The path of profitability: Connected data is where the value lies for Hortonworks


Software providers like Hortonworks Inc. that offer Apache Hadoop-based software, support and services are turning to Wall Street to increase profitability. In recent news, Cloudera Inc. announced it will be offering an initial public offering. However, some critics believe the company will not retain its value. And industry experts believe that the only companies profiting from open-source investments are the practitioners.

“There is only so much I can do to control the stock market, but what I can do is hit key measures to a path of profitability. We announced that by the third or fourth quarter of 2017, we would hit operating cash flow neutrality. Revenue is one thing,  but our subscription operating margins are at 84 percent, but that’s a software margin. We are a multi-product, cloud service product, not a single platform. That’s how you grow the business,” said Shaun Connolly (pictured), vice president of corporate strategy at Hortonworks.

Connolly spent some time talking with Dave Vellante (@dvellante), host of theCUBE, SiliconANGLE Media’s mobile live streaming studio, during DataWorks Summit 2017 EU in Munich, Germany. (*Disclosure below.) The interview covered where Hortonworks is finding value and generating revenue streams in an open-source ecosystem.

Where is the value in open source?

As Hortonworks looks to future opportunities and finds the white spaces in the market, the company is working on solutions that create value for customers. The trends that are surfacing right now may not be enterprise-ready for all, so it is important to find use cases that move customers to the technology.

Connolly explained the relationship between cloud and Internet of Things regarding how customers deploy these technologies. “One is centralization, and the other is decentralization, so it calls for a connected data architecture,” he said.

Hortonworks is working on a variety of IoT-related use cases. One example is an IoT project with Coca-Cola East Japan that is using connective devices to manage and analyze beverage replenishment, as well as optimize its distribution chain. The project is helping Coca-Cola drive better margins for the business and increasing revenue because the product is there to meet the demand. Connolly calls it an IoT and cloud-related story along with a big data and analytics story.

“Those are really interesting use cases being deployed at this convergence of IoT cloud and big data that will ultimately [help] lead to AI,” Connolly said.

If you look at the value chain under a microscope, it all points to managing the flow of the data. “And in the new world, you need to play it where it lies,” Connolly said.

Hortonworks DataFlow is its enterprise solution for managing data in motion. It is a data logistics platform, or as Connolly called it, “FedEx for data delivery” that goes out to the edge. Hortonworks has also added MiNiFi, an architecture option in Java virtual machine for expanded scalability that securely analyzes and transmits from devices at the edge.

Connolly feels that the ecosystem forces you to collaborate and view competitors as partners. By collaborating around deeply engineered systems, the revenue streams for Hortonworks come from what partners sell through to their market and ecosystem.

“Platform thinking is you provide the platform, [and] you provide for 10x value that rides atop that platform. That’s how the model works. So if you are riding atop the platform, I expect you and that ecosystem to drive at least 10x above and beyond what I would make as a platform provider,” he said.

Pointing out that studies show some of the late adopters want to power down their datacenters and run in the cloud by 2025, Connolly talked about the waves of centralization and decentralization — and that they are playing simultaneously right now with cloud and IoT.

“The fact of the matter is you’re going to have multiple clouds, prem data and data at the edge. That’s the problem I am looking to facilitate and solve. That’s why we talk about this notion of connected data. How do you connect to your data? Where is it? And are you getting value where it lies?” Connolly said.

Watch the complete video interview below, and be sure to check out more of SiliconANGLE’s and theCUBE’s coverage of DataWorks Summit 2017 EU. (*Disclosure: TheCUBE is a paid media partner at DataWorks. The conference sponsor, Hortonworks, does not have editorial oversight of content on theCUBE or SiliconANGLE.)

Photo: SiliconANGLE