of $9.18 billion to $9.23 billion, up 10% from a year ago. Non-GAAP earnings will be $2.25 a share to $2.26 a share in the fourth quarter.

• AWS, Salesforce expand partnership with Amazon Bedrock, Salesforce Data Cloud, AWS Marketplace integrations
• Salesforce launches Einstein Studio: What you need to know
• What Movies Get Wrong…and Salesforce Gets Right…About AI
• Salesforce launches AI Cloud, aims to be abstraction layer between corporate data, generative AI models

For fiscal 2024, revenue will be $34.75 billion to $34.8 billion, up 11% from a year ago. Non-GAAP operating margins will be 30.5% with non-GAAP earnings of $8.18 a share to $8.19 a share.

Speaking on the earnings call with analysts, Benioff said:

"We have 80% growth in deals more than $1 million. That is far exceeding our expectations, that we were able to pull together all of these different clouds into this kind of what we call a cocktail. The customers were wanting to buy Tableau, Slack, MuleSoft, the Data Cloud, Sales Cloud, the Service Cloud, all that we're able to build these big transactions."

Indeed, 9 out of the top 10 Salesforce deals in the quarter included six or more clouds.

Benioff also said that it added 1,000 Data Cloud customers in the quarter and ingested 6.4 trillion records. He also said Einstein GPT Copilot has performed well across the platform.

Internally, Salesforce has been able to use copilots to resolve more than 200,000 manual approvals this year and resolve employee related queries.

Other items:

• Benioff talked up MuleSoft as the way customers are connecting applications and data stores. He added that MuleSoft is becoming a key part of enabling Data Cloud.
• 17% of the Fortune 500 is using Einstein GPT Copilot.
• Weaver said:

"Companies are still really focused right now in this environment, on productivity, on automation, on time to value. You certainly see it from the CFO as my counterparts around the world. Real focus on every dollar that's being spent. We're now entering our sixth quarter of measured customer buying behavior and we're saying that this has been continuing recently. And that does reflect, particularly in areas like SMB, self-serve, create and close, you see this in professional services."

By the numbers for the third quarter:

• Sales Cloud revenue was $1.91 billion, up from $1.72 billion a year ago.
• Service Cloud revenue was $2.07 billion, up from $1.86 billion a year ago.
• Platform and other revenue were $1.686 billion, up from $1.51 billion.
• Marketing and Commerce Cloud revenue was $1.23 billion, up from $1.3 billion.
• Data revenue, including data analytics, Tableau and MuleSoft, was $1.24 billion, up from $1.02 billion. Data revenue was up 22% from a year ago.
• Americas revenue was $5.86 billion and remains the bulk of Salesforce's sales.

AWS, ServiceNow ink 5-year collaboration pact

Larry Dignan

Editor in Chief of Constellation Insights
Constellation Research

Larry Dignan is Editor in Chief of Constellation Insights at Constellation Research, where he leads editorial coverage focused on enterprise technology, digital transformation, and emerging trends shaping the future of business. He oversees research-driven news, analysis, interviews, and event coverage designed to help technology buyers and vendors navigate complex markets with clarity and context. ...

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ServiceNow applications will be available on Amazon Web Services Marketplace as part of a five-year strategic collaboration agreement between the two companies. ServiceNow and AWS will also co-develop AI business applications focused on industries.

The deal, which starts in early 2024, rhymes with AWS' pact with Salesforce. AWS is building out its AWS Marketplace by listing go-to SaaS providers. ServiceNow's applications and co-developed services will be hosted on AWS.

On the generative AI front, ServiceNow can give joint customers the ability to co-mingle its proprietary large language models with others offered via Amazon Bedrock. The two companies said they will focus on use cases in manufacturing, supply chain, call centers and cloud transformation.

