I listened to the analyst session from June 11 where this question is addressed by Kramer who was formerly with Tableau. Scroll to the 45 min mark.
https://cdn.digitalservices.online/alteryx/
My take - right now AYX focus is Fortune 2000 and they have no issues with having a server to hold data. As she says the server is hooked to cloud through nodes so they can get data in the cloud too. But right now they don’t see a need for a cloud only solution.
In contrast Talend sells (and in fact specializes in) cloud only ETL. One could actually go that way…
Understand the computing efficiency issue, and new platforms create opportunity for disruption. I don’t see the cloud titans putting out product that is better than what Talend offers and certainly not what Alteryx offers. In fact that is why both are listed as high risk take out companies. One cloud, the other not so much.
Tinker
Point being that just because the term is often misused, that doesn’t make the actual definition the misuse. SQL databases is often misused for relational databases. That doesn’t make it the correct term. SaaS is often misused to equate to cloud delivery, but that doesn’t make it correct. With relational databases, one can use SQL to retrieve data and most vendors do, but not all vendors. With SaaS, most vendors use cloud delivery, but it is not a requirement.
I don’t know whether AYX does or does not use a subscription licensing model, but your discussion is about whether or not they do or should have cloud delivery. Why not just say that instead of confusing it with the licensing model?
I think the key question here is where is the data. I am reminded of the Hybrid Data Pipeline product from Progress, which is designed to take data from anywhere and bring it together for local analysis. For actual display and the like it will feed Tableau and similar products. But, the real point is that it has connectors for many dominant cloud products like Salesforce plus connectors that allow SQL retrieval from non-relational cloud data sources like Hadoop plus connectors for on-prem data. The idea is to centralize access to all the desired sources, define relationships and rules, and thus provide an instantly updateable “view” of the combined data for analysis or feeding other processes.
If Alteryx has similar “connectors” for cloud data, there may be no need for it to run in the cloud since the combining and analysis and display is all going to happen locally anyway.
Easy compare if anybody is still confused.
AYX is subscription but not SaaS.
TTD is SaaS but not subscription.
Mongo a little of both. Some Mongodb Enterprise is subscription but not SaaS, some is both.
Atlas is SaaS but a kind of hybrid subscription model where customers subscribe to a certain contract of minimum usage and then get billed in arrears, although they also have a small number of customers that pay a year in advance.
I’m going to ruffle some feathers here. WHAT’S THE FREAKING POINT? Things do not fall into nice, simple, well-defined buckets. Anyone want to argue whether the Intel x86 processor is still a CISC architecture or whether it has morphed into RISC? Well, you can’t, because it’s both. The well-defined buckets have melted into each other. Get my point? We may as well argue if duck billed platypus is a mammal even though it lays eggs, or is it a bird without feathers and with mammary glands? Who cares if AYX is really SaaS or just some hybrid of it? Anyone hear of the True Scotsman Fallacy?
Is AYX growing fast or not? Is that growth going to continue? Should I stay invested or not? Sometimes I think this board has become way too focused on SaaS.
Rant off.
Respectfully, I disagree. I believe the business model and what the company actually produces and sells and how they recognize revenue are very important for understanding the market, opportunity, deficiencies, advantages, and more. How the product is packaged, sold, and consumed is part of understanding that.
This all has impacts on market presence, pricing power, competition, and most importantly gross profit.
I agree that in the end what matters is the numbers. In the case of Alteryx, they are outstanding. And this discussion has revealed that they probably have many levers yet to pull. Many ways to continue that outstanding growth by targeting different use cases and IT strategies by providing their product in a different consumption model. If and when that becomes necessary.
I think it’s very important to analyze how Atlas or TTD or TWLO or ZS or whomever recognizes revenue and what the impacts are for the cost of revenue. You know it’s important to know that ZScaler runs its platform on its own 100+ data centers. And how running their own data centers is expensive up front but as more customers come on board and revenue increases, that cost gets spread out and the percentage of revenue that it costs to run those data centers goes down, and Gross Margins go up. More profit.
Darth
Muji - isnt SPLK trying to address this… building cloud / SAAS / subscription for data analytics and management? And as Tinker said, TLND offering that solution?
And neither of them are getting respect from the street (nor delivering level of performance) as AYX does.
So the question is - is AYX really missing something or it is just taking right approach for the time?
In either case, I agree that cloud based SAAS / Subscription is a mandatory product from someone like AYX and not offering them puts them at risk of being disrupted by someone else…
We know from many companies now that anyone building cloud native, grounds up solution ends up having upper hand than someone starting from enterprise / on-prem background.
