>> From theCUBE Studios in Palo Alto and Boston, bringing you data driven insights from theCUBE and ETR. This is breaking analysis with Dave Vellante. >> The technology spending outlook is not pretty and very much unpredictable right now. The negative sentiment is of course being driven by the macroeconomic factors in earnings forecasts that have been coming down all year in an environment of rising interest rates. And what's worse, is many people think earnings estimates are still too high. But it's understandable why there's so much uncertainty. I mean, technology is still booming, digital transformations are happening in earnest, leading companies have momentum and they got cash runways. And moreover, the CEOs of these leading companies are still really optimistic. But strong guidance in an environment of uncertainty is somewhat risky. Hello and welcome to this week's Wikibon CUBE Insights Powered by ETR. In this breaking analysis, we share takeaways from ETR'S latest spending survey, which was released to their private clients on October 21st. Today, we're going to review the macro spending data. We're going to share where CIOs think their cloud spend is headed. We're going to look at the actions that organizations are taking to manage uncertainty and then review some of the technology companies that have the most positive and negative outlooks in the ETR data set. Let's first look at the sample makeup from the latest ETR survey. ETR captured more than 1300 respondents in this latest survey. Its highest figure for the year and the quality and seniority of respondents just keeps going up each time we dig into the data. We've got large contributions as you can see here from sea level executives in a broad industry focus. Now the survey is still North America centric with 20% of the respondents coming from overseas and there is a bias toward larger organizations. And nonetheless, we're still talking well over 400 respondents coming from SMBs. Now ETR for those of you who don't know, conducts a quarterly spending intention survey and they also do periodic drilldowns. So just by the way of review, let's take a look at the expectations in the latest drilldown survey for IT spending. Before we look at the broader technology spending intentions survey data, followers of this program know that we reported on this a couple of weeks ago, spending expectations that peaked last December at 8.3% are now down to 5.5% with a slight uptick expected for next year as shown here. Now one CIO in the ETR community said these figures could be understated because of inflation. Now that's an interesting comment. Real GDP in the US is forecast to be around 1.5% in 2022. So these figures are significantly ahead of that. Nominal GDP is forecast to be significantly higher than what is shown in that slide. It was over 9% in June for example. And one would interpret that survey respondents are talking about real dollars which reflects inflationary factors in IT spend. So you might say, well if nominal GDP is in the high single digits this means that IT spending is below GDP which is usually not the case. But the flip side of that is technology tends to be deflationary because prices come down over time on a per unit basis, so this would be a normal and even positive trend. But it's mixed right now with prices on hard to find hardware, they're holding more firms. Software, you know, software tends to be driven by lock in and competition and switching costs. So you have those countervailing factors. Services can be inflationary, especially now as wages rise but certain sectors like laptops and semis and NAND are seeing less demand and maybe even some oversupply. So the way to look at this data is on a relative basis. In other words, IT buyers are reporting 280 basis point drop in spending sentiment from the end of last year. Now, something that we haven't shared from the latest drilldown survey which we will now is how IT bar buyers are thinking about cloud adoption. This chart shows responses from 419 IT execs from that drilldown and depicts the percentage of workloads their organizations have in the cloud today and what the expectation is through years from now. And you can see it's 27% today and it's nearly 50% in three years. Now the nuance is if you look at the question, that ETRS, it's they asked about IaaS and PaaS, which to some could include on-prem. Now, let me come back to that. In particular, financial services, IT, telco and retail and services industry cited expectations for the future for three years out that we're well above the average of the mean adoption levels. Regardless of how you interpret this data there's most certainly plenty of public cloud in the numbers. And whether you believe cloud is an operating environment or a place out there in the cloud, there's plenty of room for workloads to move into a cloud model well beyond mid this decade. So you know, as ho hum as we've been toward recent as-a-service models announced from the likes of HPE with GreenLake and Dell with APEX, the timing of those offerings may be pretty good actually. Now let's expand on some of the data that we showed a couple weeks ago. This chart shows responses from 282 execs on actions their organizations are taking over the next three months. And the Deltas are quite traumatic from the early part of this charter than the left hand side. The brown line is hiring freezes, the black line is freezing IT projects, and the green line is hiring increases and that red line is layoffs. And we put a box around the sort of general area of the isolation economy timeframe. And you can see the wild swings on this chart. By mid last summer, people were kickstarting things and more hiring was going on and the black line shows IT project freezes, you know, came way down. And now, or on the way back up as our hiring freezes. So we're seeing these wild swings in organizational actions and strategies which underscores the lack of predictability. As with supply chains around the world, this is likely due to the fact that organizations, pre pandemic they were optimized for efficiency, not a lot of waste rather than business resilience. Meaning, you know, there's again not a lot of fluff in the system or if there was it got flushed out during the pandemic. And so the need for productivity and automation is becoming increasingly important, especially as actions that solely rely on headcount changes are very, very difficult to manage. Now, let's dig into some of the vendor commentary and take a look at some of the names that have momentum and some of the others possibly facing headwinds. Here's a list of companies that stand out in the ETR survey. Snowflake, once again leads the pack with a positive spending outlook. HashiCorp, CrowdStrike, Databricks, Freshworks and ServiceNow, they round out the top six. Microsoft, they seem to always be in the mix, as do a number of other security and related companies including CyberArk, Zscaler, CloudFlare, Elastic, Datadog, Fortinet, Tenable and to a certain extent Akamai, you can kind of put them sort of in that group. You know, CDN, they got to worry about security. Everybody worries about security, but especially the CDNs. Now the other software names that are highlighted here include Workday and Salesforce. On the negative side, you can see Dynatrace saw some negatives in the latest survey especially around its analytics business. Security is generally holding up better than other sectors but it's still seeing greater levels of pressure than it had previously. So lower spend. And defections relative to its observability peers, that's really for Dynatrace. Now the other one that was somewhat surprising is IBM. You see the IBM was sort of in that negative realm here but IBM reported an outstanding quarter this past week with double digit revenue growth, strong momentum in software, consulting, mainframes and other infrastructure like storage. It's benefiting from the Kyndryl restructuring and it's on track IBM to deliver 10 billion in free cash flow this year. Red Hat is performing exceedingly well and growing in the very high teens. And so look, IBM is in the midst of a major transformation and it seems like a company that is really focused now with hybrid cloud being powered by Red Hat and consulting and a decade plus of AI investments finally paying off. Now the other big thing we'll add is, IBM was once an outstanding acquire of companies and it seems to be really getting its act together on the M&A front. Yes, Red Hat was a big pill to swallow but IBM has done a number of smaller acquisitions, I think seven this year. Like for example, Turbonomic, which is starting to pay off. Arvind Krishna has the company focused once again. And he and Jim J. Kavanaugh, IBM CFO, seem to be very confident on the guidance that they're giving in their business. So that's a real positive in our view for the industry. Okay, the last thing we'd like to do is take 12 of the companies from the previous chart and plot them in context. Now these companies don't necessarily compete with each other, some do. But they are standouts in the ETR survey and in the market. What we're showing here is a view that we like to often show, it's net score or spending velocity on the vertical axis. And it's a measure, that's a measure of the net percentage of customers that are spending more on a particular platform. So ETR asks, are you spending more or less? They subtract less from the mores. I mean I'm simplifying, but that's what net score is. Now in the horizontal axis, that is a measure of overlap which is which measures presence or pervasiveness in the dataset. So bigger the better. We've inserted a table that informs how the dots in the companies are positioned. These companies are all in the green in terms of net score. And that right most column in the table insert is indicative of their presence in the dataset, the end. So higher, again, is better for both columns. Two other notes, the red dotted line there you see at 40%. Anything over that indicates an highly elevated spending momentum for a given platform. And we purposefully took Microsoft out of the mix in this chart because it skews the data due to its large size. Everybody else would cluster on the left and Microsoft would be all alone in the right. So we take them out. Now as we noted earlier, Snowflake once again leads with a net score of 64%, well above the 40% line. Having said that, while adoption rates for Snowflake remains strong the company's spending velocity in the survey has come down to Earth. And many more customers are shifting from where they were last year and the year before in growth mode i.e. spending more year to year with Snowflake to now shifting more toward flat spending. So a plus or minus 5%. So that puts pressure on Snowflake's net score, just based on the math as to how ETR calculates, its proprietary net score methodology. So Snowflake is by no means insulated completely to the macro factors. And this was seen especially in the data in the Fortune 500 cut of the survey for Snowflake. We didn't show that here, just giving you anecdotal commentary from the survey which is backed up by data. So, it showed steeper declines in the Fortune 500 momentum. But overall, Snowflake, very impressive. Now what's more, note the position of Streamlit relative to Databricks. Streamlit is an open source python framework for developing data driven, data science oriented apps. And it's ironic that it's net score and shared in is almost identical to those of data bricks, as the aspirations of Snowflake and Databricks are beginning to collide. Now, however, the Databricks net score has held up very well over the past year and is in the 92nd percentile of its machine learning and AI peers. And while it's seeing some softness, like Snowflake in the Fortune 500, Databricks has steadily moved to the right on the X axis over the last several surveys even though it was unable to get to the public markets and do an IPO during the lockdown tech bubble. Let's come back to the chart. ServiceNow is impressive because it's well above the 40% mark and it has 437 shared in on this cut, the largest of any company that we chose to plot here. The only real negative on ServiceNow is, more large customers are keeping spending levels flat. That's putting a little bit pressure on its net score, but that's just conservatives. It's kind of like Snowflakes, you know, same thing but in a larger scale. But it's defections, the ServiceNow as in Snowflake as well. It's defections remain very, very low, really low churn below 2% for ServiceNow, in fact, within the dataset. Now it's interesting to also see Freshworks hit the list. You can see them as one of the few ITSM vendors that has momentum and can potentially take on ServiceNow. Workday, on this chart, it's the other big app player that's above the 40% line and we're only showing Workday HCM, FYI, in this graphic. It's Workday Financials, that offering, is below the 40% line just for reference. Now let's talk about CrowdStrike. We attended Falcon last month, CrowdStrike's user conference and we're very impressed with the product visio, the company's execution, it's growing partnerships. And you can see in this graphic, the ETR survey data confirms the company's stellar performance with a net score at 50%, well above the 40% mark. And importantly, more than 300 mentions. That's second only to ServiceNow, amongst the 12 companies that we've chosen to highlight here. Only Microsoft, which is not shown here, has a higher net score in the security space than CrowdStrike. And when it comes to presence, CrowdStrike now has caught up to Splunk in terms of pervasion in the survey. Now CyberArk and Zscaler are the other two security firms that are right at that 40% red dotted line. CyberArk for names with over a hundred citations in the security sector, is only behind Microsoft and CrowdStrike. Zscaler for its part in the survey is seeing strong momentum in the Fortune 500, unlike what we said for Snowflake. And its pervasion on the X-axis has been steadily increasing. Again, not that Snowflake and CrowdStrike compete with each other but they're too prominent names and it's just interesting to compare peers and business models. Cloudflare, Elastic and Datadog are slightly below the 40% mark but they made the sort of top 12 that we showed to highlight here and they continue to have positive sentiment in the survey. So, what are the big takeaways from this latest survey, this really quick snapshot that we've taken. As you know, over the next several weeks we're going to dig into it more and more. As we've previously reported, the tide is going out and it's taking virtually all the tech ships with it. But in many ways the current market is a story of heightened expectations coming down to Earth, miscalculations about the economic patterns and the swings and imperfect visibility. Leading Barclays analyst, Ramo Limchao ask the question to guide or not to guide in a recent research note he wrote. His point being, should companies guide or should they be more cautious? Many companies, if not most companies, are actually giving guidance. Indeed, when companies like Oracle and IBM are emphatic about their near term outlook and their visibility, it gives one confidence. On the other hand, reasonable people are asking, will the red hot valuations that we saw over the last two years from the likes of Snowflake, CrowdStrike, MongoDB, Okta, Zscaler, and others. Will they return? Or are we in for a long, drawn out, sideways exercise before we see sustained momentum? And to that uncertainty, we add elections and public policy. It's very hard to predict right now. I'm sorry to be like a two-handed lawyer, you know. On the one hand, on the other hand. But that's just the way it is. Let's just say for our part, we think that once it's clear that interest rates are on their way back down and we'll stabilize it under 4% and we have clarity on the direction of inflation, wages, unemployment and geopolitics, the wild swings and sentiment will subside. But when that happens is anyone's guess. If I had to peg, I'd say 18 months, which puts us at least into the spring of 2024. What's your prediction? You know, it's almost that time of year. Let's hear it. Please keep in touch and let us know what you think. Okay, that's it for now. Many thanks to Alex Myerson. He is on production and he manages the podcast for us. Ken Schiffman as well is our newest addition to the Boston Studio. Kristin Martin and Cheryl Knight, they help get the word out on social media and in our newsletters. And Rob Hoff is our EIC, editor-in-chief over at SiliconANGLE. He does some wonderful editing for us. Thank you all. Remember all these episodes, they are available as podcasts. Wherever you listen, just search breaking analysis podcast. I publish each week on wikibon.com and siliconangle.com. Or you can email me at david.vellante@siliconangle.com or DM me @dvellante. Or feel free to comment on our LinkedIn posts. And please do check out etr.ai. They've got the best survey data in the enterprise tech business. If you haven't checked that out, you should. It'll give you an advantage. This is Dave Vellante for theCUBE Insights Powered by ETR. Thanks for watching. Be well and we'll see you next time on Breaking Analysis. (soft upbeat music)

>> From the Cube Studios in Palo Alto in Boston bringing you data driven insights from theCUBE and ETR, this is Breaking Analysis with Dave Vellante. >> Is the glass half full or half empty? Well, it depends on how you want to look at it. CIOs are tapping the breaks on spending, that's clear. The latest macro survey data from ETR quantifies what we already know to be true, that IT spend is decelerating. CIOs and IT buyers forecast that their tech spend will grow by 5.5% this year. That's a meaningful deceleration from near year end 2021 expectations. But these levels are still well above historical norms. So while the feel good factor may be in some jeopardy, overall things are pretty good, at least for now. Hello and welcome to this week's Wikibon Cube Insights powered by ETR. In this Breaking Analysis, we update you in the latest macro tech spending data from Enterprise Technology Research, including strategies that organizations are employing to cut costs, and which project categories continue to see the most traction. Now, CIOs were much more optimistic at the end of last year than they are today. Back then they thought their aggregates spend would increase by more than 8%. Of course, at that time the expectation was that the economy was ready to make a semi ordered return to normal, and that didn't happen as you well know. And you can see here the expectation for spending this year is down to 5.5% growth, as we said, and this is based on the most recent ETR CIO and IT buyer survey, which includes more than 1100 responses. So we started the year above 8% then made a meaningful decline into the mid sixes and nine months into the year, we're now in the mid fives, but this is still two to 300 basis points above historical norms for IT spending. And looking ahead to next year, CIOs are expecting accelerated growth edging back up toward that 6% level. Now as noted here, the visibility on this is probably less clear than pre COVID years of course, but the bottom line is digital transformations are continuing to push it spending above historical levels. Now the problem as we know, is earning estimates are coming down and forecasts are being lowered every day. I mean, as the saying goes the first disappointment is rarely the last. Even the semiconductor industry is seeing softness. Just this past week we saw AMD lower its quarterly revenue forecast by more than a billion dollars, as PC demand in the second half has significantly softened. But again, that's relative to some pretty amazing PC growth in the past couple of years thanks to the isolation economy. So we do see CIOs tapping the brakes, and these data points here tell an interesting story. ETR asked respondents about various actions that they're taking and these two stood out. The top line is, "We're accelerating new IT projects," and the bottom line is, "We're freezing IT projects," and you can see the convergence of those two lines, which of course signals the down. But again, these are not alarming data points. If you think about history. If you go back to Q1 2020, for example, just before the pandemic, that top line that was at 12% versus where it is today at 25%. And if you look at project freezes, they were at 22% in Q1 of 2020, which is significantly higher than today. So relatively speaking the spending dynamic is still strong. It just doesn't feel that way because we're coming out of an historic anomaly. Now, ETR asked a follow up question to respondents that indicated that spending would be down this quarter relative to the same quarter last year. So they wanted to better understand the most common actions that organizations would take to save money, and that's what this chart shows. The most common approach is still to consolidate redundant vendors across the lines of business. That was over 30%, as you can see here in the first set of bars. So presumably CIOs now have the latitude to go after so-called shadow projects, shadow IT, and implement standards across the organization via vendor consolidation. As well, there's a big jump in the survey from 14% to 20% of respondents saying that they were going after the Cloud bill, and that relates to the fourth set of bars which is scrutinizing consumption based services. So combined, 45% of respondents are looking at reducing their on demand spend. Now, some of that may be SaaS related, but most of the SaaS spend is committed, so pre-committed, but we do see organizations doing more audits and trying to eliminate or reduce orphaned licenses. Now the last data point that we want to focus on is the technology sectors that are of the highest priority. You can see here on the set of bars on the left while cybersecurity remains the top technology area, even this sector is showing a little bit of softness. What's really notable is the uptick in data related areas, that second set of bars, this category is now the second most cited, taking over from Cloud, which as you can see, remain strong, and of course Cloud continues to be a key component of digital transformations. As we've previously reported, machine learning, AI, and RPA are somewhat more strategic and more discretionary, and they've dropped below the 40% mark in terms of net score in the overall survey. We're not showing that data here, but we covered this in our last Breaking Analysis ahead of our UI path event. Now you have to remember these are the top seven sectors, and there are dozens in the ETR taxonomy, so making this list is goodness from a spending perspective. So even though there's some softness in most of these categories, these are the ones CIOs are most focused on addressing. So the big takeaways of this data are spending targets are coming down to the mid 5% range, but this is meaningfully higher than historical norms. And while CIOs, they are pumping the brakes on projects, they're still moving forward at rates faster than pre COVID levels and they're freezing fewer projects. Remember, this as well, this could be a skill shortage in play, but the slowdown is more likely related to the economic uncertainty. You know, we're seeing the two-sided coin of pay by the drink consumption models, right? You can dial it up as as you need to but you can also dial it down, and that's one of the alluring features of on demand. And we're seeing firms give more scrutiny to the Cloud bill, why wouldn't they? And there's a bit of unsurprising backlash to the flaws in today's SaaS pricing model that locks you in for specified terms. So people, when their term comes up are really going to scrutinize whether or not they have orphan licenses and try to reduce those. And it appears that the real savings can come from eliminating redundant vendors. That seems to be the biggest, you know, number one strategy, and that could favor some of the larger firms, think Oracle, Dell, Salesforce ServiceNow, IBM, HPE, Cisco, and others, you know, they may benefit from having more of larger footprint across the organization. You know, having that one throat to choke, you know one back to pat, as some like to say, but they could benefit those larger companies in least in the near term. Now having said that, we do see an uptick in data related areas as a priority for CIOs, and that could mean companies like Snowflake are in a strong position and can continue to thrive. You know, even though as we reported a couple of weeks ago, virtually all companies and sectors in the ETR data set are showing some softness related to spending a momentum from previous quarters. ETR will have its... will release its results next week and then we'll dig into the specific vendor action relative to previous quarters. So look, it feels like a meaningful slowdown but the sky is by no means falling. There are these kind of out of our control factors like interest rates, and Ukraine, and oil supply, and wages, et cetera, that are creating this uncertainty and causing firms to be more cautious. But generally we remain optimistic as leading tech companies are pretty well managed and have a lot of runway on the balance sheets, and can adjust costs to reflect the uncertain environment and remain flexible in their business models in doing so. Okay, that's it for today. Thanks to Alex Myerson who's on production and he also manages the podcast for Breaking Analysis. Ken Schiffman is also out of our Boston studio as well. Kristin Martin and Cheryl Knight, they help get the word out on social media and in our newsletters, and Rob Hof is our editor in chief over at Silicon Angle who posts our Breaking Analysis and does some great editing. So thank you to all. Remember all these episodes are available as podcasts. Wherever you listen all you got to do is search Breaking Analysis podcast. I publish each week on wikibon.com and siliconangle.com, and you can email me at david.vellante@siliconangle.com or DM me @dvellante, or feel free to comment on our LinkedIn posts. And please do check out etr.ai for the best survey data in the enterprise tech business. This is Dave for the theCUBE Insights powered by ETR. Thanks for watching and we'll see you next time on Breaking Analysis. (relaxing music)

>>Welcome back to HP discover 2021 My name is Dave Volonte and you're watching the cubes, virtual coverage of H. P. S. Big customer event. Of course, the virtual edition, we're gonna dig into transformations the role of technology in the role of senior technology leadership. Look, let's face it, H P. E. Has gone through a pretty dramatic transformation itself in the past few years. So it makes a great example in case study and with me is rashmi kumari who is the senior vice president and C. I. O. At HP rashmi welcome come on inside the cube. >>Dave Nice to be here. >>Well, it's been almost a year since Covid changed the world as we know it. How would you say the role of the CEO specifically and generally it has changed. I mean you got digital Zero Trust has gone from buzzword to >>mandate >>digital. Everybody was complacent about digital in many ways and now it's really accelerated remote work hybrid. How do you see it? >>Absolutely. As I said in the last discover that Covid has been the biggest reason to accelerate digital transformation in the company's I. C. C. I O. S role has changed tremendously in the last 15 months. It's no more just keep the operations running that's become a table stick. Our roles have become not only to create digital customer experience engaged with our customers in different ways, but also to transform the company operations from inside out to be able to give that digital experience from beginning to end off the customer engagement going forward. We have also become responsible for switching our strategies around the companies as the Covid. Covid hit in different parts of the world at different times and how companies structured their operations to go from one region to another. A global company like H. B had to look into its supply chain differently. Had to look into strategies to mitigate the risk that was created because of the supply chain disruptions as well as you go to taking care of our employees. How do you create this digital collaboration experience where teams can still come together and make the work happen for our end customers? How do we think about future employee engagement when people are not coming into these big buildings and offices and working together, But how to create the same level of collaboration coordination as well as delivery or faster uh goods and services which is enabled by technology going forward. So see I. O. And I. T. S. Role has gone from giving a different level of customer experience to a different level of employee experience as well as enabling day to day operations of the company's. Ceos have realized that digital is the way to go forward. It does not matter what industry you are in and now see a as have their seat at the table to define what the future of every company now, which is a technology company respective you are in oil and gas or mining or a technical product or a card or a mobility company. End of the day you have to act and behave like a technology company. >>So I want to ask you about that because you've you've been a Ceo and uh you know, leading technology provider now for the last three years and you've had previous roles and where you know non technical technology, you know, selling to I. T. Companies and as you point out those worlds are coming together, everybody is a technology company today. How do you think that changes the role of the C. I. O. Because it would always seem to me that there was a difference between A C. I. O. And a tech company. You know what I mean by that? And the C. I. O. It's sort of every other company is those two worlds converging. >>Absolutely. And it's interesting you pointed out that I have worked in many different industries from healthcare and pharma to entertainment to utilities. Um And now at a technology company end of the day um The issues that I. T. Deals with are pretty similar across the organization. What is different here is now my customers are people like me in other industries and I have a little bit of an advantage because just having the experience across various ecosystem. Even at H. B. Look I was fortunate um at H. B. Because of Antonio's leadership, we have topped out mandate to transform how we did business. And I talked about my next gen IT program in last year's cube interview. But at the same time while we were changing our customer partners experience from ordering to order processing to supply chain to finance. Uh We decided this pivot of becoming as a service company. And if you think about that pivot it's pretty common if it was a technology company or non technology company at HP. We were very used to selling a product and coming back three years later at the time of refresh of infrastructure or hardware. That's no more true for us now we are becoming as a service or a subscription company and I. T. Played a major role to enable that quote to cash experience. Which is very different than the traditional experience around how we stay connected with our customer, how we proactively understand their behavior. I always talk about this term. Um Digital exhaust which results into data which can result into better insight and you can not only Upsell cross l because now you have more data about your product usage, but first and the foremost give what your customer wants in a much better way because you can proactively understand their needs and wants because you are providing a digital product versus a physical product. So this is the change that most of the companies are now going through. If you look at Domino's transition, there are pills a sellers but they did better because they had better digital experience. If you look at Chipotle, these are food service companies I. K which is a furniture manufacturer across the board. We have helped our customers and industries to understand how to become a more digital provider. And and remember when uh hp says edge to cloud platform as a service edges the product, the customers who we deal with and how do we get that? Help them get their data to understand how the product is behaving and then get the information to cloud for further analysis. Um and understanding from the data that comes out of the products that gets up, >>I think you've been HP now think around three years and I've been watching of course for decades. Hp. Hp then HP is I feel like it's entering now the sort of third phase of its transformation, your phase one was okay, we gotta figure out how to deal or or operate as a separate companies. Okay. That took some time and then it was okay. Now how do we align our resources and you know, what are the waves that we're gonna ride? And how do we how do we take our human capital, our investments and what bets do we place and and all in on as a