ServiceNow reports strong Q3, ups outlook for 2023 | ServiceNow's latest Now Assist generative AI features highlight its strategy | ServiceNow CEO McDermott talks business transformation, generative AI, processes

Integrations planned by ServiceNow and AWS include:

• ServiceNow Customer Service Management (CSM) will be integrated with Amazon Connect to enhance workflows for case management. ServiceNow Now Assist and Amazon's AI and machine learning technologies can be used for sentiment analysis, conversation recaps and contextual data.
• The two companies will create a cloud center of excellence with the ServiceNow platform to identify workloads to move to AWS. ServiceNow's Technology Workflows will recommend operational workflows.
• AWS and ServiceNow will develop an automotive manufacturing platform for building, maintenance and repair data throughout the vehicle lifecycle. The two companies will combine ServiceNow's workflows and AWS data lakes. This platform will be developed with a "leading automotive manufacturer."
• ServiceNow said it will integrate the Now Platform with AWS Supply Chain to create a "forward looking" supply chain management set of tools for forecasting, inventory, sustainability, and automation.

Here's the week from the Constellation Research team at re:Invent.

• These overlooked AWS re:Invent launches could solve pain points
• AWS launches Amazon Q, makes its case to be your generative AI stack
• AWS Expands Zero-ETL Options, Adds AI Recommendations for DataZone
• AWS presses custom silicon edge with Graviton4, Trainium2 and Inferentia2
• AWS bets palm reading will come to an enterprise near you
• AWS Introduces Two Important Database Upgrades at Re:Invent 2023
• AWS launches Braket Direct with dedicated quantum computing instances, access to experts
• AWS re:Invent 2023: Perspectives for the CIO | Live Blog
• AWS, Salesforce expand partnership with Amazon Bedrock, Salesforce Data Cloud, AWS Marketplace integrations

These overlooked AWS re:Invent launches could solve pain points

Larry Dignan

Editor in Chief of Constellation Insights
Constellation Research

Larry Dignan is Editor in Chief of Constellation Insights at Constellation Research, where he leads editorial coverage focused on enterprise technology, digital transformation, and emerging trends shaping the future of business. He oversees research-driven news, analysis, interviews, and event coverage designed to help technology buyers and vendors navigate complex markets with clarity and context. ...

Read more

AWS re:Invent is an overwhelming barrage of features, services and launches that fly by so fast you can miss a lot of things that could drive real business value.

To that end, here are a some of the announcements that team Constellation Research thought were interesting even if they didn't get all the attention that Amazon Q, SageMaker, Graviton, Trainium and Inferentia get. These items were dropped by AWS CEO Adam Selipsky in passing while others hit the wires ahead of the lead keynote.

Data sovereignty requirements. Before AWS re:Invent kicked off at scale, AWS outlined AWS Control Tower, a set of 65 controls to meet data sovereignty requirements, which requires enterprises to control where data resides and flows.  AWS Control Tower offers a consolidated view of the controls enabled, your cmpliance status, and controls evidence across your multiple accounts. 

Constellation Research analyst Dion Hinchcliffe said:

"This announcement is very significant for large enterprises operating across different countries. Cloud is a real challenge for large multinational organizations. These new controls are vital for them to stay in compliance with data residency and other requirements. The support for multi-account controls is particularly noteworthy."

More from re:Invent:

• AWS launches Amazon Q, makes its case to be your generative AI stack
• AWS Expands Zero-ETL Options, Adds AI Recommendations for DataZone
• AWS presses custom silicon edge with Graviton4, Trainium2 and Inferentia2
• AWS bets palm reading will come to an enterprise near you
• AWS Introduces Two Important Database Upgrades at Re:Invent 2023
• AWS launches Braket Direct with dedicated quantum computing instances, access to experts
• AWS re:Invent 2023: Perspectives for the CIO | Live Blog
• AWS, Salesforce expand partnership with Amazon Bedrock, Salesforce Data Cloud, AWS Marketplace integrations

Zero-ETL integrations. Selipsky quipped that the audience winced in unison when he said ETL (extract, transform and load), but in the future zero-ETL will be a reality. ETL is a major enterprise pain point and while zero-ETL integrations will garner yawns over headlines what AWS announced could be promising for enterprises. I'm betting that there enough enterprise buyers that'll care about zero ETL to throw you a few links about integrations across AWS data stores.

