(digital music) >> Welcome back to VeeamON 2022. We're in the home stretch, actually, Dave Nicholson and Dave Vellante here. Daniel Fried is the general manager and senior vice president for EMEA and Worldwide Channel. Daniel, welcome to theCUBE. You got a big job. >> No, I don't have a big job. I have a job that I love. (chuckles) >> Yeah, a job you love. But seriously Veeam, all channel. I mean it has been. >> Yeah, I mean, it's something which just, just a few seconds on, on that piece here, the channel piece, it's something that I love because the ecosystem of partners, an ecosystem of partners, is something which is spending its time moving and developing and changing. You've got a lot of partners changing their roles, their missions, the type of services, type of product that they offer. They all adapt to what the market needs and all the markets around the world are very different because of all these different cultures, languages, and everything. So it's very interesting. In the middle of all that, you know, these tens of thousands of partners and you try to create and try to understand how you can organize, how you can make them happy. So this is fantastic. >> So you're a native of the continent in Europe, obviously. We heard Anton, today, who couldn't be here or chose not to be here, cause he's supporting family and friends in Ukraine. What's the climate like now? Can you share with us what's it like Europe? Just the overall climate and obviously the business climate. >> So the overall climate, the way I see it or I feel it, and obviously there may be some different opinions, that I will always appreciate as also very good opinions. My view is that it seems in Europe that there are a distinction between what people do for businesses, Their thinking for the business, which may be impacted by the situations that we know in Europe between, because of obviously the issues between Ukraine, because of Russia, let's put it this way. And then there is the personal view, which is okay. That happens from time to time, but life continues and we just continue pushing things and enjoying life, and getting the families together and so on and so forth. So, this is in most of the countries in Europe. Obviously, there are a number of countries, which are a little bit more sensitive, a little bit more impacted. All the ones who are next to Russia, or Belarus, so on and so forth. From an emotional standpoint, which is totally understandable. But overall, I'm pretty impressed by how the economy, how people, how the businesses are, you know, continue to thrive in Europe. >> Has Brexit had any...? What impact, if any, has it had? >> So for us Veeam, the impact is... So first there is an impact which is on the currencies. So all the European currencies are no, have slowed down and, and the US dollar is becoming much stronger. >> Despite its debt. >> Right. >> Shouldn't be, but yeah. >> But that doesn't impact on the business. I just... >> Yeah. Right. >> So everything which is economical, macroeconomical is impacted. We have the inflation also, which has an impact, which also has increased because of the oil, because of the gas of everything that they have been stuck, to be stuck. But people get used to it. As Veeam from a business standpoint, one of the big things is we stopped sales, selling into Russia and into Belarus and we are giving our technology, our product, our solutions for free to Ukraine. And that was a piece of the business that we were doing, within EMEA, which was non-neglectable. So it's, I would say a business hole, now that we need to try to fill with accelerating the business service in the other countries of Europe. >> I mean, okay. So thank you for that but we really didn't see it in last quarter's numbers that you guys shared with I mean, IBM. Similarly IBM said, it's noticeable, but it's not really a big impact on our business, but given the cultural ties that you had to Russia and the affinity, I mean you knew how to do business in Russia. It's quite remarkable that you're able to sort of power through that. How about privacy in, around data, in Europe, particularly versus the US? it seems like Europe is setting the trend on things like privacy, certainly on things like acquisitions, we saw the arm acquisition fail. >> Yeah. So there is a big difference. Effectively, there is a big difference between, I would say North America and the rest of the world. And I would say that EMEA, and within EMEA would say the EU is leading very much on what we call server sovereign cloud. So data privacy, which in other words, data is to as much as possible is to remain within either the EU or better within each of the countries, which means that there is again... It's I would say for in EMEA it's good, I would say for the business, for the partners, because then they have to develop around the cloud a number of functions to ensure that because of this data privacy, because of this GDPR or rules and things, all the data remains and resides in a given geographical environment. So it's, which is good because it creates a number of opportunities for the partners. It makes obviously the life of customers and their self a bit more difficult. But again, I think it's good. It's good. It's part of all the way we structure and we organize. And I think that it's going to expand because data is becoming so key, a key limit, a key asset of companies that we absolutely need to take care of it. And it is where Veeam plays a big role in that because we help paying companies managing their data and secure the data in sort of way. >> Yeah. Ransomware has been a big topic of conversation this week. Do you sense that the perception of that as a threat is universal? Are there, are there differences between North America and the EU and other parts of the world? Universal? >> Yeah, it is universal. We see that everywhere. And I think this is a good point, a good question too, is that it's very interesting because we need to get acquainted to the fact that we are going to ever. And so we are going to be attacked. No way out, no. There... Anybody the morning, is waking up, is going on emails and click clicking on an email. Too late. Was a run somewhere. What can you do against that? You know, all humans make mistakes. You can't so it'll happen, but where, where it's absolutely very important and where Veeam plays a big role and where our partners are going to play an even bigger role with our technology is that they can educate the customers to understand that, to have run somewhere is not an issue. What has, what happened is not a problem. What they have to do is to organize so that if they have run somewhere, their letter is safe. And this is where our place a big place. A couple hours back, I was, I was doing a kind of bar with something else. It's totally crazy, but that's okay. I'm going to say it. It's about the COVID. What, no, what do we do? Do we have, do we have something against COVID? No. People were going to get COVID, certainly many people still doing it, but what is important is to be capable of not being too sick. So it is the prevention, which is important. It's the same thing here. So there is this mindset we have psychologically with the partners and they have, they have to provide that services to their customers on how to organize their data using the technology of Veeam in order to be safe, if anything happens. >> So another related question, if I may. When Snowden blew the whistle on the NSA and divulged that the NSA was listening to all the phone calls, there was seemed to be at the time, as I recall, a backlash sentiment in Europe, particularly toward big tech and cloud providers and skepticism toward the cloud. Has the pandemic and the reliance on cloud and the rise of ransomware changed that sentiment? Had the sentiment changed before then? Obviously plenty of Cloud going on in Europe. But can you describe that dynamic? >> Yeah, no, I think that's... Yeah. I think that people were too... You know, as usual. It absolutely reminds me when I was at VMware, when we went from the physical boxes to the virtual machines. I remember the IT people in the company said, "No, I want to be capable of touching." Something here. When you talk about cloud, you talk about something which is virtual, but virtual outside, even outside somewhere. So there is a resistance, psychological resistance to where is my data? How do I control my data? And that is, I think that is very human. Then you need to, you know, it takes time. And again, depending on the cultures, you need to get acquainted to it. So that's what happened be before the pandemic, but then the pandemic took place. And then there was a big problem. There was nobody anymore in the data centers because they couldn't work there and then people were starting to, to work remotely. So the IT needed to be organized to compensate for all these different changes. And cloud was one of them where the data could be stored, where the data could reside, where things could happen. And that's how actually it has accelerated at least in a number of countries where people are a bit leg out to accept the adoption of cloud, cloud-based data. >> So is there a difference in terms of the level of domination by a small group of hyperscale clouds versus smaller service providers? You know, in theory, you have EU behaving in a unified way in sort of the same way that the United States behaves in sort of a federated way. Do you have that same level of domination or is there more, is there more market share available for smaller players in cloud? Any regional differences? >> Yeah. There are big differences. There are big differences again, because of this sovereignty, which is absolutely approved very much in Europe. I'm tell you, I'm going... I'm giving you an example that it was in, I think in October last year, somewhere. The French, the French administration said, "We don't want anymore. Any administration investing in Microsoft 365, because the data is in Azure. The data is out in the cloud." That's what they said. So now these last days, this last week that has changed because Microsoft, you know, introduced a number of technologies, data centers in