Red Hat Summit 2024 | João Couto | Microsoft

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João Couto

EMEA Vice President and COO, Cloud Commercial Solutions

Microsoft

Collaboration at the cloud’s edge: How Microsoft and Red Hat are redefining open-source integration

Technology alliances aren’t new in enterprise technology. However, Microsoft Corp. and Red Hat Inc. have forged an unlikely partnership set to reshape the landscape of cloud computing and open-source technology.“First, these are two industry leaders worldwide,” said João Couto (pictured), EMEA vice president and chief operating officer of cloud commercial solutions at Microsoft. “If you think about the Fortune 500 customers, as an example, 95% of them use Microsoft technology and 90% of them use Red Hat solutions. So, it makes a ton of sense for us to collaborate and deliver more value to our customers

play_circle_outline The Power of Collaboration: Red Hat and Microsoft Join Forces in Open Source and GitHub Acquisition

play_circle_outline Maximizing Security and Flexibility: A Seamless Integration of Red Hat and Microsoft Technologies with Azure

play_circle_outline Support and technical teams from both Red Hat and Microsoft working together

play_circle_outline Fostering innovation through open source and co-creation in the partnership

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João Couto | Microsoft

João Couto

EMEA Vice President and COO, Cloud Commercial Solutions Microsoft

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Rebecca Knight

>> Good afternoon everyone, and welcome back to theCUBE's live coverage of the Red Hat Summit here in the Mile-High City, Denver, Colorado. I'm your host, Rebecca Knight, sitting alongside my co-host and analyst, Paul Gillin. Thanks so much for being here with me today. Paul.

Paul Gillin

>> Pleasure to be here, Rebecca. This is an exciting session we're about to have because I'm old enough to remember when having a Microsoft executive appear at a Red Hat event would've been unthinkable.

Rebecca Knight

>> Right.

Paul Gillin

>> And it really shows how much this industry has changed.

Rebecca Knight

>> It really has. The partnerships, the ecosystem. And so this is great to introduce our next guest. He is Zhao Kotou, the Vice President and COO of commercial solutions for EMEA at Microsoft. Thank you so much for coming on the show.

Paul Gillin

>> Thank you very much, Rebecca. Thank you, Paul. Looking forward to it.

Rebecca Knight

>> So you're here today to talk about the strategic partnership between Red Hat and Microsoft that brings together these two industry leaders. Tell our viewers a little bit about this partnership. Just give us a broad overview.

>> It's a very good question. Look, first, these are two industry leaders worldwide. So if you think about the Fortune 500 customers, as an example, 95% of them use Microsoft technology. 90% of them use Red Hat Solutions as well. So it makes a ton of sense for us to collaborate and deliver more value to our customers. In this context, we have also been working very diligently together to promote open source. So it's not like something completely weird to do. Microsoft has been very, very keen to embrace open source. We are one of the big sponsors of the Open Source Foundation. We have been working very closely and even opening up our own code to open source. We have acquired also GitHub, which is also one of the largest repositories of open source worldwide. And in that context also it makes a lot of sense to work together with Red Hat. So what we have been doing so far is making sure that we are co-developing solutions together with Red Hat and making these solutions available to our customers, making it easy for customers to transform, to modernize their estates of Red Hat technology, running on-prem and moving them into cloud using our own Microsoft cloud technology, but Red Hat solutions in a very, very seamless integrated way. And also leveraging all the entire portfolio of Red Hat automation tools so that we can make it easier for customers, not just to do the migration, but also to the management, the run and the operation, and all the troubleshooting also from a customer care perspective. So that's basically an end-to-end partnership approach that we are taking.

Paul Gillin

>> Now about three quarters of enterprise workloads still are running on-prem, so there's a huge opportunity for companies like Microsoft in cloud migration. What are you doing to encourage those customers who are running a Red Hat stack on-prem to move to choose Azure as their cloud?

>> It's a very good question. Every single customer in the world has certain applications, certain workloads that they are not able to move to cloud, even if they wanted to. And this might be for some requirements from the application standpoint in terms of latency, it might be from regulatory standpoint, it might be from security standpoint. So there are a lot of reasons why customers are not able to move from on-prem to cloud. That doesn't mean that the customers are staying on-prem. Typically, what happens is that the customers look at their entire portfolio and then start to move into cloud, parts of that portfolio. And therefore almost differentiating the type of applications that they can move to cloud and the type of applications that they can stay on-prem. And this is where this partnership with Red Hat is unique, because we give the opportunity to customers to choose what makes more sense for them. Some workloads will remain on-prem, some workloads will go into what we call a hybrid environment, which means they run some of the workloads on-prem, but they manage it almost as if it was in the same way in the cloud. Running on the cloud, as an example, leveraging Azure Arc services, which enables you to manage a on-prem environment as if the environment was up and running on Azure on the cloud. And then you have the other workloads which customers can move immediately into cloud. And also in that context, we also collaborate with Red Hat and with customers to facilitate that move with some automation tools to make the migration as fast and as smooth as possible.