service. And now it's like okay how do we deliver on all those promises? So pretty massive transformations. You talked about edge to cloud as a service so you've got this huge pivot in your in your business. What's the technology strategy to support that transformation? >>Yeah that's a that's a great question. So as I mentioned first your second phase which was becoming a stand alone company was the next N. I. T. Program very broad and um S. Four and 60 related ecosystem application. We're even in the traditional business there was a realization that we were 100 20 billion company. We are 30 billion company. We need different types of technologies as well as more integrated across our product line across the globe. And um we I'm very happy to report that we are the last leg of next in I. T. Transformation where we have brought in new customer experience through low touch or not touch order pressing. A very strong as four capabilities. Where we are now able to run all global orders across all our hardware and services business together. And I'm happy to report that we have been able to successfully run through the transformation which a typical company of our size would take five or six years to do in around close to three years. But at the same time while we were building this foundation and the capabilities to be able to do other management, supply chain and data and analytics platforms. We also made the pivot to go to as a service now for as a service and subscription selling. It needs a very different quote to Kazakh cash experience for our customers and that's where we had to bring in um platforms like brim to do um subscription building, convergent charging and a whole different way to address. But we were lucky to have this transformation completed on which we could bolt on this new capability and we had the data and another X platform built which now these as a service products can also use to drive better insight into our customer behavior um as well as how they're using our product a real time for our operations teams. >>Well they say follow the money in the cube. We love to say follow the day to day is obviously a crucial component of competitive advantage business value. So you talk a little bit more about the role of data. I'm interested I'm interested in where I. T. Fits uh you know a lot of companies that have a Chief data officer or Ceo sometimes they're separate. Sometimes they they work you know for each other or Cdo works for C. I. O. How do you guys approach the whole data conversation? >>Yeah that's a that's a great question and has been top of the mind of a lot of C E O C I O S. Chief digital officers in many different companies. The way we have set it up here is do we do have a chief data officer and we do have a head of uh technology and platform and data within I. T. Look. The way I see is that I call the term data torture if we have multiple data lakes, if we have multiple data locations and the data is not coming together at one place at the first time that it comes out of the source system, we end up with data swamps and it's very difficult to drive insights. It's very difficult to have a single version of truth. So HP had two pronged approach. First one was as part of this next gen i. T. Transformation we embarked upon the journey first of all to define our customers and products in a very uniform way across the globe. It's called entity Master Data and Product Master Data Program. These were very very difficult program. We are now happy to report that we can understand the customer from code stage to servicing stage beginning to end across all our system. It's been a tough journey but it was a effort well spent at the same time while we were building this message capability, we also invest the time in our analytics platform because we are generating so much data now globally as one footprint. How do we link our data link to R. S. A. P. And Salesforce and all these systems where our customer data flows through and create analytics and insight from it from our customers or our operations team. At the same time, we also created a chief data officer role where the responsibility is really to drive business from understanding what decision making an analytics they need around product, around customer, around their usage, around their experience to be able to drive better alignment with our customers and products going forward. So this creates efficiencies in the organization. If you have a leader who is taking care of your platforms and data building single source of truth and you have a leader who is propagating this mature notion of handling data as enterprise data and driving that focus on understanding the metrics and the insight that the businesses need to drive better customer alignment. That's when we gain those efficiencies and behind the scenes, the chief data officer and the data leader within my organization worked very, very closely to understand each other needs sometimes out of the possible where do we need the data processing? Is it at the edge? Is it in the cloud? What's the best way to drive the technology and the platform forward? And they kind of rely on each other's knowledge and intelligence to give us give us superior results. And I have done data analytics in many different companies. This model works where you have focused on insight and analytics without because data without insight is of no value, but at the same time you need clean data. You need efficient, fast platforms to process that insight at the functional nonfunctional requirements that are business partners have and that's how we have established in here and we have seen many successes recently. As of now, >>I want to ask you a kind of a harder maybe it's not harder question. It's a weird question around single version of the truth because it's clearly a challenge for organizations and there's many applications workloads that require that single version of the truth. The operational systems, the transaction systems, the HR the salesforce. Clearly you have to have a single version of the truth. I feel like however we're on the cusp of a new era where business lines see an opportunity for whatever their own truth to work with a partner to create some kind of new data product. And it's early days in that. But I want to and maybe not the right question for HP. But I wonder if you see it with in your ecosystems where where it's it's yes, single version of truth is sort of one class of data and analytics gotta have that nail down data quality, everything else. But then there's this sort of artistic version of the data where business people need more freedom. They need more latitude to create. Are you seeing that? And maybe you can help me put that into context. >>Uh, that's a great question. David. I'm glad you asked it. So I think tom Davenport who is known in the data space talks about the offensive and the defensive use cases of leveraging data. I think the piece that you talked about where it's clean, it's pristine, it's quality. It's all that most of those offer the offensive use cases where you are improving company's operations incrementally because you have very clean that I have very good understanding of how my territories are doing, how my customers are doing how my products are doing. How am I meeting my sls or how my financials are looking? There's no room for failure in that area. The other area is though, which works on the same set of data. It's not a different set of data, but the need is more around finding needles in the haystack to come up with new needs, new ones and customers or new business models that we go with. The way we have done it is we do take this data take out what's not allowed for everybody to be seen and then what we call is a private space. But that's this entire data available to our business leader, not real time because the need is not as real time because they're doing more what we call this predictive analytics to be able to leverage the same data set and run their analytics. And we work very closely with business in its we educate them. We tell them how to leverage this data set and use it and gather their feedback to understand what they need in that space to continue to run with their with their analytics. I think as we talk about hindsight insight and foresight hindsight and insight happens more from this clean data lakes where you have authenticity, you have quality and then most of the foresight happens in a different space where the users have more leverage to use data in many different ways to drive analytics and insights which is not readily available. >>Thank you for that. That's interesting discussion. You know digital transformation. It's a journey and it's going to take many years. A lot of ways, not a lot of ways 2020 was a forced March to digital. If you weren't a digital business, you were out of business and you really didn't have much time to plan. So now organizations are stepping back saying, okay let's really lean into our strategy the journey and along the way there's gonna be blind spots, there's bumps in the road when you look out what are the potential disruptions that you see maybe in terms of how companies are currently approaching their digital transformations? That's a great question. >>Dave and I'm going to take a little bit more longer term view on this topic. Right in what's top of my mind um recently is the whole topic of E. S. G. Environmental, social and governance. Most of the companies have governance in place, right? Because they are either public companies or they're under some kind of uh scrutiny from different regulatory bodies or what not. Even if you're a startup, you need to do things with our customers and what not. It has been there for companies. It continues to be there. We the public companies are very good at making sure that we have the right compliance, right privacy, right governance in in in place. Now we'll talk about cyber security. I think that creates a whole new challenge in that governance space. However, we have the set up within our companies to be able to handle that challenge. Now, when we go to social, what happened last year was really important. And now as each and every company, we need to think about what are we doing from our perspective to play our part in that. And not only the bigger companies leaders at our level, I would say that Between last March and this year, I have hired more than 400 people during pandemic, which was all virtual, but me and my team have made sure that we are doing the right thing to drive inclusion and diversity, which is also very big objective for h P E. And Antonio himself has been very active in various round tables in us at the world Economic forum level and I think it's really important for companies to create that opportunity, remove that disparity that's there for the underserved communities. If we want to continue to be successful in this world too, create innovative products and services, we need to sell it to the broader cross section of populations and to be able to do that, we need to bring them in our fold and enable them to create that um, equal consumption capabilities across different sets of people. Hp has taken many initiatives and so are many companies. I feel like uh, The momentum that companies have now created around the topic of equality is very important. I'm also very excited to see that a lot of startups are now coming up to serve that 99% versus just the shiny ones, as you know, in the bay area to create better delivery methods of food or products. Right. The third piece, which is environmental, is extremely important as well as we have seen recently in many companies and where even the dollar or the economic value is flowing are around the companies which are serious about environmental HP recently published its living Progress report. We have been in the forefront of innovation to reduce carbon emissions, we help our customers, um, through those processes. Again, if we do, if our planet is on fire, none of us will exist, right. So we all have to do that every little part to be able to do better. And I'm happy to report, I myself as a person, solar panels, battery electric cars, whatever I can do, but I think something more needs to happen right where as an individual I need to pitch in, but maybe utilities will be so green in the future that I don't need to put panels on my roof, which again creates a different kind of uh waste going forward. So when you ask me about disruptions, I personally feel that successful company like ours have to have E. S. G. Top of their mind and think of products and services from that perspective, which creates equal opportunity for people, which creates better environment sustainability going forward. And, you know, our customers are investors are very interested in seeing what we are doing to be able to serve that cause uh for for bigger cross section of companies, and I'm most of the time very happy to share with my C I. O cohort around how are H. P E F s capabilities creates or feeds into the circular economy, how much e waste we have recycled or kept it off of landfills are green capabilities, How it reduces the evils going forward as well as our sustainability initiatives, which can help other, see IOS to be more um carbon neutral going forward as well. >>You know, that's a great answer, rashmi, thank you for that because I gotta tell you hear a lot of mumbo jumbo about E S G. But that was a very substantive, thoughtful response that I think, I think tech companies in particular are have to lead in our leading in this area. So I really appreciate that sentiment. I want to end with a very important topic which is cyber. It's obviously, you know, escalated in, in the news the last several months. It's always in the news, but You know, 10 or 15 years ago there was this mentality of failure equals fire. Now we realize, hey, they're gonna get in, it's how you handle it. Cyber has become a board level topic, you know? Years ago there was a lot of discussion, oh, you can't have the sec ops team working for the C. I. O. Because that's like the Fox watching the Henhouse, that's changed. Uh it's been a real awakening, a kind of a rude awakening. So the world is now more virtual, you've gotta secure physical uh assets. I mean, any knucklehead can now become a ransomware attack, er they can, they can, they can buy ransomware as a services in the dark, dark web. So that's something we've never seen before. You're seeing supply chains get hacked and self forming malware. I mean, it's a really scary time. So you've got these intellectual assets, it's a top priority for organizations. Are you seeing a convergence of the sea? So roll the C. I. O. Roll the line of business roles relative to sort of prior years in terms of driving security throughout organizations. >>This is a great question. And this was a big discussion at my public board meeting a couple of days ago. It's as as I talk about many topics, if you think digital, if you think data, if you think is you, it's no more one organizations, business, it's now everybody's responsibility. I saw a Wall Street Journal article a couple of days ago where Somebody has compared cyber to 9-11-type scenario that if it happens for a company, that's the level of impact you feel on your on your operations. So, you know, all models are going to change where C so reports to see IO at H P E. We are also into products or security and that's why I see. So is a peer of mine who I worked with very closely who also worked with product teams where we are saving our customers from a lot of pain in this space going forward. And H. B. E. Itself is investing enormous amount of efforts in time in coming out of products which are which are secured and are not vulnerable to these types of attacks. The way I see it is see So role has become extremely critical in every company and the big part of that role is to make people understand that cybersecurity is also everybody's responsibility. That's why in I. T. V. Propagate def sec ups. Um As we talk about it, we are very very careful about picking the right products and services. This is one area where companies cannot shy away from investing. You have to continuously looking at cyber security architecture, you have to continuously look at and understand where the gaps are and how do we switch our product or service that we use from the providers to make sure our companies stay secure The training, not only for individual employees around anti phishing or what does cybersecurity mean, but also to the executive committee and to the board around what cybersecurity means, what zero trust means, but at the same time doing drive ins, we did it for business continuity and disaster recovery. Before now at this time we do it for a ransomware attack and stay prepared as you mentioned. And we all say in tech community, it's always if not when no company can them their chest and say, oh, we are fully secured because something can happen going forward. But what is the readiness for something that can happen? It has to be handled at the same risk level as a pandemic or earthquake or a natural disaster. And assume that it's going to happen and how as a company we will behave when when something like this happen. So I'm here's believer in the framework of uh protect, detect, govern and respond um as these things happen. So we need to have exercises within the company to ensure that everybody is aware of the part that they play day today but at the same time when some event happen and making sure we do very periodic reviews of I. T. And cyber practices across the company. There is no more differentiation between I. T. And O. T. That was 10 years ago. I remember working with different industries where OT was totally out of reach of I. T. And guess what happened? Wanna cry and Petra and XP machines were still running your supply chains and they were not protected. So if it's a technology it needs to be protected. That's the mindset. People need to go with invest in education, training, um awareness of your employees, your management committee, your board and do frequent exercises to understand how to respond when something like this happen. See it's a big responsibility to protect our customer data, our customers operations and we all need to be responsible and accountable to be able to provide all our products and services to our customers when something unforeseen like this happens, >>Russian, very generous with your time. Thank you so much for coming back in the CUBA is great to have you again. >>Thank you. Dave was really nice chatting with you. Thanks >>for being with us for our ongoing coverage of HP discover 21 This is Dave Volonte, you're watching the virtual cube, the leader in digital tech coverage. Be right back. >>Mm hmm, mm.

(upbeat music) >> We just compressed about a decade of online commerce progress into about 13 or 14 months. So now we're going to look at how one retailer navigated through the pandemic and what the future of their business looks like. And with me is Alan Jensen who is the chief information officer and senior vice president of the Salling Group. Hello, Alan, how are you? >> Fine, thank you. >> Good to see you. Look, you know, when I look at the hundred year history plus of your company, I mean, it's a marked by transformations and some of them are quite dramatic. So you're Denmark's largest retailer. I wonder if you could share a little bit more about the company its history and how it continues to improve the customer experience while at the same time keeping costs under control so vital in your business. >> Yeah, the company founded approximately 100 year ago with a department store in Denmark. And I think in the 60s we founded the first supermarket in Denmark with the self-service and combined textile and food in the same store. And in the beginning 70s, we found that the first hypermarket in Denmark and then the discounter came from Germany early in 1980 and we started a discount chain. And so we are actually building department store in hypermarket in supermarket, and in the discount sector. And today we are more than 1,500 stores in three different countries in Denmark, Poland, and Germany. And especially for the Danish market we have a approximately 38% market share and it is the leader. We have over the last 10 years developed further into online first in non-food and now in food with home delivery with Clayton Calais. And we have done some acquisition in the convenience with me box solutions to our customers. And we have today also some restaurant burger chain and we are running the Starbucks in Denmark. So you can see a full plate of different opportunities for our customer in especially Denmark. >> It's an awesome story. And of course the founder's name is still on the masthead. What a great legacy. Now, of course the pandemic has forced many changes quite dramatic including the behaviors of retail customers. Maybe you could talk a little bit about how your digital transformation at the Salling Group prepared you for this shift in consumption patterns and any other challenges that you faced. >> I think luckily as for some of the you can say the coati solution in 19 we just roll out using our computers. We are direct access, so you can work from anywhere whether you are traveling from home and so on. We introduced a new age from delivery model and we just finalized the rolling out teams in January, February 20. And that was some very strong thing for suddenly moving all our employees from office to home and more or less overnight we succeed continuing our work and for IT We have not missed any deadline or task for the business in 2020. So I think that was a pretty awesome to see. And for the business, of course the pandemic changed a lot as the change in customer behavior, more or less overnight with plus 50, 80% on the online solution forced us to do some different priorities as we were looking at food home delivery and originally expected to start rolling out in 2022 but took a fast decision in April last year to launch immediately. And we have been developing that over the last eight months and has been live for the last three months now in the market. So you can say the pandemic really front-loaded some of our strategic actions for two to three years. >> What's that saying? Luck is the by-product of great planning and preparation. So let's talk about... what happened? >> And when you are in a company with some strong financial situation that you can move immediately with investment when you take such a decision, then it's really failing yeah. >> Right, awesome. Two-part question. Talk about how you leverage data to support the Solent group's mission and you know drive value for customers. And maybe you could talk about some of the challenges you face with just the amount of data, the speed of data, et cetera. >> Yeah, I said data is everything when you are in retail, as retail is detail as you need to monitor your operation down to each store each department. And if you can say, we have challenged that data is just growing rapidly as a year by year it's growing more and more because you're able to be more detailed, you're able to capture more data. And for a company like ours we need to be updated every morning as our fully updated sales for all unit department single skew selling in the stores is updated three o'clock in the night and send out to all top management and our managers all over the company. It's actually 8,000 reports going out before six o'clock every day in the morning. We have introduced a loyalty program and we are capturing a lot of data on customer behavior. What is their preferred of us? What is their preferred time in the week for buying different things. And all these data is now used to personalize our offers to our value customers. So we can be exactly hitting the best time and convert it to sales. Data is also now used for what we call intelligent price reductions so instead of just reducing prices with 50% if it's a close to running out of date now the system automatically calculate whether a store has just enough to finish with full price before end of day, or actually have too much and need to maybe reduce by 80% before. So being able to sell. So these automated solutions build on data is bringing efficiency into our operation. >> Wow, you make it sound easy. These are non-trivial items. So congratulations on that. I wonder if we could close HPE was kind enough to introduce us, tell us a little bit about the infrastructure of the solutions you're using how they differentiate you in the market. And I'm interested in you know why HPE what distinguishes them, why they choose there. >> When you look out a lot is looking at moving data to the cloud, but we still believe that due to performance, due to the availability, more or less on demand, we still don't see the cloud strong enough for Salling Group capturing all our data. We have been quite successfully having one data truth across the whole company and having one just one single BI solution and having that huge amount of data. I think we have one of the 10 largest sub business warehouses global. And on the other hand we also want to be agile and want to scale when needed. So getting close to a cloud solution, we saw it be GreenLake as a solution, getting close to the cloud but still being on-prem and could deliver what we need to have fast performance on data, but still in a high quality and still very secure for us to run. >> Great, thank you for that. Alan thanks so much for your time really appreciate your insights and congratulations on the progress and best of luck in the future. >> Thank you. >> All right, keep it right there. We have tons more content coming. You're watching Accelerating Next from HPE. (upbeat music)

(mellow music) >> Okay, we're back with Matt Cadieux who is the CIO Red Bull Racing. Matt, it's good to see you again. >> Yeah, great to see you, Dave. >> Hey, we're going to dig into a real world example of using data at the edge and in near real-time to gain insights that really lead to competitive advantage. But first Matt, tell us a little bit about Red Bull Racing and your role there. >> Sure, so I'm the CIO at Red Bull Racing. And at Red Bull Racing we're based in Milton Keynes in the UK. And the main job for us is to design a race car, to manufacture the race car, and then to race it around the world. So as CIO, we need to develop, the IT team needs to develop the applications used for the design, manufacturing, and racing. We also need to supply all the underlying infrastructure, and also manage security. So it's a really interesting environment that's all about speed. So this season we have 23 races, and we need to tear the car apart, and rebuild it to a unique configuration for every individual race. And we're also designing and making components targeted for races. So 23 immovable deadlines, this big evolving prototype to manage with our car. But we're also improving all of our tools and methods and software that we use to design and make and race the car. So we have a big can-do attitude in the company, around continuous improvement. And the expectations are that we continue to make the car faster, that we're winning races, that we improve our methods in the factory and our tools. And so for IT it's really unique and that we can be part of that journey and provide a better service. It's also a big challenge to provide that service and to give the business the agility it needs. So my job is really to make sure we have the right staff, the right partners, the right technical platforms, so we can live up to expectations. >> And Matt that tear down and rebuild for 23 races. Is that because each track has its own unique signature that you have to tune to or are there other factors involved there? >> Yeah, exactly. Every track has a different shape. Some have lots of straight, some have lots of curves and lots are in between. The track's surface is very different and the impact that has on tires, the temperature and the climate is very different. Some are hilly, some are big curves that affect the dynamics of the car. So all that in order to win, you need to micromanage everything and optimize it for any given race track. >> And, you know, COVID has, of course, been brutal for sports. What's the status of your season? >> So this season we knew that COVID was here and we're doing 23 races knowing we have COVID to manage. And as a premium sporting team we've formed bubbles, we've put health and safety and social distancing into our environment. And we're able to operate by doing things in a safe manner. We have some special exhibitions in the UK. So for example, when people return from overseas that they do not have to quarantine for two weeks but they get tested multiple times a week and we know they're safe. So we're racing, we're dealing with all the hassle that COVID gives us. And we are really hoping for a return to normality sooner instead of later where we can get fans back at the track and really go racing and have the spectacle where everyone enjoys it. >> Yeah, that's awesome. So important for the fans but also all the employees around that ecosystem. Talk about some of the key drivers in your business and some of the key apps that give you competitive advantage to help you win races. >> Yeah, so in our business everything is all about speed. So the car obviously needs to be fast but also all of our business operations need to be fast. We need to be able to design our car and it's all done in the virtual world but the virtual simulations and designs need to correlate to what happens in the real world. So all of that requires a lot of expertise to develop the simulations, the algorithms, and have all the underlying infrastructure that runs it quickly and reliably. In manufacturing, we have cost caps and financial controls by regulation. We need to be super efficient and control material and resources. So ERP and MES systems are running, helping us do that. And at the race track itself in speed, we have hundreds of decisions to make on a Friday and Saturday as we're fine tuning the final configuration of the car. And here again, we rely on simulations and analytics to help do that. And then during the race, we have split seconds, literally seconds to alter our race strategy if an event happens. So if there's an accident and the safety car comes out or the weather changes, we revise our tactics. And we're running Monte Carlo for example. And using experienced engineers with simulations to make a data-driven decision and hopefully a better one and faster than our competitors. All of that needs IT to work at a very high level. >> You know it's interesting, I mean, as a lay person, historically when I think about technology and car racing, of course, I think about the mechanical aspects of a self-propelled vehicle, the electronics and the like, but not necessarily the data. But the data's always been there, hasn't it? I mean, maybe in the form of like tribal knowledge, if it's somebody who knows the track and where the hills are and experience and gut feel. But today you're digitizing it and you're processing it in close to real-time. It's amazing. >> Yeah, exactly right. Yeah, the car is instrumented with sensors, we post-process, we're doing video, image analysis and we're looking at our car, our competitor's car. So there's a huge amount of very complicated models that we're using to optimize our performance and to continuously improve our car. Yeah, the data and the applications that leverage it are really key. And that's a critical success factor for us. >> So let's talk about your data center at the track, if you will, I mean, if I can call it that. Paint a picture for us. >> Sure. What does that look like? >> So we have to send a lot of equipment to the track, at the edge. And even though we have really a great lateral network link back to the factory and there's cloud resources, a lot of the tracks are very old. You don't have hardened infrastructure, you don't have docks that protect cabling, for example, and you can lose connectivity to remote locations. So the applications we need to operate the car and to make really critical decisions, all that needs to be at the edge where the car operates. So historically we had three racks of equipment, legacy infrastructure and it was really hard to manage, to make changes, it was too inflexible. There were multiple panes of glass, and it was too slow. It didn't run our applications quickly. It was also too heavy and took up too much space when you're cramped into a garage with lots of environmental constraints. So we'd introduced hyper-convergence into the factory and seen a lot of great benefits. And when we came time to refresh our infrastructure at the track, we stepped back and said there's a lot smarter way of operating. We can get rid of all this slow and inflexible expensive legacy and introduce hyper-convergence. And we saw really excellent benefits for doing that. We saw a three X speed up for a lot of our applications. So here where we're post-processing data, and we have to make decisions about race strategy, time is of the essence and a three X reduction in processing time really matters. We also were able to go from three racks of equipment down to two racks of equipment and the storage efficiency of the HPE SimpliVity platform with 20 to one ratios allowed us to eliminate a rack. And that actually saved a $100,000 a year in freight costs by shipping less equipment. Things like backup, mistakes happen. Sometimes a user makes a mistake. So for example a race engineer could load the wrong data map into one of our simulations. And we could restore that DDI through SimpliVity backup in 90 seconds. And this makes sure, enables engineers to focus on the car, to make better decisions without having downtime. And we send two IT guys to every race. They're managing 60 users, a really diverse environment, juggling a lot of balls and having a simple management platform like HP SimpliVity gives us, allows them to be very effective and to work quickly. So all of those benefits were a huge step forward relative to the legacy infrastructure that we used to run at the edge. >> Yes, so you had the nice Petri dish in the factory, so it sounds like your goals obviously, number one KPI is speed to help shave seconds off the time, but also cost. >> That's right. Just the simplicity of setting up the infrastructure is key. >> Yeah, that's exactly right. >> It's speed, speed, speed. So we want applications that absolutely fly, you know gets actionable results quicker, get answers from our simulations quicker. The other area that speed's really critical is our applications are also evolving prototypes and we're always, the models are getting bigger, the simulations are getting bigger, and they need more and more resource. And being able to spin up resource and provision things without being a bottleneck is a big challenge. And SimpliVity gives us the means of doing that. >> So did you consider any other options or was it because you had the factory knowledge, HCI was, you know, very clearly the option? What did you look at? >> Yeah, so we have over five years of experience in the factory and we eliminated all of our legacy infrastructure five years ago. And the benefits I've described at the track we saw that in the factory. At the track, we have a three-year operational life cycle for our equipment. 