France, and so on and so forth. So things are going to get better. But the sovereignty, the fact that the data, the privacy of data, everything has to remain in the countries is doing something like the technology of the hyperscalers is used locally wrapped by local companies like systematic writers, local systematic writers, to ensure that the sovereign is set and that the privacy of the data is for real and according to GDPR. So again, it's a value add. It makes things more complex. It doesn't mean that the Google, the Google cloud, the Azure, or the AWS are not going to exist in Europe, but there are going to be a number of layers between them and the customers in order to make sure that everything is totally brought up and that it complies with the EU regulations. >> Help us understand the numbers, Daniel. So the number of customers is mind-boggling it's over 400,000 now, is that right? >> Yeah. Correct. >> Yes. Comparable to VMware, which is again, pretty astounding and the partner ecosystem. Can you help us understand the scope of that? Part one. part two is how do you service and provide that partnership love to all those companies? >> The partners. So yeah, we have about 35,000 around the world, 35,000 partners, but again, it's 10 times less than Microsoft, by the way. So, and this is very interesting. I often have the questions, how do we manage? So first of all, we do tiering, like anybody does. >> Sure. >> We have an organization for that. And we have a two chair sales motion. That means that we use the distributors to take care of the mass, the volume of the smaller, smaller partners. We help the distributors, we help. So it's a leverage system. And we take care obviously more directly, of the large partners or the more complex partners or the ones of interest. But we don't want to forget any of those because even the small one is very important to us because he has these customers maybe in the middle of nowhere, but he's got a few of them. And again, to have a few of these customers, when you adapt, you know, it makes.. At the end, it makes a big business. You know, one plus one plus 1 million times makes, you know, makes huge things. And plus we are in the recurring business now, now that we've introduced three, four years ago, our subscription licenses, which means that it's only incremental. So it's just like the know the telephony, know the telephony business, where the number, the cell phone plans, you know, it's always grabbing as many as possible consumers in this case. So it was the same thing or I have the same, the same kind of, I do a parallel with the French, the French bakery, the French Boulangerie where I say they do their business with the baguette. And then from time to time, they sell the patisserie or they sell the cake, cookie or something, but the same of small things makes a big things. So it is important to have all these small partners everywhere that, that have their small customers or big customers, and that can serve them. So that's that's way. We segment by geography and what we do now is, it is something which is new. We segment by competencies. So it's what I call the soft segmentation. Because if not, we will have a lot of these partners competing to each other, just to sell Veeam. Veeam being number one in many countries, that is what is taking place. And we want them to be happy. We want, we don't want them to fight against each other. So what we do is we do soft segmentation and soft segmentation is this partner is competent in this field with that kind of use case doing this or this or this or this. It's just like you, when you go to the restaurant, you want the restaurant next to your place. So you click for the geography and then you want to, to go for Indian food. So you click restaurant Indian food, and then you want something. So we want to give that possibility to the customers to say, "Yeah, I think I know what I want." And then you can just click and get the partners or the list of partners, which are the most suited for, for his needs. So it's what I call the soft segmentation. The other thing which is important is the network. It's very interesting because when we look at a lot of companies, it's not the network. You've got VARs, you've got cloud and service providers. You've got SARs, you've got all the things. But if you take each of those individually, they don't have the competencies to answer all the request of the customer. So the networking is partnering with partner. That means to have the, the connection so that the partner A who has his customer, but these customer's are requests that this partner cannot fulfill because it's not its competency. That it's going to find the partners or the other partners that can feel this competency and work together. And then it's between them to have the model that they want so that together they can please the customer with their requests. >> Do you ever want to have VeeamON... I mean, I'm happy it's in the US and I like going to Europe, but you, have you ever want to have VeeamON in Europe? >> Yeah, we have VeeamON. We have many VeeamONs in Europe. >> Yeah. The mini ones. Okay. >> VeeamON tours. >> Globally. So where do you have them? >> Europe in APJ, that's what we do. Yes. >> Where do you do it in a APJ? In Japan, obviously in... >> Yeah. I don't know all the locations, tens and tens of them. >> A lot of them. Okay. >> The small ones. What we do, replicate what is done here on one day and then it goes. >> And you'll do that in UK. France, Germany. >> Yeah. Yeah. >> Local. >> And also small countries in Saudi, in South Africa, in Israel, in Bulgaria, in all these countries. Because, you know, we can be virtual. That's nice. >> Oh, right. >> But I love to be having a breakfast or a lunch or drink next to a partner or a customer because you learn so much more. The informal information is so important to understand how the business and how the market develops and what the needs are of customers and so on and so forth. >> How was the European attendance this year? It must have been down. It's hard to get into US. It's actually easier to go back to Europe. >> Virtually I, don't have the numbers, but I- >> No. Virtual. I'm sure it was huge. Yeah. But physical. >> Physical here, we've got about 300, 300 Europeans. >> Yeah. Okay. Out of, do we know? What are the numbers here? Do we know? Have we heard numbers? >> I know 45 was supposed to be around 45K combined. >> That's hybrid. >> So, yeah. >> It's hard to get into the US. We're still figuring that out. So I'm not surprised, but now you... >> But it's complimentary. Yeah. >> Do you go to 'em all? >> No >> You can't. >> No. That's not possible. I cannot. I actually, I would love... >> But some, yes. >> I would love to be capable of duplicate myself, but- >> You go to the one. >> I'm unique. >> You go to the one in France, obviously. Yeah? >> Yeah. Usually in France. Well... >> Depends if you're home. >> Yeah. You know, that is interesting is, the way we organize, the way we organize in Europe is I really want the local leaders to be the ones managing the countries. I'm there to support. I'm not there to be, you know? Yeah. The big boss is coming, he showing. No. It is not that. Again, if they request me to come, if they want me to pass a message to certain type of customer partners, I'll do that. But I don't want to run the show. It's not the way I manage that. >> Yeah. I get that. You want to respect that as if you show up in France and that's your home country, it's like rat man showing up here. It's like taking over the stage. You'll be like, you know, it's our turn. >> But it's just like, you know, I give you another example. So obviously we have... It's even the headquarters, the EMEA headquarters is in France. Right? But it is the French office. And I don't go there. I try not to be there because it is the place for the French people taking care of the French market. And for the French manager, if I go there, everybody's going to come and ask me questions and ask me to make decisions and things. No, they have to run their business. >> So where do you spend, where and how do you spend your time? >> In airports and in planes. (indistinct) What are you asking? >> Of course. >> Do you have another question? >> Actually, if we have time really quickly on just on that subject of sovereignty, we are here in Nevada just across the border, California. People in California have no problem at all, replicating things here for disaster recovery, because it's in the US. Now, is there sort of a cultural sense that tearing down those borders from a sovereignty perspective within Europe would fundamentally change the business climate and maybe tilt things in favor of the AWS and GCPs of the world instead of local regional business? The joke that I heard recently from someone, I thought it was funny. I don't know if it would offend either Germans or French, but it was that it was that AWS was confused and they were planning on putting a data center in Strasbourg, because they thought it was in Germany and it was- >> A joke. >> But the point is, the point is it's like, it's a gum bear. >> Is it true? >> No. But it was a dumb American joke. This was told by a French person basically saying... >> But this person was certainly not from- >> Yes. Right. >> Tell you, because I would've been a very bad way. >> But the point is this idea that you have these mega hyper clouds coming in and saying, "Okay, boom, we're putting one here and you're going to use us regardless of the country you're in." How does that, you know... Is there a push within the EU to tear those barriers down? Or are those sovereignty walls enjoyed by the majority because of the way that it changes the business climate? Any thoughts from that perspective? >> Oh yeah. Yeah. To me, it's very simple. It is a hybrid thing. That means that these big hyperscalers are there, not going to be used but what they do is they're going to partition themselves and work with these local people. So that their big thing appears as being independent, smaller data centers. That's the only thing, you know. You build a house and then you put walls between the different, between the different rooms. That's the only thing that happens. So it's not at all, no. At all to Azures or Google cloud. No, it's not that. It just means that there is a structure and organization that has to be put in place in order that the data resides in given geographical locations using their infrastructures, their technologies. That make, does it make sense? >> Yeah. Except that it puts them in the position of having to have a physical presence in each place, which is advantageous in one way and maybe less efficient in another. >> Yeah. But there are some big markets. >> Yeah. And they eventually got to get there. Right. I mean... >> Yeah. >> They started it. One patient in the world where they restarted was in ANZ. And that's what they did. You know, what, 5, 6, 7 years ago. They put their data centers over there because they wanted to gain the Australian market and the New Zealand market. >> So build it and they will come. Daniel, thanks so much for coming to the theCUBE. Very interesting conversation. >> Pleasure. >> Appreciate it. >> Thank you very much. >> All right, we're wrapping up. Day two at VeeamON 2022. Keep it right there. Dave and I will be back right after this break. (vibrant music)