Rebecca Knight

>> So the increased flexibility is one of the primary benefits.

>> Absolutely.

Rebecca Knight

>> What are some of the other ones in terms of disruption, economic benefits, reduced complexity? Can you talk us through those?

>> I think that the running on the cloud brings the flexibility, as you were saying, the ability to deploy it very quickly rather than waiting three months, deploy it in a minute, pay only when you use. So being able to scale up or scale down depending on peaks of demand that you might have. And that is the traditional benefit of cloud. But also when you look at it from a cost perspective, we run a very recently study with Forrester, and it's amazing to see that when they look at the total cost of ownership, customers get a return on investment of 192%. So that means that the investment that they do, they recover the investment actually faster than one year. So this gives you the sense also from an economic standpoint of what is the impact. And the reason being is very simple, because you get access to the latest technology, but you only pay for actually what you use. We also added some commercial benefits into the equation, enabling customers to use their commitments that they have with Microsoft. The vast majority of our enterprise customers have Microsoft cloud commitments that now with this partnership with Red Hat, they can actually use these commitments and use our marketplace to buy the solutions that they want to buy from Red Hat, being solutions totally new, or existing solutions as well. And they can decrement, they can leverage the Microsoft commitments to deduct those values from their Microsoft commitments. The other benefit from a commercial standpoint is also that the customers can inherit some of the commercial benefits and the commercial conditions that they have with Microsoft. And that enables them, if you have a certain platform which is running already in a stable way, they can actually buy upfront what we call the reserved instance, which means buying capacity upfront for one year or three years, which gives them savings, which can go up like 72% on a comparison base versus a pay as you go model where you only pay what you use. So this brings a huge commercial benefit to customers. The last point that I wanted to bring to attention is, of course, apart from this engineering integration, which makes the solutions already proven, already tested, so customers are able to use the solutions on an off the shelf basis, just go to our marketplace and select the solutions and they have been tested already. But apart from that, also from a support perspective, they get an integrated support experience from Red Hat technical teams and Microsoft technical teams. And this means that these two technical teams are often co-located. So whenever a customer has a challenge, they are being answered by Microsoft and Red Hat technical teams, all that are working together to solve this challenge from a customer. So this brings also an increased level of confidence to customers to move to cloud, knowing that on the support side, they will come with the power of both brands.

Paul Gillin

>> So as you are clearly giving a lot to Red Hat customers to encourage them to move to Azure. What is Red Hat giving you in exchange?

>> Well, look, as I said, Red Hat has a huge customer base. As I mentioned, 90% of the Fortune 500. And then if you go down into the Fortune 2000 or into the largest customers in the world, most of them run Red Hat solutions. And most of them also run them on-prem. And this is where the big opportunities is, to not only to migrate and transform these customers into cloud as they are going into their transformation journey, but also modernize their solutions. As they modernize their solutions, as an example with SAP is also another key partner that typically customers also use Red Hat technologies with SAP. So this is another example where you can actually leverage this partnership not just to move and migrate and modernize into cloud, but also taking advantage of all the integration with Azure services, which brings additional security, more flexibility into how you manage backup, security, disaster recovery, et cetera, all in an integrated way with Azure.

Rebecca Knight

>> So the Red Hat way is all about open source and co-creation and community. How does this partnership align in that sense? How are you together fostering innovation in this space?

>> As I mentioned, we have been long-standing already partnering together with open source. So that comes naturally. We have both engineering teams from both sides working together to achieve this level of integration between the two solutions. So when you talk about Red Hat Enterprise Linux, or when you have the Azure Red Hat OpenShift, which is a new solution that we have recently launched, these are solutions that bring in using open source, bringing an additional level of integration, flexibility, automation to customers so that they can migrate and manage their solutions in a more seamless way and in a more easy way. So we are embedding this kind of overlying partnership from an open source perspective to bring these innovations live to customers.

Paul Gillin

>> Microsoft has committed to supporting RHEL on Azure, to supporting OpenShift on Azure. Red Hat made several announcements today, RHEL for AI, OpenShift for AI. Will Microsoft support those as well?

