from around the globe it's thecube covering space and cyber security symposium 2020 hosted by cal poly hello everyone welcome to the space and cyber security symposium 2020 hosted by cal poly where the intersection of space and security are coming together i'm john furrier your host with thecube here in california i want to welcome our featured guest lieutenant general john f thompson with the united states space force approach to cyber security that's the topic of this session and of course he's the commander of the space and missile system center in los angeles air force base also heading up space force general thank you for coming on really appreciate you kicking this off welcome to the symposium hey so uh thank you very much john for that very kind introduction also uh very much thank you to cal poly uh for this opportunity to speak to this audience today also a special shout out to one of the organizers uh dustin brun for all of his work uh helping uh get us uh to this point uh ladies and gentlemen as uh as uh john mentioned uh i'm jt thompson uh i lead the 6 000 men and women of the united states space forces space and missile system center which is headquartered here at los angeles air force base in el segundo if you're not quite sure where that's at it's about a mile and a half from lax this is our main operating location but we do have a number of other operating locations around the country with about 500 people at kirtland air force base in albuquerque new mexico uh and about another 500 people on the front range of the rockies uh between colorado springs and uh and denver plus a smattering of other much smaller operating locations nationwide uh we're responsible for uh acquiring developing and sustaining the united states space force's critical space assets that includes the satellites in the space layer and also on the ground layer our ground segments to operate those satellites and we also are in charge of procuring launch services for the u.s space force and a number of our critical mission partners across the uh department of defense and the intelligence community um just as a couple of examples of some of the things we do if you're unfamiliar with our work we developed and currently sustained the 31 satellite gps constellation that satellite constellation while originally intended to help with global navigation those gps signals have provided trillions of dollars in unanticipated value to the global economy uh over the past three decades i mean gps is everywhere i think everybody realizes that agriculture banking the stock market the airline industry uh separate and distinct navigation systems it's really pervasive across both the capabilities for our department of defense and capabilities for our economy and and individuals billions of individuals across our country and the planet some of the other work we do for instance in the communications sector uh secure communications satellites that we design and build that link america's sons and daughters serving in the military around the world and really enable real-time support and comms for our deployed forces and those of our allies we also acquire uh infrared missile warning satellites uh that monitor the planet for missile launches and provide advanced warning uh to the u.s homeland and to our allies uh in case some of those missile launches are uh nefarious um on a note that's probably a lot closer to home maybe a lot closer to home than many of us want to think about here in the state of california in 2018 smc jumped through a bunch of red tape and bureaucracy uh to partner with the u.s forest service during the two of the largest wildfires in the state's history the camp and woolsey fires in northern california as those fires spread out of control we created processes on the fly to share data from our missile warning satellites those are satellites that are systems that are purpose built to see heat sources from thousands of miles above the planet and we collaborated with the us forest service so that firefighters on the ground uh could track those fires more in real time and better forecast fires and where they were spreading thereby saving lives and and property by identifying hot spots and flare-ups for firefighters that data that we were able to working with our contractors pass to the u.s forest service and authorities here in california was passed in less than an hour as it was collected to get it into the hands of the emergency responders the first responders as quickly as possible and doing that in an hour greatly surpassed what was available from some of the other assets in the airborne and ground-based fire spotters it was really instrumental in fighting those fires and stopping their spread we've continued uh that involvement in recent years using multiple systems to support firefighters across the western u.s this fall as they battled numerous wildfires that unfortunately continue working together with the u.s forest service and with other partners uh we like to make uh we like to think that we made a difference here but there's still a lot more work to go and i think that we should always be asking ourselves uh what else can space data be used for and how can we more rapidly get that space data to uh stakeholders so that they can use it for for purposes of good if you will how else can we protect our nation how else can we protect our friends and allies um i think a major component of the of the discussion that we will have throughout this conference is that the space landscape has changed rapidly and continues to change rapidly um just over the past few years uh john and i were talking before we went live here and 80 nations now have uh space programs 80 nearly 80 space faring nations on the planet um if you just look at one mission area that uh the department of defense is interested in and that's small launch there are currently over a hundred different small launch companies uh within the u.s industrial base vying for commercial dod and civil uh payload capabilities uh mostly to low earth orbit it's it's just truly a remarkable time if you factor in those things like artificial intelligence and machine learning um where we're revolutionary revolutionizing really uh the ways that we generate process and use data i mean it's really remarkable in 2016 so if you think about this four years ago uh nasa estimated that there were 28 terabytes of information transiting their space network each day and that was four years ago um uh obviously we've got a lot of desire to work with a lot of the people in the audience of this congress or in this conference uh we need to work with big thinkers like many of you to answer questions on how best we apply data analytics to extract value and meaning from that data we need new generations of thinkers to help apply cutting edge edge theories of data mining cyber behaviorism and internet of things 2.0 it's just truly a remarkable time uh to be in the space business and the cyber aspects of the states of the space business are truly truly daunting and important to uh to all of us um integrating cyber security into our space systems both commercial and government is a mandate um it's no longer just a nice to have as the us space force and department of the air force leadership has said many times over the past couple of years space is becoming congested and contested and that contested aspect means that we've got to focus on cyber security uh in the same way that the banking industry and cyber commerce focus on uh cyber security day in and day out the value of the data and services provided is really directly tied to the integrity and availability of that data and services from the space layer from the ground control segments associated with it and this value is not just military it's also economic and it's not just american it's also a value for the entire world particularly particularly our allies as we all depend upon space and space systems your neighbors and friends here in california that are employed at the space and missile system center uh work with network defenders we work with our commercial contractors and our systems developers um our international allies and partners to try and build as secure and resilient systems as we can from the ground up that keep the global commons of space free and open for exploration and for commerce um as john and i were talking earlier before we came online there's an aspect of cyber security for space systems especially for some of our legacy systems that's more how do we bolt this on because we fielded those space systems a number of years ago and the the challenges of cyber security in the space domain have grown so we have a part that we have to worry about bolting it on but then we have to worry about building it in as we as we field new systems and build in a flexibility that that realizes that the cyber threat or the cyber security landscape will evolve over time it's not just going to be stagnant there will always be new vulnerabilities and new threat vectors that we always have to look at look uh as secretary barrett who is our secretary of the air force likes to say most americans use space before they have their first cup of coffee in the morning the american way of life really depends on space and as part of the united states space force we work with defense leaders our congress joint and international military teammates and industry to ensure american leadership in space i really thank you for this opportunity to address the audience today john and thanks so much to cal poly for letting me be one of the speakers at this event i really look forward to this for uh several months and so with that i look forward to your questions as we kind of move along here general thank you very much for the awesome uh introductory statement uh for the folks watching on the stream brigadier general carthan is going to be in the chat answering any questions feel free to chat away he's the vice commander of space and missile systems center he'll be available um a couple comments from your keynote before i get to my questions because it just jumped in my head you mentioned the benefits of say space but the fires in california we're living that here that's really real time that's a benefit you also mentioned the ability for more people launching payloads into space and i only imagine moore's law smaller faster cheaper applies to rockets too so i'm imagining you have the benefits of space and you have now more potential objects flying out sanctioned and maybe unsanctioned so you know is it going to be more rules around that i mean this is an interesting question because it's exciting space force but for all the good there is potentially bad out there yeah so i i john i think the uh i think the basics of your question is as space becomes more congested and contested is there a need for more international norms of how satellites fly in space what kind of basic features satellites have to perhaps deorbit themselves what kind of basic protections does do all satellites should all satellites be afforded as part of a peaceful global commons of space i think those are all fantastic questions and i know that u.s and many uh allied policy makers are looking very very hard at those kinds of questions in terms of what are the norms of behavior and how we uh you know how how we field and field is the military term but you know how we uh populate uh using civil or uh commercial terms uh that space layer at different altitudes uh low earth orbit mid mid-earth orbit geosynchronous earth orbit different kinds of orbits uh what the kind of mission areas we accomplish from space that's all things that need to be definitely taken into account as uh as the place gets a little bit not a little bit as the place gets increasingly more popular day in and day out well i'm super excited for space force i know that a new generation of young folks are really interested in it's an emerging changing great space the focus here at this conference is space and cyber security intersection i'd like to get your thoughts on the approach that space force is taking to cyber security and how it impacts our national goals here in the united states yeah yeah so that's a that's a great question john let me let me talk about in two uh two basic ways but number one is and and i know um some people in the audience this might make them a little bit uncomfortable but i have to talk about the threat right um and then relative to that threat i really have to talk about the importance of uh of cyber and specifically cyber security as it relates to that threat um the threats that we face um really represent a new era of warfare and that new era of warfare involves both space and cyber uh we've seen a lot of action in recent months uh from certain countries notably china and russia uh that have threatened what i referred to earlier as the peaceful global commons of space for example uh it through many unclassified sources and media sources everybody should understand that um uh the russians have been testing on orbit uh anti-satellite capabilities it's been very clear if you were following just the week before last the department of defense released its uh 2020 military and security developments involving the people's republic of china um uh and uh it was very clear that china is developing asats electronic jammers directed energy weapons and most relevant to today's discussion offensive cyber uh capabilities there are kinetic threats uh that are very very easy to see but a cyber attack against a critical uh command and control site or against a particular spacecraft could be just as devastating to the system and our war fighters in the case of gps and important to note that that gps system also impacts many civilians who are dependent upon those systems from a first response perspective and emergency services a cyber attack against a ground control site could cause operators to lose control of a spacecraft or an attacker could feed spoofed data to a system to mislead operators so that they send emergency services personnel to the to the wrong address right attacks on spacecraft on orbit whether directly via a network of intrusion or enabled through malware introduced during the systems production uh while we're building the satellite can [ __ ] or corrupt the data denial of service type attacks on our global networks obviously would disrupt our data flow and interfere with ongoing operations and satellite control i mean if gps went down i you know i hesitate to say it this way because we might elicit some screams from the audience but if gps went down a starbucks wouldn't be able to handle your mobile order uber drivers wouldn't be able to find you and domino's certainly certainly wouldn't be able to get there in 30 minutes or less right so with a little bit of tongue-in-cheek there from a military operations perspective it's dead serious um uh we have become accustomed in the commercial world to threats like lance ransomware and malware and those things have unfortunately become commonplace in commercial terrestrial networks and computer systems however what we're seeing is that our adversaries with the increased competition in space these same techniques are being retooled if you will to use against our national security space systems uh day in and day out um as i said during my opening remarks on the importance of cyber the value of these systems is directly tied to their integrity if commanders in the field uh firefighters in california or baristas in in starbucks can't trust the data they see they're receiving then that really harms their decision-making capabilities one of the big trends we've recently seen is the mood move towards proliferated leo uh uh constellations obviously uh spacex's uh starlink uh on the commercial side and on the military side the work that darpa and my organization smc are doing on blackjack and casino as well as some space transport layer constellation work that the space development agency is designing are all really really important types of mesh network systems that will revolutionize how we plan and field warfighting systems and commercial communications and internet providing systems but they're also heavily reliant on cyber security uh we've got to make sure that they are secured to avoid an accident or international damage uh loss of control of these constellations really could be catastrophic from both a mission perspective or from uh you know satellites tumbling out of low earth orbit perspective another trend is introductions in artificial intelligence and machine learning on board spacecraft or at the edge our satellites are really not so much hardware systems with a little software anymore in the commercial sector and in the defense sector they're basically flying boxes full of software right and we need to ensure the data that we're getting out of those flying boxes full of software are helping us base our decisions on accurate data and algorithms govern governing the right actions and that those uh that those systems are impervious to the extent possible uh to nefarious uh modifications so in summation a cyber security is vital element of everything in our national security space goals and i would argue for our national uh goals uh writ large including uh economic and information uh uh dimensions uh the space force leadership at all levels uh from uh some of the brand new second lieutenants that general raymond uh swore into the space force this morning uh ceremonially from the uh air force association's air space and cyberspace conference uh to the various highest levels general raymond uh general d t thompson myself and a number of other senior leaders in this enterprise we've got to make sure that we're all working together to keep cyber security at the forefront of our space systems because it they absolutely depend on it you know you mentioned uh hardware software threats opportunities challenges i want to ask you because you you got me thinking of the minute there around infrastructure i mean we've heard critical infrastructure you know grids here on on earth you're talking about critical infrastructure a redefinition of what critical infrastructure is an extension of what we have so i'd love to get your thoughts about space force's view of that critical infrastructure vis-a-vis the threat vectors because you know the term threat vectors has been kicked around in the cyber space oh yeah threat vectors they're always increasing the surface area well if the surface area is from space it's an unlimited surface area so you got different vectors so you got new critical infrastructure developing real time really fast and you got an expanded threat vector landscape putting that in perspective for the folks that aren't really inside the ropes on these critical issues how would you explain this and how would you talk about those two things well so i tell you um i just like um uh just like uh i'm sure people in the security side or the cyber security side of the business in the banking industry feel they feel like it's uh all possible threat vectors represent a dramatic and protect potentially existential threat to all of the dollars that they have in the banking system to the financial sector on the department of defense side we've got to have sort of the same mindset um that threat vector from to and through space against critical space systems ground segments the launch enterprise or transportation uh to orbit and the various different uh domains within uh within space itself like i mentioned before uh leo mio and geo-based satellites with different orbits all of the different mission areas that are accomplished from space that i mentioned earlier some that i didn't mention like weather tactical or wide band communications uh various new features of space control all of those are things that we have to worry about from a cyber security uh threat perspective and it's a it's a daunting challenge right now right yeah it's awesome and one of the things we've been following on the hardware side here in the on the ground is the supply chain we've seen you know malware being you know really put into really obscure hardware who manufactures it as being outsourced obviously government has restrictions but with the private sector uh you mentioned china and and the us kind of working together across these these peaceful areas but you got to look at the supply chain how does the supply chain the security aspect impact the mission of the u.s space force yeah yeah so so um how about another um just in terms of an example another kind of california-based historical example right um the very first u.s satellite uh explorer one was built by uh the jet propulsion uh laboratory folks uh not far from here in el segundo up in uh up in pasadena um that satellite when it was first built in the late 50s uh weighed a little bit over 30 pounds and i'm sure that each and every part was custom made and definitely made by u.s companies fast forward to today the global supply chain is so tightly coupled and frankly many industries are so specialized almost specialized regionally around the planet we focus every day to guarantee the integrity of every component that we put in our space systems is absolutely critical to the operations of those satellites and we're dependent upon them but it becomes more difficult and more difficult to understand the the heritage if you will of some of the parts that are used the thousands of parts that are used in some of our satellites that are literally school bus sized right the space industry especially uh national security space sector um uh is relatively small compared to other commercial industries and we're moving to towards using more and more parts uh from non-us companies uh cyber security and cyber awareness have to be baked in from the beginning if we're going to be using parts that maybe we don't necessarily um understand 100 percent like an explorer one uh the the lineage of that particular part the environmental difficulties in space are well known the radiation environment the temperature extremes the vacuum those require specialized component and the us military is not the only uh customer in that space in fact we're definitely not the dominant customer uh in space anymore all those factors require us along with our other government partners and many different commercial space organizations to keep a very close eye on our supply chains from a quality perspective a security perspective and availability um there's open source reporting on supply training intrusions from um many different breaches of commercial retailers to the infectious spread of uh you know compromised patches if you will and our adversaries are aware of these techniques as i mentioned earlier with other forms of attack considering our supply chains and development networks really becomes fair game for our adversaries so we have to uh take that threat seriously um between the government and industry sectors here in the u.s we're also working with our industry partners to enact stronger defenses and assess our own vulnerabilities last fall we completed an extensive review of all of our major contracts here at space and missile system center to determine the levels of cyber security requirements we've implemented across our portfolio and it sounds really kind of you know businessy geeky if you will you know hey we looked at our contracts to make sure that we had the right clauses in our contracts to address cyber security as dynamically as we possibly could and so we found ourselves having to add new language to our contracts to require system developers to implement some more advanced uh protective measures in this evolving cyber security environment so that data handling and supply chain perspective uh protections um from contract inception to launch and operations were taken into account uh cyber security really is a key performance parameter for us now it's as important as the the mission performance of the system it's as important as cost it's as important as schedule because if we deliver the perfect system on time and on cost uh it can perform that missile warning or that communications mis mission perfectly but it's not cyber secure if it doesn't have cyber protections built into it or the ability to implement mitigations against cyber uh threats then we've essentially fielded a shoe box in space that doesn't do the k the the war fighter or the nation uh any good um supply chain risk management is a is a major challenge for us uh we're doing a lot to coordinate with our industry partners uh we're all facing it head on uh to try and build secure and trusted components uh that keep our confidence as leaders firefighters and baristas uh as the case may be uh but it is a challenge and we're trying to rise to that challenge you know this so exciting this new area because it really touches everything you know talk about geeking out on on the tech the hardware the systems but also you put your kind of mba hat on you go what's the roi of the extra development and how you how things get built because the always the exciting thing for space geeks is like you're building cool stuff people love it's it's exciting but you still have to build and cyber security has proven that security has to be baked in from the beginning and be thought as a system architecture so you're still building things which means you've got to acquire things you got to acquire parts you got to acquire build software and and sustain it how is security impacting the acquisition and the sustainment of these systems for space yeah from initial development uh through planning for the acquisition design development fielding or production fielding and sustainment it impacts all aspects of of the life cycle john uh we simply especially from the concept of baking in cyber security uh we can't wait until something is built and then try and figure out how to make it cyber secure so we've moved way further uh towards working side by side with our system developers to strengthen cyber security from the very beginning of a system's development cyber security and the resilience associated with it really have to be treated as a key system attribute as i mentioned earlier equivalent with data rates or other metrics of performance we like to talk in uh in the space world about uh mission assurance and mission assurance has always you know sort of taken us as we as we technically geek out right mission assurance has always taken us to the will this system work in space right can it work in a vacuum can it work in you know as it as it uh you know transfers through uh the van allen radiation belt or through the the um the southern hemisphere's electromagnetic anomaly right will it work out in space and now from a resiliency perspective yeah it has to work in space it's got to be functional in space but it's also got to be resistant to these cyber security threats it's it's not just i think uh general dt thompson quoted this term it's not just widget assurance anymore it's mission assurance um uh how does that satellite uh operator that ground control segment operate while under attack so let me break your question a little bit uh just for purposes of discussion into into really two parts uh cyber uh for cyber security for systems that are new and cyber security uh for systems that are in sustainment or kind of old and legacy um obviously there's cyber vulnerabilities that threaten both and we really have to employ different strategies for for defense of of each one for new systems uh we're desperately trying to implement across the department of defense in particular in the space world a kind of a devsecops methodology and practice to delivering software faster and with greater security for our space systems here at smc we have a program called enterprise ground services which is a tool kit basically a collection of tools for common command and control of different satellite systems egs as we call it has an integrated suite for defensive cyber capabilities network operators can use these tools to gain unprecedented insight to data flows and to monitor space network traffic for anomalies or other potential indicators of of bad behavior malicious behavior if you will um uh it's rudimentary at this point but because we're using devsecops and that incremental development approach as we scale it it just becomes more and more capable you know every every product increment that we field here at uh at uh la air force base uh uh we have the united space space forces west coast software factory which we've dubbed kobayashi maru they're using those agile devops uh software development practices uh to deliver uh space awareness software uh to the combined space operations center uh affectionately called the csp that c-spock is just down the road uh from cal poly uh there in san luis obispo at vandenberg air force base they've securely linked the c-spock with other space operation centers around the planet our allies australia canada and the uk uh we're partnering with all of them to enable secure and enhanced combined space operations so lots of new stuff going on as we bake in new development uh capabilities for our our space systems but as i mentioned earlier we've got large constellations on satellite of satellites on orbit right now some of them are well in excess of a decade or more old on orbit and so the design aspects of those satellites are several decades old and so but we still have to worry about them because they're critical to our space capabilities um we've been working with an air force materiel command organization uh called crows which stands for the cyber resiliency office for uh weapon systems to assess all of those legacy platforms from a cyber security perspective and develop defensive strategies and potential hardware and software upgrades to those systems to better enable them to to live through this increasingly cyber security uh concerned era that we currently live in our industry partners have been critical to to both of those different avenues both new systems and legacy systems we're working closely with them to defend and upgrade uh national assets and develop the capabilities to do similar with uh with new national assets coming online the vulnerabilities of our space systems really kind of threaten the way we've done business in the past both militarily and in the case of gps economically the impacts of that cyber security risk are clear in our acquisition and sustainment processes but i've got to tell you it that as the threat vectors change as the vulnerabilities change we've got to be nimble enough agile enough to be able to bounce back and forth we can't just say uh many people in the audience are probably familiar with the rmf or the risk management framework approach to um to reviewing uh the cyber security of a system we can't have program managers and engineers just accomplish an rmf on a system and then hey high five we're all good uh it's a journey not a destination that's cyber security and it's a constant battle rhythm throughout a weapon systems life cycle not just a single event i want to get to this commercial business needs and your needs on the next question but before i go there you mentioned the agile and i see that clearly because when you have accelerated innovation cycles you've got to be faster and we saw this in the computer industry mainframes mini computers and then when you started getting beyond me when the internet hit and pcs came out you saw the big enterprises the banks and and government start to work with startups it used to be a joke in the entrepreneurial circles is that you know there's no way if you're a startup you're ever going to get a contract with a big business enterprise now that used to be for public sector and certainly uh for you guys so as you see startups out there and there's acquisition involved i'm sure would love to love to have a contract with space force there's an roi calculation where if it's in space and you have a sustainment view edit software you might have a new kind of business model that could be attractive to startups could you share your thoughts on the folks who want