>>Live from Barcelona, Spain. It's the Cube covering Cisco Live 2020 right to you by Cisco and its ecosystem partners. >>Welcome back, everyone to the Cube's live coverage Day four of four days of wall to wall action here in Barcelona, Spain, for Cisco Live. 2020. I'm John Furrier with my co host Dave Volante, with a very special guest here to wrap up Cisco Live. The president of Europe, Middle East Africa and Russia. Francisco Wendy Mars Cube Alumni. Great to see you. Thanks for coming on to. I kind of put a book into the show here. Thanks for joining us. >>It's absolutely great to be here. Thank you. >>So what a transformation. As Cisco's business model of continues to evolve, we've been saying brick by brick, we still think big move coming. I think there's more action. I can sense the walls talking to us like Cisco live in the US and more technical announcement. In the next 24 months, you can see you can see where it's going. It's cloud, it's APS. It's policy based program ability. It's really a whole another business model shift for you and your customers. Technology shift in the business model shift. So I want to get your perspective this year. Opening. Keynote. Oh, you let it off Talking about the philosophy of the business model, but also the first presenter was not a networking guy. It was an application person. App dynamics. Yep, this is a shift. What's going on with Cisco? What's happening? What's the story? >>You know, if if you look for all of the work that we're doing is is really driven by what we see from requirements from our customers to change, that's happening in the market and it is all around. You know, if you think digital transformation is the driver organizations now are incredibly interested in, how do they capture that opportunity? How do they use technology to help them? But, you know, if you look at it, really, there's the three items that are so important it's the business model evolution. It's actually the business operations for for organizations. Plus, there people, they're people in the communities within that those three things working together. And if you look at it with, it's so exciting with application dynamics there because if you look for us within Cisco, that linkage off the application layer through into the infrastructure into the network. And bringing that linkage together is the most powerful thing because that's the insights and the value our customers are looking for. >>You know, we've been talking about the the innovation sandwich, you know, you got data in the middle and you've got technology and applications underneath. That's kind of what's going on here, but I'm glad you brought up the part about business model. This is operations and people in communities. During your keynote, you had a slide that laid out three kind of pillars. Yes, people in communities, business model and business operations. There was no 800 series in there. There was no product discussions. This is fundamentally the big shift that business models are changing. I tweeted provocatively, the killer wrap in digital business model. Because you think about it. The applications are the business. What's running under the covers is the technology, but it's all shifting and changing, so every single vertical every single business is impacted by. This is not like a certain secular thing in the industry. This is a real change. Can you describe how those three things are operating with that can >>sure. I think if you look from, you know, so thinking through those three areas. If you look at the actual business model itself, our business models is organizations are fundamentally changing and they're changing towards as consumers. We are all much more specific about what we want. We have incredible choice in the market. We are more informed than ever before. But also we are interested in the values of the organizations that we're getting the capability from us as well as the products and the services that naturally we're looking to gain. So if you look in that business model itself, this is about, you know, organizations making sure they stay ahead from a competitive standpoint about the innovation of portfolio that they're able to bring, but also that they have a strong, strong focus around the experience, that they're customer gains from an application, a touch standpoint that all comes through those different channels, which is at the end of the day, the application. Then if you look as to how do you deliver that capability through the systems, the tools, the processes? As we all evolve, our businesses have to change the dynamic within your organization to cope with that. And then, of course, in driving any transformation, the critical success factor is your people and your culture. You need your teams with you. The way teams operate now is incredibly different. It's no longer command and control. It's agile capability coming together. You need that to deliver on any transformation. Never, never mind. Let it be smooth, you know, in the execution they're all three together. >>But what I like about that model and I have to say, this is, you know, 10 years of doing the Cube, you see that marketing in the vendor community often leads what actually happens. Not surprising as we entered the last decade, there's a lot of talk about Cloud. Well, it kind of was a good predictor. We heard a lot about digital transformation. A lot of people roll their eyes and think it's a buzzword, but we really are. I feel like exiting this cloud era into the digital era. It feels, really, and there are companies that get it and are leaning in. There are others that maybe you're complacent. I'm wondering what you're seeing in Europe just in terms of everybody talks digital, every CEO wants to get it right. But there is complacency. Their financial services said Well, I'm doing pretty well, not on my watch. Others say, Hey, we want to be the disruptors and not get disrupted. What are you seeing in the region? In terms of that sentiment, >>I would say across the region, you know, there will always be verticals and industries that slightly more advanced than others. But I would say that the bulk of conversations that I'm engaged in independence of the industry or the country in which we're having that conversation in there is a acceptance off transfer. Digital transformation is here. It is affecting my business. I if I don't disrupt, I myself will be disrupted and we challenged Help me. So I You know, I'm not disputing the end state and the guidance and support soon drive the transition and risk mitigated manner, and they're looking for help in that there's actually pressure in the board room now around a what are we doing within within organizations within the enterprise service, right of the public sector, any type of style of company. There's that pressure point in the board room of Come on, we need to move it speed. >>Now the other thing about your model is technology plays a role and contribute. It's not the be all end. All that plays a role in each of those the business model of business operations developing and nurturing communities. Can you add more specifics? What role do you see technology in terms of advancing those three years? >>So I think, you know, if you look at it, technology is fundamental to all of those fears in regard. Teoh Theo innovation that differentiation technology could bring the key challenges. One being able to apply it in a manner where you can really see differentiation of value within the business. So and then the customer's organization. Otherwise, it's technology for the sake of technology. So we see very much a movement now to this conversation of talk about the use case, the use cases, the way by which that innovation could be used to deliver value to the organization on also different ways by which a company will work. Look at the collaboration Kate Capability that we announced earlier this week of helping to bring to life that agility. Look at the the APP D discussion of helping the link the layer of the application into the infrastructure of the network to get to root, cause identification quickly and to understand where you may have a problem before you actually arises and causes downtime many, many ways. >>I think the agility message has always been a technical conversation. Agile methodology, technology, softer development, No problem check. That's 10 years ago. But business agility is moving from a buzz word to reality. Exactly. That's what you're kind of getting. >>Their teams have. Teams operate, how they work and being able to be quick, efficient, stand up, stand down and operate in that way. >>You know, we were kind of thinking out loud on the Cube and just riffing with Fabio Gori on your team on Cisco's team about clarification with you, Gene Kim around kind of real time. What was interesting is we're like, Okay, it's been 13 years since the iPhone, and so 13 years of mobile in your territory in Europe, Middle East Africa mobility has been around before the