>> Absolutely. Look, embedding AI is something that it's already very, very present in our entire portfolio of Microsoft solutions, not just with Copilot, with the Microsoft 365 Copilot, Security Copilot, Visual Studio Copilot, Copilot Sales, et cetera, but also with the Azure, OpenAI and gen AI services. And this is where we are working together very closely with strategic partners like Red Hat to also leverage this technology to make it more easy embedded in their own solutions. And again, when you think about using simple things like how many VMs, how servers do I have activated all across on Red Hat on Azure? And then the gen AI Copilot can answer you that question, "And how many of those were activated today? And how many of those require maintenance and how many of those are fully secured, et cetera, et cetera?" So you can go on questioning the system and use the Copilot and use OpenAI and gen AI to actually deliver those answers on a very easy customer interface perspective.

Rebecca Knight

>> Would you have any customer success stories to share? Because you have highlighted some of the cost savings, the Forrester research, which highlights so much cost savings. How else are customers benefiting from this partnership?

>> Look, the customer feedback has been fantastic, I have to say. Unfortunately, I cannot name specific customers, not just not because I don't want to, but because we have a very strict policy for customers to authorize that. And given the partnership recent history, we have not yet went into this direction. But I can share with you, look, we have big customers in Germany as an example, in automotive, we have big customers on consumer goods in the largest consumer goods customers in the world. We have big customers also on the professional services arena. So every industry that I can think of, we already have very big, largest customers in the world as references that we leverage also to connect to customers that are looking into and thinking about embracing into this journey.

Rebecca Knight

>> Excellent, excellent. We had Stefanie Chiras earlier and she was talking about the ecosystem. And as a member of this ecosystem, can you talk a little bit about the benefits that you receive from being part of it and not just interacting with Red Hat, but also their own partners too? She said that there is a real sharing and a real sense of community and a sharing of best practices.

>> Absolutely. Look, I think that the beauty of this ecosystem is that it has multiple players. If you think about there are players which are, as I mentioned, the SAP, but there are also players specialized on security. There are also players specialized on running automation tools, and customers typically have multiple solutions that they benefit from, including running multi-cloud environments, not just Microsoft but also some of the other cloud providers as well. So running this in an ecosystem perspective and being able to provide to customers the benefit of choice, leveraging, as an example, our marketplace where you can actually find solutions from different providers. These solutions have been already integrated, already fully tested on our Microsoft cloud. This gives then a huge benefit to customers, but also a huge benefit to the partner ecosystem because then they are not only part of the disintegration effort, they are leading edge from an innovation perspective, so we are all innovating together, and they are benefiting also from the customer base, not just from Microsoft, but also from the other partner ecosystem. So it's actually a win-win-win scenario.

Rebecca Knight

>> Win-win-win. I love it. Zhou, thank you so much for coming on theCUBE for a really great conversation.

>> Thank you very much. Thank you.

Rebecca Knight

>> I'm Rebecca Knight. For Paul Gillin, stay tuned for more of theCUBE's live coverage of the Red Hat Summit. You're watching theCUBE, the leader in tech enterprise coverage.

João Couto | Microsoft

search

Rebecca Knight

>> Good afternoon everyone, and welcome back to theCUBE's live coverage of the Red Hat Summit here in the Mile-High City, Denver, Colorado. I'm your host, Rebecca Knight, sitting alongside my co-host and analyst, Paul Gillin. Thanks so much for being here with me today. Paul.

Paul Gillin

>> Pleasure to be here, Rebecca. This is an exciting session we're about to have because I'm old enough to remember when having a Microsoft executive appear at a Red Hat event would've been unthinkable.

Rebecca Knight

>> Right.

Paul Gillin

>> And it really shows how much this industry has changed.

Rebecca Knight

>> It really has. The partnerships, the ecosystem. And so this is great to introduce our next guest. He is Zhao Kotou, the Vice President and COO of commercial solutions for EMEA at Microsoft. Thank you so much for coming on the show.

Paul Gillin

>> Thank you very much, Rebecca. Thank you, Paul. Looking forward to it.

Rebecca Knight

>> So you're here today to talk about the strategic partnership between Red Hat and Microsoft that brings together these two industry leaders. Tell our viewers a little bit about this partnership. Just give us a broad overview.