2017 was the last year we had legacy. As we were building for 2018, it was obvious that hyper-converged was the right technology to introduce. And we'd had years of experience in the factory already. And the benefits that we see with hyper-converged actually mattered even more at the edge because our operations are so much more pressurized. Time is even more of the essence. And so speeding everything up at the really pointy end of our business was really critical. It was an obvious choice. >> So why SimpliVity? Why do you choose HPE SimpliVity? >> Yeah, so when we first heard about hyper-converged, way back in the factory. We had a legacy infrastructure, overly complicated, too slow, too inflexible, too expensive. And we stepped back and said there has to be a smarter way of operating. We went out and challenged our technology partners. We learned about hyper-convergence. We didn't know if the hype was real or not. So we underwent some PLCs and benchmarking and the PLCs were really impressive. And all these, you know, speed and agility benefits we saw and HPE for our use cases was the clear winner in the benchmarks. So based on that we made an initial investment in the factory. We moved about 150 VMs and 150 VDIs into it. And then as we've seen all the benefits we've successfully invested, and we now have an estate in the factory of about 800 VMs and about 400 VDIs. So it's been a great platform and it's allowed us to really push boundaries and give the business the service it expects. >> Well that's a fun story. So just coming back to the metrics for a minute. So you're running Monte Carlo simulations in real-time and sort of near real-time. >> Yeah. And so essentially that's, if I understand it, that's what-ifs and it's the probability of the outcome. And then somebody's got to make, >> Exactly. then a human's got to say, okay, do this, right. And so was that, >> Yeah. with the time in which you were able to go from data to insight to recommendation or edict was that compressed? You kind of indicated that, but. >> Yeah, that was accelerated. And so in that use case, what we're trying to do is predict the future and you're saying well, and before any event happens, you're doing what-ifs. Then if it were to happen, what would you probabilistically do? So, you know, so that simulation we've been running for a while but it gets better and better as we get more knowledge. And so that we were able to accelerate that with SimpliVity. But there's other use cases too. So we offload telemetry from the car and we post-process it. And that reprocessing time really is very time consuming. And, you know, we went from nine, eight minutes for some of the simulations down to just two minutes. So we saw big, big reductions in time. And ultimately that meant an engineer could understand what the car was doing in a practice session, recommend a tweak to the configuration or setup of it, and just get more actionable insight quicker. And it ultimately helps get a better car quicker. >> Such a great example. How are you guys feeling about the season, Matt? What's the team's, the sentiment? >> Yeah, I think we're optimistic. We with thinking our simulations that we have a great car. We have a new driver lineup. We have Max Verstappen who carries on with the team and Sergio Perez joins the team. So we're really excited about this year and we want to go and win races. And I think with COVID people are just itching also to get back to a little degree of normality, and, you know, and going racing again, even though there's no fans, it gets us into a degree of normality. >> That's great, Matt, good luck this season and going forward and thanks so much for coming back in theCUBE. Really appreciate it. >> It's my pleasure. Great talking to you again. >> Okay, now we're going to bring back Omar for a quick summary. So keep it right there. (mellow music)

>> Go on my lead. >> Dan: All right, very good. >> Five, four. Hello, everyone, and welcome back to the special presentation from theCUBE, where we're exploring the future of cloud and its business impact in the coming decade, kind of where we've come from and where we're going. My name is Dave Vellante, and with me is a CIO/CTO/COO, and longtime colleague, Dan Sheehan. Hello, Dan, how're you doing? >> Hey, Dave, how are you doing? Thank you for having me. >> Yeah, you're very welcome. So folks, Dan has been in the technology industry for a number of years. He's overseen, you know, large-multi, tens of millions of dollar ERP application development efforts, He was a CIO of a marketing, you know, direct mail company. Dan, we met at ADVO, it seems like such a (snickers) long time ago. >> Yeah, that was a long time ago, back in Connecticut. Back in the early 2000s. >> Yeah, ancient days. But pretty serious data for back then, you know, the early 2000s, and then you did a six-year stint as a EVP and CIO at Dunkin' Brands. I remember I came out to see you when I was starting Wikibon and trying to understand. >> Oh yeah. >> You know, what the CIOs cared about. You were so helpful and thanks for that. And that was a big deal. I mean, Dunkin', 17,000 points of distribution. I mean, that was sort of a complicated situation, right? >> Oh yeah. >> So, great experience. >> I mean, when you get involved with franchisees and trying to make everybody happy, yes, that was a lot of fun. >> And then you had a number of other roles, one was as COO at Modell's, and then to fast-forward, Beacon Health. You were EVP and CIO there. And you also, it looked like you had a kind of a business and operational role. You helped the company get acquired by Anthem Blue Cross. So awesome, congrats on that. That must've been a great experience. >> It was. A year of my life, yes. (both laugh) >> You're still standing. So anyway, you can see Dan, he's like this multi-tool star, he's seen a lot of changes in the technology business. So Dan, again, welcome back. Dan Sheehan. >> Oh, thank you. >> So when you started in your career, you know, there was no cloud, right? I mean, you had to do everything. It's funny, I remember I was... You probably know Bill Rucci, CIO of Hartford Steam Boiler. I remember we were talking one day, and this again was pre-cloud and he said, you know, I'm thinking, do I really need to manage my own email? I mean, back then, we did everything. So you had to provision infrastructure so you could write apps, and that was important. That frustrated CFOs, but it was a necessary piece of the value chain. So how have you seen that sort of IT value contribution shift over the years? Let's start there. >> Ah, well, I think it comes down to demand versus capacity. If you look at where companies want to go, they want to do a lot with technology. Technology has taken on a larger role. It's no longer and has not been a, so to speak, cost center. So I think the demand for making change and driving a company forward or reducing costs, there are other executives, peers to the CIO, to the CTO that are looking to do more, and when it comes to doing more, that means more demand, and you step back and you look at what the CIO has for capacity. Looking at Quick Solution's data, solutions in the cloud is appealing, and there are, you know, times where other functions talk to a vendor and see that they can get a vertical solution done pretty quickly. They go off and take that on, or it could be, you know, a ServiceNow capability that you want to implement across the company, and you do that just like an ERP type of roll up. But the bottom line is there are solutions out there that have pushed, I would say the IT organization to look at their capacity versus demand, and sometimes you can get things done quicker with a cloud type of solution. >> So how did you look at that shadow IT as a CIO? Was it something that kind of ticked you off or like you're sort of implying that it made you better? >> Well, I think it does ultimately make you better, but I think you have to partner with the functions because if you don't, you get these types of scenarios, and I've been involved in these just as well. You are busy with, you know, fulfilling your objectives as the leader of IT, and then you get a knock on the door from, let's say marketing or operations, and they say, hey, we just purchased this X solution and we want to integrate it with A, B and C. Well, that was not on the budget or on the IT roadmap or the IT strategy that was linked to the IT, I'm sorry, to the business strategy, and all of a sudden now you have more demand versus the capacity, and then you have to go start reprioritizing. So it's more of, yeah, kind of disrupted, but at the same time, it pushed, you know, the needle of the company forward. But it's all about just working together to make it happen. And that's a lot of, you know, hard conversations when you have to start reprioritizing capacity. >> Well, so let's talk about that alignment. I mean, there's always been a sort of a schism between IT and its ability to deliver, manage demand, and the business will always want you to go faster. They want IT to develop the systems, you know, of course, for less and then they want you to eat the cost of maintaining them, so (chuckles) there's been that tension. But in many ways, that CIO's job is alignment. I mean, it seems to me anyway that schism has certainly narrowed and the cloud's been been part of that, but what do you see as that trajectory over the years and where do you see it going? >> Well, I think it's going to continue to move forward, and depending upon the service, you know, companies are going to take advantage of those services. So yes, some of the non-mission critical capabilities that you would want to move out to the cloud or have somebody else do it, so to speak, that's going to continue to happen because they should be able to do it a lot cheaper than you can, just like use you mentioned a few moments ago about email. I did not want to maintain, you know, exchange service and keeping that all up and running. I moved quickly to Microsoft 365 and that's been a world of difference, but that's just one example. But when you have mission critical apps, you're going to have to make a decision if you want to continue to house them in-house or push them out to an AWS and house them there. So maybe you don't need a large data center and you can utilize some of the best and brightest around security, around managing size of the infrastructure and getting some of their engineering help, which can help. So it just depends upon the application, so to speak, or a function that you're trying to support. And you got to really look at your enterprise architecture and see where that makes sense. So you got to have a hybrid. I see and I have, you know, managed towards a hybrid way of looking at your architecture. >> Okay, so obviously the cloud played a role in that change, and of course, you were in healthcare too so you had to be somewhat careful, >> Yep. >> With the cloud. But you mentioned this hybrid architecture. I mean, from a technologist standpoint and a business standpoint, what do you want out of, you know, you hear a hybrid, multi, all the buzz words. What are you looking for then? Is it a consistent experience? Is it a consistent security? Or is it sort of more horses for courses, where you're trying to run a workload in the right place? What's your philosophy on that? >> Well, I mean, all those things matter, but you're looking at obviously, cost, you're looking at engagement. How does these services engage? Whether it's internal employees or external clients who you're servicing, and you want to get to a cost structure that makes sense in terms of managing those services as well as those mission critical apps. So it comes down to looking at the dollars and cents, as well as what type of services you can provide. In many cases, if you can provide a cheaper and increase the overall services, you're going to go down that path. And just like we did with ServiceNow, I did that at Beacon and also at DentaQuest two healthcare companies. We were able to, you know, remove duplicated, so to speak, ticketing systems and move to one and allow a better experience for the internal employee. They can do self-service, they can look at metrics, they can see status, real-time status on where their request was. So that made a bigger difference. So you engaged the employee differently, better, and then you also reduce your costs. >> Well, how about the economics? I mean, your experience that cloud is cheaper. You hear a lot of the, you know, a lot of the legacy players are saying, oh, no cloud's super expensive. Wait till you get that Amazon bill. (laughs) What's the truth? >> Well, I think there's still a lot of maturing that needs to go on, because unfortunately, depending upon the company, so let's use a couple of examples. So let's look at a startup. You look at a startup, they're probably going to look at all their services being in the cloud and being delivered through a SaaS model, and that's going to be an expense, that's going to be most likely a per user expense per month or per year, however, they structure the contract. And right out of the gate, that's going to be a top line expense that has to be managed going forward. Now you look at companies that have been around for a while, and two of the last companies I worked with, had a lot of technical debt, had on-prem applications. And when you started to look at how to move forward, you know, you had CFOs that were used to going to buy software, capitalize in that software over, you know, five years, sometimes three years, and using that investment to be capitalized, and that would sit below the line, so to speak. Now, don't get me wrong, you still have to pay for it, it's just a matter of where it sits. And when you're running a company and you're looking at the financials, not having that cost on your operational expenses, so to speak, if you're not looking at the depreciation through those numbers, that was advantageous to a CFO many years ago. Now you come to them and say, hey, we're going to move forward with a new HR system, and it's all increasing the expense because there's nothing else to capitalize. Those are different conversations, and all of a sudden your expenses have increased, and yes, you have to make sure that the businesses behind you, with respects to an ROI and supporting it. >> Yeah, so as long as the value is there, and that's a part of the alignment. I want to ask you about cloud pricing strategies because you mentioned ServiceNow, you know, Salesforce is in there, Workday. If you look at the way these guys price, it's really not true cloud pricing in a way, cause they're going to have you sign up for an annual license, you know, a lot of times you got pay up front, or if you want a discount, you're going to have to sign up for two years or three years. But now you see guys like Snowflake coming in, you know, big high-profile IPO. They actually charge you on a consumption-based model. What are your thoughts on that? Do you see that as sort of a trend in the coming decade? >> No, I absolutely think it's going to be on a trend, because consumption means more transactions and more transactions means more computing, and they're going to look at charging it just like any other utility charges. So yes, I see that trend continuing. Did a big deal with UltiPro HR, and yeah, that was all based upon user head count, but they were talking about looking at their payroll and changing their costing on payroll down the road. With their merger, or they went from being a public company to a private company, and now looking to merge with Kronos. I can see where time and attendance and payroll will stop being looked at as a transaction, right? It's a weekly or bi-weekly or monthly, however the company pays, and yes, there is dollars to be made there. >> Well, so let me ask you as a CIO and a business, you know, COO. One of the challenges that you hear with the cloud is okay, if I get my Amazon bill, it's something that Snowflake has talked about, where you know, to me, it's the ideal model, but on the other hand, the transparency is not necessarily there. You don't know what it's going to be at the end of (mumbles) Would you rather have more certainty as to what that bill's going to look like? Or would you rather have it aligned with consumption and the value to the business? >> Well, you know, that's a great question, because yes, I mean, budgets are usually built upon a number that's fixed. Now, no, don't get me wrong. I mean, when I look at the wide area network, the cost for internet services, yes, sometimes we need to increase and that means an increase in the overall cost, but that consumption, that transactional, that's going to be a different way of having to go ahead and budget. You have to budget now for the maximum transactions you anticipate with a growth of a company, and then you need to take a look at that you know, if you're budgeting. I know we were on a calendar fiscal year, so we started up budgeting process in August and we finalized at sometime in the end of October, November for the proceeding year, and if that's the case, you need to get a little bit better on what your consumptions are going to be, because especially if you're a public company, going out on the street with some numbers, those numbers could vary based upon a high transaction volume and the cost, and maybe you're not getting the results on the top end, on the revenue side. So I think, yeah, it's going to be an interesting dilemma as we move forward. >> Yeah. So, I mean, it comes back to alignment, doesn't it? I mean, I know in our small example, you know, we're doing now, we were used to be physical events with theCUBE, now it's all virtual events and our Amazon bill is going through the roof because we're supporting all these users on these virtual events, and our CFO's like, well, look at this Amazon bill, and you say, yeah, but look at the revenue, it's supporting. And so to your point, if the revenue is there, if the ROI is there, then it makes sense. You can kind of live with it because you're growing with it, but if not, then you really got to question it. >> Yeah. So you got to need to partner with your financial folks and come up with better modeling around some of these transactional services and build that into your modeling for your budget and for your, you know, your top line and your expenses. >> So what do you think of some of these SaaS companies? I mean, you've had a lot of experience. They're really coming at it from largely an application perspective, although you've managed a lot of infrastructure too. But we've talked about ServiceNow. They've kind of mopped up in the ITSM. I mean, there's nobody left. I mean, ServiceNow has sort of taken over the whole (mumbles) You know, Salesforce, >> Yeah. >> I guess, sort of similarly, sort of dominating the CRM space. You hear a lot of complaints now about, you know, ServiceNow pricing. There is somebody the other day called them the Oracle of ITSM. Do you see that potentially getting disrupted by maybe some cloud native developers who are developing tools on top? You see in, like, for instance, Datadog going after Splunk and LogRhythm. And there seem to be examples popping up. Well, what's your take on all this? >> No, absolutely. I think cause, you know, when we were talking about back when I first met you, when I was at the ADVO, I mean, Oracle was on it's, you know, rise with their suite of capabilities, and then before you know it, other companies were popping up and took over, whether it was Firstbeat, PeopleSoft, Workday, and then other companies that just came into play, cause it's going to happen because people are going to get, you know, frustrated. And yes, I did get a little frustrated with ServiceNow when I was looking at a couple of new modules because the pricing was a little bit higher than it was when I first started out. So yes, when you're good and you're able to provide the right services, they're going to start pricing it that way. But yes, I think you're going to get smaller players, and then those smaller players will start grabbing up, so to speak, market share and get into it. I mean, look at Salesforce. I mean, there are some pretty good CRMs. I mean, even, ServiceNow is getting into the CRM space big time, as well as a company like Sugar and a few others that will continue to push Salesforce to look at their pricing as well as their services. I mean, they're out there buying up companies, but you just can't automatically assume that they're going to, you know, integrate day one, and it's going to take time for some of their services to come and become reality, so to speak. So yes, I agree that there will be players out there that will push these lager SaaS companies, and hopefully get the right behaviors and right pricing. >> I've said for years, Dan, that I've predicted that ServiceNow and Salesforce are on a collision course. It didn't really happen, but it's starting to, because ServiceNow, the valuation is so huge. They have to grow into other markets much in the same way that Salesforce has. So maybe we'll see McDermott start doing some acquisitions. It's maybe a little tougher for ServiceNow given their whole multi-instance architecture and sort of their own cloud. That's going to be interesting to see how that plays out. >> Yeah. Yeah. You got to play in that type of architecture, let's put it that way. Yes, it'll be interesting to see how that does play out. >> What are your thoughts on the big hyperscalers; Amazon, Microsoft, Google? What's the right strategy there? Do you go all in on one cloud like AWS or are you more worried about lock-in? Do you want to spread your bets across clouds? How real is multi-cloud? Is it a strategy or more sort of a reality that you get M and A and you got shadow IT? What's your take on all that? >> Yeah, that's a great question because it does make you think a little differently around you know, where to put all your eggs. And it's getting tougher because you do want to distribute those eggs out to multiple vendors, if you would, service providers. But, you know, for instance we had a situation where we were building a brand new business intelligence data warehouse, and we decided to go with Microsoft as its core database. And we did a bake-off on business analytic tools. We had like seven of them at Beacon and we ended up choosing Microsoft's Power BI, and a good part of that reason, not all of it, but a good part of it was because we felt they did everything else that the Tableau's and others did, but, you know, Microsoft would work to give, you know, additional capabilities to Power BI if it's sitting on their database. So we had to take that into consideration, and we did and we ended up going with Power BI. With Amazon, I think Amazon's a little bit more, I'll put it horizontal, whereby they can help you out because of the database and just kind of be in that data center, if you would, and be able to move some of your homegrown applications, some of your technical debt over to that, I'll say cloud. But it'll get interesting because when you talk about integration, when you talk about moving forward with a new functionality, yeah, you have to put your architecture in a somewhat of a center point, and then look to see what is easier, cheaper, cost-effective, but, you know, what's happening to my functionality over the next three to five years. >> But it sounds like you'd subscribe to a horses for courses approach, where you put the right workload in the right cloud, as opposed to saying, I'm going to go all in on one cloud and it's going to be, you know, same skillset, same security, et cetera. It sounds like you'd lean toward the former versus going all in with, you know, MANO cloud. >> Yeah, I guess again, when I look at the architecture. There will be major, you know, breaks if you would. So yes, there is somewhat of a, you know, movement to you know, go with one horse. But, you know, I could see looking back at the Beacon architecture that we could, you know, lift and put the claims adjudication capabilities up in Amazon and then have that conduct, you know, the left to right claims processing, and then those transactions could then be moved into Microsoft's data warehouse. So, you know, there is ways to go about spreading it out so that you don't have all those eggs in one basket and that you reduce the amount of risk, but that weighed heavily on my mind. >> So I was going to ask you, how much of a factor lock-in is it? It sounds like it's more, you know, spreading your eggs around, as you say and reducing your risk as opposed to, you know, worried about lock-in, but as a CIO, how worried are you about lock-in? Where is that fit in the sort of decision tree? >> Ah, I mean, I would say it's up there, but unfortunately, there's no number one, there's like five number ones, if you would. So it's definitely up there and it's something to consider when you're looking at, like you said, the cost, risk integration, and then time. You know, sometimes you're up against the time. And again, security, like I said. Security is a big key in healthcare. And actually security overall, whether you're retail, you're going to always have situations no matter what industry, you got to protect the business. >> Yeah, so I want to ask you about security. That's the other number one. Well, you might've been a defacto CSO, but kind of when we started in this business security was the problem of the security teams, and you know, it's now a team sport. But in thinking about the cloud and security, how big of a concern is the cloud? Is it just more, you're looking for consistency and be able to apply the corporate edicts? Are there other concerns like the shared responsibility model? What are your thoughts on security in the cloud? >> Well, it probably goes back to again, the industry, but when I looked at the past five years in healthcare, doing a lot of work with the CMS and Medicaid, Medicare, they had certain requirements and certain restrictions. So we had to make sure that we follow those requirements. And when you got audited, you needed to make sure that you can show that you are adhering to their requirements. So over the past, probably two years with Amazon's government capabilities that those restrictions have changed, but we were always looking to make sure that we owned and managed how we manage the provider and member data, because yes, we did not want to have obviously a breach, but we wanted to make sure we were following the guidelines, whether it's state or federal, and then and even some cases healthcare guidelines around managing that data. So yes, top of mind, making sure that we're protecting, you know, in my case so we had 37 million members, patients, and we needed to make sure that if we did put it in the cloud or if it was on-prem, that it was being protected. And as you mentioned, recently come off of, I was going to say Amazon, but it was an acquisition. That company that was looking at us doing the due diligence, they gave us thumbs up because of how we were managing the data at the lowest point and all the different levels within the architecture. So Anthem who did the acquisition, had a breach back in, I think it was 2015. That was top of mind for them. We had more questions during the due diligence around security than any other functional area. So it is critical, and I think slowly, some of that type of data will get up into the cloud, but again, it's going to go through some massive risk management and security measures, and audits, because how fragile that is. >> Yeah, I mean, that could be a deal breaker in an acquisition. I got two other questions for you. One is, you know, I know you follow the technologies very closely, but there's all the buzz words, the digital transformation, the AI, these new SaaS models that we talked about. You know, a lot of CIOs tell me, look, Dave, get the business right and the technology is the easy part. It's people, it's process. But what are you seeing in terms of some of this new stuff coming out, there's machine learning, you know, obviously massive scale, new cloud workloads. Anything out there that really excites you and that you could see on the horizon that could be, you know, really change agents for the next decade? >> Yeah, I think we did some RPA, robotics on some of the tasks that, you know, where, you know, if the analysis types of situations. So I think RPA is going to be a game changer as it continues to evolve. But I agree with what you just said. Doing this for quite a while now, it still comes down to the people. I can get the technology to do what it needs to do as long as I have the right requirements, so that goes back to people. Making sure we have the partnership that goes back to leadership and the people. And then the change management aspects. Right out of the gate, you should be worrying about how is it going to affect and then the adoption and engagement. Because adoption is critical, because you can go create the best thing you think from a technology perspective, but if it doesn't get used correctly, it's not worth the investment. So I agree, whether it's digital transformation or innovation, it still comes down to understanding the business model and injecting and utilizing technology to grow or reduce costs, grow the business or reduce costs. >> Yeah, usage really means value. Sorry, my last question. What's the one thing that vendors shouldn't do? What's the vendor no-no that'll alienate CIO's? >> To this day, I still don't like, there's a company out there that starts with an O. I still don't like it to that, every single technology module, if you would, has a separate sales rep. I want to work with my strategic partners and have one relationship and that single point of contact that spark and go back into their company and bring me whatever it is that we're looking at so that I don't get, you know, for instance from that company that starts with an O, you know, 17 calls from 17 different sales reps trying to sell me 17 different things. So what irritates me is, you know, you have a company that has a lot of breadth, a lot of, you know, capability and functional, you know that I may want. Give me one person that I can deal with. So a single point of contact, then that makes my life a lot easier. >> Well, Dan Sheehan, I really appreciate you spending some time on theCUBE, it's always a pleasure catching up with you and really appreciate you sharing your insights with our audience. Thank you. >> Oh, thank you, David. I appreciate the opportunity. You have a great day. >> All right. You too. And thank you for watching everybody. This is Dave Vellante for theCUBE on Cloud. Keep it right there. We'll be back with our next guest right after the short break. Awesome, Dan.