iPhone, so more advanced data privacy much more advanced in your region. So you you you have a region that's pretty much I think, the tell signs for what's going on North American around the world. And so you think about that. You say Okay, how is value created? How the economics changing this is really the conversation about the business model is okay. If the value activities are shifting and being more agile and the economics are changing with SAS, if someone's not on this bandwagon is not an end state discussion, very. It's done Deal. >>Yeah, it's But I think also there were some other conversation which, which are very prevalent here, is in the region so around trust around privacy law, understanding compliance. If you look at data where data resides, portability of that data GDP our came from Europe has pushed out on those conversations will continue as we go over time. And if I also look at, you know, the dialogue that you saw, you know, within World Economic Forum around sustainability that is becoming a key discussion now within government here in Spain, you know, from a climate standpoint and many other areas >>as well. David, I've been riffing around this whole where the innovation is coming from. It's coming from your region, not so much the us US. We've got some great innovations. But look at Blockchain. Us is like, don't touch it pretty progressive outside United States. A little dangerous to, But that's where innovation is coming from, and this is really the key that we're focused on. I want to get your thoughts on. How do you see it going? Next level? The next level. Next. Gen Business model. What's your What's your vision? >>So I think there'll be lots of things if we look at things like it with the introduction. Introduction of artificial intelligence, Robotics capability five g of course, you know, on the horizon we have Mobile World Congress here in Barcelona a few weeks time. And if you talked about with the iPhone, the smartphone, of course, when four g was introduced, no one knew what the use case where that would be. It was the smartphone, which wasn't around at that time. So with five G and the capability there, that will bring again yet more change to the business model for different organizations and capability and what we can bring to market >>the way we think about AI privacy data ownership becomes more important. Some of the things you were talking about before. It's interesting what you're saying. John and Wendy, the GDP are set this standard and and you're seeing in the US they're stovepipes for that standard California is gonna do want every state is gonna have a difference, and that's going to slow things down. It's going to slow down progress. Do you see sort of an extension of GDP, our like framework of being adopted across the region, potentially accelerating some of these sticky issues and public policy issues that can actually move the market forward? >>I think I think that will because I think there'll be more and more if you look at this is terminology of data. Is the new oil What do you do with data? How do you actually get value from that data? Make intelligent business decisions around that? So, yeah, that's critical. But yet if you look for all of ours, we are extremely passionate about where's our data used again? Back to trust and privacy. You need compliance, you need regulation. And I think this is just the beginning off how we will see that >>evolving. You know, when you get your thoughts. David, I've been riffing for 10 years around the death of storage. Long live storage. But data needs to be stored somewhere. Networking is the same kind of conversation just doesn't go away. In fact, there's more pressure now to get the smartphone. That was 13 years ago, before that. Mobility, data and Video. Now super important driver. That's putting more pressure on you guys. And so hey, we did well, networking. So it's kind of like Moore's Law. More networking, more networking. So video and data are now big your thoughts on video and data video. >>But if you look out the Internet of the future, you know what? So if you look for all of us now, we are also demanding as individuals around capability and access of. That's an Internet of the future. The next phase. We want even more so they'll be more more requirement for speed availability, that reliability of service, the way by which we engage in we communicate. There's some fundamentals there, so continuing to grow, which is which is so, so exciting force. >>So you talk about digital transformation that's obviously in the mind of C level executives. I got to believe security is up. There is a topic one other. What's the conversation like in the corner office when you go visit your customers? >>So I think there's a There's a huge excitement around the opportunity, realizing the value of the of the opportunity on. You know, if you look at top of mind conversations around security around, making sure that you can make taint, maintain that fantastic customer experience because if you don't the customer go elsewhere, How do you do that? How do you enrich at all times and also looking at market? Jason sees, you know, as you go in a new tour at senior levels, within, within organizations independent of the industry in which they're in. They're a huge amount of commonalities that we see across those of consistent problems by which organizations are trying to solve. And actually, one of the big questions is what's the pace of change that I should operate us on? When is it too fast? And one is one of my too slow and trying to balance that is exciting but also a challenge for a company. >>So you feel like sentiment. There's still strong, even though we're 10 years into this, this bull market you get Brexit, China tensions with US US elections. But but generally you see sentiment still pretty strong demand. >>So I would say that the the the excitement around technology, the opportunity that is there around technology in its broader sense is greater than ever before. And I think it's on all of us to be able to help organizations to understand how they can consume and see value from us. But it's a fantastic times, >>gets economic indicators way. So >>I know you >>have to be careful, >>but really, the real I think I'm trying to get to is is the mindset of the CEO. The corner office right now is it is that we're gonna we're gonna grow short term by cutting or do we going to be aggressive and go after this incremental opportunity? And it's probably both. You see a lot of automation in cars >>both, and I think if you look fundamentally for organizations, it's it's the three things helped me to make money, how to save money, keep me out of trouble. So those are the pivots they all operate with on, you know, depending on where an organization is in its journey, whether they're start up there in the middle, the more mature and some of the different dynamics and the markets in which they operate in a well, there's all different variables, you know? So it's it's it's mixed. >>Wendy, thanks so much to spend the time to come on. The Cube really appreciate great keynote folks watching. If you haven't seen the keynote opening section, that's good. Second, the business model. I think it's really right on. I think that's gonna be a conversation will continue. So thanks for sharing that before we look. Before we leave, I want to just ask a question around, What? What's going on for you here in Barcelona? As the show winds down, you had all your activities. Take us in the day in the life of what you do. Customer meetings. What were some of those conversations? Take us inside inside. What? What goes on for you here? >>I tell you, it's been an amazing It's been amazing few days, So it's a combination of customer conversations around some of the themes We just talked about conversations with partners. There's investor companies that we invest in a Cisco that I've been spending some time with on also spending time with the teams as well. The definite zone, you know, is amazing. We have this afternoon the closing session where we got a fantastic, um, external guests who's coming in is going to be really exciting as well. And then, of course, the party tonight and will be announcing the next location, which I'm not going to reveal now. Later on today, >>we kind of figured it out because that's our job is to break news, but we're not gonna break it for you to have that. Hey, thank you so much for coming on. Really appreciate. When any market in Europe, Middle East Africa and Russia for Cisco she's got her hand on the pulse and the future is the business model. That's what's going on. Fundamentally radical change across the board in all areas. This is the Cube, bringing you all the action here in Barcelona. Thanks for watching. >>Yeah, yeah,