So yes, it is valid concern - just may not be the one to worry about for next few quarters?
nilvest
Respectfully, I disagree. I believe the business model and what the company actually produces and sells and how they recognize revenue are very important…
I read the rant as pushback against getting stuck on terminology. And I agree. I’ve had trouble following the terminology here, and I think some of it is incorrect. You said “TTD is SaaS but not subscription.” When I Google “SaaS” I get: a method of software delivery and licensing in which software is accessed online via a subscription, rather than bought and installed on individual computers.
But who cares whether the term is correct? The fact is that TTD charges ad agencies (I think a 20% fee?) to use their platform to buy ads programmatically. This is almost recurring as agencies love it and are likely to keep using it…but it’s not as recurring as subscription revenue. A short description like that helps, where (to me) the labels just confuse.
So (in my head) I boiled down Muji’s original post to his statement: But then, why isn’t Alteryx offering a managed hosting service akin to Atlas? And I scratched my head. Why would you want customers to upload their data to an Alteryx server? I don’t see how it’s anything like a Mongo database on Atlas. The data Alteryx analyzes isn’t “Alteryx data.” It’s the company’s payroll data…and accounting data…and CRM data…etc, etc. According to AYX’s CEO, Our customers have told us for years that we need to be hybrid between on prem and cloud…and support any persistence layer and any consumption layer. Why would you want them to muddy the waters and potentially turn off customers and/or lengthen sales cycles? Customers are willing to pay by the head to use AYX. What does it matter how the software is deployed?
Bear
I had to look up the “No True Scotsman” Fallacy. This video was helpful:
https://www.youtube.com/watch?v=5zzSqL–d_I
Enjoy,
Brian
I’m going to ruffle some feathers here. WHAT’S THE FREAKING POINT? Things do not fall into nice, simple, well-defined buckets.
Consider it ruffled.
Who cares if AYX is really SaaS or just some hybrid of it
Answer: NO ONE. You (and others) are getting way too hung up on the SaaS terminology lead-in (and in particular the hijacking from one poster determined to prove the term is about licensing only, which is VERY WRONG and deserved correction) and not the entire rest of my post as to why I think that the lack of cloud-enabled tools in their platform is important. THE POINT IS SCALE. Scale of their platform’s ML and of what a customer can do on it, the amount of data a user can process, and the complexity of ML models it trains or runs through.
See the entire latter half of my first post, mostly this part:
- They are limiting the scale of what a single server can handle, in terms of data load. (Vertical scaling can only go so far. Cloud SaaS architecture would allow for horizontal scaling.)
- This puts the onus of the compute and memory costs (the major factors in analytics work) on the customer, to purchase in advance.
- This doesn’t let the customer scale up as needed, either.
- I think this leaves them more open to being disrupted by SaaS services that could provide a similar ETL and analytics platform that scales.
- It may also may be limiting their potential market by being so Windows-focused with their applications - though this is likely not a bad decision with their market (likely ~80% of enterprise companies are on Windows), but many companies are Mac-focused (design shops, software developers), and more and more companies are mobile-focused or tablet driven (restaurants, retail).
Proximity of data is something that would need addressing based on these decisions if they were to move pieces/parts of their platform to SaaS. My points about it (w/ Mary Meeker’s slides) were just that more and more data is already in the cloud, so for proximity, customers are ALREADY putting Alteryx Server in cloud instances on their own in AWS and Azure, so why shouldn’t AYX help better provide that?
In answer to Saul’s post about bringing this up to AYX directly, most certainly they have discussed this all internally already at least with upper mgmt, C suite and BoD. (They are making so many right moves they can’t just be ignoring it.) But I will take you up on the challenge and do so, Saul. But unlike some here, I have never gotten much of any response from IR departments.
Regardless of these limits, AYX is doing fantastically well. But they ARE limits, a single Windows server can only do so much running Alteryx Server. AYX clearly cares about this topic, with their recent acquisition of ClearStory and their Spark prowess (in-mem analytical package that runs on Hadoop clusters), so that Alteryx platform can run side-by-side with Hadoop/Spark. But I as a shareholder with knowledge of the industry think they can do more. I would like to see AYX make more moves in this direction, and earlier outlined some easy-to-see ones from the outside looking in.
I think this is a highly relevant discussion to the future of AYX and how much farther they have to run, and I have gained a lot from it (in particular the bits about company’s prior comments on cloud and proximity of data). If those hung up on the word SaaS or its description don’t want to discuss that, instead of posting your whines just move on and hit Next Thread already.