to be a supplier to you uh whether they're a startup or an existing business that wants to be agile but they might not be that big company we are john that's a fantastic question we are desperately trying to reach out to to those new space advocates to those startups to those um what we sometimes refer to within the department of defense those non-traditional uh defense contractors a couple of things just for uh thinking purposes on some of the things that we're trying to highlight um uh three years ago we created here at uh space and missile system center uh the space enterprise consortium uh to provide a platform uh a contractual vehicle really to enable us to rapidly prototype uh development of space systems and to collaborate uh between the u.s space force uh traditional defense contractors non-traditional vendors like startups and even some academic institutions uh spec as we call it space enterprise consortium uses a specialized contracting tool to get contracts uh awarded quickly many in the audience may be familiar with other transaction agreements and that's what spec is based on and so far in just three years spec has awarded 75 different uh prototyping contracts worth over 800 million dollars with a 36 reduction in time to award and because it's a consortium based competition for um for these kinds of prototyping efforts the barrier to entry for small and non-traditional for startups even for academic institutions to be able to compete for these kinds of prototypings is really lowered right um uh these types of partnerships uh that we've been working through on spec uh have really helped us work with smaller companies who might not have the background or expertise in dealing with the government or in working with cyber security uh for their systems both their developmental systems and the systems that they're designing and trying to build we want to provide ways for companies large and small to partner together and support um uh kind of mutually beneficial uh relationships between all um recently uh at the annual air force association uh conference that i mentioned earlier i moderated a panel with several space industry leaders uh all from big traditional defense contractors by the way and they all stressed the importance of building bridges and partnerships uh between major contractors in the defense industry and new entrants uh and that helps us capture the benefits of speed and agility that come with small companies and startups as well as the expertise and specialized skill sets of some of those uh larger contractors uh that we rely on day in and day out advanced cyber security protections and utilization of secure facilities are just a couple of things that i think we could be prioritizing more so in those collaborations as i mentioned earlier the spec has been very successful in awarding a number of different prototyping contracts and large dollar values and it's just going to get better right there's over 400 members of the space enterprise consortium 80 of them are non-traditional kinds of vendors and we just love working with them another thing that many people in the audience may be familiar with in terms of our outreach to innovators uh if you will and innovators that include uh cyber security experts is our space pitch day events right so we held our first event last november in san francisco uh where we awarded over a two-day period about 46 million dollars to 30 different companies um that had potentially game-changing ideas these were phase two small business innovative research efforts uh that we awarded with cash on the spot uh we're planning on holding our second space pitch day in the spring of 2021. uh we're planning on doing it right here in los angeles uh covent 19 environment permitting um and we think that these are you know fantastic uh uh venues for identifying and working with high-speed startups startups and small businesses who are interested in uh really truly partnering with the us air force it's a as i said before it's a really exciting time to be a part of this business uh and working with the innovation economy uh is something that the department of defense uh really needs to do in that um the innovation that we used to think was ours you know that 80 percent of the industrial-based innovation that came from the department of defense uh the the script has been flipped there and so now more than 70 percent uh particularly in space innovation uh comes from the commercial sector not from uh not from the defense business itself and so um that's a tsunami of uh investment and a tsunami of uh capability and i need to figure out how to get my surfboard out and ride it you know what i mean yeah i mean it's one of those things where the flip the script has been flipped but it's exciting because it's impacting everything are you talking about systems architecture you're talking about software you're talking about a business model you talk about devsecops from a technical perspective but now you have a business model innovation all the theaters of uh are exploding in innovation technical business personnel this brings up the workforce challenge you've got the cyber needs for the u.s space force there's probably a great roi model for new kinds of software development that could be priced into contracts that's a entrepreneurial innovation you got the the business model theater you've got the personnel how does the industry adopt and change you guys are clearly driving this how does the industry adjust to you yeah so um i think a great way to answer that question is to just talk about the kind of people that we're trying to prioritize in the u.s space force from a from an acquisition perspective and in this particular case from a from a cyber security perspective as i mentioned earlier it's the most exciting time to be in space programs uh really since the days of apollo um uh you know just to put it in terms that you know maybe have an impact with the audience uh from 1957 until today approximately 9 000 satellites uh have been launched from the various space faring countries around the planet uh less than two thousand of those nine thousand are still up on orbit and operational and yet in the new space regime um players like spacex have plans to launch you know 12 000 satellites for some of their constellations alone it really is a remarkable time in terms of innovation and fielding of space capabilities and all of those space capabilities whether they're commercial civil or defense are going to require appropriate cyber security uh protections it's just a really exciting time uh to be working in stuff like this and so uh folks like the folks in this audience who have a passion about space and a passion about cyber security are just the kind of people that we want to work with because we need to make sure our systems are are secure and resilient we need folks that have technical and computing expertise engineering skills to be able to design cybersecure systems that can detect and mitigate attacks uh but we also as you alluded to we need people that have that business and um you know business acumen human networking background so that we can launch the startups and work with the non-traditional businesses uh help to bring them on board help to secure both their data and our data and uh and and make sure our processes and systems are are free as much as possible from uh uh from attack um for preparation for for audience members who are young and maybe thinking about getting into this uh trade space um you gotta be smart on digital networking uh you gotta understand basic internet protocols concepts uh programming languages uh database design uh learn what you can from penetration or vulnerability testing and and uh risk assessment i will tell you this and i don't think he will i know he will not mind me telling you this but you've got to be a lifelong learner and so two years ago i'm at home one evening and i get a phone call on my cell phone and it's my boss the commander of air force space command uh general j raymond who is now currently the chief of space operations and he is on temporary duty flying overseas he lands where he's going and he first thing he does when he lands is he calls me and he goes jt um while i was traveling um i noticed that there were e-books available on the commercial airliner i was traveling on and there was an e-book on something called scrumming and agile devsecops and i read it have you read it um and i said no sir but if you tell me what the title of the book is i will read it and so i got to go to my staff meeting um you know the very next week the next time we had a staff meeting and tell everybody in the stab meeting hey if the four star and the three star can read the book about scrumming then i'm pretty sure all of you around this table and all our lieutenants and our captains our gs13s all of our government employees can get smart on uh the scrumming development process and interestingly as another side i had a telephone call with him last year during the holidays where he was trying to take some leave and i said sir what are you up to today are you are you you know making eggnog for the event tonight or whatever and the chief of space operations told me no i'm trying to teach myself python i'm at lesson two and it's not going so well but i'm i'm gonna figure this out and so that kind of thing if the chief of staff or the you know the the the chief of space operations can prioritize scrumming and python language and innovation in his daily schedule then we're definitely looking for other people who can do that and we'll just say lower levels of rank uh throughout our entire space force enterprise um look i i we don't need to need people that can code a satellite from scratch but we need to know we need to have people that have a basic grasp of the programming basics and cyber security requirements and that can turn those things into into meaningful actions obviously in the space domain things like basic physics and orbital mechanics are also important uh space is not an intuitive uh domain so under understanding how things survive uh on orbit is really critical to making the right design and operational decisions and you know i know there's probably a lot because of this conference i know there's a probably a whole lot of high-speed cyber security experts out in the audience and i need those people in the u.s space force the the country is counting on it but i wouldn't discount having people that are just cyber aware or cyber savvy right i have contracting officers and logisticians and program managers and they don't have to be high-end cyber security experts but they have to be aware enough about it to be able to implement cyber security protections um into our space system so the skill set is is really really broad um our adversaries are pouring billions of dollars into uh define designing uh and fielding offensive and destructive space cyber security weapons right they've repeatedly shown really a blatant disregard of safety and international norms for good behavior on orbit and the cyber security aspects of our space systems is really a key battleground going forward so that we can maintain that as i mentioned before peaceful uh global commons of space we really need all hands on deck if you're interested in helping in uniform if you're interested in helping uh not in uniform uh but as a government employee a commercial or civil employee to help us make cyber security more important uh or more cape more able to be developed for our space systems then we'd really love to uh to work with you or have you on the team to build that safe and secure future for our space systems lieutenant general john thompson great insight thank you for sharing all that awesome stories too and motivation for the young next generation the united states space force approach of cyber security really amazing talk thank you for your time final parting question is as you look out and you had your magic wand what's your view for the next few years in terms of things that we could accomplish it's a super exciting time what do you hope for so um um first of all john thanks to you and and thanks to cal poly uh for the invitation and and thanks to everybody for uh for their interest in cyber security especially as it relates to space systems that's here at the conference um uh there's a quote and i'll read it here uh from uh bernard schriever who was the uh the founder if you will uh a legend in uh dod space the founder of the western development division which was a predecessor organization to space and missile systems center general shrever i think captures the essence of what how we see the next couple of years the world has an ample supply of people who can always come up with a dozen good reasons why new ideas will not work and should not be tried but the people who produce progress are breed apart they have the imagination the courage and the persistence to find solutions and so i think if you're hoping that the next few years of space innovation and cyber security innovation are going to be a pony ride at the county fair then perhaps you should look for another line of work because i think the next few years in space and cyber security innovation are going to be more like a rodeo um and a very dynamic rodeo as it goes it is a an awesome privilege to be part of this ecosystem it's really an honor for me to um to be able to play some small role uh in the space ecosystem and trying to improve it uh while i'm trying to improve the chances of uh of the united states of america in a uh in a space war fighting uh uh environment um and so i thank all of you for uh participating today and for this little bit of time that you've allowed me to share with you thank you sir thank you for your leadership and thank you for the for the time for this awesome event space and cyber security symposium 2020 i'm john furrier on behalf of cal poly thanks for watching [Music]

>> Narrator: From around the globe. It's theCUBE covering space in cybersecurity symposium 2020 hosted by Cal Poly. >> Hello, everyone. Welcome to the space and cybersecurity symposium, 2020 hosted by Cal Poly where the intersection of space and security are coming together. I'm John Furrier, your host with theCUBE here in California. I want to welcome our featured guest, Lieutenant General, John F. Thompson with the United States Space Force approach to cybersecurity. That's the topic of this session. And of course he's the commander of the space and missile system center in Los Angeles Air Force Base. Also heading up Space Force. General, thank you for coming on. I really appreciate to you kicking this off. Welcome to the symposium. >> Hey, so thank you very much, John, for that very kind introduction. Also very much thank you to Cal Poly for this opportunity to speak to this audience today. Also a special shout out to one of the organizers, Dustin Debrun, for all of his work, helping get us to this point. Ladies and gentlemen as a John mentioned, I'm JT Thompson. I lead the 6,000 men and women of the United States Space Force's Space and Missile System Center, which is headquartered here at Los Angeles Air Force Base and El Segundo. If you're not quite sure where that's at, it's about a mile and a half from LAX. This is our main operating location, but we do have a number of other operating locations around the country. We're about 500 people at Kirtland Air Force Base in Albuquerque, New Mexico, and an about another 500 people on the front range of the Rockies between Colorado Springs and Denver plus a smattering of other much smaller operating locations nationwide. We're responsible for acquiring, developing and sustaining the United States Space Force's, critical space assets. That includes the satellites in the space layer and also on the ground layer our ground segments to operate those satellites. And we also are in charge of procuring launch services for the US Space Force and a number of our critical mission partners across the Department of Defense and the intelligence community. Just as a couple of examples of some of the things we do, if you're unfamiliar with our work we developed and currently sustain the 31 satellite GPS constellation that satellite constellation, while originally intended to help with global navigation, those GPS signals have provided trillions of dollars in unanticipated value to the global economy over the past three decades. GPS is everywhere. I think everybody realizes that. Agriculture, banking, the stock market, the airline industry, separate and distinct navigation systems. It's really pervasive across both capabilities for our Department of Defense and capabilities for our economy and individuals, billions of individuals across our country and the planet. Some of the other work we do for instance, in the communications sector, secure communications satellites that we designed and build that link America's sons and daughters serving in the military around the world and really enable real time support and comms for our deployed forces. And those of our allies. We also acquire infrared missile warning satellites that monitor the planet for missile launches that provide advanced warning to the US Homeland and to our allies in case some of those missile launches are nefarious. On a note, that's probably a lot closer to home, maybe a lot closer to home than many of us want to think about here in the state of California. In 2018, SMC jumped through a bunch of red tape and bureaucracy to partner with the US Forest Service during two of the largest wildfires in the state's history, the Camp and Woolsey fires in Northern California. As those fires spread out of control, we created processes on the fly to share data from our missile warning satellites. Those are satellites that are systems that are purpose built to see heat sources from thousands of miles above the planet. And we collaborated with the US Forest Service so that firefighters on the ground could track those fires more in real time and better forecast fires and where they were spreading, thereby saving lives and property by identifying hotspots and flareups for firefighters. That data that we were able to working with our contractors pass to the US Forest Service and authorities here in California, was passed in less than an hour as it was collected to get it into the hands of the emergency responders, the first responders as quickly as possible and doing that in an hour greatly surpassed what was available from some of the other assets in the airborne and ground-based fire spotters. It was really instrumental in fighting those fires and stopping their spread. We've continued that involvement in recent years, using multiple systems to support firefighters across the Western US this fall, as they battled numerous wildfires that unfortunately continue. Working together with the US Forest Service and with other partners we'd like to think that we've made a difference here, but there's still a lot more work to go. And I think that we should always be asking ourselves what else can space data be used for and how can we more rapidly get that space data to stakeholders so that they can use it for purposes of good, if you will. How else can we protect our nation? How else can we protect our friends and allies? I think a major component of the discussion that we will have throughout this conference is that the space landscape has changed rapidly and continues to change rapidly. Just over the past few years, John and I were talking before we went live here and 80 nations now have space programs. Nearly 80 space faring nations on the planet. If you just look at one mission area that the Department of Defense is interested in, and that's small launch, there are currently over 100 different small launch companies within the US industrial base vying for commercial DoD and civil payload capabilities, mostly to lower earth orbit. It's truly a remarkable time. If you factor in those things like artificial intelligence and machine learning, where we're revolutionizing really, the ways that we generate process and use data. It's really remarkable. In 2016, so if you think about this four years ago, NASA estimated that there were 28 terabytes of information transiting their space network each day. And that was four years ago. Obviously we've got a lot of desire to work with a lot of the people in the audience in this conference, we need to work with big thinkers, like many of you to answer questions on how best we apply data analytics to extract value and meaning from that data. We need new generations of thinkers to help apply cutting edge theories of data mining, cyber behaviorism, and Internet of Things 2.0, it's just truly a remarkable time to be in the space business and the cyber aspects of the space business are truly, truly daunting and important to all of us. Integrating cyber security into our space systems, both commercial and government is a mandate. it's no longer just a nice to have as the US Space Force and Department of the Air Force leadership has said many times over the past couple of years, space is becoming congested and contested. And that contested aspect means that we've got to focus on cyber security in the same way that the banking industry and cyber commerce focus on cybersecurity day in and day out. The value of the data and services provided is really directly tied to the integrity and availability of that data and services from the space layer, from the ground control segments associated with it. And this value is not just military, it's also economic and it's not just American, it's also a value for the entire world, particularly our allies, as we all depend upon space and space systems. Your neighbors and friends here in California that are employed at the space and missile system center work with network defenders. We work with our commercial contractors and our systems developers, our international allies and partners to try and build as secure and resilient systems as we can from the ground up that keep the global comments of space free and open for exploration and for commerce as John and I were talking earlier, before we came online, there's an aspect of cybersecurity for space systems, especially for some of our legacy systems, that's more, how do we bolt this on? Cause we fielded those space systems a number of years ago, and the challenges of cybersecurity in the space domain have grown. So we have a part that we have to worry about, bolting it on, but then we have to worry about building it in as we field new systems and build in a flexibility that realizes that the cyber threat or the cybersecurity landscape will evolve over time. It's not just going to be stagnant. There will always be new vulnerabilities and new threat vectors that we all have to look at. Look, as Secretary Barrett, who is our secretary of the air force likes to say most Americans use space before they have their first cup of coffee in the morning. The American way of life really depends on space. And as part of the United States Space Force, we work with defense leaders, our Congress joint, and international military teammates and industry to ensure American leadership in space. I really thank you for this opportunity to address the audience today, John, and thanks so much to Cal Poly for letting me be one of the speakers at this event. I've really looked forward to this for several months. And so with that, I look forward to your questions as we kind of move along here. >> General, thank you very much for those awesome introductory statement. For the folks watching on the stream, Brigadier General Carthan's going to be in the chat, answering any questions, feel free to chat away. He's the vice commander of Space and Missile System Center, he'll be available. A couple of comments from your keynote before I get to my questions. Cause it just jumped into my head. You mentioned the benefits of say space with the fires in California. We're living that here. That's really realtime. That's a benefit. You also mentioned the ability for more people launching payloads into space. I'm only imagined Moore's law smaller, faster, cheaper applies to rockets too. So I'm imagining you have the benefits of space and you have now more potential objects flying out sanctioned and maybe unsanctioned. So is it going to be more rules around that? This is an interesting question cause it's exciting Space Force, but for all the good there is potentially bad out there. >> Yeah. So John, I think the basics of your question is as space becomes more congested and contested, is there a need for more international norms of how satellites fly in space? What kind of basic features satellites have to perhaps de orbit themselves? What kind of basic protections should all satellites be afforded as part of a peaceful global commons of space? I think those are all fantastic questions. And I know that US and many allied policy makers are looking very, very hard at those kinds of questions in terms of what are the norms of behavior and how we field, and field as the military term. But how we populate using civil or commercial terms that space layer at different altitudes, lower earth orbit, mid earth orbit, geosynchronous earth orbit, different kinds of orbits, what the kind of mission areas we accomplished from space. That's all things that need to be definitely taken into account as the place gets a little bit, not a little bit as the place gets increasingly more popular day in and day out. >> I'm super excited for Space Force. I know that a new generation of young folks are really interested in it's an emerging, changing great space. The focus here at this conference is space and cybersecurity, the intersection. I'd like to get your thoughts on the approach that a space force is taking to cybersecurity and how it impacts our national goals here in the United States. >> Yeah. So that's a great question John, let me talk about it in two basic ways. At number one is an and I know some people in the audience, this might make them a little bit uncomfortable, but I have to talk about the threat. And then relative to that threat, I really have to talk about the importance of cyber and specifically cyber security, as it relates to that threat. The threats that we face really represented a new era of warfare and that new era of warfare involves both space and cyber. We've seen a lot of action in recent months from certain countries, notably China and Russia that have threatened what I referred to earlier as the peaceful global commons of space. For example, it threw many unclassified sources and media sources. Everybody should understand that the Russians have been testing on orbit anti-satellite capabilities. It's been very clear if you were following just the week before last, the Department of Defense released its 2020 military and security developments involving the People's Republic of China. And it was very clear that China is developing ASATs, electronic jammers, directed energy weapons, and most relevant to today's discussion, offensive cyber capabilities. There are kinetic threats that are very, very easy to see, but a cyber attack against a critical command and control site or against a particular spacecraft could be just as devastating to the system and our war fighters in the case of GPS and important to note that that GPS system also impacts many civilians who are dependent on those systems from a first response perspective and emergency services, a cyber attack against a ground control site could cause operators to lose control of a spacecraft or an attacker could feed spoofed data to assist them to mislead operators so that they sent emergency services personnel to the wrong address. Attacks on spacecraft on orbit, whether directly via a network intrusion or enabled through malware introduced during the system's production while we're building the satellite can cripple or corrupt the data. Denial-of-service type attacks on our global networks obviously would disrupt our data flow and interfere with ongoing operations and satellite control. If GPS went down, I hesitate to say it this way, cause we might elicit some screams from the audience. But if GPS went down a Starbucks, wouldn't be able to handle your mobile order, Uber drivers wouldn't be able to find you. And Domino's certainly wouldn't be able to get there in 30 minutes or less. So with a little bit of tongue in cheek there from a military operations perspective, it's dead serious. We have become accustomed in the commercial world to threats like ransomware and malware. And those things have unfortunately become commonplace in commercial terrestrial networks and computer systems. However, what we're seeing is that our adversaries with the increased competition in space these same techniques are being retooled, if you will, to use against our national security space systems day in and day out. As I said, during my opening remarks on the importance of cyber, the value of these systems is directly tied to their integrity. If commanders in the field, firefighters in California or baristas in Starbucks, can't trust the data they're receiving, then that really harms their decision making capabilities. One of the big trends we've recently seen is the move towards proliferated LEO constellations, obviously Space X's Starlink on the commercial side and on the military side, the work that DARPA and my organization SMC are doing on Blackjack and Casino, as well as some space transport layer constellation work that the space development agency is designing are all really, really important types of mesh network systems that will revolutionaries how we plan and field war fighting systems and commercial communications and internet providing systems. But they're also heavily reliant on cybersecurity. We've got to make sure that they are secured to avoid an accident or international damage. Loss of control of these constellations really could be catastrophic from both a mission perspective or from a satellites tumbling out of low earth orbit perspective. Another trend is introductions in artificial intelligence and machine learning, onboard spacecraft are at the edge. Our satellites are really not so much hardware systems with a little software anymore in the commercial sector and in the defense sector, they're basically flying boxes full of software. And we need to ensure that data that we're getting out of those flying boxes full of software are helping us base our decisions on accurate data and algorithms, governing the right actions and that those systems are impervious to the extent possible to nefarious modifications. So in summation, cybersecurity is a vital element of everything in our national security space goals. And I would argue for our national goals, writ large, including economic and information dimensions, the Space Force leadership at all levels from some of the brand new second lieutenants that general Raymond swore in to the space force this morning, ceremonially from the air force associations, airspace and cyberspace conference to the various highest levels, General Raymond, General DT Thompson, myself, and a number of other senior leaders in this enterprise. We've got to make sure that we're all working together to keep cyber security at the forefront of our space systems cause they absolutely depend on it. >> You mentioned hardware, software threats, opportunities, challenges. I want to ask you because you got me thinking of the minute they're around infrastructure. We've heard critical infrastructure, grids here on earth. You're talking about critical infrastructure, a redefinition of what critical infrastructure is, an extension of what we have. So I'd love to get your thoughts about Space Force's view of that critical infrastructure vis-a-vis the threat vectors, because the term threat vectors has been kicked around in the cyberspace. Oh you have threat vectors. They're always increasing the surface area. If the surface area is from space, it's an unlimited service area. So you got different vectors. So you've got new critical infrastructure developing real time, really fast. And you got an expanded threat