>> From the SiliconANGLE Media office in Boston, Massachusetts, it's "theCUBE." Now, here's your host, Dave Vellante. (upbeat music) >> Hello everyone and welcome to this week's episode of "theCUBE Insights," powered by ETR. In this "Breaking Analysis," I want to look into Cisco. You know theCUBE is in Barcelona this week to cover Cisco Live. There's an expected attendance of about 17,000 people. Now today, Cisco is a company in transition. It remains a leader in key segments, but it's refocusing its business for the next decade, having exited a number of areas over the last several years. Allow me to briefly give you my perspective and review how we got here. Near the end of the dot-com bubble, Cisco was the most valuable company in the world, with a $500 billion market cap. It was one of the four horsemen of the internet, remember that? Along with Oracle, Sun, and EMC. Cisco really rose to prominence by betting big on ethernet. Old reliable TCP/IP was the linchpin of the internet, and allowed Cisco to power the wave that virtually decimated the mini-computer industry in the 1990s. There were many levers that Cisco pulled, brilliantly, during its ascendancy, and I want to call out two big ones. First was it created an army of network engineers. Literally hundreds of thousands of professionals trained on installing, configuring, managing, and optimizing Cisco gear. Cisco created very complex solutions and thrived on this complexity, and the Cisco Certified Inter-network Experts, or CCIEs, deeply understood the dark art of networking, and Cisco was their beacon. The second was acquisitions. Under the leadership of CEO John Chambers, Cisco completed about 180 acquisitions over a roughly 20-year period. This enabled TAM expansion, growth, and maintained Cisco's relevance to customers, who very typically and often were the generator of acquisition ideas. Cisco diversified quickly into a conglomerate with a portfolio that spanned video, set-top boxes, telepresence, compute, collaboration, security, wireless. At one point, Chambers talked about dozens of adjacent businesses, each of which would account for a billion dollars of incremental revenue for Cisco. Many, if not most, didn't pan out, and Chambers slashed and burned prior to handing the reins over to current CEO, Chuck Robbins. Now, under Robbins, Cisco was a more focused company, kind of going back to the basics. They're betting on what I would say are more sure bets, including data center, wireless, collaboration, security, and the Edge. Cisco is also evolving its model towards software subscriptions. Now today, I want to look at how some of those bets are performing. I'll discuss the impact of cloud on Cisco's business, and then I want to drill in to the performance in some areas like networking, collaboration, security, and then close on hyper-converged. And then the last thing I'm going to do is share some things that I'm watching as barometers of success, over the next 18 to 24 months. Now the first thing I want to do is give you a snapshot of Cisco's financials today. What this chart shows is some KPIs on a trailing 12-month basis. Cisco is about a $50 billion company with a $200 billion market value. That's a 4X revenue multiple, which is pretty good for a company that's generally viewed as a traditional hardware player. Now Cisco is guiding analysts on a flat to down year, and talking about a challenging macro environment, despite the stock market's seemingly insurmountable rise. Cisco is a very profitable company, with a 33% operating margin, and very nice, 66%, roughly, gross margin. Cisco throws off a lot of cash, around $15 billion annually in free cashflow. They make a big deal that 70% of its software revenue is now coming from subscriptions. And Cisco is mandating a new consumption model that is subscription-based. Now it's somewhat hard to tell exactly how large Cisco's software revenue is, as they're opaque in that detail, but I'm pegging it at between 11 and 12 billion by the end of this year. Today it's probably seven to eight billion. Cisco is riding some big waves, adding software to its portfolio, security grew at 22% last quarter, Wi-Fi 6, 5G, which by 2021 should start kicking in, it uses a chunk of its cash of course to buy back stock to keep the street happy, and it's leveraging a leadership position to compete. Now finally, I want to make some comments, later actually, on how they're approaching developers in a strategy that I really like. Now there are some headwinds that Cisco's facing, namely cloud, this macro picture that they talk about, which is not positive for them evidently, the company's overall complex portfolio, the competitive dynamics, and the perception that they have an aging, or that they are an aging hardware company, and they're really still touting, selling ports. So, let's drill into some of the spending data, and I want to start with this notion of leadership. This chart shows Cisco's position in its core networking segment. The chart depicts market share over time, which remember is a measure of pervasiveness into each ETR dataset. Now look at what happens. Look how Cisco maintains its leadership, far outpacing the others in this networking sector each quarter. I'm going to make some comments on the sector overall, but notice the net score in the blue bars, which is a measure of spending velocity. It holds firm at 25%. Not great, but holding steady. And you can see the pie chart of the public cloud's impact on the sector, and I'm going to make some comments there later as we go on. But first let's look at the networking sector overall. ETR just released its January survey, and here's what they said in their sentiment on networking. So, when you see the networking space, it's been sort of down for a while, and ETR has been somewhat negative on the entire space, but what this shows is really net score, which is spending velocity, and the January 2020 results, with previous periods within Fortune 500 buyers. And you can see there's an uptick in momentum for networking generally, and Cisco is really cited as rebounding. But now look at the blue call-out. It's from an ETR VENN discussion, with an IT buyer, who essentially says, "Look, as we move to the cloud, "we are going to spend less on networking gear." And given that Cisco is the leader, we want to understand how the public cloud is affecting Cisco's networking business. So to answer that, what I'm showing here is data from the latest ETR January spending survey. And I'm filtering the data on organizations that are spending on AWS, Azure, and Google Cloud platform, and showing Cisco's performance measured in market share, or pervasiveness. You see, that's what's happening now in these big cloud accounts. There's an N of 809 cloud customers, and 480 Cisco customers within those accounts. And you can see the impact that the cloud is having on Cisco, much the same way it is affecting virtually every large supplier of on prime infrastructure. A slow, steady decline over the past 10 years. And you can see a net score, which measures spending intensity, in the upper right-hand corner, of almost 30%, which is somewhat lower than Cisco's average in the ETR dataset. But the story's not just about cloud. There are other waves in the industry, of what I've referred to in the past as innovation cocktail ingredients, namely data, plus AI, plus cloud. So the next question I want to pose is, how is Cisco doing in leveraging these waves? So here we have 916 customers in these superpower segments of data, AI, and cloud, that are combined, and we show the market share, or pervasiveness, over time, of Cisco, as compared to VMware's NSX, HPE, and Dell EMC. What the data shows is a couple of points. One is that Cisco is the most pervasive competitor shown in these customer segments. Its net score is 37%, four points higher, meaningfully, than the cloud-only chart. Actually seven points higher than I showed earlier. Only NSX has a higher net score, and relatively speaking, NSX is much newer, and should be growing much faster than Cisco, so that makes sense. So I would say that Cisco is holding its own here. Its challenge really, in my view, is to use data and AI to create better customer experiences. So, be a consumer of AI, if you will, as a means of better serving customers, and compete in the multi-cloud market directly with these players and others, none of whom own a public cloud. Okay, so I spoke earlier about Cisco's portfolio, so let's look at some of the ETR data, and see how various parts of Cisco's business are doing. This chart shows the net score, or remember, spending velocity, across Cisco's offerings, and includes Meraki, which is wireless, AppDynamics, AppD, is application performance management, we're showing here Cisco overall, Cisco Umbrella, which is cloud and DNS security, and Springpath, which comprises infrastructure for Cisco's hyper-converged offering. And as you can see, the segments in which Cisco plays, there are 10 in the ETR taxonomy, spanning analytics, security, mobile, device management, infrastructure, video conferencing, et cetera, et cetera. In the interest of time, I will say just the following. Red is bad, green is good, and gray is neutral. And again, Cisco is holding its own in these major segments, with decent spending velocity. So now, let's take a look in an area that I think is going to get a lot of attention in Cisco Live, and that's collaboration. This ETR chart that I ran shows net score, or spending velocity, for video conferencing platforms. And you can see, Cisco, they got some work to do. It's sort of teetering on the red zone. So I would expect some continued enhancements there. Now comparatively, you can see GotoMeeting losing steam, and Skype really falling off a cliff in January, but look at Microsoft Teams, that blue dot, with very very strong momentum. So what Microsoft's doing is they're migrating Skype and Lync, their install base, to Teams, and they're really really well-positioned there. And you can see as well, newcomer Zoom is right there in the mix, across this sample of 500 buyers. Now, I want to turn your attention to a really important sector, which of course is security. This chart that I'm showing here shows net score, again, spending velocity, in the cyber security sector. And Cisco is both large and credible in this space. Its security business grew 22% last quarter, as I said, and it's at a $3.2 billion run rate. So, spending momentum, maybe not as strong as Palo Alto Networks, which I'm showing here, and it's not as high as the rocket ship companies, like CrowdStrike, or Okta, or CyberArk, or SailPoint, or some of the others that I've highlighted in previous "Breaking Analysis" episodes, but Cisco's pretty solid. And you can see the likes of IBM and Symantec, by comparison, these guys are leaders in security, but their spending momentum is in the red. So once again, the steam of Cisco as a large player who has credibility, this story is playing out. And clearly this is going to be an area of focus at Cisco Live. So this next data point is kind of interesting, and looks at Cisco's data center business, and specifically, I'm trying to better understand what's going on in hyper-converged, the software-defined platforms that bring together storage, compute, and networking. Now the power of the ETR platform is that I can ask the question, how are the hyper-converged players doing inside of Cisco accounts? So what I've done is I've filtered on 458 Cisco accounts across three sectors, storage, compute, and networking, and I've isolated on Nutanix, VMware, or