>> It's a very good question. Look, first, these are two industry leaders worldwide. So if you think about the Fortune 500 customers, as an example, 95% of them use Microsoft technology. 90% of them use Red Hat Solutions as well. So it makes a ton of sense for us to collaborate and deliver more value to our customers. In this context, we have also been working very diligently together to promote open source. So it's not like something completely weird to do. Microsoft has been very, very keen to embrace open source. We are one of the big sponsors of the Open Source Foundation. We have been working very closely and even opening up our own code to open source. We have acquired also GitHub, which is also one of the largest repositories of open source worldwide. And in that context also it makes a lot of sense to work together with Red Hat. So what we have been doing so far is making sure that we are co-developing solutions together with Red Hat and making these solutions available to our customers, making it easy for customers to transform, to modernize their estates of Red Hat technology, running on-prem and moving them into cloud using our own Microsoft cloud technology, but Red Hat solutions in a very, very seamless integrated way. And also leveraging all the entire portfolio of Red Hat automation tools so that we can make it easier for customers, not just to do the migration, but also to the management, the run and the operation, and all the troubleshooting also from a customer care perspective. So that's basically an end-to-end partnership approach that we are taking.

Paul Gillin

>> Now about three quarters of enterprise workloads still are running on-prem, so there's a huge opportunity for companies like Microsoft in cloud migration. What are you doing to encourage those customers who are running a Red Hat stack on-prem to move to choose Azure as their cloud?

>> It's a very good question. Every single customer in the world has certain applications, certain workloads that they are not able to move to cloud, even if they wanted to. And this might be for some requirements from the application standpoint in terms of latency, it might be from regulatory standpoint, it might be from security standpoint. So there are a lot of reasons why customers are not able to move from on-prem to cloud. That doesn't mean that the customers are staying on-prem. Typically, what happens is that the customers look at their entire portfolio and then start to move into cloud, parts of that portfolio. And therefore almost differentiating the type of applications that they can move to cloud and the type of applications that they can stay on-prem. And this is where this partnership with Red Hat is unique, because we give the opportunity to customers to choose what makes more sense for them. Some workloads will remain on-prem, some workloads will go into what we call a hybrid environment, which means they run some of the workloads on-prem, but they manage it almost as if it was in the same way in the cloud. Running on the cloud, as an example, leveraging Azure Arc services, which enables you to manage a on-prem environment as if the environment was up and running on Azure on the cloud. And then you have the other workloads which customers can move immediately into cloud. And also in that context, we also collaborate with Red Hat and with customers to facilitate that move with some automation tools to make the migration as fast and as smooth as possible.

Rebecca Knight

>> So the increased flexibility is one of the primary benefits.

>> Absolutely.

Rebecca Knight

>> What are some of the other ones in terms of disruption, economic benefits, reduced complexity? Can you talk us through those?

>> I think that the running on the cloud brings the flexibility, as you were saying, the ability to deploy it very quickly rather than waiting three months, deploy it in a minute, pay only when you use. So being able to scale up or scale down depending on peaks of demand that you might have. And that is the traditional benefit of cloud. But also when you look at it from a cost perspective, we run a very recently study with Forrester, and it's amazing to see that when they look at the total cost of ownership, customers get a return on investment of 192%. So that means that the investment that they do, they recover the investment actually faster than one year. So this gives you the sense also from an economic standpoint of what is the impact. And the reason being is very simple, because you get access to the latest technology, but you only pay for actually what you use. We also added some commercial benefits into the equation, enabling customers to use their commitments that they have with Microsoft. The vast majority of our enterprise customers have Microsoft cloud commitments that now with this partnership with Red Hat, they can actually use these commitments and use our marketplace to buy the solutions that they want to buy from Red Hat, being solutions totally new, or existing solutions as well. And they can decrement, they can leverage the Microsoft commitments to deduct those values from their Microsoft commitments. The other benefit from a commercial standpoint is also that the customers can inherit some of the commercial benefits and the commercial conditions that they have with Microsoft. And that enables them, if you have a certain platform which is running already in a stable way, they can actually buy upfront what we call the reserved instance, which means buying capacity upfront for one year or three years, which gives them savings, which can go up like 72% on a comparison base versus a pay as you go model where you only pay what you use. So this brings a huge commercial benefit to customers. The last point that I wanted to bring to attention is, of course, apart from this engineering integration, which makes the solutions already proven, already tested, so customers are able to use the solutions on an off the shelf basis, just go to our marketplace and select the solutions and they have been tested already. But apart from that, also from a support perspective, they get an integrated support experience from Red Hat technical teams and Microsoft technical teams. And this means that these two technical teams are often co-located. So whenever a customer has a challenge, they are being answered by Microsoft and Red Hat technical teams, all that are working together to solve this challenge from a customer. So this brings also an increased level of confidence to customers to move to cloud, knowing that on the support side, they will come with the power of both brands.

Paul Gillin

>> So as you are clearly giving a lot to Red Hat customers to encourage them to move to Azure. What is Red Hat giving you in exchange?

