from the silicon angle media office in Boston Massachusetts it's the queue now here's your host David on tape digital transformation is the operative watchword today but what does it mean from a cxos standpoint and how do you take those perspectives and bring them into an organization to affect its strategy and turn that strategy into action hi everybody this is Dave Allen say welcome to this cube conversations of CXO perspectives I'm here with Paul Lewis who's CTO of Americas from Hitachi ventaja Paul thanks for coming down from Toronto thanks very much I appreciate always great to be in Boston okay let's start with you in your background you're a CIO by trade been with Hitachi and now Hitachi Bonterra for a few years but tell us about your background yeah so I've been here about five years running the office of the CTO which is a highly vertical based organization prior to that I was a CIO CTO of a financial services organization for about 17 years operating technology sort of being a practitioner of what it means to create applications and operate IT and implement projects and worry about you know the blinking lights in a data centre so it's a very different world being on the manufacturer side but getting to see different verticals different industries and applying that it's been intellectually appealing so something I want to come back to exceed you were CIO and CTO which is not uncommon but often times that you know CIO is you know more in a strategy or a pure business role you had both so we'll come back to that when we talk about you know organizational issues but let's start with digital transformation as I said at the top it's the buzz word you go to every conference digital transformation you must you you must not get eaten by your competitors you must be the disrupter etc etc but what does digital transfer transformation mean to you as a CTO CIO from a customer's perspective so I see it much more as being having a customer perspective when you look at your business strategy so in as much as people say sort of customer 360 or you're taking a customer centric approach it's not really that it's it's saying how do I look at my business and evaluate it from the customers point of view so you know the three aspects of digital transformation is operational efficiency new business models and of course the new customer experience so operational efficiency says you if I'm doing a whole bunch of things or to deliver value a product or service but the only thing the customer sees is what's on the shelf and what's available to purchase then everything I do behind the scenes logistics is up for grabs maybe I do it's not an azimuth amia what's on the shelf so maybe somebody else can do it make that efficiency in terms of new business models if all my competitors especially those new digital disruptors have a new way of engaging with the client and the payment maybe it's a credit card versus cash you know capital versus op X maybe I need to diversify my portfolio to be equivalent to that to find customers that I'm currently not getting and then finally new customer experiences this is the customer point of view to say the customer wants to buy from you in a certain way so you better start to sell your products and service in the way to which they want to buy just because your products on the Shelf and the customer wants to buy from you online means you have to also be online and if your customer wants to buy from your competitor your product should be at your competitor right so you've got to think about how the customer buys not just how you sell so all that sort of business strategy so we could poke that a little bit so in a positive way so when you go back to pre-internet days the brand's had all the power right the retail companies knew what the pricing was you know the the the spreads in the stock market were really large we had Nasdaq on last week at Pentaho world all we talked about is how they're becoming basically a technology company to sell their services to others if they are transforming digitally so my my point and question to you is isn't a lot of digital transformation about how you use data to compete and actually maybe regain some of that you know market power or or or at least catch up to where the consumers are cuz the consumers today have all the advantage don't they well data certainly is a value producer versus sort of a side effect that it used to be but it is fair that the consumers have much more buying power than they have before and that's that's in many ways because of those disruptors those disruptors are creating new options for consumers and option and now consumers have that choice in fact the cut the consumerization as a whole as changing how consumers even perceive companies right so if I can download an app and if I don't like it an hour I can delete that up and download they can also choose your product in the same way they're gonna buy your product they don't like it they're gonna throw it away and buy somebody else's product they now have the ultimate choice to do anything they wish buy from anybody they want to locally or globally the globalization concept is changing the way you need to distribute your products and services to yes so the power actually in influence has gone to the consumer and it's only data that you can produce and you can consume externally that'll give you that insight to determine where I need to put my puck right where I need to hockey analogy where I need to ensure that I need to have my product and service and available before the customer wants it or even perceived to want it versus sort of waiting behind the scenes so the big difference