Constellation Research analyst Doug Henschen knows the ETL pain. He said:

"The idea of Zero-ETL is compelling because it promises considerable savings in time, effort and administrative headaches over ETL development work. It promotes low-latency insight while also reducing ETL processing and development costs. The Zero-ETL service will clearly introduce its own costs, but the time and labor savings are compelling. As for the DynamoDB to OpenSearch integration, this will enable data from massive, customer-facing DynamoDB-based transactional deployments to be quickly available to OpenSearch full-text search, fuzzy search, auto-complete, and vector search for machine learning (ML) capabilities. Talking to AWS executives it’s pretty clear a future step might be using the Zero-ETL capability to do reverse ETL from Redshift back into operational databases such as the various flavors of Aurora, RDS and DynamoDB."

Amazon DataZone. Like ETL, data cataloging isn't a lot of fun either. Anyone in the data trenches knows that it's difficult to provide context around organizational data. The process of data cataloguing matters and anything that cuts down on the labor will be welcomed by enterprises.

Henschen, who penned a report on the importance of data cataloging, added:

"The use of ML/AI for augmented cataloging is pervasive among metadata management, cataloging and governance platforms, with examples including Alation, Collibra, Microsoft Purview and Google Dataplex. What's novel here is application of GenAI, which is an obvious next step that multiple vendors are either previewing or adding to their roadmaps. Given that everything is in preview, it's hard to say whether anybody has an edge in using GenAI at this point. DataZone is in the early days of its adoption by AWS customers, so anything it can do to remove friction from using the service will help to promote wider adoption." 

Amazon Q Code Transformation. This announcement was dropped during the keynote but may have been lost. Amazon Q, a generative AI assistant that runs horizontally across AWS' portfolio, can be used to upgrade Java applications quickly. Amazon Q Code Transformation will analyze existing code, generate a transformation plan and complete tasks. Given how much enterprises need to update and transform code, Amazon Q Code Transformation is worth a look. In a blog post, AWS said:

"Previously, developers could spend two to three days upgrading each application. Our internal testing shows that the transformation capability can upgrade an application in minutes compared to the days or weeks typically required for manual upgrades, freeing up time to focus on new business requirements. For example, an internal Amazon team of five people successfully upgraded one thousand production applications from Java 8 to 17 in 2 days. It took, on average, 10 minutes to upgrade applications, and the longest one took less than an hour."

Amazon launches WorkSpaces Thin Client. This announcement received some press play but felt very retro. Thin clients?!? The economics of thin clients have made sense for a while. Adoption has been another story. WorkSpaces Thin Client will cost $195, be centrally managed and give access to Amazon WorkSpaces, WorkSpaces Web or Amazon AppStream 2.0, which provides wider access to applications. Thin clients solve a pain point and it'll be interesting to see if AWS gets traction.

Amazon EC2 high memory U7i instances for in-memory databases. These instances are in preview and designed to support large, in-memory databases including SAP HANA, Oracle, and SQL Server. Given that many enterprises are moving to SAP HANA, these instances are worth a look.

HPE sees Q4 strength in AI, edge, high performance computing

Larry Dignan

Editor in Chief of Constellation Insights
Constellation Research

Larry Dignan is Editor in Chief of Constellation Insights at Constellation Research, where he leads editorial coverage focused on enterprise technology, digital transformation, and emerging trends shaping the future of business. He oversees research-driven news, analysis, interviews, and event coverage designed to help technology buyers and vendors navigate complex markets with clarity and context. ...

Read more

Hewlett Packard Enterprise saw strong intelligent edge and high-performance computing and AI revenue growth  in the fourth quarter, but its legacy compute and storage businesses struggled.

In the fourth quarter, HPE reported earnings of 49 cents a share on revenue of $7.4 billion, down 7% from a year ago. Non-GAAP earnings for the fourth quarter were 52 cents a share. Wall Street was expecting fourth quarter earnings of 50 cents a share on revenue of $7.55 billion.

