>> Announcer: Live from Las Vegas, it's theCUBE, covering HPE Discover 2017. Brought to you by Hewlett Packard Enterprise. (upbeat techno music) >> Welcome back everyone, we're here live in Las Vegas for theCUBE's exclusive three days of coverage for Hewlett Packard Enterprise's Discover 2017, also known as HPE Discover, I'm Jeff Furrier siliconANGLE, here is my co-host, David Villante with Wikibon.org Our next guests are Jeff Carlat, Senior Director, Solutions Good Market for HPE, Internet of Things and Tushar Halgali, who's the IoT Senior Manager at Deloitte these guys putting together all the solutions. Welcome back to theCube, great to meet you, thanks for joining us. >> Jeff: You bet, it's great to be here. Great to see you guys again. >> So one of the things, actually, digital transformation which is really overblown we all know we are in this digital transformation wave. But the thing that we've been hearing on the queue over the past, I'd say 6 months of event coverage, the consistent theme with digital transformation is business transformation, and really people putting it into action. And that really is whether it's a service provider we've heard from earlier, and also just businesses trying to get their value chains and reconstruct their architectures at a business level but then having their infrastructure be responsive to that. And that's cool, but really IoT has kind of changed the equation, right, that's what you guys are doing so I want just dig right into it, IoT wave that's hitting here. >> Jeff: Right >> John: Your thoughts on the impact to customers in real time to their world. I mean obviously they have refresh cycles they're going through all kinds of infrastructure they had apps, Cloud-native on the horizon, Hybrid Cloud what's the impact to their business? How has IoT changed the game for the customers? >> Jeff: Well I'll start it, you can add on. First off, IoT brings the promise of changing the game, but not everyone is really realizing that yet, first-off because right now there's still many, many business challenges for companies of all sizes. Ya know the lack of internal corporate sponsorship to do a massive transformation and change, or the organization and the culture within. Cause you're talkin' a full life cycle digitization rather than, ya know investing or dropping new applications technology wise we've got problems, IoT represents IT merging with OT, so you've got this partnership and your solutions and offerings need to transcend your core data center and your IT technologies with the traditional operational technologies. You're talking companies that have been, Bosch and National Instruments, and folks that have been in the marketplace for some time so it's harder, it's heavy lifting, and there're limitations in the customer environment around the current IT architecture, so first and foremost to get the benefit, you've got to get them across the chasm to be able to deliver that new transformation. >> John: Tushar, I want you to weigh-in on this because the question also kind of digging in here a bit kind of subtext of the original question, where's the mindset of the customer? Are they having a wake-up call moment, are they beyond that? Where are they in the progress bar, if you will, on the IoT? Yeah, they've had some pre-existing infrastructure, operational technologies, sensors. Is it a wake-up call? Where are they? >> Tushar: Yeah, so I mean I think what is happening really is that a lot of organizations are now beginning to look into business outcomes and what technology does for them, right. A lot of them are saying "Well why should we invest on anything else?" So, companies are becoming really focused on top line growth ya know, bottom line cost optimization, and ultimately margin improvement for their shareholders. So, as industry lines are blurring, as new entrants are coming into markets, and new threats are being created there is more pressure from shareholders to come up with new growth opportunities. IoT as a field is sort of encapsulates, and takes all these different technology domains and puts it all together. Case and example, I mean, since 1970 to 2010 the worldwide productivity for manufacturing was about four percent every year, and then it just dropped to one percent. Now that's a really big deal, right. Manufacturing costs are about 18-20 percent of the costs of goods sold for a manufacturing client, so how do you increase the productivity because any impact on the productivity, or reduced down time for a manufacturing client, not only has cause on revenue but also a lot on the profit margin, right. The same thing around retailers. Because of the online presence, and because of the sales are increasing over there retail margins have reduced from 10.5 percent to about 9 percent. So retailers are asking "Well, how do we increase our sales in the in-store channel?" Where 85 percent of their sales are coming. So IoT is a huge component in delivering that. >> John: You bring up a good point. What I love about the IoT, and some of the stuff you guys are doing, is that it's the confluence of big data