>> Well, look, as I said, Red Hat has a huge customer base. As I mentioned, 90% of the Fortune 500. And then if you go down into the Fortune 2000 or into the largest customers in the world, most of them run Red Hat solutions. And most of them also run them on-prem. And this is where the big opportunities is, to not only to migrate and transform these customers into cloud as they are going into their transformation journey, but also modernize their solutions. As they modernize their solutions, as an example with SAP is also another key partner that typically customers also use Red Hat technologies with SAP. So this is another example where you can actually leverage this partnership not just to move and migrate and modernize into cloud, but also taking advantage of all the integration with Azure services, which brings additional security, more flexibility into how you manage backup, security, disaster recovery, et cetera, all in an integrated way with Azure.

Rebecca Knight

>> So the Red Hat way is all about open source and co-creation and community. How does this partnership align in that sense? How are you together fostering innovation in this space?

>> As I mentioned, we have been long-standing already partnering together with open source. So that comes naturally. We have both engineering teams from both sides working together to achieve this level of integration between the two solutions. So when you talk about Red Hat Enterprise Linux, or when you have the Azure Red Hat OpenShift, which is a new solution that we have recently launched, these are solutions that bring in using open source, bringing an additional level of integration, flexibility, automation to customers so that they can migrate and manage their solutions in a more seamless way and in a more easy way. So we are embedding this kind of overlying partnership from an open source perspective to bring these innovations live to customers.

Paul Gillin

>> Microsoft has committed to supporting RHEL on Azure, to supporting OpenShift on Azure. Red Hat made several announcements today, RHEL for AI, OpenShift for AI. Will Microsoft support those as well?

>> Absolutely. Look, embedding AI is something that it's already very, very present in our entire portfolio of Microsoft solutions, not just with Copilot, with the Microsoft 365 Copilot, Security Copilot, Visual Studio Copilot, Copilot Sales, et cetera, but also with the Azure, OpenAI and gen AI services. And this is where we are working together very closely with strategic partners like Red Hat to also leverage this technology to make it more easy embedded in their own solutions. And again, when you think about using simple things like how many VMs, how servers do I have activated all across on Red Hat on Azure? And then the gen AI Copilot can answer you that question, "And how many of those were activated today? And how many of those require maintenance and how many of those are fully secured, et cetera, et cetera?" So you can go on questioning the system and use the Copilot and use OpenAI and gen AI to actually deliver those answers on a very easy customer interface perspective.

Rebecca Knight

>> Would you have any customer success stories to share? Because you have highlighted some of the cost savings, the Forrester research, which highlights so much cost savings. How else are customers benefiting from this partnership?

>> Look, the customer feedback has been fantastic, I have to say. Unfortunately, I cannot name specific customers, not just not because I don't want to, but because we have a very strict policy for customers to authorize that. And given the partnership recent history, we have not yet went into this direction. But I can share with you, look, we have big customers in Germany as an example, in automotive, we have big customers on consumer goods in the largest consumer goods customers in the world. We have big customers also on the professional services arena. So every industry that I can think of, we already have very big, largest customers in the world as references that we leverage also to connect to customers that are looking into and thinking about embracing into this journey.

Rebecca Knight

>> Excellent, excellent. We had Stefanie Chiras earlier and she was talking about the ecosystem. And as a member of this ecosystem, can you talk a little bit about the benefits that you receive from being part of it and not just interacting with Red Hat, but also their own partners too? She said that there is a real sharing and a real sense of community and a sharing of best practices.

>> Absolutely. Look, I think that the beauty of this ecosystem is that it has multiple players. If you think about there are players which are, as I mentioned, the SAP, but there are also players specialized on security. There are also players specialized on running automation tools, and customers typically have multiple solutions that they benefit from, including running multi-cloud environments, not just Microsoft but also some of the other cloud providers as well. So running this in an ecosystem perspective and being able to provide to customers the benefit of choice, leveraging, as an example, our marketplace where you can actually find solutions from different providers. These solutions have been already integrated, already fully tested on our Microsoft cloud. This gives then a huge benefit to customers, but also a huge benefit to the partner ecosystem because then they are not only part of the disintegration effort, they are leading edge from an innovation perspective, so we are all innovating together, and they are benefiting also from the customer base, not just from Microsoft, but also from the other partner ecosystem. So it's actually a win-win-win scenario.

Rebecca Knight

>> Win-win-win. I love it. Zhou, thank you so much for coming on theCUBE for a really great conversation.

>> Thank you very much. Thank you.

Rebecca Knight

>> I'm Rebecca Knight. For Paul Gillin, stay tuned for more of theCUBE's live coverage of the Red Hat Summit. You're watching theCUBE, the leader in tech enterprise coverage.