between let's say being digital versus non digital is the data yeah but what does that mean to a CTO and a CIO so okay data that's the big difference not what I would say let's take it from the top so if the CEO now is focused on creating more value quicker they probably hire a chief digital officer that's focused on those three pillars if the organization is not that big they might have the CIO perform that function that means the CIO is less about order-taking and more about value creation the only way they're gonna be of value creators if they move from an application centric world of IT to a data centric world of IT and I use an analogy of applications infrastructure and applications I'm gonna go through that way yeah so here's your more about there's the difference between infrastructure applications and data if I look at infrastructure at lasts let's say three to five years I might be able to sweat it out any longer but if I do I'm gonna have performance scalability availability problems if I add more infrastructure to infrastructure it's gonna cost me more money I need more space I need more power and more rack right same kind of true on the application side if I that the last maybe seven to nine years maybe sweated out any longer I have seen performance of scalability problems if I add more applications to applications I have modernization as simplification and rationalization problems and it's not the number of applications that matter it's that I have the same function point recreated across five to ten different applications and five different 10 teams worrying about it same cost issue and and and data quality issue absolutely but data is in fact the opposite to that data is valuable to me from the point that I created the point that I deleted if I ever delete it in fact seeing data change over time is more valuable than seeing it static in its initial State if I add more data to data the bigger potential pot of gold I have and the Nuggets that I can find the more precise my algorithms become the more insightful I'll be able to create from a client's perspective for a firm product or transaction perspective in fact it is the value creator for IT versus the side effect that it's always been so if you remove the centricity from the CIO form application which is red green yellow projects to data being the value creator you start to be a major player in the digital transformation organization instead of sort of being the order taker project so there was a lot of things you said in there that made a lot of sense to me let me start with sort of the infrastructure that a lot of CIOs have spend have to spend their time keeping the lights on and that's not a value producing activity we can agree there were in still are many CIOs that sir were application-centric as you were saying and they would add a lot of value through those applications they have you know sharp application development team they could differentiate through those applications but increasingly when I talk to CIOs you see more sass coming into play and they're trying to avoid custom modifications so when I ask them well how do you differentiate the differentiation is the data the data and the IP that we build around that data the way that data helps us monetize whether it's directly or indirectly is our new differentiator but that's a big shift isn't it it's a large shift because they're they're completely application centric all their projects are about versioning of applications all their infrastructures creating highly available for applications so the big shift is say how do I create an organization that's data centric as a whole how to create a chief data officer and that data officer is elevated to be the peer of in many ways the VP of application the VP of M their organization has all the data centric responsibilities they have storage and protection and governance and analytics and stewardship they are the measured by the value they produce for the organization whether that's operational efficiency or revenue versus the projects to which they deliver on and that way the output of IT is not just projects it's not just spend but it's in fact revenue or profit let's talk about the organizational roles I said I wanted to come back to that and I do I you know you know the jokes CI o stands for career is over I was interviewing John haladki who was the CIO of Beth Israel Hospital a while back at MIT one of the shows we do and he was not optimistic about the role of the CIO Easter Day could disappear and the conversation it was a CDO conference chief data officer conference the conversation was well CIOs need to pick a path and you've got some experience here they either have to become CTOs or they have to become chief data officer x' now that was maybe two years ago I think the narrative has changed a little bit and people have calmed down about that but you've seen this these roles emerge chief data officer chief digital officer we just talked about how digital equals data so I actually see those two roles as you know more closely you know aligned or not depending on on the user but and the CIOs role I think you know and becoming more clear as as a business and strategy person but I wonder if you could weigh in as a former CI o-- / CTO current CTO you talk to a lot of customers how do you see organizations you know what's the right regime right regimes not the right that's not the proper term but what's the regime's that you see emerging I think the big shift determining what those organization roles are from standardization to verse2 diversification so it's less about single provider single process single implementation