(upbeat synth music) >> Narrator: Live from San Francisco, it's The Cube, covering Oracle OpenWorld 2016. Brought to you by Oracle. Now, here's your hosts John Furrier and Peter Burris. >> Hey, welcome back, everyone. We are here live in San Francisco for Oracle Open World 2016. This is SilconANGLE Media. It's The Cube, our flagship program, where we go out to the events and extract the signal from the noise. I'm John Furrier, the co-CEO of SiliconANGLE Media, joined by my co-host this week, Peter Burris, head of research at SiliconANGLE Media as well as the General Manager of Wikibon Research. Our next guest is Hari Sankar, who's the group Vice President of Enterprise Performance. Welcome to The Cube. >> Thank you. >> Thanks for joining us today. So, one of the things that you're in is performance management but in a different way, kind of a CFO perspective. >> Hari: That's right. >> Which this show is all about, ROI, total cost of ownership. But Oracle has a lot of software, finance software. First, take a step back and spend a minute to describe what is performance management and your role at Oracle. >> So traditionally, performance management is really about how finance sort of manages the overall business performance of a company. It's about things like forward-looking things like planning, forecasting, and budgeting. It's about, sort of, backward-looking things like okay, our quarter is done, how do we close the books and how do we report the numbers both internally, for management recording purposes, and externally, to the street and various stakeholders. So there is the compliance side to it. There is a strategy side to it, and these things have been traditionally what is performance management. What we are seeing now is that kind of discipline is now going beyond finance into operating lines of businesses, sales and marketing and manufacturing and so on. >> The, the-- >> One of the things, sorry, John, I think one of the things that is really interesting, especially in light of this show, is as we go through a process of digital transformation, where data becomes one of the most important assets in the business, that means that the asset specificity, to use a finance term, the degree to which an asset has only one use, starts to go down because you can program it. So marketing, sales, all the assets, intellectual property, data-oriented, that they've been developing over the years now can be bought under the umbrella of Enterprise Performance Management. >> That is absolutely true. That is absolutely-- >> So how is that happening? >> So part of how this is happening is let's say you are a marketing organization. You are spending $50 million on digital marketing. Now, there is a desire from the part of the marketing department to sort of manage that spend more diligently with more discipline and drither, just like finance manages any other line item in the budget. There's more desire to provide transparency to the business, in terms of here's where we are spending it and here's where we are getting returns, here's where we are perhaps not getting returns. So that is the planning part of it, and then there is also the reporting part of it, where we are seeing the emergence of the concept of narrative reporting, where you are saying hey, look, I'm not just going to distribute numbers and charts to my stakeholders, whether it's inside the company or outside, I'm going to give them context, I'm going to give them commentary on these numbers. If there is a variance, I'm going to tell them why is this there. Do I expect this variance to be there next quarter? What am I doing about it? So, it sort of brings those numbers to life and avoids that back and forth that typically happens. >> How much is the Performance Management moving out of the CFO function, and I want to get your take on how the costs in IT is becoming not just a functional shared resource but IT is now integrated across the whole company. Mark Hurd had tweeted yesterday on Twitter, "As more CEOs and CFOs understand "the potential of the cloud, "CIOs are going to get a lot more help," implying Oracle is going to help them. But it brings up the point that the CIO now is brought into the CFO conversation, they always have in facilities and what not, but now from a business perspective their contribution is significant and now co-mingled is it. Do you see that trend happening and what does that mean for the software side of it? >> We're definitely seeing that trend happening. For example, the most important new term to come out in finance in some time is the notion of digital finance. >> John: The notion of what? >> Digital finance, right? So this is really about whether you call it digitalization or not, digital finance, digital marketing, digital sales. So this digital business idea sort of elevates this role of the CIO because, as you said, data becomes a very, very important asset in terms of how you fundamentally drive innovation in your business, and so that digital notion is sort of elevating the role of the CIO. And in the context of Performance Management, as you see this spread beyond finance into other lines of businesses, other lines of businesses are starting to be more disciplined and rigorous in how they sort of measure their performance, how they manage their performance. There's also a need to connect the dots across. You know, if I'm doing a marketing plan, which is an important element of my overall spend, if there is a fluctuation or change, a big change in my marketing spend, that needs to be reflected back in the finance budget. So connecting the dots and aligning the plans across different functions is becoming a big priority as well. So you're seeing a lot of important changes happening. >> You just said a few things that's just gotten me standing up and getting all excited. Peter and I looked at each other, digital business, digital assets, digitizing your business, these are the mega-- >> Data value. >> Data value, this comes back down to what we've been talking about all week here on The Cube and for the past year. This is now what was once a come together, have a meeting, share, cross-pollinate, somewhat automated but in the end manual, to fully integrated. This is probably the biggest business problem in digital transformation right now. How come we're not hearing more? This is a-- >> Yeah, I think that's