VMware's vSAN, Cisco itself, and Dell EMC with VxRail. And what we're doing is we're showing net score, or spending intensity, spending velocity. And the first thing to point out is that all of the vendors are in the green, and that's because this is a growing market that still has legs. Nutanix has noticeable spending momentum, ahead of vSAN, ahead of Cisco, and Dell EMC. Now here's the thing about Cisco. On the one hand, it's putting forth its own HyperFlex platform, based on the Springpath acquisition. But it has to tread carefully because it partners with converge players, like NetApp with FlexPod and IBM with VersaStack. And its HyperFlex, as an HCI play, is essentially designed to replace converge platforms like these. Now the same is true for VBlock, the business with Dell EMC, the old VCE business, but Cisco and Dell are at each other's throats, so, neither really cares that it's replacing them. Okay, long segment, a lot to cover, I got to wrap, but I want to end by saying what to look for over the next sort of 18 to 24 months as barometers. First thing is the pace of transition to software. The second thing that I'm watching is the uptake of the new core announcement that Cisco just made for big routers, silicon, and optics. This is Cisco's wheelhouse, and I expect that the 5G rollout in 2021 is really going to start to pick up and be a tailwind for Cisco. You know the macro should be a concern. Cisco is saying its business is soft, kind of across the board, there's China, there's Brexit, but the S and P is on fire. Now does that mean upside for Cisco? In other words, are they sandbagging a little bit? Or, are there more fundamental, structural, or execution issues? I think personally, Cisco may have a little bit of upside here, but they're big and exposed, so that's something to watch. The other thing is the impact of cloud on Cisco's business, and the company's ability to compete in multi-cloud, including how it embraces Kubernetes. Cisco, and I've said this before, has to position itself as the best, the most cost-effective, the most secure, and highest performance network to connect hybrid and multi-clouds. Now as well, the company's got to hold serve in networking, which I fully expect it to do. We're seeing a little uptick in Juniper, Arista's doing okay, but they're sort of smaller in the grand scheme of things relative to Cisco. Now the wild card here is VMware's NSX. So we'll be watching that and what impact it has. A lot of customers have both. Finally, I want to talk about developers. Cisco DevNet, as I've said many times, I really like what Cisco is doing there. I think they've outshone some of the traditional players. They are retraining hundred of thousands of CCIEs to code in Python, and really, code Cisco infrastructure. So Cisco has an infrastructure-as-code strategy that's going to help propel them in multi-cloud, the Edge, new Workloads, and they're leveraging this engineering force that they have. So, very long segment here. Watch the coverage at Cisco Live on theCUBE and on SiliconANGLE. It's a big chewy company, and a lot for me to swallow in one of these segments. So tweet me @DVellante if I've missed something, or comment on my LinkedIn feed, or you can email me at David.Vellante@SiliconANGLE.com. Thanks for watching, everybody. We'll see you next time on "Breaking Analysis, "theCUBE Insights," powered by ETR. (upbeat music)

(upbeat tech music) >> Announcer: From London, England it's theCUBE, covering Coupa Insp!re 19 Emea. Brought to you by Coupa. >> Hey, welcome to theCUBE, Lisa Martin on the ground in London at Coupa Insp!re 19. Very pleased to welcome back to theCUBE the CEO and Chairman of Coupa, Rob Bernshteyn. Rob, welcome back. >> Thank you so much, thank you for being with me. >> It's great to be here, so we are in with all of these customers and partners, this has been busy all day. You started things off today with a great keynote. I was telling you before we went live, I lost count of how many big customer examples were sprinkled, and I think infused throughout your keynote. I was looking at some numbers, Coupa just keeps doing this. 5x increase in spend under management since 2016, that's only three years. You guys have thousands of customers, five million suppliers on the platform, lot of growth. What are some of the key drivers to this great growth that you're seeing? Well a couple of things, I mean first of all, this is a huge total addressable market. Every company in the world could do a better job of the way they manage their business spending, and they could use information technology, hopefully from Coupa to help make that happen, and we are so proud to cultivate this community of like minded, thoughtful professionals that want to apply best practices, best in-class modern technology solutions like the ones we offer obviously, to drive quantifiable, measurable, outcomes for the companies that they work for. So in many ways, this is a celebration of our customer community and it's a wonderful opportunity to be with our customers here like this every year in Europe and every year in the United States, and now frankly in lots of other places around the world. >> So one of the themes that was also expressed during the keynote was Rachel Botsman's theme of trust and I think about the open community, the open platform and the community that Coupa is building, there's a lot of earned trust there that Coupa has earned from this growing community. Talk to me about what that means to you and the whole team and how it's influencing the direction that Coupa is going in. >> It means a lot to me personally frankly. The O in Coupa stands for Open, and that means not only technically open in terms of APIs and integrations, but it means open in spirit, open in dialogue, honest, transparent communications. I feel that our industry in enterprise software has a legacy or a history of a lot of PowerPoints, and a lot of demos, but frankly, quite a few failures of large scale deployments and a whole host of sectors. And we want to be part of the solution, we want to have an open, authentic, honest communication with our customers, with our prospective customers in the sales process, with our partners, with all of my Coupa colleagues, so we can avoid the friction and nonsense of politics that often gets in the way of driving measurable, meaningful value for every constituent. It's a very, very important thing to me, it's important to my team, and that's something we're doing our very best to cultivate in this Coupa community that we're creating. >> Speaking of cultivation, Coupa is cultivating this category of Business Spend Management. Tell us a little bit more about that and where you are with that. >> Sure, Business Spend Management is a pretty straightforward three words to describe the fact that our buyers and our customers are responsible for literally trillions of dollars and pounds and dollars and euros of spend all over the world. And as information becomes more and more transparent, the buyer, the one who's repsonsible for that spend becomes more and more powerful. So we sit on the side of that buyer, we give them information technology solutions from sourcing, to inventory management, to spend analytics, to procurement, to expensing, to invoicing, to payments, to supplier performance. All the capabilities needed to help them make the best purchasing decisions for their organizations, and help their companies become more profitable so that every one of these Coupa community customers we have here could get more bang for their buck and be that much more operationally efficient frankly in driving their own company's visions and missions and whatever it is that they bring to the world. And that's very aspirational for us and we're excited that so many have come on board with this establishment of the Business Spend Management category with us. >> So if we look at the PIPE, as you were calling it this morning, P-I-P-E, procure, invoice, pay, expense, I memorized that, you've got this one platform that can deliver all of that to this growing community of users who have the ability to get that visibility. That is one of the biggest challenges, I was reading some stats recently about the number of businesses, they were the percentages of businesses that don't have complete visibility over their spend, it's high. >> It's very high, we just did a study of 250 or so CFOs in the UK, and they're doing a great job at budgeting and reporting, but they have minimal visibility into their supply relationships, especially with what's happening here with Brexit. They have minimal visibility in supply risks, supply chain risks, and one of the ingredients that I think we're very special at and I'm proud of is the U in Coupa, the user centricity. In order to have visibility into your spend, you have to have adoption, you have to have people purchasing, spending, expensing, paying, processing invoices, everything that you just mentioned through this pipe on one centralized platform with a common UI layer, User Experience layer or User Interface, common business logic layer, common data model, use of community intelligence to help you make the best purchasing decisions, spend decisions. So we're really on the forefront of something very, very exciting because this adoption level is happening through this user centricity, and it's given these companies control and visibility of spend, and what could be more important to driving profitability, sustained business development? I think we're in a very unique position to help these customers. >> So is one of the biggest challenges for those, think it was 96% of those UK financial decision makers that you guys surveyed said, "We don't have complete visibility." Is it because they have legacy siloed solutions that don't give them that common layer? Or is it because maybe that and a mixture of users just not adopting it because it's not as intuitive to use? >> It's a number of things. First of all, for every process, whether it's procurement, expenses, invoicing, or payments, they have seperate systems to your point. Some cases, they don't even have systems. They're calling in orders, they're handling paper