vector landscape. Putting that in perspective for the folks that aren't really inside the ropes on these critical issues. How would you explain this and how would you talk about those two things? >> So I tell you, just like, I'm sure people in the security side or the cybersecurity side of the business in the banking industry feel, they feel like it's all possible threat vectors represent a dramatic and protect potentially existential threat to all of the dollars that they have in the banking system, to the financial sector. On the Department of Defense side, we've got to have sort of the same mindset. That threat vector from, to, and through space against critical space systems, ground segments, the launch enterprise, or transportation to orbit and the various different domains within space itself. Like I mentioned before, LEO, MEO and GEO based satellites with different orbits, all of the different mission areas that are accomplished from space that I mentioned earlier, some that I did mention like a weather tactical or wide band communications, various new features of space control. All of those are things that we have to worry about from a cyber security threat perspective. And it's a daunting challenge right now. >> Yeah, that's awesome. And one of the things we've been falling on the hardware side on the ground is the supply chain. We've seen, malware being, really put in a really obscure hardware. Who manufactures it? Is it being outsourced? Obviously government has restrictions, but with the private sector, you mentioned China and the US kind of working together across these peaceful areas. But you got to look at the supply chain. How does the supply chain in the security aspect impact the mission of the US space Force? >> Yeah. Yeah. So how about another, just in terms of an example, another kind of California based historical example. The very first US Satellite, Explorer 1, was built by the jet propulsion laboratory folks, not far from here in El Segundo, up in Pasadena, that satellite, when it was first built in the late 50s weighing a little bit, over 30 pounds. And I'm sure that each and every part was custom made and definitely made by US companies. Fast forward to today. The global supply chain is so tightly coupled, and frankly many industries are so specialized, almost specialized regionally around the planet. We focus every day to guarantee the integrity of every component that we put in our space systems is absolutely critical to the operations of those satellites and we're dependent upon them, but it becomes more difficult and more difficult to understand the heritage, if you will, of some of the parts that are used, the thousands of parts that are used in some of our satellites that are literally school bus sized. The space industry, especially national security space sector is relatively small compared to other commercial industries. And we're moving towards using more and more parts from non US companies. Cybersecurity and cyber awareness have to be baked in from the beginning if we're going to be using parts that maybe we don't necessarily understand 100% like an Explorer one, the lineage of that particular part. The environmental difficulties in space are well known. The radiation environment, the temperature extremes, the vacuum, those require specialized component. And the US military is not the only customer in that space. In fact, we're definitely not the dominant customer in space anymore. All those factors require us along with our other government partners and many different commercial space organizations to keep a very close eye on our supply chains, from a quality perspective, a security perspective and availability. There's open source reporting on supply training intrusions from many different breaches of commercial retailers to the infectious spread of compromised patches, if you will. And our adversaries are aware of these techniques. As I mentioned earlier, with other forms of attack, considering our supply chains and development networks really becomes fair game for our adversaries. So we have to take that threat seriously. Between the government and industry sectors here in the US. We're also working with our industry partners to enact stronger defenses and assess our own vulnerabilities. Last fall, we completed an extensive review of all of our major contracts here at Space and Missile System Center to determine the levels of cyber security requirements we've implemented across our portfolio. And it sounds really kind of businessy geeky, if you will. Hey, we looked at our contracts to make sure that we had the right clauses in our contracts to address cybersecurity as dynamically as we possibly could. And so we found ourselves having to add new language to our contracts, to require system developers, to implement some more advanced protective measures in this evolving cyber security environment. So that data handling and supply chain protections from contract inception to launch and operations were taken into account. Cyber security really is a key performance parameter for us now. Performance of the system, It's as important as cost, it's as important as schedule, because if we deliver the perfect system on time and on cost, it can perform that missile warning or that communications mission perfectly, but it's not cyber secure. If it's doesn't have cyber protections built into it, or the ability to implement mitigations against cyber threats, then we've essentially fielded a shoe box in space that doesn't do the CA the war fighter or the nation any good. Supply chain risk management is a major challenge for us. We're doing a lot to coordinate with our industry partners. We're all facing it head on to try and build secure and trusted components that keep our confidence as leaders, firefighters, and baristas as the case may be. But it is a challenge. And we're trying to rise to that challenge. >> This is so exciting this new area, because it really touches everything. Talk about geeking out on the tech, the hardware, the systems but also you put your kind of MBA hat on you go, what's the ROI of extra development and how things get built. Because the always the exciting thing for space geeks is like, if you're building cool stuff, it's exciting, but you still have to build. And cybersecurity has proven that security has to be baked in from the beginning and be thought as a system architecture. So you're still building things, which means you got to acquire things, you got to acquire parts, you got acquire build software and sustain it. How is security impacting the acquisition and the sustainment of these systems for space? >> Yeah. From initial development, through planning for the acquisition, design, development, our production fielding and sustainment, it impacts all aspects of the life cycle, John. We simply, especially from the concept of baking in cybersecurity, we can't wait until something is built and then try and figure out how to make it cyber secure. So we've moved way further towards working side by side with our system developers to strengthen cybersecurity from the very beginning of a systems development, cyber security, and the resilience associated with it really have to be treated as a key system attribute. As I mentioned earlier, equivalent with data rates or other metrics of performance. We like to talk in the space world about mission assurance and mission assurance has always sort of taken us as we technically geek out. Mission assurance has always taken us to the will this system work in space. Can it work in a vacuum? Can it work in as it transfers through the Van Allen radiation belt or through the Southern hemisphere's electromagnetic anomaly? Will it work out in space? And now from a resiliency perspective, yeah, it has to work in space. It's got to be functional in space, but it's also got to be resistant to these cybersecurity threats. It's not just, I think a General D.T Thompson quoted this term. It's not just widget assurance anymore. It's mission assurance. How does that satellite operator that ground control segment operate while under attack? So let me break your question a little bit, just for purposes of discussion into really two parts, cybersecurity, for systems that are new and cybersecurity for systems that are in sustainment are kind of old and legacy. Obviously there's cyber vulnerabilities that threatened both, and we really have to employ different strategies for defensive of each one. For new systems. We're desperately trying to implement across the Department of Defense and particularly in the space world, a kind of a dev sec ops methodology and practice to delivering software faster and with greater security for our space systems. Here at SMC, we have a program called enterprise ground services, which is a toolkit, basically a collection of tools for common command and control of different satellite systems, EGS as we call it has an integrated suite for defensive cyber capabilities. Network operators can use these tools to gain unprecedented insight to data flows and to monitor space network traffic for anomalies or other potential indicators of a bad behavior, malicious behavior, if you will, it's rudimentary at this point, but because we're using DevSecOps and that incremental development approach, as we scale it, it just becomes more and more capable. Every product increment that we feel. Here at LA Air Force Base, we have the United Space Force's West Coast Software Factory, which we've dubbed the Kobayashi Maru. They're using those agile DevOps software development practices to deliver a space awareness software to the combined space operations center. Affectionately called the CSpock that CSpock is just on the road from Cal Poly there in San Luis Obispo at Vandenberg Air Force Base. They've so securely linked the sea Spock with other space operation centers around the planet, our allies, Australia, Canada, and the UK. We're partnering with all of them to enable secure and enhanced combined space operations. So lots of new stuff going on as we bake in new development capabilities for our space systems. But as I mentioned earlier, we've got large constellations of satellites on orbit right now. Some of them are well in excess of a decade or more or old on orbit. And so the design aspects of those satellites are several decades old. But we still have to worry about them cause they're critical to our space capabilities. We've been working with an air force material command organization called CROWS, which stands for the Cyber Resiliency Office for Weapon Systems to assess all of those legacy platforms from a cyber security perspective and develop defensive strategies and potential hardware and software upgrades to those systems to better enable them to live through this increasingly cybersecurity concerned era that we currently live in. Our industry partners have been critical to both of those different avenues. Both new systems and legacy systems. We're working closely with them to defend and upgrade national assets and develop the capabilities to do similar with new national assets coming online. The vulnerabilities of our space systems really kind of threatened the way we've done business in the past, both militarily and in the case of GPS economically. The impacts of that cybersecurity risk are clear in our acquisition and sustainment processes, but I've got to tell you, as the threat vectors change, as the vulnerabilities change, we've got to be nimble enough, agile enough, to be able to bounce back and forth. We can't just say, many people in the audience are probably familiar with the RMF or the Risk Management Framework approach to reviewing the cyber security of a system. We can't have program managers and engineers just accomplish an RMF on a system. And then, hey, high five, we're all good. It's a journey, not a destination, that's cybersecurity. And it's a constant battle rhythm through our weapon systems lifecycle, not just a single event. >> I want to get to this commercial business needs and your needs on the next question. But before I go there, you mentioned agile. And I see that clearly because when you have accelerated innovation cycles, you've got to be faster. And we saw this in the computer industry, mainframes, mini computers, and then we started getting beyond maybe when the internet hit and PCs came out, you saw the big enterprises, the banks and government start to work with startups. And it used to be a joke in the entrepreneurial circles is that, there's no way if you are a startup you're ever going to get a contract with a big business enterprise. Now that used to be for public sector and certainly for you guys. So as you see startups out there and there's acquisition involved, I'm sure would love to have a contract with Space Force. There's an ROI calculation where if it's in space and you have a sustainment view and it's software, you might have a new kind of business model that could be attractive to startups. Could you share your thoughts on the folks who want to be a supplier to you, whether they're a startup or an existing business that wants to be agile, but they might not be that big company. >> John, that's a fantastic question. We're desperately trying to reach out to those new space advocates, to those startups, to those what we sometimes refer to, within the Department of Defense, those non traditional defense contractors. A couple of things just for thinking purposes on some of the things that we're trying to highlight. Three years ago, we created here at Space and Missile System Center, the Space Enterprise Consortium to provide a platform, a contractual vehicle, really to enable us to rapidly prototype, development of space systems and to collaborate between the US Space Force, traditional defense contractors, non traditional vendors like startups, and even some academic institutions. SPEC, as we call it, Space Enterprise Consortium uses a specialized contracting tool to get contracts awarded quickly. Many in the audience may be familiar with other transaction agreements. And that's what SPEC is based on. And so far in just three years, SPEC has awarded 75 different prototyping contracts worth over $800 million with a 36% reduction in time to award. And because it's a consortium based competition for these kinds of prototyping efforts, the barrier to entry for small and nontraditional, for startups, even for academic institutions to be able to compete for these kinds of prototyping has really lowered. These types of partnerships that we've been working through on spec have really helped us work with smaller companies who might not have the background or expertise in dealing with the government or in working with cyber security for their systems, both our developmental systems and the systems that they're designing and trying to build. We want to provide ways for companies large and small to partner together in support kind of mutually beneficial relationships between all. Recently at the Annual Air Force Association conference that I mentioned earlier, I moderated a panel with several space industry leaders, all from big traditional defense contractors, by the way. And they all stressed the importance of building bridges and partnerships between major contractors in the defense industry and new entrance. And that helps us capture the benefits of speed and agility that come with small companies and startups, as well as the expertise and specialized skill sets of some of those larger contractors that we rely on day in and day out. Advanced cyber security protections and utilization of secure facilities are just a couple of things that I think we could be prioritizing more so in those collaborations. As I mentioned earlier, the SPEC has been very successful in awarding a number of different prototyping contracts and large dollar values. And it's just going to get better. There's over 400 members of the space enterprise consortium, 80% of them are non traditional kinds of vendors. And we just love working with them. Another thing that many people in the audience may be familiar with in terms of our outreach to innovators, if you will, and innovators that include cyber security experts is our space pitch day events. So we held our first event last November in San Francisco, where we awarded over a two day period about $46 million to 30 different companies that had potentially game changing ideas. These were phase two small business innovative research efforts that we awarded with cash on the spot. We're planning on holding our second space pitch day in the spring of 2021. We're planning on doing it right here in Los Angeles, COVID-19 environment permitting. And we think that these are fantastic venues for identifying and working with high-speed startups, and small businesses who are interested in really, truly partnering with the US Air Force. It's, as I said before, it's a really exciting time to be a part of this business. And working with the innovation economy is something that the Department of Defense really needs to do in that the innovation that we used to think was ours. That 80% of the industrial base innovation that came from the Department of Defense, the script has been flipped there. And so now more than 70%, particularly in space innovation comes from the commercial sector, not from the defense business itself. And so that's a tsunami of investment and a tsunami of a capability. And I need to figure out how to get my surfboard out and ride it, you know what I mean? >> Yeah, It's one of those things where the script has been flipped, but it's exciting because it's impacting everything. When you're talking about systems architecture? You're talking about software, you're talking about a business model. You're talking about dev sec opsx from a technical perspective, but now you have a business model innovation. All the theaters are exploding in innovation, technical, business, personnel. This brings up the workforce challenge. You've got the cyber needs for the US Space Force, It's probably great ROI model for new kinds of software development that could be priced into contracts. That's a entrepreneurial innovation, you've got the business model theater, you've got the personnel. How does the industry adopt and change? You guys are clearly driving this. How does the industry adjust to you? >> Yeah. So I think a great way to answer that question is to just talk about the kind of people that we're trying to prioritize in the US Space Force from an acquisition perspective, and in this particular case from a cybersecurity perspective. As I mentioned earlier, it's the most exciting time to be in space programs, really since the days of Apollo. Just to put it in terms that maybe have an impact with the audience. From 1957 until today, approximately 9,000 satellites have been launched from the various space varying countries around the planet. Less than 2000 of those 9,000 are still up on orbit and operational. And yet in the new space regime players like Space X have plans to launch, 12,000 satellites for some of their constellations alone. It really is a remarkable time in terms of innovation and fielding of space capabilities and all of those space capabilities, whether they're commercial, civil, or defense are going to require appropriate cybersecurity protections. It's just a really exciting time to be working in stuff like this. And so folks like the folks in this audience who have a passion about space and a passion about cybersecurity are just the kind of people that we want to work with. Cause we need to make sure our systems are secure and resilient. We need folks that have technical and computing expertise, engineering skills to be able to design cyber secure systems that can detect and mitigate attacks. But we also, as you alluded to, we need people that have that business and business acumen, human networking background, so that we can launch the startups and work with the non traditional businesses. Help to bring them on board help, to secure both their data and our data and make sure our processes and systems are free as much as possible from attack. For preparation, for audience members who are young and maybe thinking about getting into this trade space, you got to be smart on digital networking. You got to understand basic internet protocols, concepts, programming languages, database design. Learn what you can for penetration or vulnerability testing and a risk assessment. I will tell you this, and I don't think he will, I know he will not mind me telling you this, but you got to be a lifelong learner and so two years ago, I'm at home evening and I get a phone call on my cell phone and it's my boss, the commander of Air Force Space command, General, J. Raymond, who is now currently the Chief of Space Operations. And he is on temporary duty, flying overseas. He lands where he's going and first thing he does when he lands is he calls me and he goes JT, while I was traveling, I noticed that there were eBooks available on the commercial airliner I was traveling on and there was an ebook on something called scrumming and agile DevSecOps. And I read it, have you read it? And I said, no, sir. But if you tell me what the title of the book is, I will read it. And so I got to go to my staff meeting, the very next week, the next time we had a staff meeting and tell everybody in the staff meeting, hey, if the four star and the three star can read the book about scrumming, then I'm pretty sure all of you around this table and all our lieutenants and our captains our GS13s, All of our government employees can get smart on the scrumming development process. And interestingly as another side, I had a telephone call with him last year during the holidays, where he was trying to take some leave. And I said, sir, what are you up to today? Are you making eggnog for the event tonight or whatever. And the Chief of Space Operations told me no, I'm trying to teach myself Python. I'm at lesson two, and it's not going so well, but I'm going to figure this out. And so that kind of thing, if the chief of staff or the Chief of Space Operations can prioritize scrumming and Python language and innovation in his daily schedule, then we're definitely looking for other people who can do that. And we'll just say, lower levels of rank throughout our entire space force enterprise. Look, we don't need people that can code a satellite from scratch, but we need to know, we need to have people that have a basic grasp of the programming basics and cybersecurity requirements. And that can turn those things into meaningful actions, obviously in the space domain, things like basic physics and orbital mechanics are also important spaces, not an intuitive domain. So under understanding how things survive on orbit is really critical to making the right design and operational decisions. And I know there's probably a lot, because of this conference. I know there's probably a whole lot of high speed cybersecurity experts out in the audience. And I need those people in the US Space Force. The country is counting on it, but I wouldn't discount having people that are just cyber aware or cyber savvy. I have contracting officers and logisticians and program managers, and they don't have to be high end cybersecurity experts, but they have to be aware enough about it to be able to implement cyber security protections into our space systems. So the skill set is really, really broad. Our adversaries are pouring billions of dollars into designing and fielding offensive and destructive space, cybersecurity weapons. They repeatedly shown really a blatant disregard of safety and international norms for good behavior on orbit. And the cyber security aspects of our space systems is really a key battleground going forward so that we can maintain that. As I mentioned before, peaceful global comments of space, we really need all hands on deck. If you're interested in helping in uniform, if you're interested in helping, not in uniform, but as a government employee, a commercial or civil employee to help us make cyber security more important or more able to be developed for our space systems. And we'd really love to work with you or have you on the team to build that safe and secure future for our space systems. >> Lieutenant General John Thompson, great insight. Thank you for sharing all that awesome stories too, and motivation for the young next generation. The United States Space Force approach to cybersecurity. Really amazing talk, thank you for your time. Final parting question is, as you look out and you have your magic wand, what's your view for the next few years in terms of things that we could accomplish? It's a super exciting time. What do you hope for? >> So first of all, John, thanks to you and thanks to Cal Poly for the invitation and thanks to everybody for their interest in cybersecurity, especially as it relates to space systems, that's here at the conference. There's a quote, and I'll read it here from Bernard Schriever, who was the founder, if you will, a legend in a DoD space, the founder of the Western development division, which was a predecessor organization to Space and Missile System Center, General Schriever, I think captures the essence of how we see the next couple of years. "The world has an ample supply of people "who can always come up with a dozen good reasons "why new ideas will not work and should not be tried, "but the people who produce progress are breed apart. "They have the imagination, "the courage and the persistence to find solutions." And so I think if you're hoping that the next few years of space innovation and cybersecurity innovation are going to be upon a pony ride at the County fair, then perhaps you should look for another line of work, because I think the next few years in space and cybersecurity innovation are going to be more like a rodeo and a very dynamic rodeo as it goes. It is an awesome privilege to be part of this ecosystem. It's really an honor for me to be able to play some small role in the space ecosystem and trying to improve it while I'm trying to improve the chances of the United States of America in a space war fighting environment. And so I thank all of you for participating today and for this little bit of time that you've allowed me to share with you. Thank you. >> Sir, thank you for your leadership and thank you for the time for this awesome event, Space and Cyber Cybersecurity Symposium 2020, I'm John Furrier on behalf of Cal Poly, thanks for watching. (mellow music)

>>Hey, everyone, Thanks for taking them to join the story. Hope you and your loved ones are safe during these tough times. Let me start by introducing myself. My name is Michelle. When I walk for GlaxoSmithKline, GSK as an engineering manager in my current role, A little protocol platform A P s, which is part of the already data platform here in G S, K R and D Tech. I live in Dallas, Texas. I have a Masters degree in computer science on a bachelor's in electronics and communication engineering. I started my career as a software developer on over these years again a lot of experience in leading and building, not scale and predicts products and solutions. I also have a complete accountability for container platforms here at GSK or any tick. I've been working very closely with Dr Enterprise, which is no Miranda's for more than three years to enable container platforms that yes, came on mainly in our own Itek. So that's me. Let >>me give you a quick overview on agenda for today's talk. I'll start with what we do here at GSK on what is RND data platform. Then I'll give you an overview on What are the business drivers that >>motivated US toe? Take this container Germany on some insight into learnings on accomplishments over these years. Working with Dr Enterprise on the container platforms Lately, you must have seen a lot of articles off there which talk about how ts case liberating technologies like artificial intelligence, mission learning, UN data and analytics for the Douglas Corey process. I'm very excited to see the progress we have made in technology, but what makes us truly unique is our commitment to the patient. >>We're G escape, help millions of people, do more, feel better and live longer. Wear a global company that is focused on three were tickles pharmaceuticals vaccines on consumer healthcare. Our main intent is to lower the >>burden on the impact of diseases on the patients. Here at GSK, we allow science to drive the technology. This helps us toe build innovative products. That's helps our scientists to make better and faster additions throughout the drug discovery by plane. >>With that, let me give you some >>context on what currently data platform is how it is enabled. A T escape started in mid 2016. What used to be called us are any information platform whose main focus was to centralize curate on rationalized all the data produced within the others are in the business systems in orderto drive, a strategic business value, standardization of clinical trials, Genome Wide Association Study Analysis, also known as Jesus Storage and Crossing Off Rheal. World Evidence data some of the examples off how the only platform was used to deliver the business value four years later. No, a new set off business rivals of changing our landscape. The irony Information Platform is evolving to be a hybrid, multi cloud solution and is known as already did a platform refering to 20 >>19 GSK's annual report. These are the four teams that there are any platform will be mainly focused on. We're expanding our data capabilities to support the use. Escape by a former company on evolving into a hybrid medical platform is one of the many steps that we're taking to be future ready. Our key focus will still be making >>greater recommendations better and faster by using that wants us. We're making the areas like artificial intelligence and machine learning. No doc brings us toe. What is Germany is important. Why are we taking this German with that? Let me take you to the next topic off. Like the process of discovery, Francisco is not an easy process. Talking about the recent events occurred over the last few months on the way. How all our lives are impacted. It is a lot of talk on information going about. Why did drug discovery process is so tough working for a global health care company? I get asked this question very frequently. From many people I interact with. Question is like, Why is that? This car is so tough on why it takes so much time. Drug discovery is a complex process that involves multiple different stages on at each and every stage. There is huge amounts of data that the scientists have took process to make some decisions. Studies have shown that only 3% off small molecules entering the human studies actually become medicines. If you're new to drug discovery, you may ask, like what is the targets? Targets so low? We humans are very complex species, >>not going into the details of the process. We're G escape >>have made a lot of investments into technology that enabled us to make data river conditions. Throw the drug Discovery pipeline >>as we implement. As we started implementing these tools and technologies to enable already did a platform, we started to get a better appreciation off how these tools in track on integrate >>with each other. Our goal wants to make this platform a jail, the platform that can work at scale so that we can provide a great user experience and contribute back to the bread discovery pipeline so that the scientists can make faster editions. We want our ardently users to consume the data, and the service is available on the platform seamlessly in a self service fashion. And we also have to accomplish this by establishing trust. And then we have to end also enable the academic partnerships, acquisitions, collaborations that DSK has, which actually brings a lot of data on value to our scientists. So when we talk about so many collaborations and a lot of these systems, what this brings in is wide range off systems and platforms that are fundamentally built on different infrastructure. This is where Doctor comes into fiction on our containers significance. >>We have realized the power of containers on how we can simplify this complex ecosystem by using containers and provide a faster access off data to war scientists who didn't go >>back and contribute back to the drug discovery by play. >>With that, let me take talk to you about >>the containers journey and she escaped. So we started our container journey in late 2017. We started working with Dr Enterprise to enable the container platform. This is on our on prem infrastructure Back then, or first year or so we walked through multiple Pelosis did a lot of testing to make sure our platform is stable before we onboard either the data or the user applications. I was part of this complete journey on Dr Stream has worked with us very closely towards you. The first milestone off establishing a stable container platform. A tsk. Now, getting into 2019 we started deploying our applications in production environment. I cannot go into the details of what this Absar, but they do include both data pipelines as well as Web services. You know, initial days we have worked a lot on swamp, but in 2019 is when we started looking into communities in the same year, we enable kubernetes orchestration on the doctor and replace platform here at GSK and also made it as a de facto orchestra coming into 2020. All our micro service applications are undead. A pipelines are migrated to the container platforms on all of these are orchestrated by Cuban additional on these air applications that are running in production. As of today, we have made the container forced approach as an architectural standard across already taking GSK. We also started deploying our AML training models onto containers on All this work is happening on our Doctor Enterprise platform. Also as part off are currently platforms hybrid multicolored journey. We started enabling container and kubernetes based platforms on public clubs. Now going into 2021 on future. Enabling our RND users to easily access data and applications in a platform agnostic way is very crucial for our success because previously we had only onto him. Now we have public clothes that are getting involved on One of >>the many steps we're taking through this journey is to >>watch allies the data on ship data and containers or kubernetes volumes on demand to our our end users of scientists. And this allows us to deliver data to our scientists wherever they want in a very security on. We're leveraging doctor to do it. So that's >>our future. Learning on with that, let's take a deep dive into fuel for >>our accomplishments over these years. I want to start with a general demand and innovative one very interesting use case that we developed on Dr. This is a rapid prototyping capability that enabled our scientists seamlessly to Monday cluster communication. This was one off the biggest challenges which way his face for a long time and with the help of containers, were able to solve this on provide this as a capability to our scientists. We actually have shockers this capability in one of the doctor conferences before next. As I've said before, by migrating all over web services into containers, we not only achieved horizontal scalability for those specific services, but also saved more than 50% in support costs for the applications which we have migrated by making Docker image as an immutable artifact In our bill process, we are now able to deploy our APS or models in any container or Cuban, its base platform, either in on Prem or in a public club. We also made significant improvements towards the process. A not a mission By leveraging docker containers, containers have played a significant role in keeping US platform agnostic and thus enabling our hybrid multi cloud Germany valuable for out already did scientists. As I mentioned before, data virtualization is another viewpoint we have in terms off our next steps off where we want to take kubernetes on where we wanna leverage open it. Us. What you see here are just a few off many accomplishments which we have our, um, achieved by using containers for the past three years or so. So with that before I close all the time and acknowledge all our internal partners who has contributed a lot to this journey mainly are in the business are on the deck on the broader take. Organizations that escape also want to time document present Miranda's for being such a great partner throughout this journey and also giving us an opportunity to share this success story today. Lastly, thanks for everyone to listening to the stop and please feel free to reach out. If you have any questions or suggestions, let's be fit safe. Thank you