>> From theCube studios in Palo Alto in Boston, bringing you data-driven insights from theCube in ETR. This is Breaking Analysis with Dave Vellante. >> New data suggests the tech spending will be higher than we previously thought for 2021. COVID learnings, a faster than expected vaccine rollout, productivity gains in the last 10 months, and broad-based cloud leverage lead us to raise our outlook for next year. We now expect a three to 5% increase in 2021 technology spending, roughly double our previously forecasted growth rate of 2%. Hello everyone and welcome to this week's we keep on Cube Insights powered by ETR. In this breaking analysis, we're going to share new spending data from ETR partners and take a preliminary look at which sectors and which companies are showing momentum heading into next year. Let's get right into it. The data is pointing to a strong 2021 rebound. A latest survey from ETR and the information from theCube Community suggests that the accelerated pace of the vaccine rollout pent up demand for normalcy and learnings from COVID will boost 2021 tech spending higher than previously anticipated. Now a key factor we've cited is that the forced March to digital transformation due to the pandemic created a massive proof of concept for what works and what doesn't in a digital business. CIOs are planning to bet on those sure things to drive continued productivity improvements and new business opportunities. Now, speaking of productivity, nearly 80% of respondents in the latest ETR survey indicate that productivity either stayed the same or improved over the past three months. Now of those, the vast majority, more than 80% cited improvements in productivity. This has been a common theme throughout the year. As well, the expectation among CIOs is that many workers will return to the office in the second half of the year, which we expect will drive new spending in the infrastructure needs of company HQs, which have been neglected over the past 10 months. Now, despite the expectation that many workers will return to the office, 2020 has shown us that working remotely, hey, it's here to stay, and a much larger number of employees are going to be permanently remote working than pre pandemic. ETR survey data shows that that number is going to be approximately double over the longterm. We'll look at some of that specific data. In addition, cloud computing, it became the staple of business viability in 2020. Those that were up the cloud adoption ramp, well, they benefited greatly, those that weren't well, they had to learn fast. Now, along with remote work cloud necessitated new thinking around network security, and as we've reported identity access management, endpoint security and cloud security with the beneficiaries. Companies like Okta, CrowdStrike, Zscaler, a number of others continue to ride this wave. Larger established security companies like Cisco, Palo Alto Networks, F5, Fortunate and others, they have major portions of their business that are benefiting from the tailwinds in the shift and network traffic, as a result of cloud and remote work. Now, despite all the momentum in the market and the expect of improvements in 2021, these tailwinds are not expected to be evenly distributed, far from it. We think Q4 is going to remain soft relative to last year and Q1 2021 is going to be flat, maybe up slightly. Remember the COVID impact was definitely felt in March of this year. So based on the earnings that we saw, there may be some upside in Q1, given that organizations are still being cautious in Q4, and really there's still some uncertainty in Q1. Let's look at some of the survey responses and you'll see why we're more optimistic than we've previously reported. This chart shows the responses to key questions around spending trajectories from the March, June, September, and December surveys of this year. Now it's no surprise that there's been little change in remote workers and limiting business travel. But look at the other categories, seeing a dramatic reduction in hiring freezes. The percentage of companies freezing new IT deployments continues to drop throughout the year. And then conversely, the percentage of companies accelerating new it deployments that's sharply up to 34% from the March low of 12%. And look at the headcount trends. The percentage of companies instituting layoffs. It continues its downward trajectory while accelerated hiring is now up to 17%. So there's a lot to be excited about in these results. Now let's look the remote worker trend. How do CIO see that shift in the near to midterm? This chart shows the work from home data and it's amazingly consistent from the September survey drill down. You can see CIO's is indicate that on average, 15 to 60% of workers were remote prior to the pandemic, and that jumped up to 72 to 73% currently, and is expected to stay in the high fifties until the summer of 2021. Thereafter, organizations expect that the number of employees that work remotely on a permanent basis is going to more than double to 34% long term. By the way, I've talked to a number of executives, CEOs, CIOs, and CFOs that expect that number to be higher than these especially in the technology sector. They expect more than half of their workers to be remote and are looking to consolidate facilities cost to save money. As we've said, cloud computing has been the most significant contributor to business resilience and digital transformation this year. So let's look at cloud strategies and see how CIOs expect those to evolve. This chart shows responses to how organizations see multi-cloud evolving. It's interesting to note the ETR call-out, which concludes that the narrative around multi-cloud multi-cloud is real, and it is. But I want to talk to you about a flip side to this notion in that, as many customers have, or are planning to increasingly concentrate workloads in the cloud. This actually makes some sense. Sure, virtually every major company uses multiple clouds, but more often than not, it concentrate work on a primary cloud. CIO strategies, they're not generally evenly distributed across clouds. The data shows that this is the case for less than 20% of the respondents, rather organizations are typically going to apply an 80, 20 or a 70, 30 rule for their multi-cloud approach. Meaning they pick a primary cloud on which most work is done, and then they use alternative clouds as either a hedge or maybe for specific workloads or maybe even data protection purposes. Now, if you think about it, optimizing on a primary cloud allows organizations to simplify their security and governance and consolidate their skills. At this point in the cloud evolution, it seems CIOs feel there's more value that is going to come from leveraging the cloud to change their operating models, and maybe broadly spreading the wealth to reduce risk or maybe cut costs, or maybe even to tap specialized capabilities. What's more in thinking about AWS and Microsoft respectively. Each can make a very strong case from MANO cloud. AWS has more features than any other cloud, and as such can handle most workloads. Microsoft can make a similar argument for its customers that have an affinity and a largest state of Microsoft software. The key for multi-cloud in our view will be the degree to which technology vendors can abstract the underlying cloud complexity and create a layer that floats above the clouds and adds incremental value. Snowflakes data cloud is one of the best examples of this, and we've covered that pretty extensively. Now, clearly VMware and Red Hat have aspirations at the infrastructure layer in a similar fashion. Pure storage, and NetApp are a couple of the largest storage players with similar visions. And then Qumulo and Clumio are two other examples with promising technologies, but they have a much smaller install base. Take a look at Cisco, Dell, IBM and HPE. They have a lot to gain and a lot to lose in this cloud game. So multi-cloud is an imperative for these leaders, but for them it's much more complicated because of the complexity and vastness of their portfolios. And notably Dell has VMware and IBM of course has Red Hat, which are key assets that can be leveraged for this multi-cloud game. HPE has a channel and a large install base, but all of these firms, they have to spread R&D much more thinly than some of these other companies that we mentioned for example. The bottom line is that multi-cloud has to be more than just plugging into an operating well on any of the clouds. It require... Which is by the way, this is mostly where we are today. It requires an incremental value proposition that solves a clear problem, and at the same time runs efficiently, meaning it takes advantage of cloud native services at scale. What sectors are showing momentum heading into 2021? And who are some of the names that are looking strong? We've reported a lot that cloud containers and container orchestration, machine intelligence and automation are by far the hottest sectors, the biggest areas of investment with the greatest spending momentum. Now we measure this in ETR parlance, remember by net score. But here's the good news, almost every other sector in the ETR taxonomy with the notable exception of IT outsourcing and IT consulting is showing positive spending momentum relative to previous surveys this year. Yeah, maybe not, it's not a shock, but it appears that the tech spending recovery will be broad-based. It's also worth noting that there are several vendors that stand out and we show a number of them here. CrowdStrike, Microsoft has had consistent performance in the dataset throughout this year. Okta, we called out those guys last year and they've clearly performed as you can see in their earnings reports. Pure storage, interestingly, big acceleration and a turnaround from last quarter in the dataset, and of course, snowflake has been off the charts as we reported many times. These guys are all seeing highly accelerated momentum. UiPath just announced its intent to IPO, AWS, Google, Zscaler, SailPoint, ServiceNow, and Elastic, these all continue to trend up. And so, there are some real positives that we're looking for a member of the ETR surveys, they're forward-looking. So we'll see, as we catch up next quarter. Now, before we wrap, I want to say a few words on security, and maybe it's a bit of a non-sequitur here, but I think it's relevant to the trends that we've been discussing, especially as we talk about moving to the cloud. And as you know, we've reported many times on the security space, basically updating you quarterly with our scenarios and the spending and the technology trends and highlighting our four-star companies. Four-star company's insecurity on those with both momentum and significant market presence. And last year we put CrowdStrike, Okta and Zscaler, and some others on the radar. And we've closely track the cyber business of larger companies with a security portfolio like Palo Alto and Cisco, and more recently, VMware has made some acquisitions. Now the government hacked that became news this week. It really underscores the importance of security. It remains the most challenging area for organizations because well, failure's not an option, skills are short, tools are abundant, the adversaries are very well-funded and extremely capable yet failure is common as we saw this week. And there's a misconception that cloud solves the security problem, and it's important to point out that it does not. Cloud is a shared responsibility model, meaning the cloud provider is going to secure the infrastructure for example, but it's up to you as the customer to configure things properly and deal with application security. It's ultimately on you. And the example of S3 is instructive because we've seen a number S3 breaches over the years where the customer didn't properly configure the S3 bucket. We're talking about companies like Honda and Capital One, not just small businesses that don't have the SecOps resources. And generally it was because a non-security person was configuring things. Maybe they were Or developers who are not focused on security, and perhaps permission set too broadly, and access was given to far too many people. Whatever the issue, it took some breaches and subsequent education to increase awareness of this problem and tighten it up. We see some similar trends occurring with new workloads, especially in cloud databases. It's becoming so easy to spin up new data warehouses for example, and we believe that there are exposures out there due the lack of awareness or inconsistent corporate governance being applied to these new data stores. As well, even though important areas like threat intelligence and database security are important, SecOps budgets are stretched thin. And when you ask companies where the priorities are, these fall lower down the list, these areas specifically have taken a back seat, the endpoint, identity and cloud security. And we bring this up because it's a potential blind spot as we saw this week with the US government hack. It was stealthy, it wasn't detected for many, many months. Who knows maybe even years. And not to be a buzzkill, but the point is, cloud enthusiasm has to be concompetent with security vigilant. Enough preaching, let's wrap up here. As we enter 2020, this year, we said the cloud was going to be the force that drove innovation along with data and AI. And as we look in the rear view mirror and put 2020 behind us, I know many of you want to do that, it was the cloud that enabled businesses to not only continue to operate, but to actually increase productivity. Nonetheless, we still see IT spending declines of four to 5% this year with an expectation of a tepid Q4 relative to the last year. We see Q1 slowly rebounding and kind of a swoosh, let me try that again, recovery in the subsequent quarters with tech spending rebounding in 2021 to a positive three to 5%, let's call it 4%. Now supporting us scenario, the pandemic forced a giant Petri dish for digital. And we see some real successes and learnings that organizations will apply in 2021 to bet on sure things. These are cloud, containers, AI, ML, machine intelligence pieces and automation. For sure, along with upticks for virtually every other sector of technology because spending has been so depressed. The two exceptions are outsourcing and IT consulting and related services which continue to be a drag on overall spending. Priorities must be focused on security and governance and further improvements in applying corporate edicts in a cloud world. We also see new data architectures emerging where domain knowledge becomes central to data platforms. We'll be covering this in more detail on top of the work that we've already done in this area. Now, automation is not only an opportunity, it's become a mandate. Yes, RPA, but also broader automation agendas be on point tools. And importantly, we're not talking about paving the cow path here by automating existing processes. Rather we're talking about rethinking processes across the entire organization for a new digital reality where many of these processes are being invented. The work of Erik Brynjolfsson and Andrew McAfee on the second machine age. It was pressured back in 2014 and the conclusions they drew, they're becoming increasingly important in the 2020s, meaning that look machines have always replaced humans throughout time. But for the first time in history, it's happening for cognitive functions, and a huge base of workers is going to be, or as being marginalized, unless they're retrained. Education and public policy that supports this transition is critical. And I for one would like to see a much more productive discussion that goes beyond the cult of break up big tech. Rather I'd like to see governments partner with big tech to truly do good and help drive the re-skilling of workers for the digital age. Now cloud remains the underpinning of the digital business mandate, but the path forward isn't really always crystal clear. This is evidenced by the virtual dead heat between those organizations that are consolidating workloads in a cloud workloads versus those that are hedging bets on a multi-cloud strategy. One thing is clear cloud is the linchpin for our growth scenarios and will continue to be the substrate for innovation in the coming decade. Remember, these episodes, they're all available as podcasts, wherever you listen, all you got to do is search Breaking Analysis podcast, and please subscribe to the series, appreciate that. Check out ETR's website at ETR.plus. We also publish full report every week on wikibond.com and siliconangle.com and get in touch with me at David.vallante, siliconangle.Com, you can DM me at D. Vellante. And please by all means comment on our LinkedIn posts. This is Dave Vellante for theCube Insights powered by ETR. Have a great week everybody, Merry Christmas, happy Hanukkah, happy Kwanzaa, or happy, whatever holiday you celebrate. Stay safe, be well, and we'll see you next time. (upbeat music)

>> From theCUBE studios in Palo Alto and Boston, connecting with thought leaders all around the world, this is a CUBE Conversation. >> Hello, everybody, this is Dave Vellante, and welcome to this breaking analysis. I'm here with Erik Bradley, who's the managing director of ETR and runs their VENN program. Erik, good to see you. >> Very nice to see you too, Dave. Hope you're doing well. >> Yeah, I'm doing okay, hanging in there. You know, you guys in New York are fighting the battle, looks like we're making some progress here, so all the best to you and your family and the wider community. I'm really excited to have you on today because I had the pleasure of sitting in on a CIO/CISO panel last week and we're going to explain sort of what that's all about but one of the things that ETR does that I really like is they go deeper with anecdotal information, and it's almost like in depth interviews in these round tables. So they compliment their quarterly surveys and their other drilldown surveys with other anecdotal information from people in their communities, so it's a tried and true survey practice that adds some color to the data set. So guys, if you'd bring up the agenda, I want to share with the audience what we're going to talk about today. So, we'll talk a little bit about, you know, we just did intros. I wanted to ask Erik what ETR VENN is and then we will go through some of the guests, but if we go back to Erik, explain a little bit about VENN and the whole process, and how you guys do that? >> Yes, sure we should hire you for marketing, you just did a great job actually describing that, but about three years ago, what we decided was, ETR does an amazing job collecting the data. It can tell you what's happening, who it's happening to, and when it's happening, but it can't always tell you why it's happening. So leveraging a lot of my background in 20 plus years in journalism and the institution of Wall Street research, we decided to take the ETR community, the people that actually take the surveys and start doing interviews with them, and start doing events with them. And in enable to doing that, we're basically just trying to complement the survey findings and the data. So what we always say is that ETR will give you the quantitative answer and VENN will give you the qualitative answer. >> Now guys, let's bring up the agenda slide again, let's take a look at the folks that participated in the round table, now, for ETR's clients, they actually know the names and the titles and well the company that these guys work for. We've anonymized it for the public, but you had a CIO of a global auto supplier, a CISO of a diversified holdings firm who actually had some hospitality exposure, but also some government contract manufacturing exposure, a chief architect of a software ISV, and a VP and CISO of a global hospitality resort chain. So you had three out of the four, Erik were really in industries that are getting hit hard, obviously you know the software company, may be a little bit better but, maybe you could add some color to that? >> Well actually the software company unfortunately was getting hit hard as well because they're a software ISV that actually plays into the manufacturing space as well so this particular panel of CIOs and CISOs were actually in a very hard hit industries and are going to make sure we do two more follow ups with different industry verticals to make sure we're getting a little bit of a wider berth and collect all of that information in a better way. But coming back to this particular call the whole reason we did this and as you know you spoke to my colleague and friend Sagar Kadakia who is the director of research for ETR. And we were nimble enough to actually change our survey while it was in the field to start collecting data on what the real time impact was on the COVID-19 pandemic. We were able to take that information, extrapolate it and then say, okay, let's start reaching out to these people and dig deeper, find out why it's happening and even more so is it permanent? And which vendors are going to win and which vendors might lose from it? So that was the whole reason we set up a series of calls, we've only conducted one so far, we have another one this coming Tuesday as well with four entirely new panelists that are going to be from different industry verticals 'cause as you astutely pointed out, these verticals were very hard hit and not all of them are as hard as others, so it's important to get a wider cross-section. >> So guys, let's take a look at some of the budget impacts, the anecdotal sort of evidence that we gathered here, so let me just scan through it and then Erik, I'll ask you to comment. So, I mean like Erik said, some hard hit industries. All major projects, anything sort of next-gen have been essentially shelved, that was the ISV and then another one we cut at least 70% of the big projects moving forward, he mentioned ServiceNow actually called him out, but ServiceNow is a SaaS company, probably you know weather the storm here, but he did say, we've put that on hold. The best comment you know As-a-Service has Saved our Saas, (laughs) that one's great. And then we're going to get into some of the networking commentary, some really interesting things about how to support the work from home, you know we're kind of shifting from a hardened top into users, remote workers and then a lot of commentary on security, so you know that's sort of a high level scan and there's just so much information here, Erik but maybe you could sort of summarize on some of those, that commentary? >> Yeah, we should definitely dig in to each of those sectors a little more, but to summarize what we're seeing here was the real winners and losers are clear. Not everyone was prepared to have a work from home strategy. Not everyone was prepared to send their workers out, their VPN didn't have enough bandwidth so there was a real quick uptake in spending, but longer term we're starting to see that these changes will become more permeant. So the real winners and losers right now, we're going to see on the losers side traditional networking, the MPLS networking is in a lot of trouble according to all the data and the commentary that we're seeing, it's expensive, it's difficult to ramp up bandwidth as quickly as you need and it doesn't support remote. So we're seeing that lose out and the winners there are in the SD-WAN space, it's going to be impossible to ignore that going forward and some of our CIO and even CISO panelists said that change will be permanent. Also we're seeing at the same time, what they were calling a run SaaS and cloud, now we know these trends obviously were already happening but they're being exacerbated, they're happening even more quickly and more strong and I don't see that changing any time soon. That of course is at the expense of data centers, whether it be your own or hosted. Which has huge ramifications on on-prem hardware, even the firewall providers. So what we're seeing here is obviously we know things are going to be impacted by this situation, we didn't necessarily expect all of our community members and IT decision makers to talk about them being possibly permanent, so that on a high level was something that was extremely interesting. And the last one that I would bring up is that as we make this shift towards working from home, towards remote access, you also have to align yourself with the security that can support that. And one of the things that we're seeing in our data side on ETR, is a widening bifurcation between the next-gen security vendors and the more traditional security or the legacy security players, that bifurcation just keeps getting wider and wider and this situation could be the last straw. >> So I want to follow up on a couple of those things, you talked about sort of the network shift and toward SD-WAN, what people have described to me is that they've got a hardened top, it's a hierarchal network, it's very well understood, and it's safe right, and now all of a sudden you got all these remote workers and so you've got to completely sort of rethink your whole network architecture, the other thing I want to grill into is your cloud commentary. There's a comment that I saw Erik, that really stood out, one of the folks said, I would like to see the data centers be completely deleted, if you will or closed down, I mean I think we're going to see you know, a lot more of this, obviously. Not only from the standpoint of, and you heard this a lot the kind of pay by the drink, but just generally getting rid of all that sort of so called non-differentiated heavy lifting as we often hear about. >> That is a extreme comment, I don't think everyone feels that way, but yes, the comment was made and we've heard that comment from other people as you and I both know the larger the enterprise the harder that is to go completely SaaS, but yeah, when a situation like this happens and seeing the inflexibility of their on-prem infrastructure, yes it becomes something that really has to be addressed and it can become a permanent change, I was also shocked about that comment. That gentleman also stated that his executives outside of the IT area, the CEO, the CFO had never ever, ever wanted to discuss cloud, they did not want to discuss work from home, they did not want to discuss remote access. He said that conversation has changed immediately and to the credit of the actual IT companies out there, the technology companies, they're doing everything they can with this opportunity to make that happen. >> Yeah and so, right, I mean the whole work from home conversation that's to your point earlier, Erik, big chunks of COVID, you know the post COVID world are going to remain permanent, guys bring up the SaaS slide if you will, the SaaS commentary "As-a-Service-Saved our SaaS" as the wittiest quip award according to ETR, you know but you had, it was very interesting to hear folks, in fact I think somebody even called out, hey you know we expected Oracle to be auditing us but they're actually being very supportive as is IBM, SalesForce was an interesting comment Erik, one of the folks said they would share accounts you know on-prem but when they all do the work from home they had to actually buy some more. You also got Cisco with big props, Microsoft was called out, a lot of organizations actually allowing them to defer payments, so the SaaS vendors actually got very high marks, didn't they? >> They really did and even I wrote that summary and it was difficult to write that about Oracle because we all know that they're infamous for auditing their own customers in 2009, right after we we came out of the financial crisis. They have notoriously been a bad act, I don't know if they found religion and they decided to be nice to their customers, but every single person mentioned them as one of the vendors that was actually helping. That was very shocking. And then we all know that when bad situations happen people become opportunistic and right now it's really seeming that the SaaS vendors understand that they need a longterm relationship with these customers and they're being altruistic instead which is really nice to see. >> Yeah, I think the, I think anybody with a cloud realizes that hey, we have an opportunity here, the lifetime value of that customer whereas maybe in 2009 when Oracle didn't have a cloud they had to get people in a headlock to try to preserve their you know income statement. If we, let's go to the networking drilldown guys, that next slide, because Fortinet, some of the things that we've been reporting on is the sort of divergence in valuations between Fortinet and Palo Alto before this whole thing hit. Fortinet has done a really good job with it's cloud offerings, Palo Alto struggled a little bit with trying to figure out the sales compensation, is maybe a little bit behind, although both companies got strong props and I've talked to a number of customers and Palo Alto's going to be in the mix, but Fortinet from a cloud standpoint seems to be doing quite well, obviously networking, you know Cisco is the big gorilla there, but so and we also got call outs from guys like Trend Micro, which was interesting from some of the folks so your thoughts on this Erik? >> Yeah, I'll start in the networking side because this is something that I really, I've dug into quite amount in not only this panel but a lot of interviews and it really seems as if as networking refresh starts to come up and it's coming up with a lot of large importers, when your network refresh comes up, people are going to do an RFP for SD-WAN. They are sick and tired of paying MPLS network vendors and they really want to look at something else. That was even prior to this situation. Now what we're hearing is this is a permanent change, I particularly had one person say, I wanted to find this quote real quickly if I can, but basically they were basically saying that from a permanency perspective, the freedom from MPLS will reduce our network spend by over half, while more than doubling or tripling our bandwidth. You can't ignore that, you're going to save me money and triple my bandwidth. And hey, by the way, my refresh is due, it's something that's coming and it's going to happen. And yes you mentioned a few, right, there's Viptela, there's VeloCloud, there's some big players like Cisco. But Palo Alto just acquired CloudGenix in the midst of all of this. They just went and got an SD-WAN player themselves and they just keep acquiring a portfolio to shift from their on-prem to next-gen. It's going to take some time, 'cause 70% plus of their revenue is still on-prem hardware, but I do believe that their portfolio that they're creating is the way the world is moving and that's just one comment on the traditional networking versus the next-gen SD-WAN. >> And the customers have indicated you know it's not easy just to get off of their MPLS networks. I mean it takes time, it's like slowly pulling off the bandaid, but like many things COVID-19 is sort of accelerating that, we haven't talked about digital transformation, that came up. As a maybe more strategic initiative, but one that you know very clearly has legs. >> You know David, it's very simple, you just said it, people, when things are going well and they're comfortable they don't change