For fiscal 2023, HPE delivered earnings of $1.54 a share on revenue of $29.1 billion, up 2% from a year ago. Non-GAAP earnings of $2.15 a share for fiscal 2023 were at the high range of guidance given at HPE's annual analyst meeting in October.

HPE CEO Antonio Neri said: "As we continue to capitalize on growing market opportunities – particularly as customer interest in AI continues to explode – I am confident in our ability to deliver substantial returns to our shareholders."

"CFO Jeremy Cox said HPE was seeing "promising indicators of continued demand in the areas of the market we are prioritizing, especially in AI."

• HPE bets AI, edge, supercomputing workloads will drive growth

As for the outlook, HPE said first quarter revenue will be between $6.9 billion and $7.3 billion and reiterated fiscal 2024 sales growth between 2% to 4% in constant currency. First quarter non-GAAP earnings will be in the range of 42 cents a share to 50 cents a share.

Fiscal 2024 non-GAAP earnings will be between $1.82 a share to $2.02 a share.

HPE also reiterated annual recurring revenue growth of 35% to 45% from fiscal 2022 to fiscal 2026.

Workday Q3 shows strength, raises outlook

Larry Dignan

Editor in Chief of Constellation Insights
Constellation Research

Larry Dignan is Editor in Chief of Constellation Insights at Constellation Research, where he leads editorial coverage focused on enterprise technology, digital transformation, and emerging trends shaping the future of business. He oversees research-driven news, analysis, interviews, and event coverage designed to help technology buyers and vendors navigate complex markets with clarity and context. ...

Read more

Workday reported better-than-expected third quarter earnings and raised its outlook for the fiscal year.

The cloud HR and finance application company reported third quarter earnings of 43 cents a share on revenue of $1.87 billion, up 16.7% from a year ago. Subscription revenue for the quarter was up 18.1% from a year ago. Non-GAAP earnings were $1.53 a share.

Wall Street was expecting Workday to report third quarter non-GAAP earnings of $1.41 a share on revenue of $1.85 billion.

Carl Eschenbach, co-CEO of Workday, said the company was seeing momentum from "AI innovation, strength in full platform deals, expanding partner ecosystem, and international growth." Aneel Bhusri, co-CEO of Workday, said the company's strategy to build AI into its core products is resonating with customers.

Workday's approach to generative AI revolves around building it into its core products instead of going the add-on route that has been popular with vendors. Workday passed the 5,000 core HCM customers in the third quarter. Company executives say Workday is playing the long game and aiming to take advantage as enterprises move to consolidate vendors. 

On a conference call with analysts, Eschenbach said:

"Generative AI is becoming a business imperative. As a trusted partner and a market leader with over 65 million users under contract we can uniquely drive efficiencies and improve the employee experience. What we are doing and not just saying is resonating with our customers. Simply put, our value proposition has never been so relevant and powerful."

As for the outlook, Workday projected fiscal 2024 subscription revenue of $6.598 billion, up 19% from a year ago. Non-GAAP operating margins will come in at 23.8%, which is higher than expectations.

Bhusri said:

"We're infusing generative AI into our platform is through our investment in conversational AI. While we are still in the exploratory phase with this technology. We believe conversational AI will fundamentally change how users interact with Workday. By enabling them to easily surface information they need and interact with data through simple conversation. We're also leveraging generative AI to create a conversational experience for Workday Adaptive Planning customers. The use of conversational text will simplify the process of surfacing key planning insights. Enabling users to make quicker, more strategic decisions about their businesses."

Eschenbach had some interesting comments on how customers are thinking about AI and factoring it into their evaluations. 

At this point, I don't think people are making decisions yet, just purely on AI. I think it's something that every customer looks at to make sure that they're going to be covered with a new deployment or a customer knowing that Workday has them in a strong place, but they're still looking first and foremost at running their business and moving off of crappy legacy applications into the cloud. And we're unmatched in that category. And then when we add the AI stuff, I think it just checks that AI box.

But, I would say that despite all the hype, it's still in the early days of actual large scale deployments of AI in HR and finance, we're ready."

More:

• Workday lays out growth plans through fiscal 2027: Here are the takeaways