from the cube studios in Palo Alto in Boston connecting with thought leaders all around the world this is a cube conversation as we've been reporting the Koba 19 pandemic has created a bifurcated IT spending picture and over the last several weeks we've reported both on the macro and even some come at it from from a vendor and a sector view I mean for example we've reported on some of the companies that have really continued to thrive we look at the NASDAQ and its you know near at all-time highs companies like oh and in CrowdStrike we've reported on snowflake uipath the sectors are PA some of the analytic databases around AI maybe even to a lesser extent cloud but still has a lot of tailwind relative to some of those on-prem infrastructure plays even companies like Cisco bifurcated in and of themselves where you see this Meraki side of the house you know doing quite well the work from home stuff but maybe some of the traditional networking not as much well now what if you flip that to really try to understand what's going on with the shape of the recovery which is the main narrative right now is it a v-shape does it a u-shape what is what's that what do people expect and now you understand that you really have to look at different industries because different industries are going to come back at a different pace with me again is Sagar khadiyah who's the director of research at EGR Sagar you guys are all over this as usual timely information it's great to see you again hope all is well in New York City thanks so much David it's a pleasure to be back on again yeah so where are we in the cycle we give dividend a great job and very timely ETR was the first to really put out data on the koban impact with the survey that ran from mid-march to to mid-april and now everybody's attention sagar is focused on okay we're starting to come back stores are starting to open people are beginning to to go out again and everybody wants to know what the shape of the recovery looks like so where are we actually in that research cycle for you guys yeah no problem so like you said you know in that kind of march/april timeframe we really want to go out there and get an idea of what we're doing the budget impacts you know as it relates to IT because of kovat 19 right so we kind of ended off there around a decline of 5% and coming into the year the consensus was of growth of 4 or 5% right so we saw about a 900,000 basis points wing you know to the negative side and the public covered in March and April were you know which sectors and vendors were going to benefit as a result of work from home and so now as we kind of fast forward to the research cycle as we kind of go more into May and into the summer rather than asking those exact same question to get again because it's just been you know maybe 40 or 50 days we really want Singh on the recovery type as well as kind of more emerging private vendors right we want to understand what's gonna be the impact on on these vendors that typically rely on you know larger conferences more in-person meetings because these are younger technologies there's not a lot of information about them and so last Thursday we launched our biannual emerging technology study it covers roughly 300 private emerging technologies across maybe 60 sectors of technology and in tandem we've launched a co-ed flash poll right what we wanted to do was kind of twofold one really understand from CIOs the recovery type they had in mind as well as if they were seeing any any kind of permanent changes in their IT stacks IT spend because of koban 19 and so if we kind of look at the first chart here and kind of get more into that first question around recovery type what we asked CIOs and this kind of COBIT flash poll again we did it last Thursday was what type of recovery are you expecting is it v-shaped so kind of a brief decline you know maybe one quarter and then you're gonna start seeing growth in 2 to H 20 is it you shaped so two to three quarters of a decline or deceleration revenue and you're kind of forecasting that growth in revenue as an organization to come back in 2021 is it l-shaped right so maybe three four five quarters of a decline or deceleration and then you know very minimal to moderate growth or none of the above you know your organization is actually benefiting from from from koban 19 as you know we've seen some many reports so those are kind of the options that we gave CIOs and you kind of see it on that first chart here interesting and this is a survey a flash service 700 CIOs or approximately and the interesting thing I really want to point out here is this you know the koban pandemic was it didn't suppress you know all companies you know and in the return it's not going to be a rising tide lifts all ships you really got to do your research you have to understand the different sectors really try to peel back the onion skin and understand why there's certain momentum how certain organizations are accommodating the work from home we heard you know several weeks ago how there's a major change in in networking mindsets we're talking about how security is changing we're going to talk about some of the permanence but it's really really important to try to understand these different trends by different industries which you're going to talk about in a minute but if you take a look at this slide I mean obviously most people expect this u-shaped decline I mean a you know a u-shaped recovery rather so it's two or three quarters followed by some growth next year but as we'll see some of these industries are gonna really go deeper with an l-shape recovery and then it's really interesting that a pretty large and substantial portion see this as a tailwind presumably those with you know strong SAS models some annual recurring revenue models your thoughts if we kind of star on this kind of aggregate chart you know you're looking at about forty four percent of CIOs anticipated u-shaped recovery right that's the largest bucket and then you can see another 15 percent and to say an l-shape recovery 14 on the v-shaped and then 16 percent to your point that are kind of seeing this this tailwind but if we kind of focus on that largest bucket that you shaped you know one of the thing to remember and again when we asked is two CIOs within the within this kind of coded flash poll we also asked can you give us some commentary and so one of the things that or one of the themes that are kind of coming along with this u-shaped recovery is you know CIOs are cautiously optimistic about this u-shaped recovery you know they believe that they can get back on to a growth cycle into 2021 as long as there's a vaccine available we don't go into a second wave of lockdowns economic activity picks up a lot of the government actions you know become effective so there are some kind of let's call it qualifiers with this bucket of CIOs that are anticipating a u-shape recovery what they're saying is that look we are expecting these things to happen we're not expecting that our lock down we are expecting a vaccine and if that takes place then we do expect an uptick in growth or going back to kind of pre coded levels in in 2021 but you know I think it's fair to assume that if one or more of these are apps and and things do get worse as all these states are opening up maybe the recovery cycle gets pushed along so kind of at the aggregate this is where we are right now yeah so as I was saying and you really have to understand the different not only different sectors and all the different vendors but you got to look into the industries and then even within industries so if we pull up the next chart we have the industry to the breakdown and sort of the responses by the industries v-shape you shape or shape I had a conversation with a CIO of a major resort just the other day and even he was saying what was actually I'll tell you it was Windham Resorts public company I mean and obviously that business got a good crush they had their earnings call the other day they talked about how they cut their capex in half but the stock sagar since the March lows is more than doubled yeah and you know that's amazing and now but even there within that sector they're peeling that on you're saying well certain parts are going to come back sooner or certain parts are going to longer depending on you know what type of resort what type of hotel so it really is a complicated situation so take us through what you're seeing by industry sure so let's start with kind of the IT telco retail consumer space Dave to your point there's gonna be a tremendous amount of bifurcation within both of those verticals look if we start on the IT telco side you know you're seeing a very large bucket of individuals right over twenty percent that indicated they're seeing a tail with our additional revenue because of covin 19 and you know Dave we spoke about this all the way back in March right all these work from home vendors you know CIOs were doubling down on cloud and SAS and we've seen how some of these events have reported in April you know with this very good reports all the major cloud vendors right select security vendors and so that's why you're seeing on the kind of telco side definitely more positivity right as it relates to recovery type right some of them are not even going through recovery they're they're seeing an acceleration same thing on the retail consumer side you're seeing another large bucket of people who are indicating what we've benefited and again there's going to be a lot of bifurcation here there's been a lot of retail consumers you just mentioned with the hotel lines that are definitely hurting but you know if you have a good online presence as a retailer and you know you had essential goods or groceries you benefited and and those are the organizations that we're seeing you know really indicate that they saw an acceleration due to Koga 19 so I thought those two those two verticals between kind of the IT and retail side there was a big bucket or you know of people who indicated positivity so I thought that was kind of the first kind of you know I was talking about kind of peeling this onion back you know that was really interesting you know tech continues to power on and I think you know a lot of people try I think that somebody was saying that the record of the time in which we've developed a fit of vaccine previously was like mumps or something and it was I mean it was just like years but now today 2020 we've got a I we've got all this data you've got these great companies all working on this and so you know wow if we can compress that that's going to change the equation a couple other things sagar that jump out at me here in this chart I want to ask you about I mean the education you know colleges are really you know kind of freaking out right now some are coming back I know like for instance my daughter University Arizona they're coming back in the fall evidently others are saying and no you can clearly see the airlines and transportation as the biggest sort of l-shape which is the most negative I'm sure restaurants and hospitality are kind of similar and then you see energy you know which got crushed we had you know oil you know negative people paying it big barrels of oil but now look at that you know expectation of a pretty strong you know you shape recovery as people start driving again and the economy picks up so maybe you could give us some thoughts on on some of those sort of outliers yeah so I kind of bucket you know the the next two outliers as from an l-shaped in a u-shaped so on the l-shaped side like like you said education airlines transportation and probably to a little bit lesser extent industrials materials manufacturing services consulting these verticals are indicating the highest percentages from an l-shaped recovery right so three plus orders of revenue declines and deceleration followed by kind of you know minimal to moderate growth and look there's no surprise here those are the verticals that have been impacted the most by less demand from consumers and and businesses and then as you mentioned on the energy utility side and then I would probably bucket maybe healthcare Pharma those have some of the largest percentages of u-shaped recovery and it's funny like I read a lot of commentary from some of the energy in the healthcare CIOs and they were said they were very optimistic about a u-shaped type of recovery and so it kind of you know maybe with those two issues then you could even kind of lump them into you know probably to a lesser extent but you could probably open into the prior one with the airlines and the education and services consulting and IMM where you know these are definitely the verticals that are going to see the longest longest recoveries it's probably a little bit more uniform versus what we've kind of talked about a few minutes ago with you know IT and and retail consumer where it's definitely very bifurcated you know there's definitely winners and losers there yeah and again it's a very complicated situation a lot of people that I've talked to are saying look you know we really don't have a clear picture that's why all these companies have are not giving guidance many people however are optimistic not only for a vet a vaccine but but but also they're thinking as young people with disposable income they're gonna kind of say dorm damn the torpedoes I'm not really going to be exposed and you know they can come back much stronger you know there seems to be pent up demand for some of the things like elective surgery or even the weather is sort of more important health care needs so that obviously could be a snap back so you know obviously we're really closely looking at this one thing though is is certain is that people are expecting a permanent change and you've got data that really shows that on the on the next chart that's right so one of the one of the last questions that we asked on this you know quick coded flash poll was do you anticipate permanent changes to your kind of IT stack IT spend based on the last few months you know as everyone has been working remotely and you know rarely do you see results point this much in one direction but 92% of CIOs and and kind of IT you know high level ITN users indicated yes there are going to be permanent changes and you know one of the things we talked about in March and look we were really the first ones you know you know in our discussion where we were talking about work from home spend kind of negating or balancing out all these declines right we were saying look yes we are seeing a lot of budgets come down but surprisingly we're seeing 2030 percent of organizations accelerate spent and even the ones that are spending less they even then you know some of their some of their budgets are kind of being negated by this work from home spend right when you think about collaboration tool is an additional VPN and networking bandwidth in laptops and then security all that stuff CIOs now continue to spend on because what what CIO is now understand as productivity has remained at very high levels right in March CIOs were very with the catastrophe and productivity that has not come true so on the margin CIOs and organizations are probably much more positive on that front and so now because there is no vaccine where you know CIOs and just in general the population we don't know when one is coming and so remote work seems to be the new norm moving forward especially that productivity you know levels are are pretty good with people working from home so from that perspective everything that looked like it was maybe going to be temporary just for the next few months as people work from home that's how organizations are now moving forward well and we saw Twitter basically said we're gonna make work from home permanent that's probably cuz their CEO wants to you know live in Africa Google I think is going to the end of the year I think many companies are going to look at a hybrid and give employees a choice say look if you want to work from home and you can be productive you get your stuff done you know we're cool with that I think the other point is you know everybody talks about these digital transformations you know leading into Kovan and I got to tell you I think a lot of companies were sort of complacent they talked the talk but they weren't walking the walk meaning they really weren't becoming digital businesses they really weren't putting data at the core and I think now it's really becoming an imperative there's no question that that what we've been talking about and forecasting has been pulled forward and you you're either going to have to step up your digital game or you're going to be in big trouble and the other thing that's I'm really interested in is will companies sub optimize profitability in the near term in order to put better business resiliency in place and better flexibility will they make those investments and I think if they do you know longer term they're going to be in better shape you know if they don't they could maybe be okay in the near term but I'm gonna put a caution sign a little longer term no look I think everything that's been done in the last few months you know in terms of having those continuation plans because you know do two pandemics all that stuff that is now it look you got to have that in your playbook right and so to your point you know this is where CIOs are going and if you're not transforming yourself or you didn't or you know lesson learned because now you're probably having to move twice as fast to support all your employees so I think you know this pandemic really kind of sped up you know digital transformation initiatives which is why you know you're seeing some companies desks and cloud related companies with very good earnings reports that are guiding well and then you're seeing other companies that are pulling their guidance because of uncertainty but it's it's likely more on the side of they're just not seeing the same levels of spend because if they haven't oriented themselves on that digital transformation side so I think you know events like this they typically you know Showcase winners and losers then you know when when things are going well and you know everything is kind of going up well I think that - there's a big you know discussion around is the ESPY overvalued right now I won't make that call but I will say this then there's a lot of data out there there's data and earnings reports there's data about this pandemic which change continues to change maybe not so much daily but you're getting new information multiple times a week so you got to look to that data you got to make your call pick your spot so you talk about a stock pickers market I think it's very much true here there are some some gonna be really strong companies emerging out of this you know don't gamble but do your research and I think you'll you'll find some you know some Dems out there you know maybe Warren Buffett can't find them okay but the guys at Main Street I think you know the I am I'm optimistic I wonder how you feel about about the recovery I I think we may be tainted by tech you know I'm very much concerned about certain industries but I think the tech industry which is our business is gonna come out of this pretty strong yeah we look at the one thing we we should we should have stated this earlier the majority of organizations are not expecting a v-shaped recovery and yet I still think there's part of the consensus is expecting a v-shaped recovery you can see as we demonstrate in some of the earlier charts the you know almost the majority of organizations are expecting a u-shaped recovery and even then as we mentioned right that you shape there is some cautious up around there and I have it you probably have it where yes if everything goes well it looks like 2021 we can really get back on track but there's so much unknown and so yes that does give I think everyone pause when it comes from an investment perspective and even just bringing on technologies and into your organization right which ones are gonna work which ones are it so I'm definitely on the boat of this is a more u-shaped in a v-shaped recovery I think the data backs that up I think you know when it comes to cloud and SAS players those areas and I think you've seen this on the investment side a lot of money has come out of all these other sectors that we mentioned that are having these l-shaped recoveries a lot of it has gone into the tech space I imagine that will continue and so that might be kind of you know it's tough to sometimes balance what's going on on the investor in the stock market side with you know how organizations are recovering I think people are really looking out in two to three quarters and saying look you know to your point where you set up earlier is there a lot of that pent up demand are things gonna get right back to normal because I think you know a lot of people are anticipating that and if we don't see that I think you know the next time we do some of these kind of coded flash bolts you know I'm interested to see whether or not you know maybe towards the end of the summer these recovery cycles are actually longer because maybe we didn't see some of that stuff so there's still a lot of unknowns but what we do know right now is it's not a v-shaped recovery agree especially on the unknowns there's monetary policy there's fiscal policy there's an election coming up there's a third there's escalating tensions with China there's your thoughts on the efficacy of the vaccine what about therapeutics you know do people who have this yet immunity how many people actually have it what about testing so the point I'm making here is it's very very important that you update your forecast regularly that's why it's so great that I have this partnership with you guys because we you know you're constantly updating the numbers it's not just a one-shot deal so suck it you know thanks so much for coming on looking forward to having you on in in the coming weeks really appreciate it absolutely yeah well I will really start kind of digging into how a lot of these emerging technologies are faring because of kovat 19 so that's I'm actually interested to start thinking through the data myself so yeah well we'll do some reporting in the coming weeks about that as well well thanks everybody for watching this episode of the cube insights powered by ETR I'm Dave Volante for sauger kuraki check out ETR dot plus that's where all the ETR data lives i published weekly on wiki bon calm and silicon angle calm and reach me at evil on Tay we'll see you next time [Music]

(upbeat music) >> From theCUBE Studios in Palo Alto in Boston, connecting with thought leaders all around the world, this is a Cube Conversation. >> As we've been reporting, the COVID-19 pandemic has created a bifurcated IT spending picture. And over the last several weeks, we've reported both in the macro and even some come at it from a vendor and a sector view. I mean, for example, we've reported on some of the companies that have really continued to thrive, we look at the NASDAQ and its near a toll-time hard. Companies like Okta and CrowdStrike, we've reported on Snowflake, UiPath. The sectors, RPA, some of the analytic databases around AI, maybe even to a lesser extent Cloud but still has a lot tailwinds relative to some of those on-prem infrastructure plays. Even companies like Cisco, bifurcated in and of themselves, where you see this more rocky side of the house doing quite well. The work-from-home stuff but maybe some of the traditional networking not as much. Well, now what if you flip that to really try to understand what's going on with the shape of the recovery which is the main narrative right now. Is it a V shape? Is it a U shape? What do people expect? And now to understand that, you really have to look at different industries because different industries are going to come back at a different pace. With me again is Sagar Kadakia, who's the Director of Research at ETR. Sagar, you guys are all over this, as usual timely information, it's great to see you again. Hope all is well in New York City. >> Thanks so much David, it's a pleasure to be back on again. >> Yeah, so where are we in the cycle? You've done a great job and very timely, ETR was the first to really put out data on the Covid impact with the server that ran from mid March to mid April. And now everybody's attention Sagar, is focused on, okay, we've started to come back, stores are starting to open, people are beginning to go out again and everybody wants to know what the shape of the recovery looks like. So, where are we actually in that research cycle for you guys? >> Yeah, no problem. So, like you said, in that kind of March, April timeframe, we really want to go out there and get an idea of what are going to be the budget impacts as it relates to IT because of COVID-19, right? So, we kind of ended off there around a decline of 5%. And coming into the year, the consensus was a growth of 4% or 5%, right? So, we saw about a 900 or 1000 base point swing, to the negative side. And then (murmurs) topic we covered in March and April were which sectors of vendors were going to benefit as a result of work-from-home. And so, now as we kind of fast forward to the research cycle as we kind of go more into May and into the summer, rather than asking those exact same question again, because it's just been maybe 40 or 50 days. We really want to (murmurs) on the recovery type as well as well as kind of more emerging private vendors, right? We want it to understand what's going to be the impact on these vendors that typically rely on larger conferences, more in person meetings, because these are younger technologies. There's not a lot of information about them. And so, last Thursday we launched our biannual emerging technology study. It covers roughly 300 private emerging technologies across maybe 60 sectors of technology. And in tandem, we've launched a COVID Flash Poll, right? What we want to do was kind of twofold. One really understand from CIOs the recovery type they had in mind, as well as if they were seeing any kind of permanent changes in their IT, stacks IT spend because of COVID-19. And so, if we kind of look at the first chart here, and kind of get more into that first question around recovery type, what we asked CIOs in this kind of COVID Flash Poll, again, we did it last Thursday was, what type of recovery are you expecting? Is it V-shaped so kind of of a brief decline, maybe 1/4, and then you're going to start seeing growth into 2 each 20. Is it U-shaped? So two to 3/4 of a decline or deceleration revenue, and you're kind of forecasting that growth in revenue as an organization to come back in 2021. Is it L-shaped, right? So, maybe three, four or 5/4 of a decline or deceleration. And very minimal to moderate growth or none of the above, your organization is actually benefiting from COVID-19, as we've seen some many reports. So, those are kind of the options that we gave CIOs and you kind of see them at first chart here. >> Well, interesting. And this is a survey, a flash of survey, 700 CIOs or approximately. And the interesting thing I really want to point out here is, the COVID pandemic, it didn't suppress all companies, and the return is it's not going to be a rising tide that lifts all ships. You really got to do your research. You have to understand the different sectors, really try to peel back the onion skin and understand why there are certain momentum, how certain organizations are accommodating the work from home. We heard several weeks ago, how there's a major change