and that's the same for an enterprise or a company, hey everything's great, our revenue's fine, why would we do this? We'll worry about that next year. Then something like this happens and you realize wow, we've been dragging our feet. That digital transformation that we've been talking about and we've been a little bit slow to accept, we need to accept it, we need to move now. And yes, it was another one of the major themes and it sounds silly for researchers like you and I, because we know this is a theme, we know cloud adoption is there, we know digital transformation is there, but there are still a lot of people that haven't moved as quickly as they should and this is going to be that final catalyst to get them there without a doubt. Quickly on your point of Fortinet, I was actually very impressed with the commentary that came from that because Fortinet is sometimes one of those names that you think of that maybe plays in a smaller pool or isn't as big as some of the 800 pound gorillas out there, but in other interviews besides this I heard the phrase point of 40 everything, so through our R&D and through acquisitions, Fortinet has really expanded their portfolio. And right now is their time to shine because when you have smaller satellite you know offices and branches that you need to connect, they're really, really good at it. And you don't always want to call a Palo Alto and pay that price, when you have smaller branch offices and I actually I was glad you brought up Fortinet because it's not a name that we get to herald that often and it was deserving from this panel. >> Yeah and you know companies that can secure gateways, secure endpoints are obviously going to have momentum, Zscaler came up, you know I think that's and I tell you looking at I've done a couple of breaking analysis on security, and Fortinet has been strong in two dimensions, you know ETR as our audience is I think getting to know, we really look at two key metrics, one is a net score which is a measure of spending momentum and the other is market share, which is a measure of pervasiveness, and companies like Fortinet in security, you know show up on both of those dimensions so it's notable. >> Yes, it certainly is, it is and I'm glad you brought up Zscaler too, very recently by strong request we did a very in depth research on Zscaler versus Palo Alto Prisma access. And they were very interested and this was before all this happened. You know does Palo Alto have a chance of catching up, taking share from Zscaler? And I've had the pleasure myself personally hosting Jay, the CEO of Zscaler at an event in New York City. And I have nothing but incredible respect for the company. But what we found out through this research is Zscaler at the moment their technology is still ahead according to their answers there is no doubt, however there doesn't seem to be any real secret sauce that will stop Palo Alto from catching up. So we do believe that parody of a feature set will shrink over time and then it'll come down to Palo Alto who obviously has a wider end-user interface. Now, what's happening today might change that because if I had to make a decision right now for my company on secure web gateway, I'm still probably going to got to Zscaler, it's the name. If I had to choose that in a year from now, Palo Alto might have had a better chance, so in this panel as you brought up, Zscaler was mentioned numerous times as just the wave of the future along with CASB Brokers, right, whether you're talking about a Netskope or Forcepoint, all those people that also play in the CASB space, to secure your access, zero trust is no longer a marketing hype term, it is real and it is becoming more real by the week. >> And so I want to kind of end on one of the other comments that really struck me because we're constantly talking about okay, do you go with a portfolio of a suite of services or do you go with best of breed, what about startups? Are startups more risky in a crisis like this? And one of your panelists, I just loved his comment, he said, one of the things that I've always done, he said, you always hear about the guy, oh we're going to to the garden, we're going to check out the magic water, we'll pick out three guys in the upper right hand corner and test them out, he says, one of the things that I've always liked to do, is I'll pick two from the upper right, and I'll take one from the lower left, one of the emerging techs and I'll give them a shot, they won't win every time but then he called out FireEye as one of the organizations that he found early that gave them competitive advantage. >> Right. >> Love that comment. >> It's a great comment and honestly if you're in charge of procurement, you'd be stupid not to do that. Not only just to see what the technology is, but now I can play you off the big guys because I have negotiation leverage and I can say, oh well I can always just take their contract. So it's silly not to do it from a business perspective, but from a technology perspective what we kept hearing from these people with the smaller vendors and my partner Peter Steube, my colleague and I we did the host together, we asked this question, really believing that the financial insecurity of the moment in the times would make smaller vendors not viable. We heard the exact opposite, what our panelists said was no, I'd be happy to work with a smaller vendor right now because they're going to give me pricing flexibility, they're going to work with me right now, I don't need to pay them upfront because we're seeing a permanent shift from CAPEX to OPEX and the smaller vendors are willing to work with me and I can pay them later. So we were actually surprised to hear that and glad to hear it because to connect to your other point, the other person who was talking about security in a platform approach versus best of breed, he said listen, platform approaches you're already with the vendor you can bundle a little bit, but the problem is if you're just going to acquire a new technology every time there's a new threat, the bad guys are just going to switch the threat and you can't acquire indefinitely so therefore best of breed with security will always beat platform and that's kind of a message to Palo Alto and Cisco in my opinion because they seem to be the ones fighting that out, even Microsoft now trying to say that they're a platform approach in security. >> Wow and it says to me the security business is going to as we predicted is going to stay fragmented because you're still going to get that best of breed, you know just like cloud is going to be fragmented and it's you know multiple vendors, ever since I've been in this business people are trying to consolidate the number of vendors but technology moves so quickly, it gives competitive advantage, Erik, awesome thank you so much for joining us, I'm looking forward to next Tuesday with the next VENN and love to have you back and talk about it any time, you're a great guest, thanks so much. >> Certainly! I'll do my best to get a better AV connection the next time guys, I apologize for that, but it was great talking to you guys. >> Hey, we're all learning you know, so thank you everybody for watching, this Dave Vellante for theCUBE and we'll see you next time. (upbeat music)

>> From theCUBE Studios in Palo Alto, in Boston connecting with alt leaders all around the world, This is a CUBE conversation. >> Hello everybody, this is Dave Vellante and welcome to this Breaking Analysis. I'm here with Erik Bradley, who's the managing director of ETR and runs their VEN program. Erik good to see you. >> Very nice to see you too Dave. Hope you're doing well. >> Yeah, I'm doing okay hanging in there. You know, you guys in New York are fighting the battle. Looks like we're making some progress here so, you know, all the best, you and your family and the wider community. I'm really excited to have you on today because I had the pleasure of sitting in on a CIO/ CISO panel last week. And we're going to explain sort of what that's all about, but one of the things ETR does that I really like is they go deeper with anecdotal information and it's almost like in-depth interviews in these round tables. So they compliment their quarterly surveys, and their other drill down surveys, with other anecdotal information for people in their community. So it's a tried and true survey practice that adds some color to the dataset. So guys if you bring up the agenda, I want to share with the audience what we're going to talk about today. So, we'll talk a little bit about, you know we just did intros, I want to ask Erik, what ETR VENN is and then we'll go through some of the guests, but if we go back to Erik, explain a little bit about VENN and the whole process and how you guys do that. >> Yeah sure, we should hire you for marketing. You just did a great job, actually, describing that, but about three years ago what we decided was, ETR does an amazing job collecting the data. It can tell you what's happening, who it's happening to and when it's happening. But it can't always tell you why it's happened. So leveraging a lot of my background in twenty-plus years in journalism and institutional Wall Street research, we decided to take the ETR community, the people that actually take the surveys, and start doing interviews with them and start doing events with them. And enable to doing that, we're basically just trying to compliment the survey findings and the data. So what we always say is that ETR will always give you the quantitative answer and VENN will give you the qualitative answer. >> Now guys, let's bring up the agenda slide again, let's take a look at the folks that participated in the round table. Now, for ETR's clients, they actually know the names and the titles and well the company that these guys work for. We've anonymized it for the public. But you had a CIO of a Global Auto Supplier, a CISO of a Diversified Holdings Firm, who actually had some hospitality exposure but also some government contract manufacturing exposure. Chief Architect of a Software ISV and a VP and CISO of a Global Hospitality Resort Chain. So you had three out of the for, Erik, were really in industries that are getting hit hard. Obviously the software company maybe a little bit better. But maybe you can add some color to that. >> Well actually the software company, unfortunately, was getting hit hard as well because they're a software ISV that actually plays into the manufacturing space as well. So, this particular panel of CIOs and CISOs were actually in a very hard hit industries. And are going to make sure we do two more follow-ups with different industry verticals to make sure we're getting a little bit of a wider berth and collect all of that information in a better way. But coming back to this particular call, the whole reason we did this, and as you know, you spoke to my colleague and friend, Sagar Kadakia, who is the Director of Research for ETR, and we were nimble enough to actually change our survey while it was in the field, to start collecting data on what the real-time impact was on the COVID-19 pandemic. We were able to take that information, extrapolate it, and then say okay let's start reading out to these people and dig deeper. Find out why it's happening and even more so, is it permanent? And which vendors are going to win and which vendors might lose from it. So that was the whole reason we set up the series of calls. We've only conducted on so far. We have another one this coming Tuesday as well with four entirely new panelists that are going to be from different industry verticals because, as you astutely pointed out, these verticals were very hard hit and not all of them are as hard as others. So it's important to get a wider cross-section. >> So, guys let's take a look at some of the budget impacts the anecdotal evidence that we gathered here. So let me just scan through it and then Erik, I'll ask you to comment. So, you know, like Erik said, some hard hit industries. All major projects, anything sort of next-generation, have been essentially shelved. That was the ISV. And then another one, we cut at least 70% of the big projects moving forward. He mentioned ServiceNow actually calls them out, but the ServiceNow is a SaaS company they'll probably, you know, weather the storm here. But he did say we've put that on hold. The best comment, you know, "As-a-service has Saved our SaaS." (Erik laughs) That one's great. And then we're going to get into some of the networking commentary. Some really interesting things about how to support the work from home. You know, kind of shifting from a hardened top into remote workers. And then a lot of commentary on security. So, you know, that's sort of a high level scan and there's just so much information here Erik, but maybe you could sort of summarize on some of that commentary. >> Yeah, we should definitely dig into each of those sectors a little more, but to summarize what we're seeing here was the real winners and losers are clear. Not everyone was prepared to have a work from home strategy. Not everyone was prepared to send their workers out. Their VPN wasn't, they didn't have enough bandwidth. So there was a real quick uptick in spending, but longer term we're starting to see that these changes will become more permanent. So the real winners and losers right now, we're going to see on the loser's side traditional networking. The MPLS networking is in a lot of trouble according to all the data and the commentary that we're seeing. It's expensive, it's difficult to ramp to up bandwidth as quickly as you need and it doesn't support remote. So we're seeing that lose out and the winners there are in the SD-WAN space. It's going to be impossible to ignore that going forward and some of our CIO and CISO panelists said that change will be permanent. Also, we're seeing, at the same time, what they were calling a "SaaS and Cloud". Now, we know these trends obviously were already happening but they're being exacerbated. They're happening even more quickly and more strong. And I don't see that changing any time soon. That, of course, is at the expense of network, I'm sorry, data centers. Whether it be your own or hosted. Which has huge ramifications on on-prem hardware. Even the firewall providers. So what we're seeing here is obviously we know things are going to be impacted by this situation. We didn't necessarily expect all of our community members and IT decision-makers to talk about them being possibly permanent. So that on a high level was something that was extremely interesting. And the last one that I would bring up is that as we make this shift towards working from home, towards remote access, you also have to align yourself with the security that can support that. And one of the things that we're seeing in our data side on ETR, is a widening bifurcation between the next-generation security vendors and the more traditional security or the legacy security players. That bifurcation just keeps getting wider and wider and this situation could be the last straw. >> So I want to follow up on a couple of those things. You're talking about sort of the network shift you know, towards the SD-WAN. What people have described to me is that they got a, you know, a hardened top. It's a hierarchical network. It's very well understood and it's safe, right? And now all of a sudden you got all those remote workers and so you've got to completely soft of rethink your whole network architecture. The other thing I want to drill into is your Cloud commentary. There's a comment that I saw, Erik, that really stood out. One of the folks said, "I would like to see the data centers "be completely deleted, if you will, or closed down." I think we're going to see, you know, a lot more of this obviously. Not only from the standpoint of, and you heard this a lot, the kind of paid by the drink. But just generally getting rid of all that sort of so-called non-differentiated heavy-lifting as we often hear about. >> That is a extreme comment. I don't think everyone feels that way. But, yes, the comment was made and we've heard the comment from other people. As you and I both know, the larger the enterprise the harder that is to go completely SaaS. But yeah, when a situation like this has and see the inflexibility of their on-prem infrastructure, yes it becomes something that really has to be addressed and it can become a permanent change. I was also shocked about that comment. That gentleman also stated that his executives outside of the ITs area, the CEO, the CFO, had never ever, ever wanted to discuss Cloud. They did not want to discuss work from home. They did not want to discuss remote access. He said that conversation has changed immediately and to the credit of the actual IT companies out there, the technology companies, they're doing everything they can with this opportunity to make that happen. >> Yeah, and so you're right the whole work from home conversation. To your point earlier, Erik, big chunks of COVID, the post-COVID world are going to remain permanent. Guys bring up the SaaS slide if you will. The SaaS commentary, "As-a-Service Saved our SaaS." "The wittiest quip award" going to the ETR. You know, but you had, what's very interesting to hear folks, in fact I think somebody even called out, "Hey," you know, "we expected Oracle to," you know, "be auditing us but they're actually being supportive "as is IBM." Salesforce was an interesting common, Erik. One of the folks said they would share accounts on-prem, but when they all do the work from home they had to actually buy some more. You also got Cisco with big props. Microsoft was called out. A lot of organizations actually allowing them to defer payments. So the SaaS vendors actually got very high marks didn't they? >> They really did and even I wrote that summary and it was difficult to write that about Oracle because we all know that they're infamous for auditing their own customers in 2009 right after we came out of financial crisis. They have notoriously been a-- I don't know if they found religion and they decided to be nice to their customers, but every-single person mentioned them as one of the vendors that was actually helping. That was very shocking. And we all know that when bad situations happen people become opportunistic. And right now it's really seeming that the SaaS vendors understand that they need a longterm relationship with these customers and they're being altruistic instead. Which is really nice. >> Yeah I think that anybody with a Cloud realizes that hey, we have an opportunity here that the lifetime value of that customer, whereas maybe in 2009 when Oracle didn't have a Cloud, they had to get people in a headlock to try to persevere their, you know, income statement. Let's go to the networking drill down guys, that next slide because Fortinet, some of the things we've been reporting on is the sort of divergence in evaluations between Fortinet and Palo Alto before this whole thing hit, Fortinet has done a really good job with its Cloud offerings. Palo Alto struggles a little bit with trying to figure out the sales compensation, is maybe a little bit behind. Although both companies got strong props and I've talked to a number of customers, Palo Alto is going to be in the mix. Fortinet, from a Cloud standpoint, seems to be doing quite well? Obviously networking, Cisco is the big gorilla there. But we also got call outs from guys like Trend Micro which was interesting, from some of the folks. So, your thoughts on this Erik. >> Yeah, I'll start on the networking side because this is something that I've really, I've dug into quite amount, in not only this panel, but a lot of interviews and it really seems as if as networking refresh starts to come up, and it's coming up with a lot of large enterprises, when your network refresh comes up people are going to do an RFP for SD-WAN. They are sick and tired of paying MPLS network vendors and they really want to look at something else. That was even prior to this situation. Now what we're hearing is this is a permanent change. I particularly had one person say, I wanted to find this quote real quickly if I can, but basically they basically saying that, "From a permanency perspective, the freedom from MTLS "will reduce our networks spend by over half "while more than doubling or tripling our bandwidth." You can't ignore that. You're going to save me money and triple my bandwidth, and hey by the way, my refresh is due. It's something that's coming and it's going to happen. And yes, you mentioned the few right? There's Viptela, there's Velocloud, there's some big players like Cisco. The Palo Alto just acquired CloudGenix in the midst of all of this. They just went and got an SD-WAN player themselves. And they just keep acquiring a portfolio to shift from their on-prem to next-generation. It's going to take some time, because 70% plus of their revenues is still on-prem hardware, but I do believe that their portfolio that they're creating is the way the world is moving. And that's just one comment on the traditional networking versus the next-generation SD-WAN. >> And the customers have indicated, you know it's not easy just to get off of their MPLS network. I mean it takes time, it's like slowly pulling of the bandaid. But, like many things, COVID-19 is sort of accelerating that. We haven't talked about digital transformation. That came up as a maybe more strategic initiative. But one that very clearly has legs. >> You know, David, it's very simple. You just said it. People, when things are going well and they're comfortable, they don't change. And that's the same for an enterpriser company. Hey, everything's great, our revenue's fine. Why would we do this? We'll worry about that next year. Then something like this happens and you realize wow, we've been dragging our feet. That digital transformation that we've been talking about, and we've been a little bit slow to accept, we need to accept it, we need to move now. And yes, it was another one of the major themes and it sounds silly for researchers like you and I because we know this is a theme. We know Clouded option is there, we know digital transformation is there. But, there are still a lot of people that haven't moved as quickly as they should and this is going to be that final catalyst to get them there, without a doubt. Quickly on your point of Fortinet, I was actually very impressed with the commentary that came from that because Fortinet is sometimes one of those names that you think of that maybe plays in a smaller pool or isn't as big as some of the 800 pound gorillas out there. But in other other interviews besides this I've heard the phrase coined of "Forti-everything". So through RND and through acquisition, Fortinet has really expanded the portfolio and right now is their time to shine because when you have smaller satellite, you know, offices and branches that you need to connect, they're really, really good at it. And you don't always want to call a Palo Alto and pay that price when you have smaller branch offices. And I actually, I was glad you brought up Fortinet because it's not a name that we get to herald that often and it was deserving from this panel. >> Yeah and, you know, companies that can secure gateways, secure endpoints, obviously going to have momentum. Zscaler came up, you know I think that, and I'll tell ya, looking at, I've done a couple of breaking analysis on security and Fortinet has been strong in two dimensions. You know ETR is, as our audience is I think getting to know. We really look at two key metrics. One is net score, which is a measure of spending momentum, and the other is market share, which is a measure of pervasiveness. And companies like Fortinet, in security, show up on both of those dimensions so it's notable. >> Yes, it certainly is, it is. And I'm glad you brought up Zscaler too. Very recently by client request, we did a very in-depth research on Zscaler versus Palo Alto Prisma Access and they were very interested. This was before all this happened, you know. Does Palo Alto have a chance of catching up, taking share from Zscaler. And I've had the pleasure, myself, personally hosting Jay the CEO of Zscaler at an event in New York City. And I have nothing but incredible respect for the company. But what we found out through this research is Zscaler, at the moment, their technology is still ahead, according to their answers. There's no doubt. However, there doesn't seem to be any real secret sauce that will stop Palo Alto from catching up. So we do believe the parody of feature set will shrink over time. And then it will come down to Palo Alto obviously has a wider and user base. Now, what's happening today might change that. Because if I had to make a decision right now, for my company on secure web gateway, I'm still probably going to go to Zscaler. It's the name. If I had to choose that in a year from now, Palo Alto might have had a better chance. So in this panel, as you brought up, Zscaler was mentioned numerous times as just the wave of the future. Along with CASB brokers right? Whether you're talking about a Netskoper or Forcepointer. All those people that also play in CASB space to secure your access. Zero trust is no longer a marketing-hype term. It is real and it is becoming more real by the week. >> And so, I want to kind of end on one of the other comments that really struck me because we're constantly talking about okay, do you go with a portfolio of a suite of services or do you go with best of breed? What about startups? Are startups more risky in a crisis like this? And one of your panelists, I just love this comment, he said, "One of things that I've always done," he said, "You always hear about the guy, "oh we're going to go to the gardener, we're going to "check out the magic water, we'll pick out three guys "in the upper right hand corner and test them out." He says, "One of the things I always like to do, "I'll pick two from the upper right "and I'll take one from the lower left." One of the emerging, text, "And I'll give em a shot." It won't win every time, but then he called out FireEye as one of the organizations that he found early that gave them competitive advantage. >> Right. >> Love that comment. >> It's a great comment. And honestly if you're in charge of procurement you'd be stupid not to do that. Not only just to see what the technology is, but now I can play you off the big guys because I have negotiating leverage and I can say oh, well I could always just take their contract. So it's silly not to do it from a business perspective. But from technology perspective, what we kept hearing from these people with the smaller vendors. My partner Peter Steube, my colleague and I, we did the host together, we asked this question really believing that the financial insecurity of the moment and the times would make smaller vendors not viable. We heard the exact opposite. What our panelists said was, "No, I'd be happy "to work with a smaller vendor right now "because they're going to give me pricing flexibility, "they're going to work with me right now. "I don't need to pay them upfront "because we're seeing a permanent shift from CapEx to OpEX, "and the smaller vendors are willing to work with me and I can pay them later." So we were actually surprised to hear that and glad to hear it because, to connect to your other point, the other person who was talking about security and the platform approach versus best of breed, he said "Listen, platform approaches you're already "with the vendor, you can bundle a little bit. "But the problem is, if you're just going to acquire "a new technology every time there's a new threat, "the bad guys are just going to switch the threat. "And you can't acquire indefinitely. "So therefore, best of breed with security "will always beat platform." And that's kind of a message to Palo Alto and Cisco, in my opinion, because they seem to be the ones fighting that out. Even Microsoft now, trying to say they're a platform approach in security. >> Well and this says to me the security business, as we predicted, is going to stay fragmented because you're still going to get that best of breed. You know, just like Cloud is going to be fragmented and it's, you know, multiple vendors. Ever since I've been in this business people are trying to consolidate the number of vendors, but technology moves so quickly, it gives competitive advantage. Erik, awesome! Thank you so much for joining us. I'm looking forward to next Tuesday with the next vendor and love to have you back and talk about it anytime. You're a great guest, thanks so much. >> Certainly, I'll do my best to get a better AV connection the next time guys, I apologize for that. But it was great talking to you tonight. >> Hey we're all learning, you know so, thank you everybody for watching, this is Dave Vellante for theCUBE and we'll see you next time. (upbeat music)

