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New Elastic CEO puts cloud front and centre

New Elastic CEO puts cloud front and centre

As the new CEO of the enterprise search specialist, Ashutosh Kulkarni is reorganising the company to focus on selling cloud software and expand into the lucrative observability and security domains.

Ashutosh Kulkarni (Elastic)

Ashutosh Kulkarni (Elastic)

Credit: Elastic

The new CEO of the enterprise search software company Elastic has one priority: cloud.

“Cloud is front and centre,” he told InfoWorld during a recent interview. “That is really where you should continue to see me double down.”

Before taking over as CEO in January of this year, Ashutosh Kulkarni was the chief product officer at Elastic and previously served stints at content delivery and cyber security vendor Akamai and data management company Informatica.

Kulkarni has a tough act to follow. The previous CEO and now CTO was Elastic founder Shay Banon, who built the company behind the popular open source search and logging software into one that goes toe-to-toe with the likes of Splunk and Datadog in the realms of enterprise application performance management (APM), observability, and security information event management (SIEM).

Now the vendor's fully managed Elastic Cloud brings these capabilities together into a single enterprise platform, which Kulkarni clearly sees as the engine of growth for the company.

Banon also spent years fighting off the cloud giants, especially Amazon Web Services (AWS) after it launched its own managed Elasticsearch service without collaborating with Elastic. The dispute only recently culminated in a trademark infringement settlement.

The below conversation has been edited for clarity and brevity.

InfoWorld: Where are you looking to carry on with Shay’s recent strategy for Elastic and where are you looking to change direction, if at all?

Kulkarni: When I joined Elastic, I had a good sense of what the capabilities were and where I thought Elastic really needed to focus. I saw a pretty big opportunity, both in cloud, and in the convergence that I saw happening between observability and security, both of which are clearly data problems.

These areas are things that I worked on with Shay very carefully. I contributed to all of this, as much as Shay has been the founder and creator of several of these ideas.

Now where I am definitely leaning in a lot more than perhaps we have in the past is my belief that there will be a day when almost our entire revenue comes from Elastic Cloud, that cloud is the future.

Even customers in regulated industries — I saw this in spades when I was in Europe recently—regulated customers in government agencies and financial services are moving to the cloud. They have realised that the amount of innovation in the cloud is so significant that they can’t avoid it. It is about finding ways to gracefully start moving to the cloud.

If the cloud is our future, then we need to make sure that we aren’t just agnostic about whether somebody chooses self-managed or cloud, but that we lean in with cloud both in terms of how we invest in R&D and making sure that our cloud product is absolutely fantastic. You should expect to see that across all functions within Elastic and when you come to the Elastic website, the call to action, first and foremost, being Elastic Cloud.

InfoWorld: What are the remaining blockers for customers to adopt the cloud version of Elastic?

Kulkarni: There’s always going to be the truism that customers will move to the cloud at different speeds, just given where they started from, the investments that they might or might not have made in their own data centres or the regulations that guide them. We need to be ready and continually helping customers understand that we are compliant, and have the certifications that they are looking for.

Our history was open source, that was our genesis, and in the open source world, the predominant model was to download the piece of software and start working with it. The customers that have been with us for a while are using us in self-managed mode. 

It is extremely important that we are constantly helping those customers understand that our cloud product is always going to be easier to use, it’s going to be faster to onboard the technology, you don’t have to worry about monitoring, management, all of the things that become efforts that you need to take on with your own engineering teams.

The second thing that I’m seeing is, as security is becoming a bigger and bigger concern, people want to get started faster. Security logs tend to be voluminous. 

To be able to do security right, you need to be able to store data for a year or more and you can’t do that unless you have an economic way to be able to scale efficiently, store petabytes of data at scale in a relatively cheap manner. We need to make that very simple, with capabilities like searchable snapshots, which allows you to store data in low-cost object storage.

InfoWorld: Given your background, is it safe to assume that Elastic is going to focus mostly on the security domain now?

Kulkarni: Not really, because observability and security are quite naturally two sides of the same coin. If you think about the data that you typically pull in to ensure that your applications are up and running, it’s almost always similar to the data that you’re pulling in to detect whether there are any indicators of compromise in your applications and your systems.

What we tend to see is customers start with observability and then move to security, or vice versa. I expect that observability and security will be big focus areas for us.

Observability today is the biggest part of our business, accounting for over 40% of our overall business. Security now accounts for over 25 per cent of our business, and it was about 20% not too long ago, so it’s growing faster than the rest of the company. Then enterprise search accounts for the remaining third.

InfoWorld: How do you balance that developer and open source heritage with the new focus areas, which are, by the sounds of it, a little bit more enterprise focused?

Kulkarni: It’s not an either/or in my mind. If you think about the role that developers play today — in modern system architectures, where you have microservices, public cloud, and orchestration capabilities like Kubernetes, which are based on open source—development of new applications, and naturally, the security of those new applications, is being driven more by developers than ever before. The developer friendliness that we’ve always had, that DNA, is a massive source of strength for us.

You can start small and we make it easy for you to get going. It’s almost always developers who take that lead and then champion us within the organisation. We marry the bottom-up motion with the top-down selling motion.

InfoWorld: How do you differentiate from rivals like Splunk in the marketplace?

Kulkarni: We’ve been doing a lot of displacements of Splunk as they’ve been going through some interesting times.

From our perspective, where we really differentiate is that our cloud product and self-managed product is identical, it’s one single code base. From what we hear from customers as they move to Elastic, they find it easier to migrate to Elastic than to migrate to [Splunk’s] cloud offering.

The second thing is, we’ve really invested in technologies, like searchable snapshots, that really drive the total cost of ownership down. Our whole model is to constantly innovate to make sure that the customer is not having to choose between how much data they bring in because of concerns over economics. We are not charging you based on the amount of data ingested.

InfoWorld: What sort of baggage do you bring in terms of the fraught recent relationship between Elastic and AWS?

Kulkarni: I see AWS as a wonderful partner and I see that partnership is already improving significantly.

The history is what it is and the reality is that there was a lot of confusion in the market for many years because there were two Elasticsearch offerings, one from Elastic and the second from AWS. We were very confident for a while in the product differentiation that we had, because we had a lot of the core capabilities as well as observability and security capabilities that we built into the paid tier.

That functionality was always licensed under our Elastic version one, ELv1, license. Early last year, we took the step of putting all of the code under the Elastic ELv2 licence, which forced their [AWS’] hand. We expected that they would create a fork, which they did. The community is now seeing the difference in pace of innovation between Elasticsearch and Opensearch.

Our licence is extremely permissive. Customers and partners and community users can continue to use the free version. The one thing that they can’t do is take our code as is and then offer it as-a-service.

InfoWorld: What’s at the top of your priority list for the year ahead?

Kulkarni: Cloud. Making sure that customers are able to take advantage of how frictionless cloud is. Making sure that we are continuing to drive innovation in the cloud. It’s front and centre.

When it comes to the three markets that we play in, security, observability, and enterprise search, I believe that these are all search-powered areas and fundamentally search problems. Our goal as a company is to really help customers get the most out of these search-powered solutions and become leaders in these three categories. Cloud is the conduit, because cloud allows that journey to really accelerate.

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