in networking mindsets we're talking about how security is changing. We're going to talk about some of the permanents, but it's really, really important to try to understand these different trends by different industries, which we're going to talk about in a minute. But if you take a look at this slide, I mean, obviously most people expect this U-shape decline. I mean, U-shape recovery rather. So it's two or 3/4 followed by some growth next year. But as we'll see, some of these industries are going to really go deeper with an L-shape recovery. And then it's really interesting that a pretty large and substantial portion see this as a tailwind, presumably those with strong SAS models, annual recurring revenue models, your thoughts? >> If we kind of start on this kind of aggregate chart, you're looking at about 44% of CEO's anticipate a U-shaped recovery, right? That's the largest bucket. Then you can see another 15% anticipate an L-shape recovery 14 on the V-shaped, and then 16% to your point that are kind of seeing this tailwind. But if we kind of focus on that largest bucket that U-shaped, one of the things to remember and again, when we asked this to CIOs within this kind of COVID Flash Poll, we also asked, can you give us some commentary? And so, one of the things that, or one of the themes that are kind of coming along with this U-shape recovery is CIOs are cautiously optimistic about this U-shape recovery. They believe that they can get back onto a growth cycle, into 2021, as long as there's a vaccine available. We don't go into a second wave of lockdowns. Economic activity picks up, a lot of the government actions become effective. So there are some kind of let's call it qualifiers, with this bucket of CIOs that are anticipating a U-shape recovery. What they're saying is that, "look, we are expecting these things to happen, "we're not expecting a lockdown, "we are expecting a vaccine. "And if that takes place, "then we do expect an uptake in growth, "or going back to kind of pre COVID levels in 2021." But I think it's fair to assume that if one or more of these are ups and things do get worse as all these States are opening up, maybe the recovery cycle gets pushed along. So kind of at the aggregate, this is where we are right now. >> Yeah. So as I was saying, you really have to understand the different, not only different sectors not only the different vendors, but you can really get to look into the industries, and then even within industries. So if we pull up the next chart, we have the industry sort of break down, and sort of the responses by the industry's V-shape, U-shape or L-shape. I had a conversation with a CIO of a major resort, just the other day. And even he was saying, well, it was actually, I'll tell you it was Wyndham Resorts, public company. I mean, and obviously that business got crushed. They had their earnings call the other day. They talked about how they cut their capex in half. But the stock, Sagar, since the March loss is more than doubled. >> Yeah. >> It was just amazing. And now, but even there, within that sector, they're appealing that on you are doing well, certain parts are going to come back sooner, certain parts are going to take longer, depending on, what type of resort, what type of hotel. So, it really is a complicated situation. So, take us through what you're seeing by industry. >> Yeah, sure. So let's start with kind of the IT-Telco, retail, consumer space. Dave to your point, there's going to be a tremendous amount of bifurcation within both of those verticals. Look, if we start on the IT-Telco side, you're seeing a very large bucket of individuals, right over 20%? That indicated they're seeing a tailwind or additional revenue because of COVID-19 and Dave, we spoke about this all the way back in March, right? All these work from home vendors. CIOs were doubling down on Cloud and SAS and we've seen how some of these vendors have reported in April, with very good reports, all the major Cloud vendors, right? Like Select Security vendors. And so, that's why you're seeing on the kind of Telco side, definitely more positivity, right? As you relates to recovery type, right? Some of them are not even going through recovery. They're seeing an acceleration, same thing on the retail consumer side. You're seeing another large bucket of people who are indicating, "look, we've benefited." And again, there's going to be a lot of bifurcation, there's been a lot of retail consumers. You just mentioned with the hotel lines, that are definitely hurting. But if you have a good online presence as a retailer, and you had essential goods or groceries, you benefited. And those are the organizations that we're seeing really indicate that they saw an acceleration due to COVID-19. So, I thought those two verticals between kind of the IT and retail side, there was a big bucket of people who indicated positivity. So I thought that was kind of the first kind of as we talked about kind of feeling this onion back. That was really interesting. >> Tech continues to power on, and I think a lot of people try, I think somebody was saying that the record time in which we've developed a vaccine previously was like mumps or something. I mean, it was just like years. But now today, 2020, we've got AI, we've got all this data, you've got these great companies all working on this. And so, wow, if we can compress that, that's going to change the equation. A couple of other things Sagar that jump out at me here in this chart that I want to ask you about. I mean, the education, the colleges, are really kind of freaking out right now, some are coming back. I know, like for instance, my daughter at University of Arizona, they're coming back in the fall indefinitely, others are saying, no. You can clearly see the airlines and transportation, has the biggest sort of L-shape, which is the most negative. I'm sure restaurants and hospitality are kind of similar. And then you see energy which got crushed. We had oil (laughs) negative people paying it, big barrels of oil. But now look at that, expectation of a pretty strong, U-shape recovery as people start driving again, and the economy picks up. So, maybe you could give us some thoughts on some of those sort of outliers. >> Yeah. So I kind of bucket the next two outliers as from an L-shaped and a U-shaped. So on the L-shaped side, like you said, education airlines, transportation, and probably to a little bit lesser extent, industrials materials, manufacturing services consulting. These verticals are indicating the highest percentages from an L-shaped recovery, right? So, three plus 1/4 of revenue declines in deceleration, followed by kind of minimal to moderate growth. And look, there's no surprise here. Those are the verticals that have been impacted the most, by less demand from consumers and businesses. And then as you mentioned on the energy utility side, and then I would probably bucket maybe healthcare, pharma, those have some of the largest, percentages of U-shaped recovery. And it's funny, like I read a lot of commentary from some of the energy and the healthcare CIOs, and they were saying they were very optimistic (laughs) about a U-shaped type of recovery. And so it kind of, maybe with those two issues that we could even kind of lump them into, probably to a lesser extent, but you could probably lump it into the prior one with the airlines and the education and services consulting, and IMM, where these are definitely the verticals that are going to see the longest, longest recoveries. And it's probably a little bit more uniform, versus what we've kind of talked about a few minutes ago with IT and retail consumer where it's definitely very bifurcated. There's definitely winners and losers there. >> Yeah. And again, it's a very complicated situation. A lot of people that I've talked to are saying, "look, we really don't have a clear picture, "that's why all these companies are not giving guidance." Many people, however, are optimistic only for a vaccine, but also their thinking is young people with disposable income, they're going to kind of say,"Damn the torpedoes, "I'm not really going to be exposed." >> And they could come back much stronger, there seems to be pent up demand for some of the things like elective surgery, or even some other sort of more important, healthcare needs. So, that obviously could be a snapback. So, obviously we're really closely looking at this, one thing though is certain, is that people are expecting a permanent change, and you've got data that really shows that on the next chart. >> That's right. So, one of the last questions that we ask kind of this quick COVID Flash Poll was, do you anticipate permanent changes to your kind of IT stack, IT spend, based on the last few months? As everyone has been working remotely, and rarely do you see results point this much in one direction, but 92% of CIOs and kind of high level IT end users indicated yes, there are all going to be permanent changes. And one of the things we talked about in March, and look, we were really the first ones, in our discussion, where we were talking about work from home spend, kind of negating or bouncing out all these declines, right? We were saying, look, yes, we are seeing a lot of budgets come down, but surprisingly, we're seeing 20,30% of organizations accelerate spend. And even the ones that are spending less, even them, some of their budgets are kind of being negated by this work from home spend, right? When you think about collaboration tools and additional VPN and networking bandwidth, and laptops and then security, all that stuff. CIOs now continue to spend on, because what CIOs now understand is productivity has remained at very high levels, right? In March CIOs were very concerned with the catastrophe and productivity that has not come true. So on the margin CIOs and organizations are probably much more positive on that front. And so now, because there is no vaccine, where we know CIOs and just in general, the population, we don't know when one is coming. And so remote work seems to be the new norm moving forward, especially that productivity levels are pretty good with people working from home. So, from that perspective, everything that looked like it was maybe going to be temporary, just for the next few months, as people work from home, that's how organizations are now moving forward. >> Well, and we saw Twitter, basically said, "we're going to make work from home permanent." That's probably because their CEO wants to live in Africa. Google, I think, is going to the end of the year. >> I think many companies are going to look at a hybrid, and give employees a choice, say, "look, if you want to work from home "and you can be productive, you get your stuff done, we're cool with that." I think the other point is, everybody talks about these digital transformations leading into COVID. I got to tell you, I think a lot of companies were sort of complacent. They talk the talk, but they weren't walking the walk, meaning they really weren't becoming digital businesses. They really weren't putting data at the core. And I think now it's really becoming an imperative. And there's no question that what we've been talking about and forecasting has been pulled forward, and you're either going to have to step up your digital game or you're going to be in big trouble. And the other thing I'm really interested in is will companies sub-optimize profitability in the near term, in order to put better business resiliency in place, and better flexibility, will they make those investments? And I think if they do, longer term, they're going to be in better shape. If they don't, they could maybe be okay in the near term, but I'm going to put up a caution sign, although the longer term. >> Now look, I think everything that's been done in the last few months, in terms of having those continuation plans, due to pandemics and all that stuff, look, you got to have that in your playbook, right? And so to your point, this is where CIOs are going and if you're not transforming yourself or you didn't before, lesson learned, because now you're probably having to move twice as fast to support all your employees. So I think this pandemic really kind of sped up digital transformation initiatives, which is why, you're seeing some companies, SAS and Cloud related companies, with very good earnings reports that are guiding well. And then you're seeing other companies that are pulling their guidance because of uncertainty, but it's likely more on the side if they're just not seeing the same levels of spend, because if they haven't oriented themselves, on that digital transformation side. So I think events like this, they typically showcase winners and losers than when things are going well. and everything's kind of going up. >> Well, I think that too, there's a big discussion around is the S&P over valued right now. I won't make that call, but I will say this, that there's a lot of data out there. There's data in earnings reports, there's data about this pandemic, which it continues to change. Maybe not so much daily, but we're getting new information, multiple times a week. So you got to look to that data. You got to make your call, pick your spots, earlier you talk about a stock pickers market. I think it's very much true here. There are some going to be really strong companies. emerging out of this, don't gamble but do your research. And I think you'll find some gems out there, maybe Warren buffet can't find them okay. (laughs) But the guys at main street. I'm optimistic, I wonder how you feel about the recovery. I think I maybe tainted by tech. (laughs). I'm very much concerned about certain industries, but I think the tech industry, which is our business's, going to come out of this pretty strong? >> Yeah. Look, the one thing we should have stated this earlier, the majority of organizations are not expecting a V-shaped recovery. And yet I still think there's part of the consensus is expecting a V-shaped recovery. You can see as we demonstrate in some of the earlier charts, That U-shaped, there is some cautious optimism around there, almost the majority of organizations are expecting a U-shape recovery. And even then, as we mentioned, right? That U-shape, there is some cautious optimism around there, and I have it, you probably have it where. Yes, if everything goes well, it looks like 2021 we can really get back on track. But there's so much unknown. And so yes, that does give I think everyone pause when it comes from an investment perspective, and even just bringing on technologies. into your organization, right? Which ones are going to work, which ones aren't? So, I'm definitely on the boat of, this is a more U-shaped in a V-shape recovery. I think the data backs that up. I think when it comes to Cloud and SAS players, those areas, and I think you've seen this on the investment side, a lot of money has come out of all these other sectors that we mentioned that are having these L-shaped recoveries. A lot of it has gone into the text-based. I imagine that will continue. And so that might be kind of, it's tough to sometimes balance what's going on, on the investment that stock market side, with how organizations are recovering. I think people are really looking out into two, 3/4 and saying, look to your point where you said that earlier, is there a lot of that pent up demand, are things going to get right back to normal? Because I think a lot of people are anticipating that. And if we don't see that, I think the next time we do some of these kind of COVID Flash Polls I'm interested to see whether or not, maybe towards the end of the summer, these recovery cycles are actually longer because maybe we didn't see some of that stuff. So there's still a lot of unknowns. But what we do know right now is it's not a V-shaped recovery. >> I agree, especially on the unknowns, there's monetary policy, there's fiscal policy, there's an election coming up. >> That's fine. >> There's escalating tensions with China. There's your thoughts on the efficacy of the vaccine? what about therapeutics? Do people who've had this get immunity? How many people actually have it? What about testing? So the point I'm making here is it's very, very important that you update your forecast regularly That's why it's so great to have this partnership with you guys, because you're constantly updating the numbers. It's not just a one shot deal. So Sagar, thanks so much for coming on. I'm looking forward to having you on in the coming weeks. Really appreciate it. >> Absolutely. Yeah, we'll really start kind of digging into how a lot of these emerging technologies are fairing because of COVID-19. So, I'm actually interested to start digging through the data myself. So yeah, we'll do some reporting in the coming weeks about that as well. >> Well, thanks everybody for watching this episode of theCUBE Insights powered by ETR. I'm Dave Vellante for Sagar Kadakia, check out etr.plus, that's where all the ETR data lives, I publish weekly on wikibond.com and siliconangle.com. And you can reach me @dvellante. We'll see you next time. (gentle music).

>> Live, from Las Vegas, it's theCUBE covering UiPath Forward Americas 2019. Brought to you by UiPath. >> Welcome back to the Bellagio in Las Vegas, everybody. You're watching theCUBE, the leader in live tech coverage. My name is Dave Vellante. Day one of UiPath Forward III, hashtag UiPathForward. Elena Christopher is here. She's the senior vice president at HFS Research, and Elena, I'm going to recruit you to be my co-host here. >> Co-host! >> On this power panel. Jean Youngers here, CUBE alum, VP, a Six Sigma Leader at Security Benefit. Great to see you again. >> Thank you. >> Dave: And Amy Chandler, who is the Assistant Vice President and Director of Internal Controls, also from Security Benefit. >> Hello. >> Dave: Thanks for coming on theCUBE. >> Thank you. >> Alright Elena, let's start off with you. You follow this market, you have for some time, you know HFS is sort of anointed as formulating this market place, right? >> Elena: We like to think of ourselves as the voice-- >> You guys were early on. >> The voice of the automation industry. >> So, what are you seeing? I mean, process automation has been around forever, RPA is a hot recent trend, but what are you seeing the last year or two? What are the big trends and rip currents that you see in the market place? >> I mean, I think one of the big trends that's out there, I mean, RPA's come on to the scene. I like how you phrase it Dave, because you refer to it as, rightly so, automation is not new, and so we sort of say the big question out there is, "Is RPA just flavor of the month?" RPA is definitely not, and I come from a firm, we put out a blog earlier this year called "RPA is dead. Long live automation." And that's because, when we look at RPA, and when we think about what it's impact is in the market place, to us the whole point of automation in any form, regardless of whether it's RPA, whether it be good old old school BPM, whatever it may be, it's mission is to drive transformation, and so the HFS perspective, and what all of our research shows and sort of justifies that the goal is, what everyone is striving towards, is to get to that transformation. And so, the reason we put out that piece, the "RPA is dead. Long live integrated automation platforms" is to make the point that if you're not- 'cause what does RPA allow? It affords an opportunity for change to drive transformation so, if you're not actually looking at your processes within your company and taking this opportunity to say, "What can I change, what processes are just bad, "and we've been doing them, I'm not even sure why, "for so long. What can we transform, "what can we optimize, what can we invent?" If you're not taking that opportunity as an enterprise to truly embrace the change and move towards transformation, that's a missed opportunity. So I always say, RPA, you can kind of couch it as one of many technologies, but what RPA has really done for the market place today, it's given business users and business leaders the realization that they can have a role in their own transformation. And that's one of the reasons why it's actually become very important, but a single tool in it's own right will never be the holistic answer. >> So Jean, Elena's bringing up a point about transformation. We, Stew Bennett and I interviewed you last year and we've played those clips a number of times, where you sort of were explaining to us that it didn't make sense before RPA to try to drive Six Sigma into business processes; you couldn't get the return. >> Jean: Right. >> Now you can do it very cheaply. And for Six Sigma or better, is what you use for airplane engines, right? >> Right. >> So, now you're bringing up the business process. So, you're a year in, how's it going? What kind of results are you seeing? Is it meeting your expectations? >> It's been wonderful. It has been the best, it's been probably the most fun I've had in the last fifteen years of work. I have enjoyed, partly because I get to work with this great person here, and she's my COE, and helps stand up the whole RPA solution, but you know, we have gone from finance into investment operations, into operations, you know we've got one sitting right now that we're going to be looking at statements that it's going to be fourteen thousand hours out of both time out as well as staff hours saved, and it's going to touch our customer directly, that they're not going to get a bad statement anymore. And so, you know, it has just been an incredible journey for us over the past year, it really has. >> And so okay Amy, your role is, you're the hardcore practitioner here right? >> Amy: That's right. >> You run the COE. Tell us more about your role, and I'm really interested in how you're bringing it out, RPA to the organization. Is that led by your team, or is it kind of this top-down approach? >> Yeah, this last year, we spent a lot of time trying to educate the lower levels and go from a bottom-up perspective. Pretty much, we implemented our infrastructure, we had a nice solid change management process, we built in logical access, we built in good processes around that so that we'd be able to scale easily over this last year, which kind of sets us up for next year, and everything that we want to accomplish then. >> So Elena, we were talking earlier on theCUBE about you know, RPA, in many ways, I called it cleaning up the crime scene, where stuff is kind of really sort of a mass and huge opportunities to improve. So, my question to you is, it seems like RPA is, in some regards, successful because you can drop it into existing processes, you're not changing things, but in a way, this concerns that, oh well, I'm just kind of paving the cow path. So how much process reinvention should have to occur in order to take advantage of RPA? >> I love that you use that phrase, "paving the cow path." As a New Englander, as you know the roads in Boston are in fact paved cow paths, so we know that can lead to some dodgy roads, and that's part of, and I say it because that's part of what the answer is, because the reinvention, and honestly the optimization has to be part of what the answer is. I said it just a little bit earlier in my comments, you're missing an opportunity with RPA and broader automation if you don't take that step to actually look at your processes and figure out if there's just essentially deadwood that you need to get rid of, things that need to be improved. One of the sort of guidelines, because not all processes are created equal, because you don't want to spend the time and effort, and you guys should chime in on this, you don't want to spend the time and effort to optimize a process if it's not critical to your business, if you're not going to get lift from it, or from some ROI. It's a bit of a continuum, so one of the things that I always encourage enterprises to think about, is this idea of, well what's the, obviously, what business problem are you trying to solve? But as you're going through the process optimization, what kind of user experience do you want out of this? And your users, by the way, you tend to think of your user as, it could be your end customer, it could be your employee, it could even be your partner, but trying to figure out what the experience is that you actually want to have, and then you can actually then look at the process and figure out, do we need to do something different? Do we need to do something completely new to actually optimize that? And then again, line it with what you're trying to solve and what kind of lift you want to get from it. But I'd love to, I mean, hopping over to you guys, you live and breathe this, right? And so I think you have a slightly different opinion than me, but-- >> We do live and breathe it, and every process we look at, we take into consideration. But you've also got to, you have a continuum right? If it's a simple process and we can put it up very quickly, we do, but we've also got ones where one process'll come into us, and a perfect example is our rate changes. >> Amy: Rate changes. >> It came in and there was one process at the very end and they ended up, we did a wing to wing of the whole thing, followed the data all the way back through the process, and I think it hit, what, seven or eight-- >> Yeah. >> Different areas-- >> Areas. >> Of the business, and once we got done with that whole wing to wing to see what we could optimize, it turned into what, sixty? >> Amy: Yeah, sixty plus. Yeah. >> Dave: Sixty plus what? >> Bot processes from one entry. >> Yeah. >> And so, right now, we've got 189 to 200 processes in the back log. And so if you take that, and exponentially increase it, we know that there's probably actually 1,000 to 2,000 more processes, at minimum, that we can hit for the company, and we need to look at those. >> Yeah, and I will say, the wing to wing approach is very important because you're following the data as it's moving along. So if you don't do that, if you only focus on a small little piece of it, you don't what's happening to the data before it gets to you and you don't know what's going to happen to it when it leaves you, so you really do have to take that wing to wing approach. >> So, internal controls is in your title, so talking about scale, it's a big theme here at UiPath, and these days, things scale really fast, and boo-boos can happen really fast. So how are you ensuring, you know that the edicts of the organization are met, whether it's security, compliance, governance? Is that part of your role? >> Yeah, we've actually kept internal audit and internal controls, and in fact, our external auditors, EY. We've kept them all at the table when we've gone through processes, when we've built out our change management process, our logical access. When we built our whole process from beginning to end they kind of sat at the table with us and kind of went over everything to make sure that we were hitting all the controls that we needed to do. >> And actually, I'd like to piggyback on that comment, because just that inclusion of the various roles, that's what we found as an emerging best practice, and in all of our research and all of the qualitative conversations that we have with enterprises and service providers, is because if you do things, I mean it applies on multiple levels, because if you do things in a silo, you'll have siloed impact. If you bring the appropriate constituents to the table, you're going to understand their perspective, but it's going to have broader reach. So it helps alleviate the silos but it also supports the point that you just made Amy, about looking at the processes end to end, because you've got the necessary constituents involved so you know the context, and then, I believe, I mean I think you guys shared this with me, that particularly when audit's involved, you're perhaps helping cultivate an understanding of how even their processes can improve as well. >> Right. >> That is true, and from an overall standpoint with controls, I think a lot of people don't realize that a huge benefit is your controls, cause if you're automating your controls, from an internal standpoint, you're not going to have to test as much, just from an associate process owner paying attention to their process to the internal auditors, they're not going to have to test as much either, and then your external auditors, which that's revenue. I mean, that's savings. >> You lower your auditing bill? >> Yeah. Yeah. >> Well we'll see right? >> Yeah. (laughter) >> That's always the hope. >> Don't tell EY. (laughter) So I got to ask you, so you're in a little over a year So I don't know if you golf, but you know a mulligan in golf. If you had a mulligan, a do over, what would you do over? >> The first process we put in place. At least for me, it breaks a lot, and we did it because at the time, we were going through decoupling and trying to just get something up to make sure that what we stood up was going to work and everything, and so we kind of slammed it in, and we pay for that every quarter, and so actually it's on our list to redo. >> Yeah, we automated a bad process. >> Yeah, we automated a bad process. >> That's a really good point. >> So we pay for it in maintenance every quarter, we pay for it, cause it breaks inevitably. >> Yes. >> Okay so what has to happen? You have to reinvent the process, to Elena's? >> Yes, you know, we relied on a process that somebody else had put in place, and in looking at it, it was kind of a up and down and through the hoop and around this way to get what they needed, and you know there's much easier ways to get the data now. And that's what we're doing. In fact, we've built our own, we call it a bot mart. That's where all our data goes, they won't let us touch the other data marts and so forth so they created us a bot mart, and anything that we need data for, they dump in there for us and then that's where our bot can hit, and our bot can hit it at anytime of the day or night when we need the data, and so it's worked out really well for us, and so the bot mart kind of came out of that project of there's got to be a better way. How can we do this better instead of relying on these systems that change and upgrade and then we run the bot and its working one day and the next day, somebody has gone in and tweaked something, and when all's I really need out of that system is data, that's all I need. I don't need, you know, a report. I don't need anything like that, cause the reports change and they get messed up. I just want the raw data, and so that's what we're starting to do. >> How do you ensure that the data is synchronized with your other marts and warehouses, is that a problem? >> Not yet. >> No not yet! (laughter) >> I'm wondering cause I was thinking the exact same question Dave, because on one hand its a nice I think step from a governance standpoint. You have what you need, perhaps IT or whomever your data curators are, they're not going to have a heart attack that you're touching stuff that they don't want you to, but then there is that potential for synchronization issues, cause that whole concept of golden source implies one copy if you will. >> Well, and it is. It's all coming through, we have a central data repository that the data's going to come through, and it's all sitting there, and then it'll move over, and to me, what I most worry about, like I mentioned on the statement once, okay, I get my data in, is it the same data that got used to create those statements? And as we're doing the testing and as we're looking at going live, that's one of our huge test cases. We need to understand what time that data comes in, when will it be into our bot mart, so when can I run those bots? You know, cause they're all going to be unattended on those, so you know, the timing is critical, and so that's why I said not yet. >> Dave: (chuckle) >> But you want to know what, we can build the bot to do that compare of the data for us. >> Haha all right. I love that. >> I saw a stat the other day. I don't know where it was, on Twitter or maybe it was your data, that more money by whatever, 2023 is going to be spent on