a great point, John. At the end of the day and what we've been talking about is that so this is is a little bit of SiliconANGLE Media, Wikibon, we believe that digital business, full-stop, is how you use data to differentially create sustained customers. >> Absolutely. >> That is digital business. You can say all kinds of new channels and all this other stuff, but it all boils down to are you using data as an asset better than your competitors? >> Yep. >> So that as a basis, two things. First off, interesting that Mark Hurd, we talked about it earlier, this is a quick aside, Mark Hurd talking about how CIOs are going to get more help. Remember when we talked about how Oracle's going to have to bring a lot of the IT group forward in its new transformation. >> This is it right here. >> Absolutely, but I'm going to throw you a little bit of a curve ball. I hope I'm not going to throw you a curve ball but its a very, very important point. As the IT organization, or as increasingly, the methods that we use to create digital assets, and increasingly also products, they're iterative, they're empirical, they're opportunistic, they're agile. That the traditional, year-long budget that says you have a certain money to spend, and you spend it or it goes away and you better not fail with this money, comes under attack by Agile, and I know a lot of CIOs that I talk to are trying to reconcile the impedance mismatch between Agile and Sprints, and being opportunistic and recognizing when something isn't working, and the CFO who's still talking about annualized releases of money. So I've always felt that you could not reconcile those. You could not bring those two points of view forward without EPM. Are you seeing that as well and how are you helping it? >> Yeah, we're definitely seeing this because this older, you're absolutely right. The old notion of let's make a budget once a year, get it right, and execute on it for the rest of the year, we are seeing that seeing that fading really fast. What people are saying is, look, plans are made only to be changed. Let's not fixate on getting the perfect plan in place. Let's start with a reasonable plan with the assumption that it's going to tweak and iterate and change many, many times over the year. So the focus is now on, less on getting it right the first time, more on how do we make dynamic changes to it in an agile fashion, just to your point. >> And reflect those changes throughout the entire cost-- >> And into finances-- >> Back into finance. >> It all comes back to finance. >> It comes back to finance because at the end of the day, let's say, take a simple example of a manufacturing company-- >> Paul: Finance is the language of business. It still is. >> End of the day, your business performance is measured in dollars and cents. I mean, period, right? So, let's say, your product mix changes because your customer demand is changing. That needs to be reflected back into finance, in terms of, okay, are we making more money or less money? Is it more revenue or less revenue? That needs to be reflected back, and so we're definitely seeing, in fact, the tagline for Enterprise Performance Management that we use these days is enabling business agility. So two parts to that, driving agile decisions, to your point, the second is, once you drive those agile decisions. Let's say I decided to expand into a new business and I did an acquisition. Fast forward six months, you need to reflect the results of that combined entity into your financial results, do it quickly, do it in a way that is correct and you're confident about the results and that's the job of finance. So it's agility of operations, agility in decision making, those two have to sort of come together. >> So here's my question then. I love this conversation because I think this speaks to the full-closed loop of Cloud and DevOps and the innovation around Agile. How much flexibility is built into the software, and I'm kind of going with the database route for a second, systems of records, schemas in database 'cause business plans can say it once a year and it's failing, I agree, I can see that failing. But, also, fixed schemas, can fail too. Well, I don't want to add the new data in 'cause the database can't handle it. I've heard that from developers before. Again, it slows the things down, so as you move from systems of record, which can be fixed and tweaked, the engagement data is the business engagement gestures. So how is that factoring into your software? You guys see that and is this AI Bot revolution and the machine learning, the smart software after engagement. Can you thread that through and explain how that fits? >> Let's start simple and sort of get a little more sophisticated quickly. The first things is we are seeing a lot more people come into the planning process than before. The old model was finance did the planning for other people. Now, people are doing their own plans, then sort of feeding it into the overall plan. People intentionally are pushing that because they want plans and decisions to be made closer to the point of action. Secondly, there is a greatest emphasis on driving fact-based decisions. For instance, we are working with some large consumer goods companies where they are saying, look, don't come here and tell me that I'm going to spend 10% less on this large line item compared to last year, Throw the last year's budget out and do a zero-based budget. I mean, zero-based budgeting is not a new concept. It's been around, but it's getting a new lease of life because in industries where profits are on the squeeze, they are saying "Look, I don't want "to do the traditional budgeting. "I want to go to a zero-based budget." >> Because they get facts that are surfacing faster. Is that kind of the premise? >> Facts, but more over to the performance of the business. >> That is definitely true. The facts that are surfacing faster, and, therefore, I want to give the tools to make use of those facts to the people who are closer to where they are surfacing. >> John: This is a digitized business in that scenario. >> Definitely true. >> Everything's instrumented. >> Good value. >> Hari: Yeah, definitely true. >> We always say on The Cube, I mean, this is the first time in the history of business in the world that you can actually measure everything. >> That is absolutely true. >> If you want to