>> Narrator: theCUBE presents Ignite 22. Brought to you by Palo Alto Networks. >> Hey, welcome back to Las Vegas. Lisa Martin here with Dave Vellante. This is day two of theCUBE's coverage of Palo Alto Ignite 2022. Dave we're just talking about how many times we're in Vegas. And we were here two weeks ago with our guest who's back in Alumni. And it's a blur, right? >> It's true, I lost count. Luckily I'm not flying red eye tonight. So that's good. >> I'm impressed. >> Excited about that. >> Yeah >> I'm actually going to enjoy the, nightlife here for a period of time. And, you know, we were at re-Invent. >> Yeah. >> And what a difference. This is nice and relaxed. You have time. You're not getting bumped in the hallway. >> Right. >> A lot of time for learning. So it's been great show. >> It's been great. And one of the things that we've been talking about is the supply chain. Securing the modern software supply chain is really complicated. We've got an Alumni back with us, to talk about what Palo Alto is doing in that respect. Ankur Shah joins us. The SVP and GM of Cloud Security at Palo Alto Networks. Welcome back. >> Yeah, happy to be back. Good to see you again. Dave and Lisa. >> It's been two long weeks. >> Ankur: I know. It's been two weeks, yeah >> Dave: It's kind of crazy. I mean, ReInvent really was a blur. And it's like you had everything coming at you. And there was obviously a big chunk of security, but you. It was just so much to absorb. >> Yeah. >> Right? >> Yeah, and I couldn't get into any of the sessions versus at Ignite. I mean, you could, you could learn a lot. To your point Dave. And 70,000 people versus 3000 in change. Big difference. >> Dave: Yeah. >> Lisa: Huge difference. >> Yeah. >> Lisa: Huge difference. So we touched on the Cider acquisition. >> Ankur: Yeah. >> Which was announced the intent to acquire last month. Let's dig into a little bit more of that, and then some of the great things that had been announced. >> Ankur: Yeah. >> In the last couple of days. >> Oh, absolutely. So, this is something that we have been marinating for last nine months. Thinking about how best to secure supply chain. And this is software supply chain. The modern application software is fairly complex. You know, back in the days when I was a developer, it was a simple three tier application. Ship the code once a year, et cetera. But now with microservices, new architectures, Kubernetes Public Cloud, we talked about this. It's getting super complicated, and the customers are really worried about securing their entire supply chain. Which is nothing but the software pipeline. And so we started looking at a whole bunch of companies and Cider really stood out. I mean, they had, they were the innovators in this space. Very early days, we've seen supply chain attack. But there hasn't been a really good and strong solution in that space. And Cider just delivered that incredible team. Great technology, super excited about what that integration will look like. in the coming quarters. >> What do we need to know about them? I mean, I'll be honest with you, I wasn't familiar with Cider until I saw you guys made the announcement of the intent to acquire them. What, what should we know about them? Why Cider? What was it that attracted you to them? >> Ankur: Yeah, so, you know, we have a history of technology acquisitions as you know, over the last four years, just in the public cloud. We acquire over half a a dozen companies, small and large. And typically we are always looking for companies who have the next gen technology available. Technology that is more in tune with how application software is going to look like in future. So we're not always going after companies that are making you know, tens of hundreds of millions of dollars in a year and all. We're looking for the right tech. The future. And that's what we found in Cider. Like they have a really strong application security background. And AppSec just broadly speaking, supply chain is part of it. But application security, just broadly speaking, is right for disruption. You've got a lot of vendors, who have been around for like last two decades. Old school stuff, lots and lots of false positives. So we've been bolstering, beefing up our portfolio in the application security space. And Cider really fits right nicely into it. Because it can like I said, secure a lot of technology and tooling, that software developers use as part of their software supply chain. So, great founding team, great technology. It was a perfect fit. >> Talk about integration. We spoke with Nikesh yesterday, with Nir, with a whole bunch of folks. Lee this morning. BJ yesterday as well. And one of the things that seems to stick out at me. With all the shows that we do, is the focus that Palo Alto has on ensuring that it's making the right acquisitions. But that it's the integration, is really seems to be like leading part of the strategy. That seems to be a little bit of a differentiator to me. >> Yeah, it absolutely is. There are two ways to integrate a technology into an existing platform. And Prisma Cloud is a platform as you know. Code-to-cloud, CNAPP platform as we call it. One is just kind of slotted in, put the whole thing in a box. And that's basically making one plus one equal to two. We're looking for high leverage in integrations, whereby once that integration comes along. It makes the rest of the platform even better and superior. It makes that technology look even better. So that's why there's a lot of focus on ensuring that we're delivering the right type of integration, that delivers instant customer value. And that makes the overall platform even superior. So customers don't feel like hey, like there's just one more add-on, on top of the other thing. >> Lisa: Right, not a bolt on. >> So that's why there's a lot of focus on that. Getting the strategy nailed. Because the founding teams generally have a preconceived notion about how the world looks like. Then they understand how Prisma cloud and Palo Alto Networks think about it. And then, we sort of merge the two ideas, and build something that's incredible. So I am, we're spending a lot of time in integration. That honeymoon phase of like, let's high five acquisitions done, that's over. Now it's the grinding work of actually getting this right. And you know, getting hundreds and thousands of customers. >> Well I like how you don't have the private equity mentality. It's not about EBITDA and cashflow. We'll take care of that. >> Ankur: Yeah. >> You know, it's about getting that integration. Getting that flywheel effect, inside the platform. You know, we said one plus one equals, maybe even more than two. Can you explain Prisma Cloud Secrets Security? What is that all about? What do we need to know about that? >> Ankur: Absolutely. So, the developers, you know generally store some stuff in the code repo for their automation work to build application. And that thing, the API keys or as Secrets are stored in code repo. It shouldn't be. Or even if they are, they should be encrypted, or locked down and things of that nature. But, you know, the need for speed trumps everything else. Developers want to go fast. And sometimes they're like, okay well. I guess my application needs this particular, you know API access token or secret. I'm just going to stick it in the code. Now the challenge with that is that, if somebody gets hold of your code repo. Now not only is your code repo, which has all your sensitive data. Your code is the life and blood of a technology company. That's in trouble. But also those secrets and API access keys can be used to log into your cloud accounts. And there you may have sensitive customer data. Everything that you have as a technology company stored in that public cloud accounts. So that's the worry. It's usually the initial access for the kill chain. Because that's where the attacks start. Let me get the secret, let me get the API access key. And let me see what I can do in public cloud. So we are now giving customers the visibility into where the secrets are stored. More importantly, it just right there on developer's face. In the code repo as they're checking in the code. They say why, hey, there's a secret here. Are you sure you want to, you want to keep it like this, no? Okay, well then you can either encrypt it, or just get rid of it. So we're making, we're bringing security where the developers are in their code repo, et cetera. >> So I can see a lot of developers saying, yeah, go ahead, encrypt it. So I don't have to do anything else, you know, extra. It's almost, the analogy is a very small you know, version of this. Its like, use a password manager. You store all your passwords in your contacts on your phone, right? I mean, somebody gets a hold of your contacts, you're screwed. >> Ankur: That's exactly right. >> And so, but I could still see a lot of developers say, check in the box. Say, yeah just encrypt it, leave it there. But you're saying best practice is to not to do that, right? >> Yeah, usually you're not supposed to, you know, store all your secrets, et cetera in code repo to begin with. But if you do, you know, you use a key wall like technology to really encrypt it and store it in a secret manner, yeah. >> Dave: There's an old saying, bad user behavior trump's great security every time. >> Ankur: Every time. >> But this is an example where, we know you're going to have bad behavior. So we're going to protect the bad behavior. >> Yeah, and actually, sorry Lisa, just to that point. The bad user behavior trumps good security. The classic example, this happened three weeks ago. Three, four weeks ago, where Dropbox, one of the file sharing companies there. 120 plus code repos were exposed. And the way their attack started, was a simple social engineering attack. Bad user behavior. There was an email, hey, like your passwords are updated for your, you know, this code plugin. Can you enter the password? And boom, now you have access to the code repo. And now if you have secrets inside of it, now, you know all bets are off. >> Are there hard-coded secrets versus like, I mean, like I think like, like you were saying, Dave. Like usernames and passwords and tokens, versus like soft coded secrets. >> Ankur: It's, I think it, this is more so two forms of it, you know. The most primary one is what we call the API access keys. And this keys are used to access cloud accounts, workloads and things of that nature. But there are actually secret secrets. Could be database login passwords, et cetera. The application is using it to spin up databases. Now, you know, you have access to the data stores. Any other application, there's a login password, all of that stuff. So it's less about the user password, but more the application and databases and things of that nature. >> Dave: So again, and, again, everybody should be using password managers. But when you use a password manager, it's going to give you a long list of passwords, that are either been compromised or are weak. And you just go uh, okay. So can you help? How do you help customers identify what the high risk? You know, API, you know, access are versus those ones that they may not have to worry about. >> Ankur: Yeah, look. You know, secrets aside. Risk prioritization is one of the biggest topics that our customers have across the board, in cloud security. All the security vendors are really, really good at one thing, generating alerts. Everybody does it. They generate an alert. You know, your ring camera, if you've got one. I mean this pop up every day, like every minute rather. Well like can you prioritize it for me? What should I really look at it? So that's a number one thing. What Prisma Cloud does is, you know, contextualize it. What the real risk is? They can tell you like, hey, here's the kill chain. If this thing, you know, goes to public internet. These are the potential exposures that you have. So we provide a prioritized risk of critical alerts that customers have to take care of before they can start taking care of more hygiene type of stuff, right? So that's how we do it. Like we leverage a lot of technology. We apply a lot of context. We tell you like, hey, this code repo is not protected by multifactor authentication. And then there's a secret inside. Are you sure, you know, you don't want to fix it? So that's what we do. But it's a great question. Top of mind for all our customers. And that's how we think about it across the board. Versus generating just alerts all the time. >> Dave: Is the strategy, Because we all know phishing is the sort of most, you know obvious way to. It's the top way in which people get hacked. >> Ankur: Yeah. >> Is your strategy essentially to say. Okay we know that's going to happen, so we're going to try to protect it at the back end. How much of the, maybe it's an industry question. more so than just a Palo Alto specifically, How much emphasis is do you think the industry is taking or should be taking on stopping that, you know that those phishing attacks? Because if that's the number one problem you know, maybe that's where we should be starting. >> Yeah, it's a great question. It's typically the initial vector, for a lot of attacks to your point. But there is one thing that technology and AI cannot solve. Which is the user behavior, to your point. Like we can't get into the heads of the user. I mean, you can train them, you can do everything. You can't prevent somebody from clicking a button. Of course there's technology out there for email security that does that. But your point is, right, it's going to happen. Now what do you do? How do you protect your applications, your crown jewel? You know, whether it's in the cloud or it's in the code repo. So a lot of what we are trying to do in code security, or cloud security, or in general at Palo Alto Networks. is to protect those crown jewel. Because we can't prevent somebody from doing something. User behavior is hard to change. >> Dave: So it's almost like, okay, you left your front door open. Somebody's going to walk in, but oh, they walk into a vault. And they don't know where to go. And there's nowhere they can- >> Ankur: Yeah. >> You know, nothing they can take. They can't get to the silverware or the jewelry. >> I think that's it, yeah. >> What are some of the things, like as we look at, we're wrapping up calendar year '22 heading into '23. That customers can look to Palo Alto Networks to help them achieve? One of the things that we talked about with Nikesh and Niri yesterday, is consolidation. Like, and you guys just did a recent, survey. >> Ankur: Yeah. >> About the state of Cyber, and organizations on average have 366 apps in their environment. 31 security tools, 30 to 50 security tools. >> Ankur: Yeah. >> Consolidation is really key there. What are some of the things that you are excited about to deliver to customers where consolidation is concerned? >> Ankur: Yeah. >> Where software supply chain security is concerned in the next year? >> Yeah, absolutely. Look, there are over 3000 security vendors. And this can be, I mean you talked about average customer having 300. I was talking to a CSO, this was last year for one of the largest financial institution I go, "How many security tools do you have?" He got 120. I said, why? He goes, we have a no vendor left behind policy. >> Wow. >> It's crazy. >> Dave: What? >> Obviously he was joking, but it's crazy, right? Like that's how the CSO's are. >> Dave: I mean, he was kidding. >> Yeah. >> Dave: But recognized that. Wow. >> Yeah, and, this is the state the security industry is in. And our mission has been, and Lee and Nikesh and Niri talked about it. Is just platforms, will platforms take moonshots, things long term. And especially the, macro headwinds that we're seeing. We're hearing more and more from the customers that, look we're not going to buy point product. Then we got to buy another product that stitches it all together. We need platforms, whether it's for zero trust, Prisma SaaS, whether it's cloud. Prisma cloud or for your sock transformation. You know XIM and Cortex line of products. So I think you're going to see more and more of that in 2023. I'm confident in that. >> We heard from Lee today, the world record's 400. >> Yes. >> Yeah. >> That's crazy. >> He's going for it. He's got a ways to go. 120 He's got to... >> Maybe he wasn't, that guy wasn't kidding about his no vendor left behind policy. (laughing) Do you have Ankur, a favorite customer story that really articulates the value of what Palo Alto delivers and continues to. You know, 'cause one of the things that Nikesh said in his keynote was that you know, security's a data problem. Well every company these days, in every industry has to be a data company. But really what they need to be able to be is a secured data company. >> Ankur: Yeah. >> How are you guys enabling that? >> Oh, absolutely. Look, many customer examples come to mind, but speaking of data. You know, one of, some of our largest customers who are protecting their PCI workers where they have sensitive data. They're using for example, Prisma Cloud, to ensure that malicious attacks don't happen. And those workloads are used for credit card processing. They're processing tens of thousands of credit card transactions a second. And make sure that nobody gets hold of that. And that's why they have to make sure that nobody is. No attacker is trying to get hold of the sensitive data, to your point, So we have customers across financial services, media and entertainment technology company. Where we are helping them go as fast as possible in public cloud. Go through digital transformation, by securing their applications. >> Dave: What's the T-shirt say? I see code. >> Oh yeah. >> Dave: Secure from Code to Cloud. >> Lisa: Shift Happens. >> Shift Happens, Secrets from Code to Cloud. >> I love that. I was looking at that, going back to that, what's next in cyber survey? >> Ankur: Yeah. >> It said 74% of respondents, and I believe there was 1300 CIO's, CXO's that were surveyed globally. Where they said security is slowing down DevOps. Can customers look to Palo Alto Networks to help them? >> Ankur: Be enablers? >> Yes. >> Yeah, hundred percent. Look, the conversation over the last few years have changed now. Security used to say like, oh, I don't know about these people who are building applications. The DevOps is like security slowing down. I think there's an opportunity for companies like Palo Alto Networks, to build the bridge between the two. And the way we do it is make the securities easy, simple and not super intrusive. Where developers have to do a natural thing. And one part of it, and I talked about it earlier, is bring security where the developers are. In their code repo, in their IDE. Make it super simple. Don't make them do unnatural things. And it just, this is no different from changing the behavior of our kids. Right? Like you make them do unnatural things, they're not going to do it. But if it is part of their regular, you know, day-to-day operating procedures. I think they're going to be more open to change. Yeah. So I think it's possible. And Palo Alto has a huge responsibility to bridge the divide between the apps team, or the DevOps and the security organization. >> Lisa: Lots of great stuff to come. We thank you so much for coming back, two weeks. Only being on two weeks ago. We appreciate your insights, learning more information. It's great to see you at Palo Alto Ignite. And we'll have to have you back on. 'Cause we know that there's so much more to follow with respect to what you're doing. And shifting left, shift happens. >> Awesome. Lisa, Dave, thank you so much. It's been a pleasure. >> Lisa: Thank you so much. For Ankur Shah and Dave Vellante. I'm Lisa Martin. You're watching theCUBE. The leader in live and emerging tech coverage.

>>Welcome back here on the Cube. I'm John Walls. We are in Las Vegas at the Venetian, and this is Reinvent 22 in the Executive Summit sponsored by Accenture. Glad to have you with us here as we continue our conversations. I'm joined by Paul Puckett, who's the former director of the Enterprise Cloud Management Services at the US Army. Paul, good to see you sir. Hey, you as well, John. Thank you. And Justin, she who is managing director and cloud go to market lead at Accenture Federal Services. Justin, good morning to you. Good morning, John. Yeah, glad to have you both here on the cube. First time too, I believe, right? Yes sir. Well, welcome. I wish we had some kind of baptism or indoctrination, but I'll see what I can come up with in the next 10 minutes for you. Let's talk about the Army, Paul. So enterprise cloud management, US Army. You know, I can't imagine the scale we're talking about here. I can't imagine the solutions we're talking about. I can't imagine the users we're talking about. Just for our folks at home, paint the picture a little bit of what kind of landscape it is that you have to cover with that kind of title. >>Sure. The United States Army, about 1.4 million people. Obviously a global organization responsible for protecting and defending the United States as part of our sister services in the Department of Defense. And scale often comes up a lot, right? And we talk about any capability to your solution for the United States Army scale is the, the number one thing, but oftentimes people overlook quality first. And actually when you think of the partnership between the Army and Accenture Federal, we thought a lot when it came to establishing the enterprise Cloud management agency that we wanted to deliver quality first when it came to adopting cloud computing and then scale that quality and not so much be afraid of the, the scale of the army and the size that forces us to make bad decisions. Cuz we wanted to make sure that we proved that there was opportunity and value in the cloud first, and then we wanted to truly scale that. And so no doubt, an immense challenge. The organization's been around for now three years, but I think that we've established irreversible momentum when it comes to modernization, leveraging cloud computing >>For the army. So let's back up. You kind of threw it in there, the ecma. So this agency was, was your a collaboration, right? To create from the ground up and it's in three years in existence. So let's just talk about that. What went into that thinking? What went into the planning and then how did you actually get it up and run into the extent that it is today? >>Sure. Well, it was once the enterprise cloud management office. It was a directorate within the, the CIO G six of the United States Army. So at the headquarters, the army, the chief information Officer, and the G six, which is essentially the military arm for all IT capability were once a joint's organization and the ECMO was created to catalyze the adoption of cloud computing. The army had actually been on a, a cloud adoption journey for many years, but there wasn't a lot of value that was actually derived. And so they created the ecma, well, the ECMO at the time brought me in as the director. And so we were responsible for establishing the new strategy for the adoption of cloud. One of the components of that strategy was essentially we needed an opportunity to be able to buy cloud services at scale. And this was part of our buy secure and build model that we had in place. And so part of the buy piece, we put an acquisition strategy together around how we wanted to buy cloud at scale. We called it the cloud account management optimization. OTA >>Just rolls right off the >>Tongue, it just rolls right off the tongue. And for those that love acronyms, camo, >>Which I liked it when I was say cama, I loved that. That was, that was, >>You always have to have like a tundra, a little >>Piece of that. Very good. It was good. >>But at the time it was novetta, no, Nevada's been bought up by afs, but Novea won that agreement. And so we've had this partnership in place now for just about a year and a half for buying cloud computing net scale. >>So let's talk about, about what you deal with on, on the federal services side here, Justin, in terms of the army. So obviously governance, a major issue, compliance, a major issue, security, you know, paramount importance and all that STEM leads up to quality that Paul was talking about. So when you were looking at this and keeping all those factors in, in your mind, right? I mean, how many, like, oh my God, what kind of days did you have? Oh, well, because this was a handful. >>Well, it was, but you could see when we were responding to the acquisition that it was really, you know, forward thinking and forward leaning in terms of how they thought about cloud acquisition and cloud governance and cloud management. And it's really kind of a sleepy area like cloud account acquisition. Everyone's like, oh, it's easy to get in the cloud, you know, run your credit card on Amazon and you're in, in 30 seconds or less. That's really not the case inside the federal government, whether it's the army, the Air Force or whoever, right? Those, those are, they're real challenges in procuring and acquiring cloud. And so it was clear from, you know, Paul's office that they understood those challenges and we were excited to really meet them with them. >>And, and how, I guess from an institutional perspective, before this was right, I I assume very protective, very tight cloistered, right? You, you, in terms of being open to or, or a more open environment, there might have been some pushback was they're not. Right? So dealing with that, what did you find that to be the case? Well, so >>There's kind of a few pieces to unpacking that. There's a lot of fear in trepidation around something you don't understand, right? And so part of it is the teaching and training and the, and the capability and the opportunity in the cloud and the ability to be exceptionally secure when it comes to no doubt, the sensitivity of the information of the Department of Defense, but also from an action acquisition strategy perspective, more from a financial perspective, the DOD is accustomed to buying hardware. We make these big bets of these big things to, to live in today's centers. And so when we talk about consuming cloud as a utility, there's a lot of fear there as well, because they don't really understand how to kind of pay for something by the drink, if you will, because it incentivizes them to be more efficient with their utilization of resources. >>But when you look at the budgeting process of the d od, there really is not that much of incentive for efficiency. The p PPE process, the planning program, budgeting, execution, they care about execution, which is spending money and you can spend a lot of money in the cloud, right? But how are you actually utilizing that? And so what we wanted to do is create that feedback loop and so the utilization is actually fed into our financial systems that help us then estimate into the future. And that's the capability that we partnered with AFS on is establishing the closing of that feedback loop. So now we can actually optimize our utilization of the cloud. And that's actually driving better incentives in the PPE >>Process. You know, when you think about these keywords here, modernized, digitized, data driven, so on, so forth, I, I don't think a lot of people might connect that to the US government in general just because of, you know, it's a large intentionally slow moving bureaucratic machine, right? Is that fair to characterize it that way? It >>Is, but not in this case. Right? So what we done, >>You you totally juxtapose that. Yeah. >>Yeah. So what we've done is we've really enabled data driven decision making as it relates to cloud accounts and cloud governance. And so we have a, a tool called Cloud Tracker. We deployed for the army at a number of different classifications, and you get a full 360 view of all of your cloud utilization and cloud spend, you know, really up to date within 24 hours of it occurring, right? And there a lot of folks, you know, they didn't never went into the console, they never looked at what they were spending in cloud previously. And so now you just go to a simple web portal and see the entire entirety of the army cloud spend right there at your fingertips. So that really enables like better decision making in terms of like purchasing savings plans and reserved instances and other sorts of AWS specific tools to help you save money. >>So Paul, tell me about Cloud Tracker then. Yeah, I mean from the client side then, can you just say this dashboard lays it out for you right? In great detail about what kind of usage, what kind of efficiencies I assume Yeah. What's working, what's not? >>Absolutely. Well, and, and I think a few things to unpack that's really important here is listen, any cloud service provider has a concept. You can see what you're actually spending. But when it comes to money in the United States government, there are different colors of money. There's regulations when it comes to how money is identified for different capabilities or incentives. And you've gotta be very explicit in how you track and how you spend that money from an auditability perspective. Beyond that, there is a move when it comes to the technology business management, which is the actual labeling of what we actually spend money on for different services or labor or software. And what Cloud Tracker allows us to do is speak the language of the different colors of money. It allows us to also get very fine grain in the actual analysis of, from a TBM perspective, what we're spending on. >>But then also it has real time hooks into our financial systems for execution. And so what that really does for us is it allows us to complete the picture, not just be able to see our spend in the cloud, but also be able to able to see that spending context of all things in the P P P E process as well as the execution process that then really empowers the government to make better investments. And all we're seeing is either cost avoidance or cost savings simply because we're able to close that loop, like I said. Yep. And then we're able to redirect those funds, retag them, remove them through our actual financial office within the headquarters of the army, and be able to repurpose that to other modernization efforts that Congress is essentially asking us to invest >>In. Right. So you know how much money you have, basically. Exactly. Right. You know how much you've already spent, you know how you're spending it, and now you how much you have left, >>You can provide a reliable forecast for your spend. >>Right. You know, hey, we're, we're halfway through this quarter, we're halfway through the, the fiscal year, whatever the case might be. >>Exactly. And the focus on expenditures, you know, the government rates you on, you know, how much have you spent, right? So you have a clear total transparency into what you're going to spend through the rest of the fiscal. Sure. >>All right. Let's just talk about the relationship quickly then about going forward then in terms of federal services and then what on, on the, the US Army side. I mean, what now you've laid this great groundwork, right? You have a really solid foundation where now what next? >>We wanna be all things cloud to the army. I mean, we think there's tremendous opportunity to really aid the modernization efforts and governance across the holistic part of the army. So, you know, we just, we want to, we wanna do it all with the Army as much as we can. It's, it's, it's a fantastic >>Opportunity. Yeah. AFS is, is in a very kind of a strategic role. So as part of the ecma, we own the greater strategy and execution for adoption of cloud on behalf of the entire army. Now, when it comes to delivery of individual capabilities for mission here and there, that's all specific to system owners and different organizations. AFS plays a different role in this instance where they're able to more facilitate the greater strategy on the financial side of the house. And what we've done is we've proven the ability to adopt cloud as a utility rather than this fixed thing, kind of predict the future, spend a whole bunch of money and never use the resource. We're seeing the efficiency for the actual utilization of cloud as a utility. This actually came out as one of the previous NDAs. And so how we actually address nda, I believe it was 2018 in the adoption of cloud as a utility, really is now cornerstone of modernization across all of the do d and really feeds into the Jo Warfighting cloud capability, major acquisition on behalf of all of the D O D to establish buying cloud as just a common service for everyone. >>And so we've been fortunate to inform that team of some of our lessons learned, but when it comes to the partnership, we just see camo moving into production. We've been live for now a year and a half. And so there's another two and a half years of runway there. And then AFS also plays a strategic role at part of our cloud enablement division, which is essentially back to that teaching part, helping the Army understand the opportunity of cloud computing, align the architectures to actually leverage those resources and then deliver capabilities that save soldier's >>Lives. Well, you know, we've, we've always known that the Army does its best work on the ground, and you've done all this groundwork for the military, so I'm not surprised, right? It's, it's a winning formula. Thanks to both of you for being with us here in the executive summit. Great conversation. Awesome. Thanks for having us. A good deal. All right. Thank you. All right. You are watching the executive summit sponsored by Accenture here at Reinvent 22, and you're catching it all on the cube, the leader in high tech coverage.