chat bots than mobile development. >> Jean: I can imagine, yes. >> What are you doing with chat bots? And how are you using them? >> Do you want to answer that one or do you want me to? >> Go ahead. >> Okay so, part of the reason I'm so enthralled by the chat bot or personal assistant or anything, is because the unattended robots that we have, we have problems making sure that people are doing what they're supposed to be doing in prep. We have some in finance, and you know, finance you have a very fine line of what you can automate and what you need the user to still understand what they're doing, right? And so we felt like we had a really good, you know, combination of that, but in some instances, they forget to do things, so things aren't there and we get the phone call the bot broke, right? So part of the thing I'd like to do is I'd like to move that back to an unattended bot, and I'm going to put a chat bot in front of it, and then all's they have to do is type in "run my bot" and it'll come up if they have more than one bot, it'll say "which one do you want to run?" They'll click it and it'll go. Instead of having to go out on their machine, figure out where to go, figure out which button to do, and in the chat I can also send them a little message, "Did you run your other reports? Did you do this?" You know, so, I can use it for the end user, to make that experience for them better. And plus, we've got a lot of IT, we've got a lot of HR stuff that can fold into that, and then RPA all in behind it, kind of the engine on a lot of it. >> I mean you've child proofed the bot. >> Exactly! There you go. There you go. >> Exactly. Exactly. And it also provides a means to be able to answer those commonly asked questions for HR for example. You know, how much vacation time do I have? When can I change my benefits? Examples of those that they answer frequently every day. So that provides another avenue for utilization of the chat bot. >> And if I may, Dave, it supports a concept that I know we were talking about yesterday. At HFS it's our "Triple-A Trifecta", but it's taking the baseline of automation, it intersects with components of AI, and then potentially with analytics. This is starting to touch on some of the opportunities to look at other technologies. You say chat bots. At HFS we don't use the term chat bot, just because we like to focus and emphasize the cognitive capability if you will. But in any case, you guys essentially are saying, well RPA is doing great for what we're using RPA for, but we need a little bit of extension of functionality, so we're layering in the chat bot or cognitive assistant. So it's a nice example of some of that extension of really seeing how it's, I always call it the power of and if you will. Are you going to layer these things in to get what you need out of it? What best solves your business problems? Just a very practical approach I think. >> So Elena, Guy has a session tomorrow on predictions. So we're going to end with some predictions. So our RPA is dead, (chuckle) will it be resuscitated? What's the future of RPA look like? Will it live up to the hype? I mean so many initiatives in our industry haven't. I always criticize enterprise data warehousing and ETL and big data is not living up to the hype. Will RPA? >> It's got a hell of a lot of hype to live up to, I'll tell you that. So, back to some of our causality about why we even said it's dead. As a discrete software category, RPA is clearly not dead at all. But unless it's helping to drive forward with transformation, and even some of the strategies that these fine ladies from Security Benefit are utilizing, which is layering in additional technology. That's part of the path there. But honestly, the biggest challenge that you have to go through to get there and cannot be underestimated, is the change that your organization has to go through. Cause think about it, if we look at the grand big vision of where RPA and broader intelligent automation takes us, the concept of creating a hybrid workforce, right? So what's a hybrid workforce? It's literally our humans complemented by digital workers. So it still sounds like science fiction. To think that any enterprise could try and achieve some version of that and that it would be A, fast or B, not take a lot of change management, is absolutely ludicrous. So it's just a very practical approach to be eyes wide open, recognize that you're solving problems but you have to want to drive change. So to me, and sort of the HFS perspective, continues to be that if RPA is not going to die a terrible death, it needs to really support that vision of transformation. And I mean honestly, we're here at a UiPath event, they had many announcements today that they're doing a couple of things. Supporting core functionality of RPA, literally adding in process discovery and mining capabilities, adding in analytics to help enterprises actually track what your benefit is. >> Jean: Yes. >> These are very practical cases that help RPA live another day. But they're also extending functionality, adding in their whole announcement around AI fabric, adding in some of the cognitive capability to extend the functionality. And so prediction-wise, RPA as we know it three years from now is not going to look like RPA at all. I'm not going to call it AI, but it's going to become a hybrid, and it's honestly going to look a lot like that Triple-A Trifecta I mentioned. >> Well, and UiPath, and I presume other suppliers as well, are expanding their markets. They're reaching, you hear about citizens developers and 100% of the workforce. Obviously you guys are excited and you see a long-run way for RPA. >> Jean: Yeah, we do. >> I'll give you the last word. >> It's been a wonderful journey thus far. After this morning's event where they showed us everything, I saw a sneak peek yesterday during the CAB, and I had a list of things I wanted to talk to her about already when I came out of there. And then she saw more of 'em today, and I've got a pocketful of notes of stuff that we're going to take back and do. I really, truly believe this is the future and we can do so much. Six Sigma has kind of gotten a rebirth. You go in and look at your processes and we can get those to perfect. I mean, that's what's so cool. It is so cool that you can actually tell somebody, I can do something perfect for you. And how many people get to do that? >> It's back to the user experience, right? We can make this wildly functional to meet the need. >> Right, right. And I don't think RPA is the end all solution, I think it's just a great tool to add to your toolkit and utilize moving forward. >> Right. All right we'll have to leave it there. Thanks ladies for coming on, it was a great segment. Really appreciate your time. >> Thanks. >> Thank you. >> Thank you for watching, everybody. This is Dave Vellante with theCUBE. We'll be right back from UiPath Forward III from Las Vegas, right after this short break. (technical music)

>> Announcer: Live, from Copenhagen, Denmark, it's theCUBE! Covering Nutanix.NEXT 2019. Brought to you by Nutanix. >> Welcome back everyone to theCUBE's live coverage of Nutanix.NEXT. We are at the Bella Center in Copenhagen, Denmark. I'm your host, Rebecca Knight, alongside of Stu Miniman, of course. We are joined by a good friend of theCUBE, Ray Wang, principal analyst and CEO of Constellation Research. Thank you so much for returning to theCUBE. >> Hey, how you doing? Good morning! >> Good morning, good morning! >> Good morning! (laughing) >> Good morning! >> I don't know. I get all my accents wrong out here. >> (laughing) So, you got a shout out on the main stage this morning, from Monica Kumar, congratulations on that. She talked about you and your research on the infinite role of computing. You also do a lot with the future of work. I know that that is really right in your wheelhouse right now. What are you hearing, what are you seeing, what kinds of conversations are you having that are interesting you? >> Yeah, so, this infinite computing option, it's one of the that we're talking about, the fact that you can scale out forever, right? And the problem that's holding us back has been technical debt, right? So all that legacy that everyone's got to figure out. It's like, my connections, my server, my disk-rack recovery, my disaster recovery, my backup, everything. It's a pain in the butt. And I'm still trying to get onto the cloud. So on that end, we're like, okay, all this stuff is holding us back, how do we get there? Now, the future of work is a little bit different. We're seeing a very very different set of work. People have talked about where we are the gig economy, but that's just one aspect of it. Everything is being decomposed into microservices. Large processes are becoming smaller and smaller microservices, they're being reusable, well our work and tasks are following the same way. We're getting smaller and smaller tasks, some are more repetitive, some are going to be automated, and it's really about where we actually find the difference between augmentation of humanity, and full automation, and that's where the next battle's going to be. >> Yeah, Ray, some of the discussions we've been having this week, is how do we really simplify the environment? The balance I hear from customers, on the one hand, they're always like, I don't have enough money, I don't have enough personnel, on the other hand, oh my gosh, that full automation sounds like you're going to put me out of a job. We know we're not putting everybody out of work in the next couple of years. There are challenges; we worry about the hollowing out of the center of the economy, but here, what Nutanix is trying to do, of course, is, I don't want to have to thrive in that complexity anymore, I want to be able to drive innovation, keep up with that, take advantage of that unlimited resources out there, so, where do you see, you've been here at the show, what are you hearing from the customers here? Anything different in Europe versus back in North America that you'd share about that journey onto the changing roles? >> Oh it's a great point. It's about simplifying everything where you can, it's about areas of automation where they make sense. Here in Europe it's slightly different because a lot of the focus in Europe has been about cost and efficiency, followed by of course regulatory. Those have been the two drivers. And they've been battling that in order to be, even they will look at some level of innovation. Where in the US, people are head on doing innovation, regulatory and operational efficiency at the same time. So that creates a very very different environment. But what we have noticed are some patterns, especially when we look at automation and AI; there are four areas out of seven where we see a lot more automation that's happening. The first one is massively repetitive tasks, those are things, yeah, got to get that out of the way, we don't do this very very well. The second one is really thinking about massive nodes of interaction. When you're connected to multiple places, multiple organizations, multiple instances, that's something where we start to get overwhelmed, and then of course, there's lots of volume. If you've got lots of volume or requests that are coming through, you can't possibly handle that, and that's a place where we see a lot of machine scale. And the last piece is really when you have to scale, humans don't scale very well. However, it's actually not a hollowing out of the middle; it's actually a hollowing out of the ends in a very, very real end, because really really simple tasks go away, super complex tasks go away, and the middle actually remains, and the middle is things that are complex that cannot be recreated by math, they're also areas that require a lot of creativity, humans make the rules, we break the rules, and then the last part is really fine motor skills and presence, the machines still aren't as good. So we still have some hope. So the middle stays, it's the hollowing out of the ends, the high end jobs and the low end jobs are the ones where we're going to see a lot of risk. >> So what does that mean? So we have, leaving the middle there, and as you said, the high end jobs and the low end jobs go away, but what does that mean in terms of the skills? In terms of what employers are looking for, in terms of what they need in their prospective applicants and hirees. >> That's a great point. Soft skills are important; it's the qualitative skills that become even more important, it's also being able to manage and orchestrate the hard skills; because you don't necessarily have to know how to do the calculation, you have to just know which algorithm to apply. >> Okay, and then also, these soft skills of managing people, I'm assuming too? Because computers are not so good at that either. >> Yes. Soft skills are managing people, but also manage the human and machine equation that's going to happen. Because we have to train the machines, the machines aren't going to know that level of intuition, and there's a large amount of training that's going to happen over time. >> All right. So, Ray, one of the things Nutanix is doing is, as they've been transforming to not only subscription, software's always been at their core, but they're starting to do not just infrastructure software, but application software. I know you live in that world quite a lot, so when you hear Nutanix talking about building databases, delivering these services, it's something that I look at, Amazon does some of that, but for the most part they're infrastructure and build on top of us. How do you think, how is Nutanix doing, what are some of the challenges for them, going up against some of the bellwethers out there in tech, and all the open source projects that are out there. >> So the challenge is always going to be, there is a one dominant player in every market. And what they're providing is an alternative to allow the orchestration of not having that, not only that dominant player, but a choice. So in every single market, they're focused on giving users choice, and giving the ability to aggregate, and bring everything into one single plane. That is tough to do, right? And the fact that they see that as their big hairy audacious goal, that's impressive. If you said they were going to do this three years ago, I wouldn't have believed them. >> Well yeah, I think back to, remember almost 10 years ago, VMware tried to get into applications, they bought Zimbra, they bought a few others. Cisco did like 26 adjacencies, they were going to take over video and do all these things, and we've seen lots of failures over the years. They refocused on their core, was a big thing that I heard, that the users seem to be excited about. Are there areas that you're find especially interesting as to where Nutanix is poking? >> So, I would say that Nutanix three years ago was a little bit sleepy. They got comfortable, they did the stuff that they did really well, and it feels like, maybe about 12 months ago, Dheeraj had a different vision. Like something snapped, something hit, he said this isn't working, we're going to change things, and we've seen a whole bunch of new talent come into play. We've also seen a huge expansion of what they're trying to do, and a cleanup of all those side projects that were all going on before. So I think they've actually honed in on, okay, if we can simplify this piece, this is a money-winning business for some time, and they're talking about 80% margins last quarter, I mean that's huge, and that's just trying to save customers money, and make their lives simpler. >> Do you think that they have the messaging right? Because, I mean, they're going to this Thoreauvian/Emersonian idea of simplify, simplify, simplify, and it does resonate, of course! What customer doesn't want a simpler computing experience? But do you think that they are reaching the right people, and they have obviously very passionate customers, but are they getting into new businesses. >> I think they're getting to the businesses that their customers are asking them to, those adjacencies are huge, I think and when you think about cleaning up technical debt, all that legacy debt that you actually have to fix, I mean, this is where you begin. It's so hard to make that cloud journey to begin with, it's even harder to carry all that legacy with you. And we're going to see a lot more of this going forward. >> All right. So, Ray, talk a little bit about, I loved an event you did last year, the people's centered digital future. Help explain to our audience what this is about, and where you're taking it again this year. >> So that event was a one-time event. We were celebrating the 70th anniversary of the United Nations founding, we were celebrating almost 50 years of the internet, and 50% of the world being connected to the internet. And part of the reason that was an important event was, we really felt that there was a need to get back to the roots of where the internet had begun, and more importantly, talk about where we are today in the world of privacy. One of the biggest challenges we have in the a digital world is that your personal data, your genomics, all this information about you is being brokered for free. And what we have to do is take that back. And by taking that back, what I mean is, we've got to make all these rights, property right. If we can make that a property right, we can leverage the existing rules and legislation that's there, and we can actually start paying people for that data through consent, and giving people that ability, on consent to data, could create lots of things, from universal basic income, to a brand new set of data economy that equalizes the playing field, while keeping the large tech giants. >> There's some of those big journeys that we went on, you talk about the internet, this year's 50th anniversary of the first walking on the moon, and you look at how entire countries rallied together, so much technology was-- >> Yeah, look at India. >> Spun off of what they've done there, it's like we need some rallying cries in today's day and age to solve some of these big day and age. Is that AI? Where are some of the big areas that you see tech needing to drive forward in the next decade? >> I think the big area's going to be around decentralization, giving individuals more empowerment. We've got large, big tech companies, that are, I'd say, imbalanced. We start companies right away, building monopolies on day one, and we don't open up those markets. And the question is, how do we create a level playing field for the individual to be to compete, to bring a new idea, and to innovate, if that's continuously stifled by big technology companies without an opportunity, we're in trouble. And so that starts by making data a property right, to the personal data. It starts by also creating marketplaces for that data, and those marketplaces have to have regulations, similar to capital market flows. The way treat exchanges, we treat marketplaces, we need to do the same thing with the way we do with data, and then the third piece, there has to be some level of a tax, that goes to all these data economies, so that they can fund the infrastructure and the watch dogs that are there. Now this is coming from a free market, I'm a free market capitalist, okay? I can't stand regulation, but I also realize that it's so important that we have a fair market. >> But do you, we know so much about how Americans are so much more cavalier about their privacy than even Europeans, what will it take to galvanize Americans to care about those little crumbs that they're leaving on the internet, that is the data that you say should be a property right, that we should be paid for? >> I think it's going to start with companies actually take, and do the right thing, where they actually give them that opportunity to monetize that information. >> Will they do that? >> I think the new set of startups are starting to do that, because they're looking at the risk that's being posed, at Facebook and Google and Amazon, on the anti-trust, DOJ, FCC, they're all coming in at the same time, the FTC, they're all wondering, do we break these companies up or not? The short answer is, I don't think they're going to, because we're competing with China, and when you're looking at that scale of data, where Amazon's transactions are only 1/10 of Ali Baba's? That's huge. So the consolidation has to happen, but we need to create a layer that actually democratizes and creates a fair trading play. >> And those startups, you think, can compete with established players? >> I think once we set the roles, and the ground rules, I think people are going to be able to do that, but once you free that data, what are we competing on now? You have to pay for my consent, you have to earn my business, you can't trade it for free, or just say, "Hey look, you are the product." That changes everything. >> Rebecca: Yeah, that's a good point. >> Ray, I know you spend a lot of time talking to, and giving advice to some of the leaders in technology, you're welcome to get into some specifics about Nutanix, or some of the cloud players, but what are some of the key themes, what are people getting right, and what are they still doing wrong? >> Okay, so theme number one, this is going to be a multicloud hybrid world for a long time. Anybody that's bucking the multicloud trend, they've missed the point, right? Because we want portability in data, there's only two or three players in every single market, if I can't move my data, my workloads, and my IO in and out, then you've actually created vendor lock-in from hell. And I think customers are going to protest against that. The second one, and you guys are probably following this trend a lot, is really about AI ethics and design principles for AI. So what is ethical AI? We've got five things that are important: The first one is make sure it's transparent. See the algorithms, see what they write. Second one, make sure it's explainable. Hey, bias is not a bad thing, so if I'm discriminating against redheads, with, left-handed, and that happened to like, I don't know, Oracle, fine. But, if that was unintended, and you're discriminating against that, then we have to get rid of that, right? And so we have to figure out how to reduce that kind of bias, if it's unwanted bias. If you discover that you're discriminating, and not being inclusive, you've got to make sure that you address that. So then the next part is, it's got to be reversible. And once you have that reversibility, we also make sure that we can train these systems over time. And then the last piece is, Musk could be right! Musk could be right, the machines might take over, but if you insert a human at the beginning of the process, and at the end of the process, you won't get taken over. >> I want to hear about what the future of work looks like for Ray Wang. You are on the road constantly, you are (laughs) you are moving your data from one place, you are everywhere, all the time. So what do you have on next, what's exciting you about your professional life? >> I think the challenge's that we are living in a world where there's too much information, too much content. And you guys say this all the time, right? Separating the signal from the noise. And people are willing to pay for that signal. But that is a very very tough job, right? It's about the analysis, the insights, and when you have that, people don't want to read through your reports. They don't want to watch through the videos. They just want to call you up and say, "Hey, what's going on?" And get the short version of it. And that's what's making it very interesting, because you would expect this would be in a chat bot, it'd be in a robo advisor, doesn't work that way. People still want the human connection, especially given all that data out there, they want the analysis and insights that you guys provide, that's very very important, but even more important right now, it's really about getting back to those relationships. I think people are very careful about the relationships they're keeping, they're also curating those relationships, and coming back to spending more time. And so we're seeing a lot more of in-person meetings, in-person events, very very small, curated conversations, and I think that's coming back. I mean that's why we do our conference every year, as well, we try to keep 200 to 300 people intimately together. >> Those human connections, not going away. (laughs) >> Nope, not going away, in an automated, AI, digital world! This is our post-digital future. >> That's excellent. Well Ray, thanks you so much for coming on theCUBE, it's always so much fun to talk to you. >> Hey, thanks a lot. >> High energy guy (laughs). >> Low energy. >> I'm Rebecca Knight for Stu Miniman, we will have more from the Bella Center at Nutanix.NEXT coming up in just a little bit. (upbeat music)

>> from Santa Clara in the heart of Silicon Valley. It's the Q covering the Churchills 2019 brought to you by Silicon Angle Media. >> Hey, welcome back, everybody. Jefe Rick here with the Cube. We're in Santa Clara, California At the Churchills. It's the ninth annual kind of awards banquet at the Church O Club. It's on, and the theme this year is all about leadership. And we're excited to have not one of the winners, but one of the newest board members of the church, Oh, club. And someone is going to be interviewing some of the winners at a very many time. Cuba LEM Ray Wong, You know, from Constellation Research of founder, chief analyst >> and also >> a new board member for the Churchill Club Brigade, is >> also being back here. I love this event. There's one my favorite ones. You get to see all the cool interviews, >> right? So you're interviewing Grandstand from Pallet on for the life changer award. >> Yeah, so this is really incredible. I mean, this company has pretty much converge right. We're talking, It's media, It's sports, It's fitness. It's like social at the same time. And it's completely changed. So many people they've got more writers than soul cycle. Can you believe that? >> Yeah. I like to ride my bike outside, so I'm just not part of this whole thing. But I guess I guess on those bikes you can write anywhere >> you can write anywhere, anywhere with anyone. But it's not that. It's the classes, right? You basically hop on. You see the classes. People are actually pumping you up there. Okay, Go, go, go. You can see all the other riders are in the space. It's kind >> of >> addictive. Let's let's shift gears. Talk about leadership more generally, because things were a little rough right here in the Valley right now. And people are taking some hits and black eyes. You talk to a lot of leaders. She go to a tonic, shows you got more shows. A. We go to talk to a lot of CEOs when you kind of take a step back about what makes a good leader, what doesn't make a good leader? What are some of the things that jump into your head? >> You know, we really think about a dynamic leadership model. It's something conceit on my Twitter handle. It's basically the fact that you got a balance. All these different traits. Leaders have to perform in different ways in different situation. Something like Oh, wow, that's a general. They've done a great job commanding leadership. Other times we had individuals, a wonderful, empathetic leader, right? There's a balance between those types of traits that have to happen, and they curve like seven different dimensions and each of these dimensions. It's like sometimes you're gonna have to be more empathetic. Sometimes you got to be more realistic. Sometimes you're going to be harder. And I think right now we have this challenge because there's a certain style that's being imposed on all the leaders that might not be correct >> theater thing. The hypothesis for you to think about is, you know, when a lot of these people start the Silicon Valley companies the classic. It's not like they went to P and G and work their way up through the ranks. You know, they started a company, it was cool. And suddenly boom. You know, they get hundreds of millions of dollars, the I po and now you've got platforms that are impacting geopolitical things all over the world. They didn't necessarily sign up for that. That's not necessarily what they wanted to do, and they might not be qualified. So, you know, Is it? Is it fair to expect the leader of a tech company that just built some cool app that suddenly grew into, ah, ubiquitous platform over the world that many, many types of people are using for good and bad to suddenly be responsible? That's really interesting situation for these people. >> Well, that's what we talked about the need for responsive and responsible leadership. Those are two different types of traits. Look, the founding individual might not be the right person to do that, but they can surround themselves with team members that can do that. That could make sure that they're being responsive or responsible, depending on what's required for each of those traits. You know, great examples like that Black Mirror episode where you see the guru of, like, some slasher meet a guy. Some guys like Colin is like, you know, he wants to make sure that you know someone's paying attention to him. Well, the thing is like a lot of times, at least folks are surrounded by people that don't have that empathetic You might not have had what a founder is looking at, or it could be the flip side. The founder might not be empathetic. They're just gung ho, right, ready to build out the next set of features and capabilities that they wanted to d'oh! And they need that empathy that's around there. So I think we're going to start to see that mix and blend. But it's hard, right? I mean, going through a start up as a CEO and founder is very, very different than coming in through the corporate ranks. There's a >> very good running a company, you know. It's funny again. You go to a lot of shows. We get a lot of shows, a lot of key, knows a lot of CEO keynotes, and it's just interesting. Some people just seem to have that It factor one that jumps off the top is Dobie. You know, some people just seemed >> like the have it >> where they can get people to follow, and it's it's really weird. We just said John W. Thompson, on talking about Sathya changing the culture at Microsoft, with hundreds and hundreds of thousands of employees distributed all over the world. What a creative and amazing job to be able to turn that ship. >> Oh, it is. I mean, I can turn on the charm and just, like, get your view Lee excited about something just like that, right? And it's also about making sure you bring in the input and make people feel that they're inclusive. But you gotta make decisions at some point, too. Sometimes you have to make the tough choices. You cut out products, you cut out certain types of policies, or sometimes you gotta be much more responsive to customers. Right? Might look like you're eating crow. But you know what? At the inn today, cos they're really built around customers or state Kohler's stay close air bigger today than just shareholders. >> Right. Last question. Churchill Club. How'd you get involved? What makes you excited to jump on board? >> You know, this is like an institution for the valley, right? This is you know, if you think about like the top interviews, right? If you think about the top conversations, the interesting moments in the Valley, they've all happened here. And it's really about making sure that you know, the people that I know the people that you know there's an opportunity to re create that for the next set of generations. I remember coming here when it's like I go back, I think give Hey, just I don't hear anybody in 96 right? And just thinking like, Hey, what were the cool activities? What were the interesting conversations and the church? The club was definitely one of those, and it's time to give back. >> Very good. All right, well, congrats on that on that new assignment. And good luck with the interview tonight. Hey, thanks a lot. All right. He's Ray. I'm Jeff. You wanted the Cube with that? Churchill's in Santa Clara, California. Thanks for watching. We'll see you next time.