meets real infrastructure, and what you're referring to we hear this in the ad business all the time. "I don't know where my spins going." It's an instrumentation game, right. So talk about that impact because now actually not an art it's actually science as well. You can actually instrument it and focus on those areas. >> Tushar: I mean absolutely, just to build on the marketing story that you just talked about, that's a huge piece in retail, right. So if you have a multi-brand retailer you want to be able to not only see what your customers are doing, but also try and monetize the data. So one channel is to look into who your marketers are, advertisers are, and then be able to place the ad at the right place, in the right context with the consumer that you might have in your store. And a lot of this is about in-store data attribution right. What is the ROI that marketers and the advertisers are getting back for the spin that they have. And so ROI with the help of, Beacons and Colts and wifi all these technologies, is able to sort of capture all of that location data the contextual data, the behavioral data of the clients along with wireless infrastructure data. Put it all together and create that picture. >> Jeff: And what I'm seeing customers are kind of one of two camps. Those that understand a grocket, but they don't know where to start. How do I truly start digitizing? Then the other ones are they don't fully realize the value and the necessity to start transforming, or their going to be out of business. >> Tushar: Yep. >> Jeff: I mean go look at a lot of examples, your brick and mortars >> Tushar: Yep. >> Jeff: talk about your retails. I think this is where we're coming together to really deliver and make it easier for those clients... >> John: It's the classic case of early adopters. Believers and non-believers, and the believers kind of go jump in the deep end, waffle around, learn how to swim. And then the non-believers become believers cause they get bitten in the butt with cost >> Jeff: Yeah. >> John: or some sort of impact. >> Jeff: Exactly right. >> Tushar: Or their out of business. >> David: But it's a really hard problem for organizations. So and you mentioned it before, is that companies have to go through their digital transformation, but they have to fund it. And it's hard to fund it if your having to grow your top-line, and cut the cost of your legacy systems. Okay so part of the problem is you talk about digital transformation, it's all about technology, it's all about data certainly IoT plays into that as John pointed out but people really don't understand the value of their data. The accounting industry doesn't recognize value of data on the balance sheet. There's really no standards. People don't know how to monetize data. So how can you guys help customers through those really gnarly problems? Where do you start? >> Tushar: Well I mean what we started with was an industry focused view, right. So Deloitte goes to the market by industry, so let's take retail and manufacturing, whichever the case might be, and what we really are looking into is an industrial digital value chain transformation story. So we'll take the value chain off an industry, break it down into processes, and then break that down further into use cases. We'll look at a use case, look at the value drivers of the use case. See what economic impact, or the business outcomes that might be derived of those use cases. And then when you aggregate all of them it starts creating a shareholder value impact, and that becomes really interesting. So case and example, for a retailer you can look at improving the basket size, or in-store conversion improving the the foot fall traffic. All of that improves the growth, increases the revenue. You talk about asset efficiency or improving the resources or the associates, their utilization to store the supply chain operations improvement. All of that improves the cost optimization and together impacts the margin. So we put that picture together for our clients to see in real economic terms. >> David: And data sits at the center of that analysis, right? >> Tushar: Well, correct. So the enablement of the use cases happen through technology and as the various facets of technology, the ERB system, the CRM the point-of-sales, the Beacons, the wifi all work together. The data generated will create 360 degree views of the customer, which then leads to all of these outcomes. >> John: Tushar talk about the value chain piece on that. Because I think that's indicative of IoT's impact as well as other things that are digitally connected. What is the difference between the digital value chain, in terms of its configuration its value, verus non-digital? How they used to approach it from a management perspective, and obviously digital is a little bit different. Is there any characteristics you can point out that you've seen in your observations, and with your engagement with customers, that jump out? >> Tushar: Sure, I mean the traditional value chain I think is very linear, right. If you take a manufacturing value chain for example a lot of it