invoices, so there are different levels of maturity in each of those four areas. So one is getting them on to a common platform where all of those are orchestrating together. Secondarily, there's an opportunity to create synergy between those areas, so a lot of things that are getting expensed really should be preapproved and should be routed toward preferential pricing that procurement can negotiate on behalf of the user. Many times invoices are duplicate coming in from suppliers and AP departments are so excited that they pay quickly, but they're not necessarily sure whether they received the goods and services that the invoice is for. So having one common platform, that's the C in Coupa, Comprehensive. One common comprehensive platform for all these business processes is critical, leveraging the synergy of all them working together is critical, and getting that widespread user adoption is part of the secret formula here. >> Let's talk about the community. It's big, it's growing, 1.3 trillion in spend managed, and I watched our video back that you and I did a few months ago, it was 1.2. So that was four months ago, and you showed a bar chart today of just the last 12 months, had to look up this way to see that, so this community that has the ability to help derive and leverage the insights, talk to me about the insights and being able to help businesses go from reactive to predictive as a game changer for Coupa. >> Sure, it's a huge game changer and we really aspire to be, if you will, the tail that wags the dog in the enterprise software industry overall because the enterprise software industry, in effect, every customer is on their own island using information technology for a certain business process. What we've done with community intelligence is we've aggregated, anonymized, and sanitized data from the customer base and then are distilling insights that we could be prescriptive about. So we could tell our customers and we're telling them, "Hey, our community is having challenges with such "and such supplier based on literally perhaps millions "of dollars and millions of pounds in transactional spend. "We recommend you consider this supplier in "that same category because our community is having "great success with them. "The products are being shipped on time, "there's no war over invoicing, there's no breakage in "what's delivered." Those are just some examples, we're helping them think through commodities. A lot of our customers forgiven commodity, they have 20, 30 different suppliers. We're helping them think through in their industry. How can they do supply consolidation that makes sense based on benchmarking across the entire industry? We're helping them avoid supplier risk, we're helping them avoid fraud, we're identifying employees that may be expensing things or doing things that are fraudulent based on the collective intelligence of what we're seeing around the entire world in real time and we're prescribing actions to be taken before payments go out. So these are just some examples of what we're doing, we're doing things in benchmarking based on community intelligence, we're really just at the tip of the sphere of what's possible and we've prescribed tens of thousands of prescriptions in our platform to our customers. Many of them are taking those prescriptions and are making their businesses more operationally fit, and more agile, which is something we're very, very proud of. >> Speaking of those prescriptions, I think the number you shared this morning was 22,000 prescriptions delivered in one year? >> In the last 12 months, that's right. >> So we've got to talk about acceleration 'cause we've talked about the COUP, the acceleration, that is one example of that. I also saw that you guys have gotten, customers are doing approvals 30% faster than they were a year ago. You're getting mid-market customers up and running in four months, large enterprises up in eight months, talk to me about that acceleration that you guys are achieving. >> Absolutely, the A in Coupa is about Accelerated, it's about learning from our entire customer base and taking those learnings and making them part of best practices-based appointments so we could go faster and faster and faster. We look at retail customer, we've done dozens of retail customers, large and small. We know how to set up catalogs, we know how to set up workflow, we know how to think through the analytics that they need. So when they get going with the deployment from Coupa, they can get up and running way faster than with going back to five or six years ago where you have to think about it from scratch and a blueprint. They could leverage the insight from the community with doing that in mid-market, with doing that in subverticals like credit unions, for example. Biotechs, we're doing it in insurance, we're doing it in pharma, all hosts of industries, and I think as we learn from every deployment and collect those insights, we're going to be able to drive value faster and faster to our customers. And the other element that's important here is it's not just taking the customer live, all of our customers grow with us. They get more and more value every year, this is why our renewal rate is so strong and customers add more business with us because they're getting value and that value continues to grow, and that's really what value as a service is about. We're not a software company, and we're not a software as a service company. We're truly a value as a service company, which is a very different concept and one that we're cultivating in this marketplace. >> What are some of your favorite, I know you love being in front of the customers, what are some of your favorite examples that really show the value that Coupa is delivering to the changing role of procurement, making that girl or guy much more strategic and much more of a partner to the business? >> Sure, I shared some examples this morning that I really loved and appreciated celebrating some of our trendsetters, or what we call spendsetters. You look at Zalando, our retailer where they weren't necessarily going to take them so seriously about savings, but when they went to marketing and said, "We can give you much more bang "for your marketing budget "so you could reach more potential consumers," well of course they embraced that. And we gave them a usable opportunity, a usable platform for doing that as similar Zalando, they engaged. Now they have something like 85% spender management. When we started working with them, they had zero purchase orders, everything was the wild west. You look at, I was just speaking to one of our customers at Procter & Gamble just five minutes ago here at the expo. They've run more than 50 billion pounds of spend through the Coupa platform, 50 billion. That's not easy, but they've done that in just a couple of years with us, and not only did they have visibility spent, but they're saving, they're routing purchases to preferred suppliers, so the list just goes on and on and on our website, at Coupa.com on the Customers tab, you'll see obviously dozens of customers holding up signs of the real measurable value they're getting from working with us and that's something that we really take a lot of pride in. >> That speaks for itself. Last question for you Rob, talk to me about those strategic partnerships that Coupa has. I know some news coming out today with what you guys are doing with American Express. >> Sure, we've entered the payment space and we entered it because our customer community asked us for it. They said, "Look, if we're procuring goods "and services through you, why wouldn't we all, "and we're doing invoice and we're doing all "of the components of the pipe, "why wouldn't we also go deeper into payments, help us pay." Because many now have to log in to all these different ERP systems and kick off batch process, so we went into payments. And in payments, we have a host of partnerships. Now, today we announced the relationship with American Express in the UK and Australia for virtual credit card payments. Now it's very simple in Coupa, someone needs a good or service, it gets routed through workflow for approval. Once approved, a dynamic credit card number is generated by American Express, the individual makes the purchase, and all the reconciliation, the back-end is handled by Coupa. All the reporting, the visibility, the insights to price points and category assessments are there and visible and the company's in a position to fine tune their spend profile. So that's just one example, and we're doing things in dynamic discounting and accelerating payments. We've just launched today in general availability and Robby will be discussing it tomorrow ahead of business acceleration. We launched our batch payments capability, the ability to do invoice payments in batch along any rail, whether it be banking relationships, whether it be eCheck, whether it be credit card, going into one environment and kicking off batch payments without having to wait for all these different ERP systems to take hold. So we're really at the, in my mind, at the very beginning of addressing a huge market opportunity, we're proud of what we've achieved so far. I'm particularly proud of the customer community developing around us, and we're excited about the days, weeks, months, quarters, and years to come. >> So you talked about, last question, the big TAM, in this total adjustable market. What are some of the core elements to Coupa's path to a billion in revenue? >> We're not as exciting to many investors as a hot startup that grows really quickly and maybe has some sort of viral component to it. We've been at this for over 10 years, we've grown thoughtfully, we've grown carefully. The growth is fast 30, 40 plus percent, but it's thoughtful and careful, it's one customer at a time. We're careful in how much we spend on sales and marketing, especially want customers to choose us rather than us hard-selling them on everything, we want the offering to sell itself. We have an ecosystem of systems integrators, now more than 3,000, Centric, APMG, Deloitte, and others that are certified on deploying Coupa. We're expanding our product footprint, our customers now use on average 4.7 applications from us and they're consuming those applications rather than us pushing them on them. We're expanding globally, we're expanding in terms of the enterprise business and the mid-market business. Our mid-market business is now really at scale and scaling beautifully, it's a beautiful business model. So those are just some of the vectors in which we'll continue to expand, but I think the path to $1 billion for us is very clear, and ultimately comes down to execution, delivering for every customer, making sure they're getting value from working with us year in and year out, and I think before you know it, we'll be on the doorstep of that $1 billion. >> Excellent. Rob, it's been a pleasure having you back on theCUBE. Thank you for having theCUBE out here in London, we appreciate your time. >> Thank you. >> For Rob Bernshteyn, I am Lisa Martin, you're watching theCUBE from Coupa Insp!re 19. Thanks for watching. (upbeat tech music)