-m
And I scratched my head. Why would you want customers to upload their data to an Alteryx server? I don’t see how it’s anything like a Mongo database on Atlas. The data Alteryx analyzes isn’t “Alteryx data.” It’s the company’s payroll data…and accounting data…and CRM data…etc, etc.
Bear,
My Atlas comparison wasn’t about treating Alteryx as a data store – I meant that it is a server-side package that AYX could provide managed hosting of for its users, akin to what MDB does with Atlas (hosting MongoDB for users as the experts-on-call, simplifying the amount of IT expertise needed). Probably a bad company to use for the example if it made you think I was calling Alteryx Server a data store.
I just wrote about this a bit in the prior post but there I focused on scale. Here let’s talk about the proximity to data issue. You are not factoring in how proximity to the data works both ways. Thus far proximity has typically meant near to the on-premise data, but more and more companies have many or even all of their datasets in the cloud. There will be a tipping point PER COMPANY as to how much data is read local and how much data is read from cloud, and the cost balance for transfer rates will determine where Alteryx Server should lie. Your point about Alteryx Server not being a data store is correct - but the closer it lives to the data being analyzed, the faster/cheaper it becomes.
Let me amend your statement with today’s enterprise reality, and see if it changes your perspective…
EXAMPLE 1:
It’s the company’s payroll data [in local Oracle db]…and accounting data [in a local Oracle db] …and CRM data [IN SALESFORCE]…etc, etc.
So in that particular case, if the on-prem account data is massively larger than the other cloud-based datasets, then it makes perfect sense to have the Alteryx Server be on-premise.
EXAMPLE 2 (expanding their datasets):
It’s the company’s payroll data [NOW IN WORKDAY]…and accounting data [in a local Oracle db] …and CRM data [IN SALESFORCE]…and ADDING NEW DATASETS IN Marketing campaign data [IN MARKETO] and advertising pricing data [IN TTD] and company event data [IN CVENT] and travel data [IN CONCUR].
Here suddenly the balance shifts as the company then moved Payroll to a SaaS service, and added in a bunch more data sets from other SaaS services. Now perhaps 2/3+ of the data volume is data already in the cloud. At some point the company will decide that they shouldn’t run Alteryx Server on-prem but instead move it to a hosted cloud instance.
And this isn’t factoring in that some companies don’t run any software on-prem already, but instead rely solely on SaaS (assuredly an Okta customer in that case!). Suddenly they would need to pull all the data from the cloud onto on-prem to analyze it into Alteryx Server if they ran it local. In this case they would certainly only be using Alteryx Server in the cloud as a self-managed instance (the only option).
Start to make more sense why a managed cloud-instance of Alteryx Server might be useful (my EASY suggestion), instead of the customer having to put up and self-manage an instance? Hell, I bet there is already a consulting company just doing that. Many customers are opting to start running Alteryx Server on their own Azure or AWS Windows VM, as they don’t need to be pulling all the cloud data to on-premise. They are going to flip the scenario and start pulling their on-premise data (if any) up to the Azure/AWS instance for processing, perhaps into AWS S3 or Azure Blob first for easier ingestion. [Blob is a horrible name for a product but makes the dev nerds happy as that is what blocks of raw data are called.]
Hope that helps put the discussion on proximity in better perspective.
-muji
long AYX
Why would you want customers to upload their data to an Alteryx server?
With SaaS uploading data to the cloud is incidental. As a subscriber you fire up AYX in your browser and you crunch your data and you don’t care where the crunching happens! The big benefit is not having a server, backups, emergency generators, and an expensive (and often prickly) priesthood to take care of it all.
Old style web hosting is not called SaaS but that’s what it is. For 20 years I have not worried about new generations of chips, software upgrades, hacker attacks, blackouts, backhoes cutting optic fibers, and god knows what else, for a measly $35 a month! What started as a shared server has acquired an off-site backup, an off-site emergency server, increase in memory allocation and bandwidth all at no increase in price. And a great help desk to boot.
SaaS means that you outsource all that pain in the butt!
Denny Schlesinger
To be sure, some of the data may already be in the cloud … but not necessarily the same cloud. E.g., if the company is using SalesForce, that data is in the cloud, but it is a different cloud than their cloud-based ERP system, for example. So, if one has that and perhaps an on-prem payroll system, where is the right place to put the analysis? This is the point of Hybrid Data Pipeline, as cited. The data can be lots of places, cloud or local, and can be in many different technologies, but the combining and presentation of that data happens local to the data scientist.
Now perhaps 2/3+ of the data volume is data already in the cloud.
Yes, but on 6 different servers, not all in one place. Where is the right place to install Alteryx? And yet, to be useful, every one of those cloud data sources has to be connected to the company, i.e., all of the data is locally available.