was let's do R&D, come up with a product, then let's go procure the product, the raw materials. Then make the product, then you ship it, logistics, and then you do after sale services. It's very linear one after the other. With the admit of data and the way you capture at every stage of the value chain. Well different stages now talk to one another. So as a machine is about to break you can create a new order, and then it improves the production. So it's less linear and more interrelated, and so the value chain is no longer very simple it's very complex, but by showing visibility into each stage of the value chain, that's where value created and captured from. >> David: And the data model is very complex, >> Tushar: Absolutely. >> David: Before you've got external data and now you've got a whole new data quality challenge >> Tushar: That's right. >> David: and data access challenge. Okay so back to John's question about where are we on the maturity meter? Is it sort of second inning here or the game is just starting, national anthem? >> Jeff: Well, hey for certain industries I think we're on second inning. You go look at areas like oil and gas, I mean there is a lot of historical work going on around machine learning, AI. Go and look at automotive, autonomous vehicles semi-autonomous vehicles, I think that's advancing and advancing rapidly. But I'll guarantee there are many, many industries that they don't even realize how much data they have. And yes there may be tag in two to three percent of that. This is a new wave. This is a really, really exciting time. >> John: So Jeff, on that point are you finding that, that makes a lot of sense actually if people have existing operational technologies, they have some legacy experience in some systems. It may not be connected to IT so they have some legacy with respect to that piece. >> Jeff: Perfect, perfect example. Part of our joint partnership and the announcement that we're making together around IoT is not only deliver the consulting the advisory services, but we're delivering prepackaged offerings specifically for vertical use margins. Asset maintenance and monitoring, we're coming together, bringing together our edge line capabilities we're bringing together PTC and National Instruments from the center. Bringing all this together in consortium, building an appliance and its going through consulting of nature of proof of concept to show and prove through proof of concepts the value that a customer can achieve by harnessing all that data, and being able to actually drive predictive analytics and then well once they see the benefits of that the value, the proof in the pudding, they will expand that across their entire production line, then its just going to go skyrocket. >> John: Alright talk about the relationship with Deloitte. I'd like you guys to just take us through a day in the life of a use case and how someone would envision and engage with you guys. Obviously Deloitte well known on the services side you guys got great credibility and track record, also with you guys IoT new market, how do you guys engage? What does a joint relationship look like? Take us through an example. >> Jeff: Well I'll start. First off we're building off of twenty years of joint partnership together, and a day in the life is we strategically sit down and we take the assets we can bring to the table as the new HPE, and that spans heavily the infrastructure and some of the support, point next services capability and we bring that in with the capabilities of Deloitte and we build these offerings, and we build a comprehensive program to take it to market, and have those discussions at the right level of the organization and hold their hand through this whole transformation process. Don't worry we got ya covered. We can help you get through this, and we can demonstrate the value on the returns. >> Tushar: So yeah, I'll just build on this. Some of the offerings that we have built together now, so as we get a client who's let's say interested in IoT what we'd actually do is sort of work with them and say let's do an IoT workshop, right. It might be a one day workshop, we might get our industry experts that are very focused on the vertical. We might get our technology experts. We might get our ecosystem partners who are doing startups and things of that sort, so they kind of know what is going on in the marketplace. We're together then we'll sit down we'll figure out what's a value chain transformation story. What are the things, let's say a manufacturing client just take for example, needs to do to go from a modern factory to connected factory to a smart factory to do that manufacturing transformation story. What are those 50 60 use cases that they need to go through. And out of that what are the one or two use cases that they need to do today that'll deliver near term tangible value. So for those 50-60 let's create the business case that delivers the enterprise shareholder return. Today what do they need to do to get that quick win. Take those two-three use cases, the offerings that Jeff spoke about, let's take those offerings and