having a single set of IT services for all the potential workloads and more like what does the business and specific the line of business require and then how am I going to support that so it's now I'm going to have internal services I'm gonna have a private cloud I'm gonna use public cloud offerings I'm gonna have managed services I'm gonna go to third-party offerings I'm going to use a bunch of sass I'm going to consume a lot of cloud versions of ERP type products and that's the complexity of my environment and if that's the complexity of my environment that's the complexity and change of the shift of the roles the CIO now has to be less about project delivery in other words creating applications and more about managing an ecosystem of diverse deployments they have to manage relationships with public clouds they have to manage and create business offerings with the CFO and the CEO and the chief corporate officer in terms of creating new acquisitions or mergers right the CTO is focused on creating a highly secure framework of delivery so that not only the IT shop can deliver on value but all that shadow IT that's happening outs external to greet create a platform and a secure platform for them to deliver because the reality is of every hundred dollars of the CIO has there's $250 out in the business so why don't you make it 350 million it's $350 IT budget instead of 101 you do that by providing platforms and so therefore the CIO is part of the business leader versus being the IT leader the CTO is looking at platforms and therefore the chief data officer becomes the value producer they're the one focused almost entirely on creating revenue or creating so much efficiency in the organization that the profit margins dramatically increase so now business perspective business perspective business perspective and everything underlying is ecosystem it's not everything that I built it's things that I consume externally Wow okay so again a lot of things you said in there that make some sense that I want to better understand so the chief data officer as you described it sort of job one for her or him is to is understand how to essentially make money with data right all right and and again I don't want to say go sell your data because that's not always the answer but you're saying draw you can drive efficiencies and that the simplest form you can cut cost you can increase revenue or you can make better decisions right that's the whole champion in Channel your concept you can have a better understanding of your clients or your products and more importantly have a better understanding of clients - which currently don't purchase your products right how do I look at internal information and compared to external data to say oh how are those other consumers that are going to other my other disruptors what are they purchasing and why can't I produce something that's like or at least competitive in that world so you started off this conversation with three things operational efficiency new business models and the customer experience so there's certainly the chief data officer as you just mentioned can affect operational efficiency ways to cut cost you know through data and I guess they touch new business models as well hey if we're gonna monetize our data directly or a partner or bring in other data and you know did we talk about Nasdaq before that's a completely new before even working with the finance office to say if I were to make changes to my business here would be the net financial effect right okay now the customer experience is that the domain of the chief digital officer really more in that customer facing still still a combination but I would agree that the chief digital officer focusing on creating to matching the selling experience with the buy experience and that might be new mobile interfaces this might be creating omni-channel experiences or expanding upon that to say how do we ensure that we have an integrated channel experience it's not just that they can bribe you know a shoe and the website a shoe in a store it's that they can go online look at the shoes go to the store have those shoes be brought down automatically as soon as I walked in and then choose whether I buy it now take it home buy it online have it delivered to my house before I get home or it's $5 cheaper five stores down right so that experience will be chief digital officer but all of that requires data one can't deliver on all that unless they have a a deep understanding of their products a deep understanding of how the transactions the deep understanding how clients buy all of that experience data based whether it's mobile or human created or business data all combined together in fact that's actually a great jump into the sort of the IOT world the machine or the physical world where I now need to appreciate data that's happening the store in the kiosk and all of that experience data needs to be brought back and combined with the financial data to really appreciate with the transition of that digital experience money so those those roles do really span you know your three areas I can see just thinking here and hearing you speak the chief digital officer might go to the chief data officer and say hey I need this data so I can create a customer experience that gives us competitive advantage and I need that data to be accessible of high quality I maybe need you pulling some other data points exact I need real-time I need a blended I need it integrated with my ERP make it so exactly exactly that can't be too hard and then then that involves the CIO to actually provide the infrastructure and whatever SAS or internal execution but find