>> From Palo Alto, California, it's theCUBE. Covering The Conference Board's 6th Annual Innovation Master Class. >> Hey, welcome back everybody, Jeff Frick here with theCUBE. We're at the Innovation Master Class that's put on by The Conference Board. We're here at Xerox PARC, one of the original innovation centers here in Silicon Valley. Tremendous history, if you don't know the history of Xerox PARC go get a book and do some reading. And we're excited to have our next guest because there's a lot of talk about tech but really not enough talk about people and where the people play in this whole thing. And as we're seeing more and more, especially in downtown San Francisco, an assumption of responsibility by tech companies to use some of the monies that they're making to invest back in the community. And one of the big problems in San Francisco if you've been there lately is homelessness. There's people all over the streets, there's tent cities and it's a problem. And it's great to have our next guest, who's actually doing something about it, small discrete steps, that are really changing people's lives, and I'm excited to have him. He's Kevin Adler, the founder and CEO of Miracle Messages. Kevin, great to meet you. >> Great to meet you too Jeff. >> So, before we did this, doing a little background, you knew I obviously stumbled across your TED Talk and it was a really compelling story so I wonder A, for the people, what is Miracle Messages all about, and then how did it start, how did you start this journey? >> Miracle Messages, we help people experiencing homelessness reconnect to their loved ones and in the process, help us as their neighbors reconnect with them. And we're really tackling what we've come to call the relational poverty on the streets. A lot of people that we walk by every day, Sure, they don't have housing, but their level of disconnection and isolation is mind boggling when you actually find out about it. So, I started it four years ago. I had an uncle who was homeless for about 30 years. Uncle Mark, and I never saw him as a homeless man. He was just a beloved uncle, remembered every birthday, guest of honor at Thanksgiving, Christmas. >> And he was in the neighborhood, he just didn't have a home? >> He was in Santa Cruz, he suffered from schizophrenia. And, when he was on his meds he was good and then he'd do something disruptive and get kicked out of a halfway house. And we wouldn't hear from him for six months or a year. >> Right. So, after he passed away, I was with my dad, and not far from here, visiting his grave site in Santa Cruz. And I was having a conversation with my dad of the significance of having a commemorative plot for Uncle Mark. I said, he meant something to us, this is his legacy. So that's nice, but I'm going to go back in the car, pull out my smartphone, and see status updates from every friend, acquaintance I've ever met, and I'm going to learn more about their stories on Facebook, with a quick scroll, than I will at the grave site of my Uncle Mark. So, I'm actually a Christian. I have a faith background, and I asked this question: "How would Jesus use a smartphone?" "How would Jesus use a GoPro camera?" Cause I didn't think it was going to be surfing pigs on surf boards. And I started a side project where homeless volunteers, like my Uncle Mark, wore GoPro cameras around their chests. And I invited them to narrate those experiences and I was shocked by what I saw. And I won't regale you with stories right now but I heard over and over again, people say "I never realized I was homeless when I lost my housing, "only when I lost my family and friends." >> Right. >> And that led me to say, if that's true, I can just walk down the street and go up to every person I see and say "Do you have any family or friends "you'd like to reconnect with?" And I did that in Market Street, San Francisco four years ago, met a man named Jeffrey, he hadn't seen his family in 22 years. Recorded a video on the spot to his niece and nephew, go home that night, posted the video in a Facebook group connected to his hometown, and within one hour the video was shared hundreds of times, makes the local news that night. Classmates start commenting, "Hey, "I went to high school with this guy, "I work in construction, does he need a job? "I work at the mayor's office does he need healthcare?" His sister gets tagged, we talk the next day. It turns out that Jeffrey had been a missing person for 12 years. And that's when I quit my job and started doing this work full time. >> Right, phenomenal. There's so many great aspects to this story. One of the ones that you talked about in your TED Talk that I found interesting was really just the psychology of people's reaction to homeless people in the streets. And the fact that once they become homeless in our minds that we really see through them. >> Totally. >> Which I guess is a defense mechanism to some point because, when there's just so many. And you brought up that it's not the condition that they don't have a place to sleep at night, but it's really that they become disassociated with everything. >> Yeah, so I mean, you're introduction to me, if you had said hey there's this guy, there's no TED talk, there's nothing else, he's a housed person, let's hear what he has to say. Like, what would I talk... That's what we do every single day with people experiencing homelessness. We define them by their lack of one physical need. And, sure, they need it, but it presumes that's all there is to being human. Not the higher order needs of belonging, love, self-actualization. And some of the research has found that the part of the brain that activates when we see a person, compared to an inanimate object, does not respond when we see a person who's experiencing homelessness. And in one experiment in New York, they had members of a person's very own family, mom and dad, dress up to look homeless on the streets. Not a single person recognized their own member of their own family as they walked by 'em. >> Yeah, it's crazy. It's such a big problem, and there's so many kind of little steps that people are trying to do. There's people that walk around with peanut butter and jelly sandwiches that we see on social media, and there's a couple guys that walk around with scissors and a comb and just give haircuts. These little tiny bits of humanization is probably the best way to describe it makes such a difference to these people. And I was amazed, your website... 80 percent of the people that get reconnected with their family, it's a positive reconnection. That is phenomenal because I would have imagined it's much less than that. >> Every time we reconnect someone, we're blown away at the lived examples of forgiveness, reconciliation. And every reunion, every message we record from a person experiencing homelessness, we have four, five messages from families reaching out to us saying, "Hey I haven't seen "my relative in 15 years, 20 years." The average time disconnect of our clients is 20 years. >> Right, wow. >> So what I've been doing now is, once you see it like this, you walk down the street, you see someone on the streets, you're like that's someone's son or daughter. That's someone's brother or sister. It's not to say that families sometimes aren't the problem. Half of the youth in San Francisco that are homeless, LGBTQ. But it's to say that everyone's someone's somebody that we shouldn't be this disconnected as people in this age of hyper-connectivity and let's have these courageous conversations to try to bring people back in to the fold. >> Right, so I'm just curious this great talk by Jeff Bezos at Amazon talking about some of the homeless situations in Seattle and he talks, there's a lot-- >> He's a wealthy guy, right? >> He's got a few bucks, yeah, just a few bucks. But he talks about there's different kind of classes of homelessness. We tend to think of them all as the same but he talks about young families that aren't necessarily the same as people that have some serious psychological problems and you talked about the youth. So, there's these sub-segments inside the homeless situations. Where do you find in what you offer you have the most success? What is the homeless sub population that you find reconnecting them with their history, their family, their loved ones, their friends has the most benefit, the most impact? >> That's a great question. Our sweet spot right now, we've done 175 reunions. >> And how many films have you put out? >> Films in terms of recording the messages? >> Yeah, to get the 175. >> 175 reunions, we have recorded just north of about 600 messages. And not all of 'em are video messages. So, we have a hotline, 1-800-MISS-YOU. Calls that number, we gather the information over the phone, we have paper for 'em. So 600 messages recorded, about 300, 350 delivered and then half of them lead to a reunion. The sweet spot, I'd say the average time disconnected of our clients is 20 years. And the average age is 50, and they tend to be individuals isolated by their homelessness. So, these are folks for decades who have had the shame, the embarrassment, might not have the highest level of digital literacy. Maybe outside of any other service provider. Not going to the shelter every night, not working with a case worker or social worker, and we say hey, we're not tryna' push anything on ya' but do you have any family or friends you'd like to reconnect with. That opens up a sense of possibility that was kind of dormant otherwise. But then we also go at the other end of the spectrum where we have folks who are maybe in an SRO, a single room occupancy, getting on their feet through a drug rehab program and now's the point that they're sayin' "Hey, I'm stably housed, I feel good, "I don't need anything from anyone. "Now's the time to rebuild that community "and that trust from loved ones." >> Kevin, it's such a great story. You're speaking here later today. >> I think so, I believe so. >> On site for good, which is good 'cause there's so much... There's a lot of negative tech press these days. So, great for you. How do people get involved if they want to contribute time, they want to contribute money, resources? Definitely get a plug in there. >> Now, or later? Right now, yeah, let 'em know. >> No time like the present. We have 1200 volunteer digital detectives. These are people who use social media for social good. Search for the loved ones online, find them, deliver the messages. So, people can join that, they can join us for a street walk or a dinner, where they go around offering miracle messages and if they're interested they can go to our website miraclemessages.org and then sign up to get involved. And we just released these T-shirts, pretty cool. Says, "Everyone is someone's somebody." I'm not a stylish man, but I wear that shirt and people are like "That's a great shirt." I'm like, wow, and this is a volunteer shirt? Okay cool, I'm in business. >> I hope you're putting one on before your thing later tonight. >> I have maybe an image of it, I should of. >> All right Kevin, again, congratulations to you and doing good work. >> Thanks brother, I appreciate it. >> I'm sure it's super fulfilling every single time you match somebody. >> It's great, yeah, check out our videos. >> All right he's Kevin, I'm Jeff. We're going to get teary if we don't get off the air soon so I'm going to let it go from here. We're at the Palo Alto Xerox PARC. Really the head, the beginning of the innovation in a lot of ways in the computer industry. The Conference Board, thanks for hosting us here at the Innovation Master Class. Thanks for watching, we'll see you next time. (bright ambient music)

(upbeat music) >> Narrator: Live from the Wynn Hotel in Las Vegas, it's theCUBE, covering Magento Imagine, 2018. Brought to you by Magento. >> Welcome back to theCUBE, I'm Lisa Martin. We've had a really informative day talking all things commerce, open commerce, and digital commerce innovation at Magento Imagine 2018. I'm joined by Amanda Batista, who is the head of content marketing for Magento. Amanda, thanks so much for all your help in coordinating this. We've had a really educational day with your folks, with your customers and partners. >> Yeah, we've had a really great community. It's been wonderful to have theCUBE here, and I'm so thrilled to be able to be here with you closing out the show. >> So this is the eighth Imagine event, There's over 3000 people here. You guys had some great speakers on stage today. I'm always very excited to see female leaders on stage. >> Absolutely. >> We talked about Baked by Melissa, she was our first guest today sharing her story. You've been growing this event year over year. What is it about #LeadingTheCharge, your hashtag and message for this event, that really differentiates this eighth event from the last several? >> Well #LeadingTheCharge is a really exciting message for us because ultimately we're focused on empowering merchants and developers and really allowing them to not worry about the technology component of things. Whatever you can dream, you can do on Magento. So, #LeadingTheCharge for us here today is really about bringing people together, making connections, and really thinking about, How do you use this community? How do you tap into all these resources? How do you see people that you haven't seen in a while? It's kind of our coming out party, our big coming together. You know, #LeadingTheCharge I think means different things for different folks, but I think for us we're really aiming to empower individuals to do the work that they do really well but also come together. So I actually heard a gentleman say that part of Leading the Charge for him is a matter of making connection. It's almost stepping out as a leader and allowing other people to come together. I think #LeadingTheCharge has been a really nice message for us today and I think our speakers have really brought that to life. >> I agree and with the sentiment that we've heard. Magento started reputation-wise, helping retailers to target the online shoppers and the experiences there. We talked with Peter Sheldon today about what you guys are doing in really formalizing how you're helping businesses, B2B organizations. There's so much opportunity that's really being driven by all of us as consumers and we have this expectation that we can get anything, anywhere, anytime. >> That's right. >> And have it delivered day or night. Amazon sets the bar really high. You guys had Amazon on main stage this morning talking about the fact that there's now 100 million Prime subscribers and how half of Amazon's revenue doesn't come from products they sell, this third-party marketplace just kicks open the doors of opportunity- >> Amanda: Right. >> for businesses from small to large alike. >> Yeah, I think it's really exciting, too, because, you know we can't all compete on price. We can't all be Amazon, but I think as we're really encouraging merchants to think about, What are you offering that's special? What are you doing from a content standpoint? Obviously, content is near and dear to me, that's my bread and butter and what I've been doing for a long time, but we really think about, what are we offering people that's value-add? Is it an added catalog, is it a manual? Is it something that helps you do your job better? Is it something that helps you go back to your organization and feel celebrated and feel excited?" I think when it comes to how we're empowering people, we're really focused on, from a content perspective, enabling you to, again, not really worry about the tech component, but think about how you can innovate your business. That's really important to us. >> Well, that's one of the things that Melissa Ben-Ishay, she's product officer at Baked by Melissa Cupcakes and how- >> Amanda: Sweet it is. >> I still want, it is, and I still want a cupcake. >> Amanda: Yes! >> It was very evident when we were talking with her that she gets, because of technology, that makes things simple for folks like herself, it allows her not to just grow the business, to open more stores, to reach hundreds of thousands of people, but to do so in a way that she doesn't have to worry about the technology. >> Amanda: Right, right. >> And that really- >> That's a great example, really, for us. I think when we look at who we're looking to enable, you know, Melissa started a business ten years ago, was let go from her job and said, Let me take a passion and bring it to life with business. They had e-commerce even before they had stores. They had e-commerce before they were up and running. I think using that as a linchpin, as a springboard to really bring her business to life, delivering a hundred cupcakes on foot on the New York City subway. I'm from New York, I ride the subway, I wouldn't want to do it with a hundred cupcakes, frankly, but these are the sort of bootstrap methods that she was enabled to do not worrying about that sort of tech component, right? She's bootstraps, she only had about five founders, five people around her with her business. Really great to hear from her and I don't see any cupcakes anywhere but I'm dying for one. >> Me too! >> Or five. >> We need to get some. One of the things that you mentioned, content, earlier, in being a content marketer, look at media as an example, with Netflix and Spotify and Amazon, and what's happened to traditional media. It's now that the way a service is delivered is as important as the content >> Absolutely. >> and what we've heard a lot from your customers that have been on the program today is they have the opportunity to deliver services in a responsive way, and in a way that's really personalized, which is really key, right? As consumers, we all want to have an experience that's tailored to us, and we've heard that as sort of an enabling capability that Magento is helping. We had a gentleman from Coca-Cola on, talking about the Share a Coke experience and how that started as a program in Australia. >> Amanda: Right. >> With one bottler, then went to Europe, then became something that was focused in store, and then the consumers are going, Hey, Coca-Cola, I can't find a bottle with my name on it. And it became this really big program for them, that they had to figure out, How do we do this in the U.S. with 70 bottlers? They needed technology that would allow them to identify and have this visibility of inventory, which you guys allow them to do, but to enable their customers to have an experience with a personalized bottle of Coca-Cola. >> Right. >> Amazing how the technology opens up doors like that, and allows these businesses, whether it's something as an establishment like Coca-Cola, or a Baked by Melissa, to be able to deliver this relevant, personal experience, at the touch of a button. It's Amazing. >> Well, listen, and it's non-negotiable, right? Think about your own experiences as a consumer. Who are you shopping with? I'm shopping with brands that understand me, that know what I need, that are offering value-add. You know, you might also revolutionize the way that we view our experiences, and we really don't have patience. Like you said, we have digital, everything is very quick, and I think the experience is the differentiator. We're really focused, again, on taking the technology out of your planning equation so that you can focus on what are you offering? What are you delivering? How are you delighting? That's a big, big area of opportunity and I think what you do to delight and engage and if you're using data intelligently, and not just the nitty gritty of data, but also simple things, the way that you welcome people via email, the way you engage on Instagram. There's a number of ways to do things that don't really require a lot of planning, a lot of cost, and so in our content efforts, we're really encouraging merchants to think about that. How do you do things in a sort of home-grown way without spending a lot of time or money? We have to be agile, we have to be quick as marketers, I certainly know that, that's the world I live in, and again, it's non-negotiable. I think as a consumer, if I don't feel that you understand me, if I don't feel that you're paying attention to the things that I'm buying or not buying, I'm going somewhere else. I'm going to go to a place that makes me feel as though I'm going to be fulfilled and delighted. I think delight is such an understated thing, but we're here at the Wynn which does a wonderful job with experience and everywhere you go it's so delightful and wonderful. >> Lisa: It is delightful! >> I came back to the room last night and my computer cord was just rattled up ever so gently, and I thought, That's delightful! You know, I Instagrammed that. That's a perfect example of providing experience that is superior. >> Speaking of experience, we just had the gentleman from the Accent Group on, Mark Teperson. It was so interesting how they've taken this company down in Australia and New Zealand, with multiple, many, many, many brands of footwear. And, you know, the online and the physical world have been merging in retail for a while now, but what they're wanting to do, to click and collect, and to create this in-store experience. It was such an interesting way of thinking about and hearing from a Chief Digital Officer say, We want to be able to enable people, especially mobile first, we're sitting on the couch with these things often, but to enable them to be able to come into my store and have an experience. That word is, we heard that referenced in many different times today, the Accent Group was a great example of that, as well as when we had your V.P. of Strategy on saying, A lot of cases depending on the, whether it's B2B or B2C, it's not mobile too, it's mobile only. It's not just leveraging technology and data and analytics to understand what I want as a consumer, but it's how I want to consume it. So it's what I was saying earlier about we're seeing this level playing field of how services are delivered, equally as important as the content that you're going to deliver to me. >> Yeah, absolutely. Again, non-negotiable, right? This idea of an omni-channel experience bridging the gaps between online and in-store, like you said, we're on the couch. I almost never shop on a computer any more, right? I'm mobile, we're enabled, we have PayPal, we our credit cards saved. I think to keep that momentum going, you want it to be a seamless experience. How many times have you gone online and found that an item is supposed to be available in the store. When you go, it's not there, right? I've even done due diligence as a savvy shopper who works in retail and says, Let me call the store and make sure it's there. There's really no margin for error there, because when we talk about experience, if you do go in store, and if you do take the initiative to make that purchase and take time out of your day, right, we're all busy people. I think mobile and digital has made it easy, especially Amazon Prime revolutionized that. (mimics beeping noise) Two days, it's on your doorstep. I think as we look to see who's sort of mimicking that experience, I think an easy way to do it, is simply put, have your systems connected, ensure that things are integrated, ensure that your inventory visibility is on point. It's a non-negotiable experience, really. >> Well, Amanda, we've had a blast at Magento Imagine 2018. Our first one, looking forward to being back next year. Thank you for putting together a great array of guests. I know we've learned a ton about this. I won't look at online shopping again the same. We want to thank you for helping us have a really enlightened and delightful conversation. >> And likewise, we've loved having theCUBE. You guys have been wonderful. I've learned a great deal and it's been really nice spending this time with you. So thanks for having me, Lisa. >> Absolutely. We hope you've had a delightful experience today with us on theCUBE. We've been live at Magento Imagine 2018. Check out theCUBE.net where you can find all the replays of the segments that we filmed today. You can also find the editorial components on SiliconANGLE.com. I'm Lisa Martin for theCUBE. We'll see you next time. (upbeat music)

[Announcer]: Live from Orlando, Florida, It's the Cube. Covering ServiceNow Knowledge17. Brought to you by ServiceNow. (electronic music) >> Hi Everybody, we're back in Orlando, Florida. This is The Cube, the leader in live-tech coverage and we are covering ServiceNow Knowledge17, three days of wall-to-wall coverage. My name is Dave Vellante and my co-host, Jeff Fricke. Jeff, our fifth year doing Knowledge. >> Amazing. >> We've talked over the years about ServiceNow extending its platform into the line of business, and one of those areas is HR. We've had a number of guests on the HR and we're pleased to invite Deepak Bharadwaj, who is the general manager of the HR business unit. Great to see you Deepak, thanks for coming on again. >> Thanks Dave, pleasure. >> So off from the keynote this morning, I had tweeted out it was the best IT demo I'd ever seen. No technology, just people with footballs, soccer balls, taking us through an HR example. But, so before we get there, the keynote today. A huge audience, a lot of interest in HR and bringing ServiceNow to HR. >> Yeah, absolutely. I think what we recognized is HR is where a lot of these processes related life events start and then that has implications to many other departments. So, you think about onboarding, off boarding, transfers, relocations, external leave of absence. Almost all of these processes cut across all departments. And the department that gets the biggest workload often times is IT. So, one of the reasons we see all that interest from IT in HR type use cases is because they are at the receiving end of all of that action, if you will, and if we can solve it for IT, we solve it for HR, we are ultimately solving it for the employee and that's what we're all about. So, it's truly exciting to see the interest both in my HR topic keynote yesterday, as well as today. There are slightly different audiences. My topic keynote was more geared towards the HR audience and we actually have a lot of them at the show, which is always encouraging. And today's keynote was more geared towards what we call our IT champions who want to integrate HR to impress the platform and that's absolutely work we like to see as well. >> Yeah, so the momentum in the business is quite good. I know you guys don't break out the numbers specifically for your business unit but you talk about a lot of Pioneer Lightspeed HR customers. You gave some examples. One of the examples you gave was your recent, your personal experience. Everybody can relate to HR, but your recent name change. >> Yup. >> So give us an update, sort of on the business and talk a little bit more about why HR is so critical to ServiceNow. >> I think the opportunity to transform the enterprise is huge with HR, and just looking at the traction that we're seeing from the market place, it's almost the next adjacency after IT where there's just a lot of inefficiency. If you think about our work and lightspeed model, we're really going after unstructured work patterns and guess where the most unstructured work happens today. It's in HR. It's a nice adjacency for us. Plays well with our platform, the core of what we do with service management. And it's a market that's been underserved for years. Customers have told us, "This is what we would like you "to do." And that's how the HR business unit itself was formed, that's why I came here, that's how I got this job. And since then, we've just seen just dramatic traction, especially as the emphasis moves more and more towards making that experience truly consumerized, the service experience for the employee consumerized across all of the departments within the enterprise. So how do you treat your employees just like you would your customers? That's kind of a theme that you see cut across the entire costumer base, and they're really wanting to get on that bandwagon. And ServiceNow is an excellent platform to be accomplishing that. >> It's just so interesting how we see these great successes built in companies recently, just attacking unidentified inefficiency. The Cloud identified just a ridiculously low utilization rate at corporate data centers, and unlocked the value of that efficiency. Uber unlocked the inefficiency of all these cars sitting around not being used. And as you guys have identified, there's so much inefficiency in these unstructured processes that go cross multiple channels. Phone, text, email, Slack, Gerub, pick your favorite thing, they're all over the place. So, it's really this huge value opportunity to grab because it is just grossly inefficient, and almost so inefficient we don't even recognize that there's a much, much better way, until you actually do it in a much, much better way. >> Yeah, no, Jeff, that's absolutely right. So, like you mentioned, there's a technology aspect to this, so, there's just multiple systems, and that leads to inefficiency. And then, when you don't get what you want from the technology, what do you do? You resort to people. And so, for years, HR has dealt with this problem by just throwing more people at it. And the way I like to think about it is we've gone from this era of trying to, essentially, create reincarnations of things that were already automated. So, I come from the HCM space, if you will. Talent management, recruiting, and so, we've taken a recruiting system, and then tried to make that better and better and better. Put it in the cloud, and so on and so forth. And if you look Code HR and some of these other technologies that's what they do, and they do a great job at that. But what we've recognized is, yes, that is obviously important and necessary, but really, like I said earlier, when you have a life event, you are looking for just information, so you can make the choices that you want to be making during that life event. You want step-by-step guidance. You want access to some person, a real person, that can help answer those questions. And when you don't get those types of things, now you're back to unstructured emails and sending text messages to somebody in HR, and that's not their job. Their job is to be helping you with providing strategic support. And so, how can we unlock the utilization, if you will, of those HR professionals, the people, as an asset, within HR, and make them more productive. That's what we're all about. >> And then jump on the latest, greatest trend, which is Cloud, obviously you guys have Cloud application, a little bit of software automation, a little bit data support into that automation, and then, ta-da. Hopefully, it's a whole lot smoother process. >> Yeah, yeah. >> What has to happen for a customer to take advantage of HR within ServiceNow? We had one guest on yesterday that they actually started at HR, but generally, that's not the case, right? Normally, it's an extension of ITSM. So, what's the typical case and what are the prerequisites for customers? >> I think in mind, a couple of things have to happen. One is HR has to be brought in. So, we got a lot of IT champions, which is great, but I encouraged them to go out and to give these HR people a hug, literally. Because they need to understand what the platform can do for HR and how it can unlock that productivity that he just spoke about, Jeff. And HR has to be brought in, they need to be educated on the problem that they have. A lot of times, they don't even recognize that there's a problem, because they've just gotten used to doing things a certain way, and now, there is this revolutionary platform that can help them, so getting them on board, getting that buy in is important. I think the other thing that has to happen is these organizations need to identify very specific set of problems that they want to go after because if you look at the problem set that we can address it's everything from just simple case management all the way to automating business processes like on boarding. You can start wherever you want in that spectrum, but you need to figure out what your priorities are and start there, and if it's case management, that's fine. You figure that out. Now, you can actually measure progress and move from there. If you want to start with on boarding and automating a business process, that's fine, as well. But very often, I find that our customers need some help in trying to identify the priority projects that they can tackle. And that's a blessing and a curse of having such a powerful platform. It can do everything, and often times, it's just getting to the right set of priorities that you want to tackle. >> The flexibility of the platform, like you say, it's a two-sided coin. But I want to ask you a question. You're a software executive, you've been in the business a while. You know one of the complaints of software, historically, is if I have a process that's fossilized, a lot of times when I bring in new software, I have to change that process to adapt to the way in which the software handles it, and that's been a headwind for a lot of adoption. If I have a process that's baked can I just sort of use that within ServiceNow, and apply the existing processes? And is that typically how it happens? Or do customers sit back and say, hey, there's a better way to do this? >> Yeah, I would say, there's probably a mix of the two. There is the where do I start? I have a process, can't I just take that and put it into ServiceNow? And absolutely. That's been happening since ServiceNow has been in its existence. That's the core of what we do, being able to structure work, being able to automate it through workflows, things like that. But oftentimes, what'll happen is then they get the analytics, using performance analytics or reporting solutions, you can now start to look at what's working, what's not, and then make some adjustments. So, for example, with HR, you might start off with, hey, everything is a general inquiry. And so, now you're getting a number of things that are tagged as general inquiries, but then you look at analytics data, and it says, well 30% of those are actually going to the payroll department. So guess what? Now we need to restructure our processes so