within 8 weeks let's deliver a proof of concept that shows the client I can take one of your assets, connect them, get the data out, show the inside, and then create the roadmap for scaling it out to make it a reality. >> Jeff: Start small, think big, and scale fast. That's what we say. >> John: Alright that's a great point I'm glad you brought that up because I want to ask the tough question. Cause this is the bottom line, we hear a lot of customers through our research Wikibon team, and we get a lot of "There's tons of barriers in front of me." So I want to ask you what are the barriers and how do they get over those obstacles, but also privately a lot of CXOs say to us, "Look it, this is like a four year sports contract, if I'm not up and running in four years, I'm out of job." So the notion of bringing the consultant, and HP, and we're going to do a focus group, and we're going to lay this out. The old days, back in the early ERP days, those time cycles were 18 months just to get going, and do the organizational transformation. They need proof on the table immediately. >> Tushar: That's right. >> John: So the Ford CEO was replaced, not sayin that was because of this, but people have short tenure, they need to see results immediately. >> Tushar: That's right. >> John: So the psychology of the pressure, with the work that needs to get done are two huge issues. What are the obstacles? And then the psychology of showing the results immediately. >> Tushar: I think in terms of the sort of business challenges we have a lot of centers around leadership and sponsorship. Do you have a tech focused culture in the company? Right. Is there collaboration between business and IT? Do you have expertise for IoT within the business, or within the enterprise and outside? Right. Those are some very basic, it's people, people, people all the time. From a technology stand point a lot of this is around the whole IT OT convergence piece of things. Right, it's this very complex domain. Nobody has all the knowledge base, so how do you get that to work? And traditionally IT hasn't played well with OT and vice versa. So how do you get that? Standards are evolving around security, privacy things of that sort, so how do you keep up with that? And finally, there are so many different solutions. How you do make sense out of that? Procurement is painful, right. And that's where some of the solutions like Jeff talked about were made. The solutions were at the procurement cycle becomes really simple. >> John: So tons of choices out there, >> Tushar: Right, >> John: That's an obstacle init of itself. >> Tushar: Exactly >> Jeff: Yeah >> Tushar: So how do we deal with these challenges, and how do we jumpstart the story. If you take the principle of agile and software development that's what we have pulled into our offerings, right. Instead of spending three, four, six months in trying to figure out what the universe is going to look like, and how things will change, it's not like that. We've taken sprint approaches to our delivery, like I shared earlier it's about that one day IoT journey workshop, quickly get that done, get it out of the way. >> John: Not a lot of waterfall, which that prolongs that organizational transformation piece >> Tushar: Correct. And then its constant recalibration, that's what we want to focus on. Let's show some quick wins in eight week increments. >> Jeff: And I'll guarantee as we are showing the quick wins in certain verticals, their dropping like dominoes because when they see their competition all of sudden gain efficiencies and providing greater experience for their clients or their customers, believe me everyone wants a piece of that. >> John: Bottom line there's obstacles to point. Move fast, start small, think big, move fast, I love that. And again there's a psychology out there it's real, and being agile, the waterfall takes too long. Alright guys thanks so much for sharing the inside of IoT, congratulations. Event here, what do you think, what's going on for you guys real quick we'll end the segment, final words. >> Jeff: Final words? >> John: 2017 Discover, what's your take away so far? >> Tushar: Well my take away is we are just at the cusp here. In IoT we are still in the, I'd call it the crawl stages of this. IoT's going to be huge, very exciting times coming, and it's going to impact every industry. >> Jeff: Yeah my parting word, I love to see the partner first mentality we have in here. The fact that we are here with all SIs our OT partners. I also love to see we are now building and designing innovations, such as the HP Edgeline Conversion systems from the ground up, specifically for IoT, same thing with Aruba Portfolios. We got a great set of tools and a great set of partners to work with. >> John: We didn't bring up Aruba, we had a big conversation on that earlier. Tushar, Jeff thanks so much for sharing the insight. Internet of Things, Industrial of Things. This theCube, the video of things here at HPE Discover 2017 I'm John Furrier, Dave Villante. We'll be back with more coverage after this short break. Stay with us. (upbeat techno music)