>> Announcer: theCUBE presents HPE Discover 2022, brought to you by HPE. >> We're back at the formerly the Sands Convention Center, it's called the Venetian Convention Center now, Dave Vellante and John Furrier here covering day three, HPE Discover 2022, it's hot outside, it's cool in here, and we're going to heat it up with Rashmi Kumar, who's the Senior Vice President and CIO of Hewlett Packard Enterprise, great to see you face to face, it's been a while. >> Same here, last couple of years, we were all virtual. >> Yeah, that's right. So we've talked before about sort of your internal as-a-service transformation, you know, we do call it dog fooding, everybody likes to course correct and say, no, no, it's drinking your own champagne, is it really that pretty? >> It is, and the way I put it is, no pressure to my product teams, it's being customer zero. >> Right, take us through the acceleration on how everything's been going with you guys, obviously, the pandemic was an impact to certainly the CIO role and your team but now you've got GreenLake coming in and Antonio's big statement before the pandemic, by 2022 everything will be as a service and then everything went remote, VPNs and all this new stuff, how's it going? >> Yeah, so from business perspective, that's a great point to start that, right? Antonio promised in 2019 that HPE will be Everything-as-a-Service company and he had no view of what's going to happen with COVID. But guess what? So many businesses became digital and as-a-service during those two years, right? And now we came back this year, it was so exciting to be part of Discover when now we are Everything-as-a-Service. So great from business perspective but, when I look at our own transformation, behind the scene, what IT has been busy with and we haven't caught a breadth because of pandemic, we have taken care of all that change, but at the same time have driven our transformation to make HPE, edge to cloud platform as a service company. >> You know, I saw a survey, I referenced it earlier today, it was a survey, I think it was been by Couchbase, it was a CIO survey, so they asked, who was responsible at your organization for the digital transformation? And overwhelming, like 75% said, CIO, which surprised me 'cause, you know, in line with the business and so forth but in fact I thought, well, maybe, because of the forced march to digital that's what was top of their mind, so who is responsible for, and I know it's not just one person, for the digital transformation? Describe that dynamic. >> Yeah, so definitely it's not one person, but you do need that whole accountable, responsible, informed, right, in the context of digital transformation. And you call them CIO, you call them CDIO or CDO and whatnot but, end of the day, technology is becoming an imperative for a business to be successful and COVID alone has accelerated it, I'm repeating this maybe millions time if you Google it but, CIOs are best positioned because they connect the dots across organization. In my organization at HPE, we embarked upon this large transformation where we were consolidating 10 different ERPs, multiple master data system into one and it wasn't about doing digital which is e-commerce website or one technology, it was creating that digital foundation for the company then to transform that entire organization to be a physical product company to a digital product company. And we needed that foundation for us to get that code to cash experience, not only in our traditional business, but in our as-a-service company. >> So maybe that wasn't confirmation bias, I want to ask you about, we've been talking a lot about sustainability and I've made the comment that, if you go back, you know, 10, 12 years and you were CIO IT at that time, CIO really didn't care about the energy bill, that was paid for by facilities, they really didn't talk to each other much and that's completely changed, why has it changed? How should a CIO, how do your your peers think about energy costs today? >> Yeah, so, at some point look, ESG is the biggest agenda for companies, regulators, even kind of the watchers of ISS and Glass Lewis type thing and boards are becoming aware of it. If you look at 2-4% of greenhouse emission comes from infrastructure, specifically technology infrastructure, as part of this transformation within HPE, I also did what I call private cloud transformation. Remember, it's not data center transformation, it's private cloud transformation. And if you can take your traditional workload and cloudify it which runs on a GreenLake type platform, it's currently 30% more efficient than traditional way of handling the workload and the infrastructure but, we recently published our green living progress report and we talk about efficiency, by 2020 if you have achieved three times, the plan is to get to 30 times by 2050 where, infrastructure will not contribute to energy bill in turn the greenhouse emission as well. I think CIOs are responsible multifold on the sustainability piece. One is how they run their data center, make it efficient with GreenLake type implementations, demand from your hyperscaler to provide that, what Fidelma just launched, sustainability scorecard of the infrastructure, second piece is, we are the data gods in the company, right? We have access to all kinds of data, provide that to the product teams and have them, if we cannot measure, we cannot improve. So if you work with your product team, work with your BU leader, provide them data around greenhouse gas and how they're impacting a mission through their products and how can they make it better going forward, and that can be done through technology, right? All the measurements come from technology. So what technology we need to provide to our manufacturing lines so that they can monitor and improve on the sustainability front as well. >> You mentioned data, I wanted to bring that up 'cause I was going to bring that up in another top track here, data as an asset now is at play, so I get the data on the sustainability, feed that in, but as companies go to the cloud operating model, they go, hey, I got the hyperscalers, you call microscale, Amazon for instance, and you got on-premises data center, which is a large edge and you got the edge, the data control plane, and then the control plane and the data plane are always seem to be like the battle ground, I want to control the data plane, will customers own the data plane or will the infrastructure providers control that data plane? And how do you see that? Because we want to power the machine learning, so data plane control plane, it seems to be like the new middleware, what's your view on that? How do you look at that holistically? >> Yeah, so I'll start based on the hyperscaler conversation, right? And I had this conversation with one of the very big ones recently, or even our partner, SAP, when they talk about RISE, data center and how I host my application infrastructure, that's the lowest common denominator of our job. When I talk about CIOs being responsible for digital transformation, that means how do I make my business process more innovative? How do I make my data more accessible, right? So, if you look at data as an asset for the company, it's again, they're responsible, accountable. As CIO, I'm responsible to have it managed, have it on a technology platform, which makes it accessible by it and our business leader accountable to define the right metrics, right kind of KPIs, drive outcome from that data. IT organization, we are also too busy driving a lot of activities and today's world is going to bad business outcome. So with the data that I'm collecting, how do I enable my business leader to be able to drive business outcome through the use of the data? That's extremely important, and at HPE, we have achieved it, there are two ways, right? Now I have one single ERP, so all the data that I need for what I call operational reporting, get hindsight and insight is available at one place and they can drive their day to day business with that, but longer term, what's going to happen based on what happened, which I call insight to foresight comes from a integrated data platform, which I have control of, and you know, we are fragmenting it because companies now have Databox, Snowflake, AWS data analytics tool, Azure data analytics tool, I call it data torture. CIOs should get control of common set of data and enable their businesses to define better measurements and KPIs to be able to drive the data. >> So data's a crown jewel then, it's crown jewel not-- >> Can we double-click on that because, okay, so you take your ERP system, the consumers of data in the ERP system, they have the context that we've kind of operationalized those systems. We haven't operationalized our analytics systems in the same way, which is kind of a weird dynamic, and so you, right, I think correctly noted Rashmi that, we are creating all these stove pipes. Now, think I heard from you, you're gaining control of those stove pipes, but then how do you put data back in the hands of those line of business users without having to go through a hyper specialized analytics team? And that's a real challenge I think for data. >> It is challenge and I'll tell you, it's messy even in my world but, I have dealt with data long enough, the value lies in how do I take control of all stove pipes, bring it all together, but don't make it a data lake which is built out of multiple puddles, that data lake promise hasn't delivered, right? So the value lies in the conformed layer which then it's easier for businesses to access and run their analytics from, because they need a playground because all the answers they don't have, on the operation side, as you mentioned, we got it, right? It'll happen, but on the fore site side and deeper insight side based on driving the key metrics, two challenges; understanding what's the key metrics in KPI, but the second is, how to drive visibility and understanding of it. So we need to get technology out of the conversation, bring in understanding of the data into the conversation and we need to drive towards that path. >> As a business, you know, line of business person putting that hat on, I would love to have this conversation with my CIO because I would say, I just want self-service infrastructure and I want to have access to the data that I need, I know what metrics I need to run my business so now I want the technology to be just a technical detail, you take care of that and then somebody in the organization, probably not the line of business person wants to make sure that that data is governed and secure. So there's somebody else and that maybe is your responsibility, so how do you handle that real problem? So I think you're well on the track with GreenLake for self-serve infrastructure, right, how do you handle the sort of automated governance piece of it, make that computational? Yeah, so one thing is technology is important because that's bringing all the data together at one place with single version of truth. And then, that's why I say my sons are data scientist, by the way, I tell them that the magic happens at the intersection of technology knowledge, data knowledge, and business knowledge, and that's where the talent, which is very hard to find who can connect dots across these three kind of circles and focus on that middle where the value lies and pushing businesses to, because, you know, business is messy, I've worked on pharma companies, utilities, now technology, order does not mean revenue, right? There's a lot more that happen and pricing or chargeback, rebates, all that things, if somebody can kind of make sense out of it through incremental innovation, it's not like a big bang I know it all, but finding those areas and applying what you said, I call it the G word, governance, to make sure your source is right and then creating that conform layer then makes into the dashboard the right information about those types of metrics is extreme. >> And then bringing that to the ecosystem, now I just made it 10 times more complicated. >> Yeah, this is a great conversation, we on theCUBE interview one time we're talking about the old software days where shrink-wrap software be on the shelf, you wouldn't know if was successful until you looked at the sales data, well after the fact, now everything's instrumented, SaaS companies, you know exactly what the adoption is, either people like it or they don't, the data doesn't lie. So now companies are realizing, okay, I got data, I can instrument everything, your customers are now saying, I can get to the value fast now. So knowing what that value is is what everyone's talking about. How do you see that changing the data equation? >> Yeah, that's so true even for our business, right? If you talk to Fidelma today, who is our CTO, she's bringing together the platform and multiple platforms that we had so far to go to as-a-service business, right? Infosite, Aruba Central, GLCP, or now we call it it's all HPE GreenLake, but now this gives us the opportunity to really be a alongside customer. It's no more, I sold a box, I'll come back to you three years later for a refresh, now we are in touch with our customer real time through Telemetry data that's coming from our products and really understanding how our customers are reacting with that, right? And that's where we instantiated what we call is a federated data lake where, marketing, product, sales, all teams can come together and look at what's going on. Customer360, right? Data is locked in Salesforce from opportunity, leads, codes perspective, and then real time orders are locked in S4. The challenge is, how do we bring both together so that our sales people have on their fingertip whats the install base look like, how much business that we did and the traditional side and the GreenLake side and what are the opportunities here to support our customers? >> Real quick, I know we don't have a lot of time left, but I want to touch on machine learning, which basically feeds AI, machine learning, AI go together, it's only as good as the data you can provide to it. So to your point about exposing the data while having the stove pipes for compliance and governance, how do you architect that properly? You mentioned federated data lake and earlier you said the data lake promise hasn't come back, is it data meshes? What is the architecture to have as much available data to be addressed by applications while preserving the protection? >> Yeah, so, machine learning and AI, I will also add chatbots and conversational AI, right? Because that becomes the front end of it. And that's kind of the automation process promise in the data space, right? So, the point is that, if we talk about federated data lake around one capability which I'm talking about GreenLake consumption, right? So one piece is around, how do I get data cleanly? How do I relate it across various products? How do I create metrics out of it? But how do I make it more accessible for our users? And that's where the conversational AI and chatbot comes in. And then the opportunity comes in is around not only real time, but analytics, I believe Salesforce had a pitch called customer insight few years ago, where they said, we have so many of you on our platform, now I can combine all the data that I can access and want to give you a view of how every company is interacting with their customer and how you can improve it, that's where we want to go. And I completely agree, it ends up being clean data, governed data, secure data, but having that understanding of what we want to project out and how do I make it accessible for our users very seamlessly. >> Last question, what's your number one challenge right now in this post isolation world? >> Talent, we haven't talked about that, right? >> Got to get that out there. >> All these promises, right, the entire end to end foundational transformation, as-a-service transformation, talking about the promise of data analytics, we talked about governance and security, all that is possible because of the talent we have or we will have, and our ability to attract and retain them. So as CIO, I personally spend a lot of time, CEO, John Schultz, Antonio, very, very focused on creating that employee experience and what we call everything is edge for us, so edge to office initiative where we are giving them hybrid work capabilities, people are very passionate about purpose, so sustainability, quality, all these are big deal for them, making sure that senior leadership is focused on the right thing, so, hybrid working capability, hiring the right set of people with the right skill set and keeping them excited about the work we are doing, having a purpose, and being honest about it means I haven't seen a more authentic leader than Antonio, who opens up his keynote for this type of convention, with the purpose that he's very passionate about in current environment. >> Awesome, Rashmi, always great to have you on, wonderful to have you face to face, such a clear thinker in bringing your experience to our audience, really appreciate it. >> Thank you, I'm a big consumer of CUBE and look forward to having-- >> All right, and keep it right there, John and I will be back to wrap up with Norm Follett, from HPE discover 2022, you're watching theCUBE. 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>>And welcome back to the cubes coverage of AWS executive summit at re-invent 2021. I'm John ferry hosts of the cube. This segment is about surviving and thriving and with the digital revolution that's happening, the digital transformation that's turning into and changing businesses. We've got two great guests here with guardian life. Nick Volpi CIO of individual markets at guardian life and Kim golly CTO of life. And is at Accenture essentially, obviously doing a lot of cutting-edge work, guardian changing the game. Nick, thanks for coming on, Kevin. Thanks for coming on. >>Thanks John. Good to be here. >>So I wonder before I get into the question, I want to just set the table a little bit. The pandemic has given everyone a mandate, the good projects are exposed. The bad projects are exposed. Everyone can kind of see kind of what's happening because of the pandemic forced everyone to kind of identify what's working. What's not working what the double-down on innovation for customers is a big focus, but now with the pandemic kind of relieving and coming out of it, the world's changed. This is an opportunity for businesses, Nick, this is something that you guys are focused on. Can you take us through what guardian lives doing kind of in this post pandemic changeover as cloud goes next level? >>Yeah. Thanks John. So, you know, the immediate need in the pandemic situation was about the new business capability. So those familiar with insurance traditionally, you know, life insurance, underwriting, disability underwriting is very in-person fluids labs, uh, attending physician statements. And when March of 2020 broke that all came to an abrupt halt, right doctor's office were either closed. Testing centers were either closed or inundated with COVID testing. So we had to come up with some creative ways to digitize our new business, um, adopt the application and adopt our new medical questionnaires and also get creative on some of our underwriting standards that put us at, you know, certain limits and certain levels and how we, when we needed fluids. So we, we, we have pretty quickly, we're agile about decisions there. And we moved from about, uh, you know, 40 to 50% adoption rate of our electronic applications to, you know, north of 98% across the board. >>Um, in addition, we kind of saw some opportunities for products and more capabilities beyond new business. So after we weathered the storm, we started taking a step back. And like you said, look at what we were doing. Like kind of have a start, stop, continue conversation internally to say, you know, this digitation digitization is a new norm. How do we meet it from every angle, not just a new business, right? And that's where we started to look at our policy administration systems, moving more to the cloud and leveraging the cloud to its fullest extent versus just a lift and shift. >>Kim, I want to get your perspective at a century I'm, I've done a lot of interviews with the past, I think 18 months, lots of use cases with a central, almost in every vertical where you guys are almost like the firefighters get called in to like help out cause the cloud actually now isn't an enabler. Um, how do you see the impact of the, of the pandemic around reverbing through? I mean, obviously you guys come to the table, you guys bring in, I mean, what's your perspective on this? >>So, yeah, it's really interesting. I think the most interesting fact >>Is, you know, we talk about Nick raised the, you know, such a strong area in our business of underwriting and how can we expedite that? There's been talking on the table for a number of years. Um, but the industry has been very slow or reluctant to embrace. And the pandemic became a very informed, I became an enforcer in it to be honest. And a lot of the companies were thinking about a prior. Um, but that's, it they'll think about it. I mean, even essentially we, we launched a huge three-year investment to get clients into cloud and digital transformation, but the pandemic just expedited everything. Now the upside is clients that were in a well-advanced stage of planning, uh, that we're easily able to adopt. Uh, but clients that weren't were really left behind. Um, so we became very, very busy just supporting the clients that weren't didn't have as much forethought as the likes of guardian, et cetera. >>Nick, that brings up a good point. I want to get your reaction to see if you agree. I mean, people who didn't put their toe in the cloud, or just jump in the deep end, really got flat-footed when the pandemic hit, because they weren't prepared people who were either ingratiated in with the cloud or how many active projects were even being full deployments in there did well, what's your take on that? >>Yeah, the, the enablement we had and, and the gift we were given by starting our cloud journey, and I want to say 2016, 17 was we really started moving to the cloud. And I think we were the only insurer that moved production load to the cloud at that point. Um, most of insurers were putting their development environments, maybe even their environments, but, you know, guardian had a strategy of getting out of the data center and moving to a much more flexible, scalable environment architecture using the AWS cloud. Um, so we completed our journey into the cloud by 2018, 19, and we were at the point of really capitalizing versus moving. So we were able to move very quickly, very nimbly, uh, when, when the pandemic hit or in any digital situation, we have that, that flexibility and capacity that AWS provides us to really respond to our customers, our customer's needs. So we were one of the more fortunate insurers that were well into our cloud journey and at the point of optimization versus the point of moving. >>So let's talk about the connection with, with the sensors, life insurance and annuity platform also known as a, I think the acronym is, uh, what was that? Why was that relevant? What, what was that all about? >>Yeah. So I'll go first and then Kim, you can jump in and see if you agree with me. Um, so >>It's essentially, >>I suspect you would write John, like I said, our new business focus was the original, like the, the, the, the emergency situation when the pandemic hit. But as we went further into it and realized the mortality and morbidity and the needs and wants of our customers, which is a major focus of guardian, really being, having the client at the center of every conversation we have, we realized that there was a real opportunity for product and his product continues to change. And you had regulations like 7,702 coming out where you had to reprice the entire portfolio to be able to sell it by January 1st, 2022, we realized our current systems are for policy admin. We're not matching our digital capabilities that we had moved to the cloud. So we embarked on a very extensive RFP to Accenture and a few other vendors that would come to the table and work with us. >>And we just really got to a place where combination of our, our desire to be on the cloud, be flexible and be capable for our customers. Married really well with the, the knowledge, the industry knowledge and the capabilities that Accenture brought to the table with the Ayla platform, um, their book of business, their current infrastructure, their configuration versus development, really all aligned with our need for flexible, fast time to market. You know, we're looking to cut development times significantly. We're looking to cut tests in times niggly. And as of right now, it's all proving true between the CA the cloud capability and halo capability. We are reaping the benefits of having this new platform, uh, coming up in live very soon here before. >>Well, I get to, um, a center's perspective. I want to just ask you a quick follow-up on that. Nick, if you don't mind the, you basically talk us through, okay, I can see what's happening here. You get with Accenture take advantage of what they got going on. You get into the cloud, you start getting the efficiencies, get the cultural change. What refactoring has you have you seen? What's your vision? I should say, what's your vision around what's next? Because clearly there's a, there's a, there's a, there's a playbook you get in the cloud replatform, you get the cultural fit, you understand the personnel issues, how to tap the resources. Then you gotta look for innovation where you can start changing. What, how you do things to refactor the business model. >>Yeah. So I think that, you know, specifically to this conversation, that's around the product capability, right? So for all too long, the insurance companies have had three specific sleeves of insurance products. We've had individual life. We have an individual disability and we'd have individual annuities, right? Each of them serving a specific purpose in the customer's lives, what this platform and this cloud platform allows us to do is start to think about, can we create the concept of a single rapper? Can we bring some of these products together? Can we centralize the buying process? And with ALA behind the scenes, you don't have that. You know, I kind of equate it to building a Ferrari and attaching a, uh, a trailer to it, right? And that's what we were doing today. Our digital front ends, our new business capabilities are all being anchored down or slowed down by our traditional mainframe backends by introducing Accenture on the cloud in AWS, we now have our Ferrari fully free to run as fast as it can versus anchoring this massive, you know, trailer to it. Um, so it really was a matter of bringing our product innovation to our digital front end innovation that we've been working on for, you know, two or three years prior. >>I mean, this is the kind of the Amazon way, right? You decouple things, you decompose, you don't want to have a drag. And with containers, we're seeing companies look at existing legacy in a way that's different. Um, can you talk about how you guys look at that Nick and terminally? Because a lot of CEO's are saying, Hey, you know what? I can have the best of both worlds. I don't have to kill the old to bring in the new, but I can certainly modernize everything. What's your reaction to that? >>Yeah. And I think that's, that's our exact, that's our exact path forward, right? We don't, we don't feel like we need to boil the ocean. Right. We're going after the surgically for the things that we think are going to be most impactful to our customers, right? So legacy blocks of business that are sitting out there that are, you know, full, completely closed. They're not our concern. It's really hitching this new ALA capability to the next generation of products. The next generation of customer needs understanding data, data capture is very important. And right. So if you look at the mainframes and what we're living on now, it's all about the owner of the policy. You lose connection with the beneficiary or the insured, what these new platforms allowed us to do is really understand the household around the products that they're buying. Right. I know it sounds simple, but that data architecture, that data infrastructure on these newer platforms and in the cloud, you can turn it faster. >>You have scale to do more analysis, but you're also able to capture in a much cleaner way on the traditional systems. You're talking about what we call intimately the blob on the mainframe that has your name, your first name, your last name, your address, all in one free form field sitting in some database. It's very hard to discern on these new platforms, given our need and our desire to be deeper into the client's lives, understanding their needs, ALA coupled with em, with AWS, with our new business capabilities on the front end really puts together that true customer value chain. That's going to differentiate us. >>Okay. I'm okay. CTO of a live as he calls it, the acronym for the service you have, this is a great example. I hate to use the word on-ramp cause that sounds so old, right? But in a way in vertical markets, you're seeing the power of the cloud because the data and the AI could be freed up and you can take advantage of all the heavy lifting by providing some platform or some support with Amazon, the, your expertise. This is a great use case of that, I think. And I think, you know, this is, I think a future trend where the developments can be faster, that value can be faster and your customers don't have to build all that lower level abstractions. If you will. Can you describe the essential relationship to your customers as you guys? Cause this is a real great use case. >>Yeah, it is. You know, our philosophy is simple. Let's not reinvent the wheel and with cloud and native services as AWS and, uh, provide w we want to focus on the business of what the system needs to do and not all the little side bets, we can get a great service. That's fully managed that has, uh, security patches updates. We want to focus on the real deal. Like Nick wants to focus on the business and not so much what's underneath it. That's my problem. I'm focusing on that. And we will work together, uh, in a nice little gel. You've had the relatively new term, no code, low code. You know, it's strange a modern system, like a lip has been that way for a number of years. Basically it means I don't want to make code changes. I just want to be able to configure it. >>So now more people can have access to make change, and we can even get it to the point where it's the people that are sitting there, dealing with the clients that would be the ultimate, where they can innovate and come up with ideas and try things because we've got it so simple. We're not there yet, but that's the ultimate goal. So alien, the no code, no code has been around for quite some time. And maybe we should take advantage of that, but I think we're missing one thing. So as good as the platform is the cloud moving in calculating native services, using the built-in security that comes with all that, um, and extending the function and then being able to tap into, you know, the InsureTech FinTech internet of things, and quickly adapt. I think the partnership is big. Okay. Uh, it's, it's very strong part of the exercise, so you can have the product, but without the people that work well together, I think it's also a big challenge. >>You know, all programs have their idiosyncrasies and there's a lot of challenges along the way. You know, there's one really small, simple example I can use. Um, I'd say guardian is one of our industries, market leaders, when, and when they approach the security, they really do lead the way out there. They're very strict, very, um, very responsible, which is such a pleasure to say, but at the end of the day, you still need to run a business. So, you know, because we're a partnership because we all have the same challenges we want to get to success. We were able to work together quite quickly. We planned out the right approach that maximize the security, but it also progressed the business. So, and we applied that into the overall program. So I think it is the product. Definitely. I think it is, uh, everything Nick said you actually elaborated on, but I'd like to point out there's a big part of the partnership to make it a success. >>Yeah. Great, great call out there, Nick, let's get your reaction on that because I want to get into the customer side of it. This enablement platform is kind of the new platform has been around for awhile, but the notion of buying tools and having platforms are now interesting because you have to take this kind of low code, no code capability, and you still got to code. I mean, there's some coding going on, but what it means is ease of use composing and being fast, um, platforms are super important. That requires real architecture and partnership. What's your reaction. >>Yeah. So I think, you know, I'll, I'll tie it all together between AWS and ALA, right? And here's the beauty of it. So we have something called launchpad where we're able to quickly stand up in AIDAP instance for development capabilities because of our Amazon relationship. And then to Kim's point, we have been successful 85% or more of all the work we've done with Inala is configuration versus code. And I'd actually I'd venture to say 90%. So that's extremely powerful when you think about the speed to market and our need to be product innovative. Um, so if our developers and even our, our analysts that sit on the business side could come in and quickly stand up a development buyer and start to play with, um, actuarial calculations, new product features and function, and then spin that to a more higher end development environment. You now have the perfect coupling of a new policy administration system that has the flexibility and configuration with a cloud provider like Amazon and AWS that allows us to move quickly with environments. Whereas in days past you'd have to have an architecture team come in and stand up the servers. And, you know, I'm going way back, but like buy the boxes, put the boxes in place and wire them down. This combination available in AWS has really a new capability to guardian that we're really excited about. >>I love that little comparison. Let me just quickly ask you compared to the old way, give us an order of magnitude of pain and timing involved versus what you just described as standing up something very quickly and getting value and having people shift their, their intellectual capital into value activities versus undifferentiated heavy lifting. >>Yes. I'll, I'll give you real dates. Right? So we engage really engaged with Accenture on the ALA program. Right before Thanksgiving of last year, we had our environment stood up and running all of our vitamins dev set UAT up by February, March timeframe on AWS. And we are about to launch our first product configuration into the, of the platform come November. So within a year we've taken arguably decades of product innovation from our mainframes and built it onto the Ayla platform on the Amazon cloud. So I don't know that you can do that in any other type of environment or partnership. >>It's amazing. You know, that's just great example to me, uh, where cloud scale and real refactoring and business agility is kinda plays out. So congratulations. I got to ask you now on the customer side, you mentioned, um, you guys love, uh, providing value to the customers. What is the impact of the customer? Okay, now you're a customer guardian life's customer. What's the impact of them. Can you share how you see that rendering itself in the marketplace? >>Yeah, so, so clearly AWS has rendered tons of value to the customer across the value stream, right? Whether it be our new business capability, our underwriting capability, our ability to process data and use their scale. I mean, it just goes on and on about the AWS, but specifically around ad-lib, um, the new API environment that we have, the connectivity that we can now make with the new backend policy admin systems has really brought us to a new, a new level. Um, whether it be repricing, product innovation, um, responding to claims capabilities, responding to servicing capabilities that the customer may need. You know, we're able to introduce more self-service. So if you think about it from the back end policy admin, going forward to our client portal, we're able to expose more transactions to self-serve. So minimize calls to the call center, minimize frustration of hold times and allow them to come onto the portal and do more and interact more with their policies because we're on this new, more modern cloud environment and a new, more modern policy admin. So we're delivering new capabilities to the customer from beginning to end being on the cloud with, with, >>Okay, final question. What's next for guardian life's journey year with Accenture. What's your plans? What do you want to knock down for the next year? What's what's on your mind? What's next? >>Uh, so that's an easy question. We've had this roadmap plan since we first started talking to Excentra, at least I've had it in my head. Um, we, we want off all of our policy admin systems for new business come end of 2025. So we've got about four policy admin systems maintaining our different lines of business, our individual disability or life insurance, and our newest, um, four systems that are kind of weighing us down a little bit. We have a glide path and a roadmap with Accenture as a partner to get off of all of these, for new business capability, um, by end of 2024. And that's, you know, I'm being gracious to my teams when I say that I'd like to go a little bit sooner, and then we begin to migrate the, the most important blocks of business that caused the most angst and most concerned with the executive leadership team and then, you know, complete the product. >>But along the way, you know, given regulation, given new, uh, customer customer needs, you know, meeting the needs of the customers changing life, we're going to have parallel tracks, right? So I envision we continue to have this flywheel turning of moving, but then we begin another flywheel right next to it that says we're going to innovate now on the new platform as well. So ultimately John, next year, if I could have my entire whole life block, as it stands today on the new admin platform and one or two new product innovations on the platform as well, by the third quarter, fourth quarter of next year, that would be a success. As far as that. >>Awesome. You guys had all planned out. I love, and I have such a passion for how technology powers business. And this is such a great story for next gen kind of where the modernization trend is today and kind of where it's going. It's the Nick. Appreciate it, Kim. Thanks for coming out with a censure Nixon. It's an easy question for you. I have to ask you another one. Um, this is, I got you here. You know, you guys are doing a lot of great work for other CEOs out there that are going through this right now, whether whatever they are on the spectrum missed the cloud way of getting in. Now this notion of refactoring and then replatforming, and then refactoring business is a playbook we're seeing emerge. People can get the benefits of going to the cloud, certainly for efficiency, but now it opens up the aperture for different kinds of business models. With more data access with machine learning. This refactoring seems to be the new hot thing where the best minds are saying, wow, we could do more, even more. What's your vision? How would you share those folks out there, out there, or the CEOs? What should they be thinking? What's their approach? What advice would you give? >>Yeah, so a lot of the mistakes we make as CEOs, we go for the white hot core first, right? We went the other way. We went for the newer digital assets. We went for the stuff that wasn't as concerning to the business should be fall over. Should there be an outage? Should there be anything? Right? So if you avoid the white hot core, improve it with your peripherals, easier moves to the cloud portals, broker, portals, um, beneficiary portals, uh, simple, you know, AIX frames, moving to the cloud and making them cloud native new builds. Right? So we started with all those peripheral pieces of the architecture and we avoided the white hot core because that's where you start to get those very difficult conversations about, I don't know if I'm ready to move. And I don't see the obvious benefit of moving a dividend generating policy admin system to the cloud. Like why, when you prove it in the pudding and you put the other things out there and prove you can be successful the conversation and move your core and your white hot core out to the platform out to leverage the cloud and to leverage new admin platforms, it becomes a much easier conversation because you've kind of cut your teeth on something much less detrimental to the business. Should it be >>What's the other expression, put water through the pipes, get some reps in and get the team ready to bring training, whatever metaphor you. That's what you're essentially saying. There, get, get some, get some, get your sea legs, get, get practice >>Exactly. Then go for the hard stuff, right? >>It's such a valid point. John is, you know, we see a lot of different approaches across a lot of different companies and, and the biggest challenges, the core is the biggest part. And if you start with that, it can be the scariest part. And I've seen companies trip up big time and you know, it becomes such a bubble spend, which really knocks you on for years, lose confidence in your strategy and everything else. And you're only as strong as your weakest link. So whether you do the outside first or the inside first from a weakest link until it's, the journey is complete, you're never going to maximize. So it was a, it was a very, uh, different and new and great approach that they took by doing a learning curve around the easiest stuff. And then, >>Yeah. Well, that's a great point. One quick, quick followup on that is that the talk about the impact of the personnel, Kim and Nick, because you know, there's a morale issue going on too. There's a, there's a, there's a training. I won't say training, but there's not re-skilling, but there's the rigor. If you're refactoring, you are, re-skilling, you're doing new things, the impact on morale and confidence. If you're not, you get the white, you don't wanna be in the white core unconfident. >>Maybe I should get first. Cause it's Nick's stuff. So he probably might want to say a lot, but yeah. Um, what we see with a lot of insurance companies, uh, they grow through acquisition. Okay. They're very large companies grown over time, uh, buying companies with businesses and systems and bringing it in. They usually bring a ten-year staff. So getting the staff to the next generation, uh, those staff is extremely important because they know everything that you've got today, and they're not so, uh, fair with what's coming up in the future. And there is a transition and people shouldn't feel threatened, but there is change and people do need to adopt and evolve and it should be fun and interesting, but it is a challenge at that turnover point on who controlling what, and then you get the concerns and get paranoid. So it is a true HR issue that you need to manage through >>The final word here. Go for it. >>Yeah. John, I'll give you a story that I think will sum the whole thing up about the excitement versus contention. We see here at guardian. I have a 50 year veteran on my legacy platform team and this person is so excited, got themselves certified in Amazon and is now leading the charge to bring our mainframes onto a lip and is one of the most essential. And I've actually had Accenture tell me if I had a person like this on every one of my engagements who is not only knowledgeable of the legacy, but is so excited to move to the new. I don't think I'd have a failed implementation. So that's the kind of guardian, the kind of backing guardians putting behind this, right? We are absolutely focusing on rescaling. We are not going to the market. We're giving everyone the opportunity and we have an amazing take-up rate. And again, like I said, 50 year veteran who probably could have retired 10 years ago is so excited, reeducated themselves, and is now a key part of this implementation, >>Hey, who wouldn't want to drive a Ferrari when you see it come in, right? I mean Barston magnet trailer. Great story, Nick. Thank you for coming on. Great insight, Kim, great stuff for the century as always a great story here, right? At the heart of the real focus where all companies are feeling right now, we're surviving and thriving and coming out of the pandemic with a growth strategy and a business model with powered by technology. So thanks for sharing the story. Appreciate it. Thanks John. Appreciate it. Okay. So cube coverage of 80 of us executive summit at re-invent 2021. I'm John furrier, your host of the cube. Thanks for watching.