that we've got some special handling for payroll, because that tends to be a friction point for employees. And that's how our platform can provide that visibility, so you can evolve as your needs evolve and you mature. >> I was going to say, and I'm sure people are wondering, there's other big HCM applications out there. You've worked with some of them. How does the ServiceNow offering suite fix into their existing HR application infrastructure. >> Great question. So, this is probably the number one question that our customers ask us. They're trying to figure out where does ServiceNow start and where do these other applications begin. And I think the answer is it depends. And we want to provide customers with choices. What we are trying to optimize for is that employee service experience. What does that look like, and how do we make it as consumerized as possible? So, there's maybe three broad use cases where these solutions fit in. So, one might be I am within one of these systems. So, let's say I'm doing a performance review within a work day or success factors, and now, I have a question, I'm stuck here. Now, you're in ServiceNow, and you're submitting a case, asking a question, searching a knowledge article, as an example. That's one use case. The second use case is something happened in my life. I'm going to have a baby, or somebody in my family is sick and I need to tend to them. Or I need to relocate an employee from a different country. Where do I even begin? So you start with ServiceNow, potentially. You figure out what you want to do, and then you submit the request, and eventually, you might end up completing a transaction in one of the systems. But what we do is help guide that employee to where they need to be going. And the third one really is the use case we explored this morning, which is around on boarding, off boarding, transfers, how do we take what's happening within those systems, and extend that to all the other department? So, there may be aspects of on boarding, as an example, that's happening in a recruiting system. How do we take that and then extend it into IT and finance and facilities, and so on and so forth. >> Jeff: Great. That's a good question. >> Deepak, can you share with us some early customer experiences, some maybe metrics, proof points? >> Sure, yeah. I actually had a couple of those on the screen this morning so I'll use Sally Beauty as an example. Beauty supply retailer. And they started with the employee relations function, and trying to optimize that. And the challenge they were having is all of the employee relations questions from the field, and they got a number of stores, and all of these associates where sending in these questions and inquiries and complaints, in some cases, to the HR business partner. So, there were regional business partners in each of the regions, and they were getting all of these questions. So, as a result, that HR business partner, who is supposed to be thinking about how to help staff new stores, and just provide more strategic support to the managers, district managers, they are fielding first level questions about employee relations. And so, what they did was they centralized that function, the HR service delivering function, so that there is all these calls go to a central location, and they just had two people, now, manning it, and we did some value calculation with them, and what we recognized is they had saved the equivalent of seven people's worth of time, that could then be repurposed back into something else. So, the centralized the function, the moved work from high cost business partners to lower cost HR support personnel, and each person that you can free up is at least $100,000 a year, fully loaded. And so that math starts to add up pretty fast and pretty quickly. This is just employee relations. You extend that to benefits and payroll, and so on and so forth. You in millions of dollars a year. >> That's a pretty powerful example, and even though they're not getting rid of people, but they're avoiding potentially new hires, and as you say, they're driving new value. Every company we talk to is trying to do some kind of digital transformation. What they don't want to do is route paper. So, is that what you're seeing? Where are they putting the resources that they're saving. What are seeing? Some examples of what customers are doing. >> It's all sorts of things. I think analyzing the data is a big area. Just the data science piece of it. So, if you look at a service center, would you rather be looking at how to reorganize your resources, or would you rather respond via email to all these unstructured queries? Clearly, the former is a much more higher value added work. So that's one area that you see a lot of repurposing. The other that I talk about is how can you improve the quality of service itself. So, instead of you answering questions about my benefits plan, go find me a better benefits plan. Do some research and look at what else it out there. That's where you should be spending time. And the classic one is really around talent. There's just a lot of talent management type activities that need to take place from sourcing, recruiting, managing succession planning processes and thing like that. Again, you should not be telling me how to put a job requisition online, and what pay grade to select and what area to post this in. All of that should be available as some sort of a knowledge-based item. You should be actually going out there and doing your job of sourcing high-quality candidates. So, that's how these things really compliment each other and unlock the potential of the HR team. >> Yeah, spend your time sharpening the sod, not whackin' at the tree, right? >> Exactly. >> I got an automated tree whacker. I can actually focus on where I want to go next. >> All right, real quick, we have limited time here, but the announcements that you're makin' today, we haven't touched on that yet. So, give us the run down. >> What we've done, essentially, is looked at processes that require, and the way we categorize it is these are processes that are usually long running, processes that require action across multiple parties, multiple departments, and they have a specific sequence. So, we looked at that as the baseline, and we said, hey, what fits into this? Because if we could create a structure that models this out in a very easy to configure manner, than what problems could we solve. Obviously we used onboarding as the example of where we wanted to go, but we found out that that model is easily applicable for transfers or off boarding, things like that. And so, what we've done is taken the underlying workflow capabilities off the platforms. Underneath the covers, it's still a workflow that is running but we essentially created a very clean data model on top. The imagery that I use is when you go into these HR, visit any HR customer, if they are going through an exercise of revamping, let's say, their onboarding process, then you'll see a wall with sticky notes, Post-It sticky notes, different colors. And we took that and we said how can we get that into the software, where you'll see phases. There is day, offer stage, pre boarding, week one, month one, and so on and so forth, and each of those stickies, they actually represent activities within the application. So, we've created a model that lets you take that visual imagery and put it in the product, so it's just easy for them, easy for HR to be able to configure this without needing any technical expertise and that's where I think there's a lot of IP. It helps them with change management. It'll help with adoption. And hopefully, it'll bring a true transformation, not just to HR, but across the enterprise. >> Excellent, well, Deepak, thanks very much for coming back in The Cube. It's good to see you again. >> My pleasure, Dave, Jeff. Thank you so much. >> All right, keep it right there, everybody. We'll be back with our next guest. This is The Cube, we're live from Knowledge17, and we'll be right back. (electronic music)

>> Good Live from Las Vegas. It's the cute covering knowledge sixteen Brought to you by service. Now carry your host David, Dante and Jeffrey. >> Oh, >> welcome back to knowledge. Sixteen everybody, this is the cubicle wall to wall coverage. We got the events. We extract the signal from the noise. This is Day one for us will be going Three days of knowledge extraction from knowledge. Sixteen. Ray Wong is here. He's the founder and principal analyst and chairman of Consolation Research. Up and coming Smoking Hot research company. Ray, Always a pleasure to see you. Thanks for coming >> on. Excited to be here, man. It's been a world one week of events, so >> I'LL say So you were You were down. It's Sapphire, right? You were over it on Tampa Amplify And >> I'm Austin s Wait after this race, a >> normal week for you >> It's a normal week for all of us. >> So impressed You were telling us off camera that you were at one of the earlier knowledge events down in San Diego. So you've got a lot of experience with this company, >> you know, it was in a tent. It was outside they had detected. I think it's like a park. I'm not even sure what it was. I just But remember, there's one one hundred fifty people next. There's like five hundred people. Three years later, it's pretty wild. >> So they've come out of the blue and really, you know, escalated a lot of momentum. The latest billion dollar software company with a plan to get to four billion. So stepping back a second just looking at the software landscape, one has to be impressed with the progress that service now is made. What's your take on the industry and service now in particular? >> Well, I think what people don't understand this service now is a platform, right? There's a business model platform or the way that we used to look at paga or the way we used to look at a lot of those companies that were actually sit in the middle. That orchestration what's changes? Because everything's in the cloud. What we now have the ability to abstract orchestrating doing away that we've never seen before, right so you can take specific business problems. Take the heart of what's actually happened on the idle piece. Use it to not just manage the process, but also do the analytics and the monitoring. So when we get the things like Coyote coyotes really about having a set of smart services and being well. To put that in the construct is a lot of the opportunity that we see going forward >> so high. So I said three years ago in the Cube after I saw the platform capabilities and said, Wow, this is a collision course with sales force Investor's Business Daily wrote a article today. Collision course of sales for so glad they caught up with Theo. But But, I mean, it's you could kind of see it coming together. And now you Frank lays out this vision this morning. Have you got the AARP estate, the C R M estate and tea or a service management Rather kind of bridging those two. How do you see it? >> No, we definitely see this as a platform play. Now here's what's interesting is the lots of the developments, and you see this all the time has been happening in the APP to have side of the House package. APS have kind of been at a standstill for innovation compared to what's going on on the customs side. And so every so often we see that flip on platforms. This is the beginning of that flip, more than one person said. I it is going to be the end of the affair, right, because we're going to put all the intelligence into the interaction. You don't have to go to the specific app. No. And the fact is, what becomes important is the ability, the orchestration, the intelligence, the recommendation and what you want to build to get to the part where I'm making the right set of recommendations to augment the next set of processes. That's what gets really powerful and these platforms that are emerging on, What's the next set of clouds? That's going to be where we're going to see a lot of this advancement. >> So the FBI essentially becomes the product. Is that kind of? >> It's the orchestration of the AP eyes, the way the context was delivered against those AP eyes and more importantly, how we actually pulled together those journeys, like a couple things that we talk about time mass personalization of scale, lots of context, right, so rolls relationship, identity weather, location, time, all important, Then choose your own adventure journeys the ability to actually abstract different processes from different places and bring them together, and the more importantly, we call intention driven design, which is. I'm gonna give you three or four choices. Learn over time. Take that machine learning. Then apply that the next set of recommendations and then start building against that. And that power sits on the network. That power sits in these new platforms. >> So you're here speaking to the service now customers about customer experience, right? It's something we hear a lot about. Your an expert in that in that space. What did you say? What was the reaction? What was the feedback? >> Well, I think the important thing is we're seeing new business models and you hear me say this before it's we're in a post sale on demand, attention, economy. And what that means is everything after the sale is what's happening right now. That's the service. That's the experience. Peace. The on demand pieces were accessing smaller, smaller slices of a product. Maybe not even a product, a service, maybe not even a service, and incite maybe not even insight and experience. And then, more importantly, it's an attention to come. If you're not capturing my time and attention, which is mind share, or if you're not saving me time and money, I don't care. And That's what we're in. We're in. These business moms are built around. This is interesting. Came out of the Oracle Marketing cloud shows Well, same thing. Just smaller and smaller slices of attention based on the way you interact with all the other applications you have. You don't have time to give somebody the big story. You've got to get him when you can. They could be standing in line. They look at their phones, are in the middle of their kids, switching innings at the baseball game. And you got to get in that little tiny video that in between time is so important because you don't close there. You lose him, right? And it's not for something really big. It's move them along the needle down. The journal. Correct. >> What do you make of this, Dave? Dave Wright was just not talking about the new state of work. IBM has been talking about a new way to work in. He is kind of running the collaboration, you know, group. Now you you talk about millennials and how they work. What are you seeing in state of work? >> Well, a lot of the research we're looking on the future of work is by one of my colleagues, Alain Le Pastilles, and what he's been really looking as this shift in terms of conversations as a service. He's been looking at the shift in terms of intelligent collaboration. Right, and all this stuff is actually leading the point where we're actually using technology to augment ability. Teo do decisions had a lot more automation than we had him before. But then cognitive assistance pop up right and they help make a smarter. And they learned from our different our actions and all that's starting to come into the workplace, which is exciting and a little bit creepy and scary at the same time. >> So what's the What's the What's new with Constellation? You guys are growing. Bring it on. New analyst Cranking out Want to research? Your event keeps growing? Give us the update on Constellation. >> You know, I think the big thing is this digital transformation story we've been talking about for the last five to six years is huge. The next set is really not about transformation. It's about finding growth in times where there is no growth. That's where we're going to talk about the next five years at our conference. Really? Talking about what are those factors, right? We gotta jump start growth. Global GDP is growing two to three percent at best. Every company has a target of like five to ten. Someone's gonna lose, and it's gonna be very interesting. >> So you think that growth is going to come through productivity improvements or investments in technology? Actually, Dr sort of new productivity levels were taking away from >> someone else. I think we're taking me for someone else. That's what I'm really scared about, that they're smart growth that's sustainable and helps people with the jobs and the job transitions. And there's what we've been doing, which a lot of destructive Cross, which is actually limiting all of the jobs and actually making it harder to grow in the long run. >> Well, so yeah, we've talked about this on the Cuba lot machines replacing humans, which they've always replaced humans. But it seems to be now happening at the cognitive level. That's scary. I know you guys to the valley, wags. You know the seasonal nervous right now, You guys, you more sanguine? Then the VCs air >> well with these three big areas where we see a lot of investment. Deep learning happens to be one of them, right? We see a lot of medicine going off. Some of the smartest people I know are all focused and on deep learning. Very interesting thing. If you look at that university, California, Irvine there's a whole department around. This artificial intelligence that just lifted itself up became a private corporation. So there's very unfeeling things there. There's nanotech, which is also some erasers, things on the material science piece that's also playing a big role. And then, of course, there's stem cells in the biotech piece. Those three things are converging, and you know it's more than just building out the Star Trek roadmap that Apple's been doing. It's a lot bigger than that. There's some big societal shift that are happening. >> What, what's next for you? You say you're heading Teo. That's sweet, but we're So we work. We find Ray Juan. I'm >> off this sweet world, Max. There's a monetary it next week. There's a whole bunch of other events picking up in June as well as you. You're going to be at them, but I think we do our retreat every year at the end of the year. May June, we're going to be at Stanford, the faculty club. All the constellation folks get together on. Then we go back out into the field and it's a crazy summer as well. I don't know when this stops making, so yeah, you could always find him on Twitter That that's but I looked for you guys when I'm where you're at is where the events are. >> Well, hopefully our past will continue to cross. We love having you in the Cube was a great guests. Really appreciate your time. Thanks for coming on. >> You know, Thanks for having have a >> great conference. All right. They've travelled, right, everybody. We'LL be back after this short break. This's the Cube or live from knowledge. Sixteen, right? >> Service now is the

okay we're back here live ending up day one of IBM's information on demand exclusive coverage for SiliconANGLE and Wikibon and constellation research breaking down the day one analysis I'm John furrier and join my co-host E on the cube Dave vellante of course as usual and for this closing wrap up segment of day one we have analyst and founder of constellation research ray Wang former analyst big data guru software heading up the partner pavilion kicking off all the flying around the world your own event this month past month things going great how are you how are you doing we're going to great man there's a lot of energy in q3 q4 we've been watching people look at trying to spend down their budgets and I think people are just like worried that there's going to be nothing in 2014 right so they're just bending down we're seeing these big orders like tonight I've got to fly out to New York to close out a deal and help someone else that's basically it was a big day to deal that's going down this is how crazy it's going on and so it's been like this pretty much like for the last four or five weeks so flows budget flush I just wash this budget lunchtime what are you seeing for the deals out there give us some of the examples of some of the sizes and magnitude is it you know you know how are you up and run to get get some cash into secure what size scopes are you seeing up yeah i mean what we're seeing I mean it's anything from a quarter million into like five million dollar deals some of our platform we sing at all levels the one that's really hot we were talking about this that the tableau conference was the date of is right dative is is still really really hot but on the back end we're saying data quality pop-up we're seeing the integration piece play a role we also saw a little bit of content management but not the traditional content management that's coming in more about the text mining text analytics to kind of drive that I mean I'm not sure what are you guys seeing alone yeah so what we're seeing a lot of energy I've seen the budget flush we're not involved in the deals like you are Dave is but for me what I'm seeing is IT the cloud is being accepted I'll you know those has not talked about publicly is kind of a public secret is amazon is just destroying the value proposition of many folks out there with cloud they're just winning the developers hand over fist and you know i'm not sure pivotal with cloud family even catch up even OpenStack has really got some consume energy around we're following that so it opens stack yet amazon on the public cloud winning everything no money's pouring into the enterprise saying hey we got to build the infrastructure under the hood so you can't have the application edge if you don't have the engine so the 100 x price advantage and that's really a scary thing but I think softlayer gives IBM a shot here yeah we were talking about self leyva so you are seeing more I'm seeing it aight aight figure deals and big data right and it's starting to get up there so softly I'd love to get your take on soft layers we've been having a debate all day Oh softlayer jaws mckenna what do you what's your take you're saying it's a hosting I've been a look at first of all yeah I love putting a huge gap 9 million dollars per lock event data center hosting now if that's a footprint they can shave that and kind of give their customers some comfort I think that's the way i see it i mean just I haven't gone inside the numbers to see where it's going to be where this energy is but like we're software virtualization is going on where everyone's going on with virtualization the data center I'll give them a cloud play I just don't see ya didn't have one before I mean happy cloud I mean whistling private club Wow is their software involved I think it provides them with an option to actually deliver cloud services with a compression ratio on storage and a speed that they need to do to deliver mobile mobile data analytics right there's things that are there that are required so it gives them an option to be playing the cloud well I just saw I mean in the news coverage and the small inspection that we did I did was I just didn't reek of software innovation it's simply a data center large hosting big on you agree they didn't really have a northern wobblin driving him before this was brilliant on your Sun setting their previous all these chairs deal kind of musical chairs me for the music stops get something it was that kind of the deal no I think they are feel more like customers asking for something and they wanted IBM to have it yeah IBM works it's an irr play for IBM they're gonna make money on this team not a tuck under deal 900 million no I know but they'll make money on it that's IBM almost always does with it I'll leave it up to you guys to rip on I was your conference oh thanks hey constellation connecting enterprise was awesome we were at the half moon bay Ritz we had 220 folks that were there senior level individuals one of the shocking things for me was the fact that when we pulled the audience on day one two things happen that I would never imagine first thing as ninety percent of the folks downloaded our mobile app which was like awesome right so the network was with them the knowledge is with them when they leave the event and all the relationships the second thing that really shocked me we knew we had really good ratios but it was seventy-five percent of the audience that was line of business execs and twenty-five percent IT it was like we were we didn't have to preach to the choir it was amazing and the IT folks that were they were very very innovative on that end so it was awesome in that way so a lot like the mix the mix here is much more line of business execs the last week at hadoop world loose you know the t-shirt crowd right a lot of practitioners you know scoop I've flume hey we got the earth animals ever right oh but no this event is actually interesting IBM iod for me is like I didn't realize this when I didn't I looked at numbers when we're doing a partner event yesterday and there are thirteen thousand attendees here that actually makes that the biggest big data and analytics conference bigger than strata bigger than a whole bunch of other ones and so I mean this is pretty much the Nexus of what about open world big data over there but this is a big opera you see world any world cloud big data yeah hey the between no but so IBM's done a fantastic job of really transitioning this conference from sort of an eclectic swix db2 informix right I'm management routine fest right yeah and now it's like what are the business things I mean what are we trying to save around the world are they telling the story effectively it's a hard story to tell you got big data analytics cloud mobile in the middle and you got social business but then you got all this use case they have success stories if customers that creating business outcomes they telling the story effectively is it not enough speeds and fees is it too what's your take the stories are there we've seen like 122 case studies from the business partner side we just haven't seen them percolate out and I think they've got to do a better job evangelizing stories but what's interesting is like there's that remember we talked about this data to decision level there's that data level that was IBM right here's the database here's the structure here's the content management here's the unstructured stuff this is where it sets then there was that information management level which that they started to do which is really about cleaning the data connecting that data connecting to upstream and downstream systems getting into CRM and payroll and then they got to this level about insights which was all the Cognos stuff right so they've been building up the stat from data decisions so they got data information information to insight and then we're getting to this decision-making level which they haven't made a lot of the assets or acquisitions there but that's the predictive analytics that's the cognitive computing you can see how they're wrapping around there I mean there's a lot of vendors to buy there's a lot of opportunity out there's a lot to connect and they've been working on it for a while but I guess I got to ask you how they doing what's your report card from last year this year better better storytelling better messaging I think the stories are getting better but we're seeing them in more deals now right before we'd see a lot more SI p traditional SI p oracle you know kind of competes and a little bit of IBM Cognos now we're seeing them in a lot of end-to-end deals and what we're talking about it's not like I T deals these are line of business folks that say look I really need to change my shopping experience what do you guys have we see other things like you know the fraud examples that any was talking about those are hilarious I mean those are real I see em in every place right I mean even with Obamacare right there's gonna be massive amounts of fraud there any places that people going to want to go in and figure out how to connect or correct those kind of things yeah so so seeing the use cases emerge yeah and in particular me last week in a dupe world it was financial services you're talking risk you talk a marketing you're talking fraud protection to forecasting yep the big three and then underneath that is predicted predictive analytics so you know that's all sort of interesting what's your take on on Amazon these days you know they are crushing it on so many different unbelievable right on more billion this year maybe it's when you build a whole company which is basically on the premise of hey let's get people to offset our cost structure from November 15th to january first I mean it's pretty amazing what you can do it's like everyone's covering for it and even more funny it's like they're doing in the physical world with distribution centers I know if we talked about this before but what's really interesting is they've got last mile delivery UPS FedEx DHL can't cat can't handle their capacity so now the ability from digital to physical goods they've got that and beezus goes out and buys the post so he can make the post for example a national paper overnight again he can do home delivery things that they couldn't do before they can take digital ads bring that back in and so basically what they're doing on the cloud side they're also doing on the physical distribution side amazing isn't it they're almost the pushing towards sunday delivery right US Postal Service go into five day deliveries sort of the different directions amazon I'm Amazon's going to be the postal service by the time they're done we're all going to subsidize it so so I gotta get you take on the the Oracle early statement Larry Ellison said were the iphone for the data center that's his metaphor a couple of couple or global enrolls ago now you got open stack and though we kind of laugh at that but but amazon is like the iPhone you know it's disruptive its new its emerging like Apple was reading out of the ashes with Steve Jobs Oracle I think trying to shoehorn in an iphone positioning but if OpenStack if everyone's open and you got amazon here there is a plausible strategy scenario that says hey these guys can continue to to put the naysayers at the side of the road as they march forward to the enterprise and be the iphone they've turned the data center into an API so so we got the date as their lock in right so this sim lock in Apple has lock in so is that lock in what's your take of that scenario you think it's video in the open ecosystem world they're all false open because a walk-in also applies but but you've been even to this for a long time right and probably one of the things that you're seeing is that it's not about open versus closed it's about ubiquity right Microsoft was a closed evil empire back ten years ago now it's like oh the standard right it's like ok they're harmless Google was like open and now they're the evil empire right it just depends on the perception and the really is ubiquity Amazon's got ubiquity on it so i did is pushing their winning the developers the winning the developers they got the ecosystem they got ubiquity they've got a cost structure I mean I don't know what else could go wrong I think they could get s la's maybe and once that had I don't know what is Amazon's blind spot I mean s la's I think well a lumpy performance no one wants lumpy right they want the big Dayton who's got ever who's got better public as public cloud SL is denied well I think about what he just said us everybody no but here's think that's a public road statement not an amazon said let's crunch big data computation December fifteenth you tell me what this is all I want to know well I think I think an easy move is I mean this day you've got to do that on premise I just I just don't I just don't think that people are forecasting amazon the enterprise properly and you just set out the Washington Post that is a left-field move we can now look back and say okay I said makes sense amazon can continue to commoditize and disrupt and be innovative then shift and having some sort of on prem playing oh then it's over right then and then gets the stir days surrounded the castle but they really don't have a great arm tremblay have no on print but they could they could get one good I think they want to see well think they want to but I think with them what they figured out was let's go build some cool public service get everyone else to subsidize our main offerings right it's basically ultimate shared service everyone's subsidizing Amazon's destruction of their business right so if you're Macy is why the heck are you on amazon right you know if you're competing with them why the heck are you on Amazon you're basically digging your own grave I'm paying them to do it it's amazing I mean that's that's the brilliance of this goes invade they brag about it yeah digging your own brave like it's a you know put the compute power is great okay great but you're subsidizing Amazon's for the you know compute power so r a great shot great to have you here congratulations on your event constellation research awesome successful venues ahead last month top folks in you're doing a great job with your company and the end the day out today in the last word tell the folks what's happening with IBM what do you expect to hear from them tomorrow I know you're going to be another thing you had to fly to but what does IBM what's a trajectory coming out of the show for IBM what's your analysis I think the executives have figured out that the important audience here is really the line of business leaders and to figure out how to do couple things one democratize decision-making the second thing figure out how they can actually make it easy to consume IBM at different entry points and I think the third thing is really how can we focus on improving data visualization graphics I think you'll see something about that ray Wang on the cube cube alumni tech athlete entrepreneur new for his new firm not new anymore it's a couple years on his belt doing a great job but three years old congratulations we'll be back day two tomorrow stay with us here exclusive coverage of IBM information I'm John prairie with Dave vellante this is the cube will see you tomorrow the queue