a means to solve the problem and it's not gonna always be built it's likely gonna be consumed it's likely gonna be buy it's likely gonna be partner and so that's part of that historically it was the application kind of tail wagging the dog now it's the data that was really sort of the driver of the bus which is why you really need what we referred to as a data strategy for digital transformation creating a set of services or capabilities that are focused much more on data than IT like we're used to saying IT services make sure you have computer and storage and networking available to you but now it's saying you know what you have business data let's make sure you have services like store and manage and govern you have human sets of data that's blend and correlate and match and then you have machine data well that's much more about grid and point and and IOT related correlations and need to bring all that together as a series of data servers to which IT provides to the chief digital officer okay you talked about the edge before how do you see I mean we're seeing the pendulum now swing back from centralized you know cloud sort of decentralized this notion of edge to cloud is probably not gonna happen it's gonna be some stuff in between but how do you see let's follow the data how do you see in Itachi and Hitachi event ARRA has obviously a perspective on this you guys are an industrial you know giant how what's Itachi ventajas perspective on how the edge will evolve generally but specifically how the data model and the data flow will change so we see an Enterprise Information model has having sort of four legs to this table right and that one should keep data where it is because sometimes it's physically impossible to move data from where it was created to where it needs to be for analytics a train is example and we produce you know a high speed train that could be four or five seven terabytes per day well that's almost physically impossible to move to a server to be able to deal with right and when you look at larger machines like nuclear power plants and well treatment centers all of a sudden it's almost impossible so this four legs are you know you still need an enterprise data warehouse you still need a means to collect your business data and produce your thousands of Mis reports they actually run the business that is a ten million dollar machine - what you've created you then need a you need a content store an object store because you have all this human unstructured data - which in fairness a good portion of what might be dark a good portion of it like your twenty seven versions of your PowerPoint simply won't have any production nuggets of gold right but you still have lots of voice and video records and unstructured files that that could contain nuggets then you have your your Big Data Lake where you want to put your information that you want to do perform an analytics on right.you it's it's you don't want to worry about the data model you don't want to worry about how you're structuring the information until you actually do analytics on it and then finally the edge keeping data where it is have a federated distributed model and only when I want to do and perform specific analytics do I go collect that information bring it to the core perform the analytics produce visualization result we kind of refer to this as a as a data refinement mechanism where I'm searching for the appropriate information using those mathematical statistical algorithms in order to create you know visualizations that we can blend right back into the original sources so a lot of data will be created at the edge and and it'll stay at the edge and in fact a lot of data probably won't be even be persisted at the edge it'll be may be acted on thrown away and you'll save what you need to save is that exactly and you and you could say that there's going to be data that's at the edge that persist or not you'll might have data which might be referred to as the fog where you will collect it at the CEO or at the PIO right and you one or the pop and you want to be able to perform analytics with a little bit more compute you might bring some of that data centrally because you want to combine and blend with other information and then you might actually put it into the cloud because you want to combine other organizational related data and do very complex highly mathematical problem sets so we almost see it from sort of edge to outcome where there's edge processing fog processing core processing and then cloud processing okay so let's unpack that a little bit in the time we have remaining so you got the at least the three maybe even a four maybe it's a three in a three a tier model edge that that second tier gateway right aggregation point where you're doing some analytics and then the third tier and I guess maybe the fourth tier let's call it your own cloud private cloud or maybe the public cloud where you're doing the heavy modeling right and the training of the models and then maybe your ship in the model back down that's forever because it's now modifying the machine potentially or the machines understanding of data and then you're collecting new data based on that new algorithm to which you're now pushing out all right we don't have time but that just whole totally changes the whole security paradigm as well absolutely no had well Paul thanks very much for for coming on the cube and having this cube conversation really excellent work that you're doing congratulations and keep it up thank you very much you're welcome all right thanks for watching everybody this is Dave Volante and this is cube conversations we'll see you next time