I think the key here is that Alteryx is like Excel, in that Apple cannot even give Numbers away because everyone needs to use Excel as it is what everyone’s processes are built on. Alteryx is the same way.
Therefore, it will take a lot for some new “disruptive” cloud native competitor to take marketshare, but it could happen. Alteryx has little real competition at the moment so they are behaving like a software company in such a competitive situation and that is maximizing their economic returns even if they are not completely satisfying the customer. They can get away with it.
I think we will see this change if Alteryx sales people start bumping into customers who want cloud first and who are tired of managing their own infrastructure unnecessarily. Given that Alteryx prides itself on using its own software to know its customers better than anyone, one has to assume Alteryx will have the information necessary when it becomes necessary to move to the cloud to cut off any up and coming interloper.
It is a great strategy, the only risk is if their response to any such interloper is too little too late. One has to have confidence Alteryx will come through when the time comes. We have no information otherwise with Alteryx as we only know what they tell us.
But take away is that Alteryx will be difficult to disrupt and if the disruption comes, Alteryx is becoming so embedded in processes that they will not need to be the first mover in doing so. They will simply need to have a response that is good enough. Customers will stick with what has become their enterprise standard (like Excel) with such a response.
If Alteryx was in a more competitive environment we would probably have seen a cloud first, or hybrid first product long ago.
Tinker
Tinker, I think you are missing the point that the analysis is occurring local to the company, but the data can be all over the place. Even if every app that a company uses is in the cloud somewhere, that can easily mean that the data is in half a dozen different servers, none of which have anything to do with one another. But, every one of those data sources is connected to the company’s local networks since otherwise how would they update or use the data. Analysis of data in one subsystem might well occur in the server where that data is housed … that would be efficient. But, it is likely that the bulk of that analysis is using the tools provided by the vendor who provides the software using that particular data. If one wants to combine data from subsystems, e.g., CRM with ERP with some marketing data, the logical place for that to happen is local to the company where there are connections to all the relevant data sources.
Muji,
Dean Stocker addresses the cloud issue more in that analyst video that I linked in my last post. It seemed to make sense. You may get more out of it. Worth a listen starting at around the 1 hour mark, basically the last 10 min of the presentation.
Many customers are opting to start running Alteryx Server on their own Azure or AWS Windows VM, as they don’t need to be pulling all the cloud data to on-premise.
That seems infinitely better than a solution hosted by Alteryx, right? Much less moving of data to do, I (not a techie) would think. Am I wrong?
Bear
This is a great thread and I have enjoyed the spirited debate. Just to chime in, I would like to underscore the comment by tamhas, and refer back to the comments from the last earnings call on May 1:
“According to a recent survey by IDC commissioned by Alteryx, a typical data process involves an average of six disparate data sources, 40 million rows of data and seven different output. Despite increases in innovation data and analytic processes have become more complex not less.”
Also as a reference, the comments from the same call on the ClearStory acquisition, a small($20M)but meaningful signal on the internal focus at AYX.
If I was AYX, and I am focused on Data Scientist/Analyst community, and the rise of the CDO role as a trend - both of which are aggressively growing in the Global 2000 space - why would I want to pivot and shift my focus to integrating and operating a customer’s data from an average of 6 different sources, and then seven different outputs? What is the true gain or TAM expansion from hosting and operating their expanding product list? I instantly have to deal with security, performance complaints, networking, integrations and cloud hosting in multiple vendors. For what?
ClearStory has them diving into the unstructured data area, arguably the largest growing data source for Global 2000 customers. This also dovetails (my opinion) nicely with Connect/Promote. This directly makes Alteryx more attractive to the Data Analyst/Scientist space.
I am a 10%+ port holder of AYX. I would encourage anyone with a large holding to socialize with a Data Scientist. They abhor cleaning and prepping data. They want to skip that and get to the analysis phase and drive value for their orgs. The data prep and cleanup is the dirty part of their job. I see AYX focusing on how to reduce the waste of this data prep stage and empower product users to get straight to analysis. This is specifically mentioned frequently by AYX execs and their engineering team.
If AYX shifted to cloud hosting of their expanded platform, they instantly shift engineering focus, sales strategy changes, margins are affected. They have to then focus on (at least) the Big 3 cloud providers, who all have their significant quirks. That is a lot of change for a young company to absorb.
As a shareholder, I would prefer they stay in their current lane and make strong moves that fit their overall strategy. Let’s see where customers and the cloud evolution take this. Customers will bring their data to public cloud hosting themselves, and AYX is suited to go along for that journey. I don’t see the need for them to be the disruptor of that right now, and shift the focus away from their current growth.