(upbeat music) >> Hello and welcome back to theCUBE's coverage of AWS Executive Summit at re:Invent 2021. I'm John Furrier, your host of theCUBE. This segment is about surviving and thriving with the digital revolution that's happening in the digital transformation that's turning into and changing businesses. We've got two great guests here with Guardian Life, Nick Volpe, CIO of Individual Markets at Guardian Life and Kim Gully, CTO of Life and Annuities at Accenture. Accenture obviously doing a lot of cutting-edge work, Guardian changing the game. Nick, thanks for coming on. Kim, thanks for coming on. >> Thanks John, good to be here. >> So, well, before I get into the question, I want to just set the table a little bit. The pandemic has given everyone a mandate. The good projects are exposed. The bad projects are exposed. Everyone can see what's happening because the pandemic forced everyone to identify what's working, what's not working, what the double-down on. Innovation for customers is a big focus, but now with the pandemic relieving and coming out of it, the world's changed. This is an opportunity for businesses. Nick, this is something that you guys are focused on. Can you take us through what Guardian Life's doing in this post pandemic changeover as cloud goes next level? >> Yeah, thanks John. So the immediate need in the pandemic situation was about the new business capability. So those familiar with insurance, traditionally life insurance underwriting, disability underwriting is very in-person, fluids, labs, attending physician statements. And when March of 2020 broke, that all came to an abrupt halt. Doctor's office were either closed. Testing centers were either closed or inundated with COVID testing. So we had to come up with some creative ways to digitize our new business, adopt the application, and adopt our medical questionnaires, and also get creative on some of our underwriting standards that put us at certain limits and certain levels and when we needed the fluids. So we are pretty quickly, we're agile about decisions there. And we moved from about 40 to 50% adoption rate of our electronic applications to the north of 98% across the board. In addition, we saw some opportunities for products and more capabilities beyond new business. So after we weathered the storm, we started to take a step back. And like you said, look at what we were doing, that have a start, stop, continue conversation internally to say, this digitization is a new norm. How do we meet it from every angle, not just a new business. And that's where we started to look at our policy administration systems, moving more to the cloud and leveraging the cloud to its fullest extent versus just a lifted shift. >> Kim, I want to get your perspective at Accenture. I've done a lot of interviews with the past, I think 18 months. A lot of use cases with Accenture, almost in every vertical where you guys are almost like the firefighters, get called in to like help out 'cause the cloud actually now is an enabler. How do you see the impact of the pandemic reverbing through? I mean, obviously you guys come to the table, you guys bring in, I mean, what's your perspective on this? >> So, yeah, it's really interesting. I think the most interesting fact is we talk about, Nick raise such a strong area in our business of underwriting and how can we expedite that, is being talked on the table for a number of years, but the industry has been very slow or reluctant to embrace. And the pandemic became an enforcer in it to be honest. And a lot of the companies were thinking about it prior, but that's it, they'll think about it. I mean, even Accenture, we launched a huge three-year investment to get clients into cloud and digital transformation, but the pandemic just expedited everything. Now the upside is clients that were in a well-advanced stage of planning, they were easily able to adopt, but clients that weren't, were really left behind. So we became very, very busy just supporting the clients that didn't have as much forethought as likes of Guardian, et cetera. >> Nick, it brings up a good point. I want to get your reaction to see if you agree. I mean, people who didn't put their toe in the cloud or just jump in the deep end, really got flat-footed when the pandemic hit, because they weren't prepared. People who were either ingratiated in with the cloud or having active projects or even being full deployments in there did well. What's your take on that? >> Yeah, the enablement we had and the gift we were given by starting our cloud journey, in I want to say 2016, 17 was we really started moving to the cloud. And I think we were the only insurer that moved production load to the cloud. At that point, most of insurers were putting their development environments, maybe even their SIT environments, but Guardian had the strategy of getting out of the data center or moving to a much more flexible, scalable environment architecture using the AWS cloud. So we completed our journey into the cloud by 2018, 19, and we were at the point of really capitalizing versus moving. So we were able to move very quickly, very nimbly. When the pandemic hit or in any digital situation, we have that flexibility and capacity that AWS provides us to really respond to our customers, our customers need. So we were one of the more fortunate insurers that were well into our cloud journey. And at the point of optimization versus the point of moving. >> Let's talk about the connection with Accenture's life insurance and annuity platform also known ALIP, I think the acronym is. What was that? Why was that relevant? What was that all about? >> Yeah, so I'll go first and then Kim, you can jump in and see if you agree with me. >> He essentially help that, love it. (laughs) >> Yeah, you would suspect you would, right John? >> Yeah. (laughs) >> Like I said, our new business focus was the original, like the emergency situation when the pandemic hit. But as we went further into it and realized the mortality and morbidity and the needs and wants of our customers, which is a major focus of Guardian, really being, having the client at the center of every conversation we have, we realized that there was a real opportunity for product and it's product continues to change and you had regulations like 7702 coming out where you had to reprice the entire portfolio to be able to sell it by January 1, 2022. We realized our current systems are for policy admin. We're not matching our digital capabilities that we had moved to the cloud. So we embarked on a very extensive RFP to Accenture and a few other vendors that would come to the table and work with us. And we just really got to a place where combination of our desire to be on the cloud, be flexible, and be capable for our customers, married really well with the knowledge, the industry knowledge and the capabilities that Accenture brought to the table with the ALIP platform. Their book of business, their current infrastructure, their configuration versus development, really all aligned with our need for flexible, fast time to market. We're looking to cut development times significantly. We're looking to cut test in times significantly. And as of right now, it's all proving true between the cloud capability and the ALIP capability. We are reaping the benefits of having this new platform coming up in live very soon here. >> Before I get to Accenture's perspective, I want to just ask you a quick follow-up on that, Nick, if you don't mind. You basically talk us through, okay, I can see what's happening here. You get with Accenture, take advantage of what they got going on. You get into the cloud, you start getting the efficiencies, get the cultural change. What refactoring have you seen? What's your vision, I should say. What's your vision around what's next? Because clearly there's a playbook. You get in the cloud, re-platform, you get the cultural fit, you understand the personnel issues, how to tap the resources, then you've got to look for innovation where you can start changing, how you do things to refactor the business model. >> Yeah, so I think that, specifically to this conversation, that's around the product capability. So for all too long, the insurance companies have had three specific sleeves of insurance products. We've had individual life. We have an individual disability and we'd have individual annuities. Each of them serving a specific purpose in the customer's lives. What this platform and this cloud platform allows us to do is start to think about, can we create the concept of a single wrapper? Can we bring some of these products together? Can we centralize the buying process? And with ALIP behind the scenes, you don't have that, I kind of equate it to building a Ferrari and attaching a trailer to it, and that's what we were doing today. Our digital front-ends, our new business capabilities are all being anchored down or slowed down by our traditional mainframe back-ends. By introducing Accenture on the cloud in AWS, we now have our Ferrari fully free to run as fast as it can versus anchoring this massive trailer to it. So it really was a matter of bringing our product innovation to our digital front-end innovation that we've been working on for two or three years prior. >> I mean, this is the kind of the Amazon way. You decouple things, you decompose, you don't want to have a drag. And with containers, we're seeing companies look at existing legacy in a way that's different. Could you talk about how you guys look at that Nick internally because a lot of CIO's are saying, Hey, you know what? I can have the best of both worlds. I don't have to kill the old to bring in the new, but I can certainly modernize everything. What's your reaction to that? >> Yeah. And I think that's our exact path forward. We don't feel like we need to blow the ocean. We're going after this surgically for the things that we think are going to be most impactful to our customers. So legacy blocks of business that are sitting out there, that are for completely closed, they're not our concern. It's really hitching this new ALIP capability to the next generation of products, the next generation of customer needs, understanding data. Data capture is very important. So if you look at the mainframes and what we're living on now, it's all about the owner of the policy. You lose connection with the beneficiary or the insured. What these new platforms allowed us to do is really understand the household around the products that they're buying. I know it sounds simple, but that data architecture, that data infrastructure on these newer platforms and in the cloud, you can churn it faster, you have scale to do more analysis, but you're also able to capture in a much cleaner way. On the traditional systems, you're talking about what we call intimately the blob on the mainframe that has your name, your first name, your last name, your address, all in one free form field sitting in some database. It's very hard to discern. On these new platforms, given our need and our desire to be deeper into the client's lives, understanding their needs, ALIP coupled with AWS, with our new business capabilities on the front-end really puts together that true customer value chain. That's going to differentiate us. >> Kim, okay, CTO of ALIP as he calls it, the acronym for the service you have. This is a great example. I hate to use the word on-ramp cause that sounds so old. But in a way, in vertical markets, you're seeing the power of the cloud because the data and the AI could be freed up and you can take advantage of all the heavy lifting by providing some platform or some support with Amazon, your expertise. This is a great use case of that, I think. And this is I think a future trend where the developments can be faster, that value can be faster, and your customers don't have to build all the lower level abstractions, if you will. Can you describe the essential relationship to your customers as you guys? Because this is a real great use case. >> Yeah, it is. Our philosophy is simple. Let's not reinvent the wheel. And with cloud and native services that AWS provide, we want to focus on the business of what the system needs to do and not all the little side bits. We can get a great service that's fully managed, that has security patches updates. We want to focus on the real deal. Like Nick wants to focus on the business and not so much what's underneath it. That's my problem, I'm focusing on that. And we will work together in a nice little gel. You've had the relatively new term, no code/low code. It's strange. A modern system like ALIP has been that way for a number of years. Basically it means, I don't want to make code changes. I just want to be able to configure it. So now more people can have access to make change, and we can even get it to the point where it's the people that are sitting there, dealing with the clients. That would be the ultimate, where they can innovate and come up with ideas and try things because we've got it so simple. We're not there yet, let's be realistic, but that's the ultimate goal. So ALIP, the no code/low code has been around for quite some time. And maybe we should take advantage of that, but I think we're missing one thing. So as good as the platform is, the cloud moving in, calculating native services using the built-in security that comes with all that and extending the function and then be able to tap into the InsurTech, FinTech, internet of things, and quickly adapt. I think the partnership is big. Okay, it's very strong part of the exercise. So you can add the product, but without the people that work well together, I think it's also a big challenge. All programs have their idiosyncrasies and there's a lot of challenges along the way. There's one really small simple example I can use. I'd say Guardian is one of our industries market leaders when they approach the security. They really do lead the way out there. They're very strict, very responsible, which is such a pleasure to say, but at the end of the day, you still need to run a business. So, 'cause we're a partnership because we all have the same challenges, we want to get to success. We were able to work together quite quickly. We planned out the right approach that maximize the security, but it also progressed the business and we applied that into the overall program. So I think it is a product definitely. I think it is everything Nick said, you actually elaborated on, but I'd like to point out, there's a big part of the partnership to make it a success as well. >> Yeah, great, great call out there. Nick, let's get your reaction on that because I want to get it to the customer side of it. This enablement platform is the new, I mean, platform has been around for awhile, but the notion of buying tools and having platforms are now interesting 'cause you have to take this low code/no code capability. I mean, you still got a code. I mean, there's some coding going on, but what it means is ease of use composing and being fast. Platforms are super important. That requires real architecture and partnership. What's your reaction? >> Yeah, so I think I'll tie it all together between AWS and ALIP, and here's the beauty of it. So we have something called LaunchPad where we're able to quickly stand up in ALIP instance for development capabilities because of our Amazon relationship. And then to Kim's point, we have been successful with 85% or more, of all the work we've done with an ALIP is configuration versus code and I'd actually I'd venture to say 90%. So that's extremely powerful when you think about the speed to market and our need to be product innovative. So if our developers and even our analysts that sit on the business side could come in and quickly stand up a development environment, start to play with actuarial calculations, new product features and function and then spin that to a more higher-end development environment. You now have the perfect coupling of a new policy administration system that has a flexibility and configuration with a cloud provider like Amazon and AWS that allows us to move quickly with environments, whereas in days past, you'd have to have an architecture team come in and stand up the servers. And I'm going way back, but like buy the boxes, put the boxes in place and wire them down. This combination of ALIP and AWS has really brought a new capability to Guardian and we're really excited about. >> I love that little comparison. Let me just quickly ask you, compared to the old way, give us an order of magnitude of pain and timing involved versus what you just described as standing up something very quickly and getting value and having people shift their intellectual capital into value activities versus undifferentiated heavy lifting. >> Yes, I'll give you real dates. So we really engaged with Accenture on the ALIP program right before Thanksgiving of last year. We had our environment stood up and running, all of our DEV, SIT, UAT up by February, March timeframe on AWS and we are about to launch our first product configuration into the ALIP platform coming November. So within a year, we've taken arguably decades of product innovation from our mainframes and built it onto the ALIP platform on the Amazon cloud. So I don't know that you can do that in any other type of environment or partnership. >> That's amazing. That's just great example to me where cloud scale and real refactoring and business agility is plays out. So congratulations. I got to ask you now, on the customer side you mentioned, you guys love providing value to the customers. What is the impact to the customer? Okay, now you're a customer, Guardian Life's customer. What's the impact to them? Can you share how you see that rendering itself in the marketplace? >> Yeah, so clearly AWS has rendered tons of value to the customer across the value stream whether it be our new business capability, our underwriting capability, our ability to process data and use their scale. I mean, it just goes on and on about the AWS, but specifically around ALIP, the new API environment that we have, the connectivity that we can now make with the new back-end policy admin systems has really brought us to a new level, whether it be repricing, product innovation, responding to claims capabilities, responding to servicing capabilities that the customer might need. We're able to introduce more self-service. So if you think about it from the back-end policy admin going forward to our client portal, we're able to expose more transactions to self-serve. So minimize calls to the call center, minimize frustration of hold times and allow them to come onto the portal and do more and interact more with their policies because we're on this new, more modern cloud environment and a new more modern policy admin. So we're delivering new capabilities to the customer from beginning to end being on the cloud with ALIP. >> Okay, final question. What's next for Guardian Life's journey year with Accenture? What's your plans? What do you want to knock down for the next year? What's on your mind? What's next? >> So that's an easy question. We've had this roadmap plan since we first started talking to Accenture, at least I've had it in my head. We want off all of our policy admin systems for new business come end of 2025. So we've got about four policy admin systems maintaining our different lines of business, our individual disability, our life insurance, and our annuities, for systems that are weighing us down a little bit. We have a glide path and a roadmap with Accenture as a partner to get off of all of these for new business capability by end of 2024. And I'm being gracious to my teams when I say that I'd like to go a little bit sooner. And then we begin to migrate the most important blocks of business that caused the most angst and most concerned with the executive leadership team and then complete the product. But along the way, given regulation, given new customer needs, meeting the needs of the customer's changing life, we're going to have parallel tracks. So I envision we continue to have this flywheel turning of moving, but then we begin another flywheel right next to it that says we're going to innovate now on the new platform as well. So ultimately John, next year, if I could have my entire whole life block, as it stands today on the new admin platform, and one or two new product innovations on the platform as well by the 3rd quarter, 4th quarter of next year, that would be a success as far as I'm concerned. >> Awesome, you guys had all planned out. I love, and I have such a passion for how technology powers business. And this is such a great story for next gen where the modernization trend is today and where it's going. So Nick appreciate it. Kim, thanks for coming out with Accenture. Nick, so just an easy question for you. I have to ask you another one. This is I got you here. You guys are doing a lot of great work. For other CIOs out there that are going through this right now, whatever they are on the spectrum, missed the CloudWave, getting in now, this notion of refactoring and then re-platforming and then refactoring business is a playbook we're seeing emerge. People can get the benefits of going to the cloud, certainly for efficiency, but now it opens up the aperture for different kinds of business models. With more data access, with machine learning. This refactoring seems to be the new hot thing where the best minds are saying, wow, we could do more, even more. What's your vision? How would you share those folks out there of the CIOs? What should they be thinking? What's their approach? What advice would you give? >> Yeah, so a lot of the mistakes we make as CIOs, we go for the white hot core first. We went the other way. We went for the newer digital assets. We went for the stuff that wasn't as concerning to the business. Should we fall over? Should there be an outage? Should there be anything? So if you avoid the white hot core, improve it with your peripherals, easier moves to the cloud portals, broker portals, beneficiary portals, simple AIX frames, moving to the cloud and making them cloud native, new builds. So we started with all those peripheral pieces of the architecture and we avoided the white hot core because that's where you start to get those very difficult conversations about, I don't know if I'm ready to move. And I don't see the obvious benefit of moving a dividend generating policy admin system to the cloud, like why? When you prove it in the pudding and you put the other things out there and prove you can be successful, the conversation to move your core and your white hot core out to the platform out to leverage the cloud and to leverage new admin platforms, it becomes a much easier conversation because you've kind of cut your teeth on something much less detrimental to the business should it go alright. >> What's the old expression, put water through the pipes, get some reps in and get the team ready to bring training, whatever your metaphor you use, that's what you're essentially saying there. Get some, your sea legs, get practice. >> Exactly. >> Then go for the hard stuff. >> It's such a valid point, John. We see a lot of different approaches across a lot of different companies and the biggest challenges, the core is the biggest part. And if you start with that, it can be the scariest part. And I've seen companies trip up big time and it becomes such a bubble spend, which really knocks you on for years, lose confidence in your strategy and everything else. And you're only as strong as your weakest link. So whether you do the outside first or the inside first, from a weakest link until the journey is complete, you never going to maximize. So it was a very different and new and great approach that they took by doing a learning curve around the easiest stuff and then hit in the core. >> Yeah, well, that's a great point. One quick, quick followup on that is that, talk about the impact to the personnel, Kim and Nick, because there's a morale issue going on too. There's a training. I won't say training, but there's a not re-skilling, but there's the rigor, if you're refactoring, you are re-skilling, you're doing new things. The impact of morale and confidence you get certainly. you don't want to be in the white core unconfident. >> Maybe I should get first 'cause it's Nick's stuff. So he probably might want to say a lot, yeah. What we see with a lot of insurance companies, they grow through acquisition. Okay, they're very large companies, grown over time, buying companies with businesses and systems and bringing it in. They usually bring a tenure staff. So getting the staff to the next generation, that staff is extremely important because they know everything that you've got today and then not so aware with what's coming up in the future. And there is a transition and people shouldn't feel threatened, but there is change and people do need to adopt and evolve and it should be fun and interesting, but it is a challenge at that turnover point on who controlling what, and then you get the concerns and get paranoid. So it is a true HR issue that you need to manage through. >> Nick you're the final word here. Go for it. >> Yeah, John. I'll give you a story that I think will sum the whole thing up about the excitement versus contention we see here at Guardian. I have a 50-year veteran on my legacy platform team and this person is so excited, got themselves certified in Amazon and is now leading the charge to bring our mainframes onto ALIP and is one of the most essential, and I've actually had Accenture tell me, if I had a person like this on every one of my engagements who is not only knowledgeable of the legacy, but is so excited to move to the new, I don't think I'd have a failed implementation. So that's the kind of Guardian, the kind of backing Guardian's putting behind this. We are absolutely focusing on rescaling. We are not going to the market. We're giving everyone the opportunity and we have an amazing take-up rate. And again, like I said, 50-year veteran who probably could have retired 10 years ago is so excited, reeducated themselves and is now a key part of this implementation. >> And who wouldn't want to drive a Ferrari when you see it come in. I mean, back in the trailer. Great story, Nick. Thank you for coming on, great insight. Kim, great stuff for the Accenture, as always a great story here. We're here at the heart of the real focus where all companies are feeling right now. We're surviving and thriving and coming out of the pandemic with a growth strategy and a business model powered by technology. So thanks for sharing the story, appreciate it. >> Thanks John, appreciate it. >> Okay, it's CUBE coverage of AWS Executive Summit at re:Invent 2021. I'm John Furrier, your host of theCUBE. Thanks for watching. (bright music)