measure everything, you actually can do it. >> That is absolutely true. >> Now the CFO, which was once the measurement system, has to get integrated in. Am I getting this right? >> You are getting this right. You are getting this right. And the other part of your question is about okay, how is intelligence coming into, so some of these decisions over time, if you see a pattern, they can be perhaps automated. Plan adjustments can be, maybe some elements of plan adjustments can be automated, but I don't see finance going that far. That may be taken as an input. Maybe a recommendation comes from automated intelligence, and people will sort of take a look at it and say, "Hey, I want to go with this because it makes sense, "or I'm going to override it this way "because this doesn't take into account "what I'm planning for in the next quarter." >> Yeah, what scares me, though, in the whole bot thing, I mean, this is not a dis on Larik, I love the vision, it's got me all excited, is if they try to get too AI before they actually build the building blocks, they really can get ahead of themselves. So, you can see that head room, for sure, but a lot of companies are kind of in that planing mode. Is that true? What's this progress bar of customers right now who are into this, are in the software? I mean, track bots are great for certain things, but you can't really automate AI yet and everything. Or can you? >> I think there is probably a class of decisions that can be automated, but when it comes to finance, and finance tends to be conservative and for good reason, they definitely see the value of recommendations based on data, based on real-time data, but they still want to have the controls. >> [John} Got It. >> So that's kind of the mindset that we have seen. >> So real options valuations could really, really be helped by AI. But at the end of the day, you have to be able to close the books, and you don't need AI to help you close the books. >> This is a fascinating conversation. >> If I can add one quick conversation, just a quick point, as Enterprise Performance Management starts to weave its way into other parts of the business, institutionally, does that mean we're going to see controllers start to end up in different functions? >> Hari: (laughs) IOD of controllers? >> As a human interface that goes along with the system so that it works together. >> It's a definite possibility, right? Because if you're planning as rigorously in marketing as in finance and if you aremeasuring and reporting as rigorously in sales as you're doing in finance, maybe there's a sales controller function that becomes a legitimate need. But at the end of the day, today, you focus so much attention on reporting your numbers to the street. You focus attention on precision and accuracy and confidence in all of that. Why is that not a requirement for internal Reporting? >> It's the same argument when we talk about the technology of a structure. You move the computer to where the data is. You could move the controller where the action is, to your point earlier. It's a fascinating conversation, Hari. Thanks for sharing the insight. Love to do a follow-up on this because I think this really connects the language of business and kind of validates the digital fabric of digitization. But quick, I want to give you the last minute to give an update on the business, how you guys are doing. This is a pretty big deal. How's your business results, what's down the roadmap, what's the sales going to be like next month? I'm only kidding, I know. (all laugh) >> Sure, sure. I think the cloud has been a really game changer in this business. What the cloud has done has lowered the bar where we're seeing many mid-sized businesses start using Performance Management best practices, just like larger companies. We are seeing divisions or functions inside of larger businesses using Performance Management software for the first time. So there's a big market expansion, and we are seeing an expansion across other lines of businesses outside of finance. We are certainly seeing that. We are seeing that, you know, we introduced our first Cloud software in Enterprise Performance Management about two and a half years ago. At that time, we were not sure how the market update was going to be because we said finance tends to be conservative. Are they going to be comfortable doing their aggregated planning in the cloud, or are they going to be comfortable doing, reporting things in the cloud? We've been sort of pleasantly surprised by the willingness of finance, helped in part by the success the companies have had in deploying HR software in the cloud or CRM software in the cloud and so on. So the cloud has taken off. We have well north of 1,000 customers that have picked up EPM software in the cloud. We are very happy to see 100, 150 deployments go live every quarter, and we are seeing use cases in marketing, we are seeing use cases in HR of strategic workforce planning or marketing spend planning happened using EPM-style software. So, happy to see mid-sized businesses see real value from planning. >> John: Good integration capabilities? >> Good integration, I'm glad you mentioned it. Very good integration back into, for example, if you have financials in the cloud and EPM in the cloud, there are nice linkages between the two. So four teams are very important to us. We are seeing pervasive use of EPM software. We are seeing agile operations helped by EPM software in the cloud. We are seeing connected operations, whether it's the backbone systems or across functions. And we are seeing people take a sort of a comprehensive view of this, whether it's across functions or across processes. >> This is fascinating. We could go another hour. This is a really interesting topic because I think it really highlights a fact that, what we always say in The Cube is, you can provision technology faster and you get time to value certainly as the customers start to be creative and implement it. They get to actually put it to work and get the data around and behind. So thanks so much for spending the time on the insights on the EPM. We appreciate it, thank you so much. >> Thank you, I enjoyed the conversation. >> Okay, you're watching The Cube, live coverage here in San Francisco at Oracle OpenWorld 2016. I'm John Ferrier with Peter Burris. Thanks for watching. (upbeat synth music)