>>From London, England. It's the cube covering Kupa inspire 19 PVR after you by Cooper. >>Hi. Welcome to the cube Lisa Martin on the ground in London at Kupa inspire 19 please do welcome back to the cube Ravi talker, the SVP, a business acceleration that Cooper won't be welcome back. It's great to be back. Thanks for having me. Likewise. So lots of, lots of buzz around us. Everyone's eating lunch, but there's a lot of folks here in London, a lot of exciting news coming out in this morning. Lot of customers and fused in Rob's keynote. I lost count of how many great customer examples were showed. Talk to us a little bit about Kupa pay and some of the innovations that you guys are delivering now. >>Yeah, absolutely. So pay pays a great new area for Coupa. We call it the fourth pillar and Rob's analogy of the pipe procurement, invoicing, payment and expenses. And so actually we started this journey a really last year at this event where we announced virtual card for purchase orders and a strategic relationship with Barclaycard. And over that past year we've done some amazing things with relationships with JP Morgan, Citibank, and we just announced a great relationship with American express to provide American express virtual cards on the Coupa pay platform. So we've been working hard at it. We've seen some really good success early success with customers. Uh, we announced some other great innovations in our Vegas conference just a few months ago where we announced invoice payments is generally available along with partnerships with Stripe and PayPal. So it's been really busy. >>It has been the B2B payments space. It's a big market, 1.2, I think trillion global and global volume. But it's also challenging because on the consumer side, on the BDC side, it's so easy for us to do transactions right on our phone, tablet watches, and we had this expectation that we can pay for anything. We can find anything, we can pay bills so easily. But on the B2B side there's a lot more complexity. The BDB hasn't, payments hasn't been able to innovate nearly as quickly as on the consumer side. But I'd love to get your thoughts on what is Cooper able to leverage with Coupa pay that's maybe going to start meeting some of the demands of those business folks who in their consumer lives have this expectation of a swipe or a click to do a transaction. >>Yeah, it's a completely different ball game consumer versus B2B, whole avenues around risk profiles of your suppliers. You know if you pay a supplier that's doing illegal business are doing place and where the government doesn't allow it puts your brand and your reputation at risk. Very serious risks. And so we incorporate a lot of what we do with the community. So you heard Rob talk about that in his keynote. A lot of things around community intelligence. So for us being able to rely on thousands of customers of data, millions of transactions, being able to see things across all of our customers and really create alerts and transactional efficiencies for our customers in B2B payments. That's a big change for our customers and we're just starting to get to see some of those transactional elements. I think the second thing that we've seen with B2B payments, and it's interesting money, 2020 is one of the largest, uh, payment conferences, uh, in the world. And it happened I think last week or the week before in Vegas. And this year has been a lot of talk about B2B payments, whereas last year is mostly B to C. and so we feel we've been making an impact in the entire payments area because to us it's bringing together all of the different payment rails, whether it's virtual card or bank transfers or cross border, but being able to do it across dozens and hundreds of countries and it global fashion. That's a big game changer for large enterprises. >>So one of the things that was a theme this morning during the keynote was trust. I had the opportunity to speak with Rachel Botsman trust expert who did a keynote this morning. And as we look at some of the numbers that Rob shared, you mentioned a few of over a thousand plus customers using Coupa. I think he's shared over 5 million suppliers on the platform. You talked about this community, this massive community that you are co creating with. Talk to me about Coupa pay and its ability to help deliver that trust so that Coupa can be that trusted advisor that it wants to be with. It's not just its customers but as partners too. >>No, absolutely. And Rachel's presentation this morning was fantastic. Yeah, absolutely. And so, you know, uh, my background actually I Kupa for a decade I ran customer success. So I engaged with C level executives at all of our customers. And as part of that process, a trust was a big factor in that when we said something we would deliver that. And over the course of the years that coop has been around about 1314 years we've held very true. That stands in our number one core value of ensuring customer success. And when you look at all of the customers that are willing to put their six, what we call success metrics, how much they've spent saved the spend that they have under management when they are publicly talking about it. That's trust that we've created with them in this partnership because they believe in what our ability to deliver says we decided to go into payments or we're trust and payments is a very big deal as mentioned earlier. Right? You don't get necessarily fired for screwing up our purchase order or an invoice, but if you send money to the wrong supplier to the wrong country, you know, there's a lot of risk associated with that. So we take that very, very seriously and how we've been developing and creating solutions around Kupa pay. And so it's just the overall Avenue that we work with our, we treat them as partners, not as a vendor supplier relationship. And because of that we have this mutual trust that we're both in this together in this large community. >>Yeah. And Rachel Botsman talk about sort of that balance between, uh, trust and risk. Yeah. Which was very interesting concept. Um, talk to me about, I'm just thinking like even from a fraud on a supplier perspective, one of the things I know that Cuba is able to do is alert a customer, Hey, there's a supplier that has a history of whatever it happens to me that's, that's my inflict risk on that customer. Tell me a little bit about that. From a trust risk kind of balanced perspective, what you guys are delivering there. >>It's a great area that we're just really starting to get into as well. And so being able to leverage the community of buyers and suppliers and having everything in a single code system code platform allows us to do a number of these things. And so for providing our customers, not the necessarily the, the exact thing that they should do, but providing them the relevant information in order for them to make the right decisions. Yeah. There's an old adage that I go by which is trust but verify. And so it's the same similar concept here. It's our goal to provide these prescriptions to our customers on what is the supplier doing or how can you improve your processes. And with these prescriptions, as Rob mentioned this morning, it's, it's up to our customers to choose what they want to do with those prescriptions. Sometimes they may take it, sometimes they may not >>and he gave a number, I want to say 22,000 prescriptions and he gave a time period in the past 12 months. That's what I thought as well. So a lot of insight literally coming out of that community. Love to chat though about the community in terms of the B2B payment space, not only we talked about how it's being influenced by consumers, but the changing role of procurement and finance. Yeah, a lot of just disruption there. We talked about that a few months ago and didn't get a lot of opportunity for financial leaders to become much more strategic and a lot of the examples that Rob shared showed how impactful company wide the impact that procurement folks, finance folks can make. Talk to me about how the Coupa is leveraging that community to help them get more visibility on how that procurement role is changing and how Coupa can help it be much more strategic. You know what I, that's a great question. And >>what I respond with that is, what's the name of our conference? It's inspire, right? We want to inspire this community to really go to that next level and really look deep inside themselves. It, Rob talks about all these different adjectives of Brown, all the different, what we call spend setters. It's a great initiative that we've created because we're giving our community of voice and that's always the biggest thing in how you affect change. How do you give people a voice? How do you give someone a story that they can grasp onto such that they can make it their own, such as they can take those facts and that relevance and apply it to their own day to day jobs. And that's a big thing that we're looking to do. But it requires going back to trust. It requires a little bit of trust in what we're doing. And by providing those stories, it gives these, our customers, our champions, uh, the ability to fall back on those, have that foundation for how to make change, how to disrupt their organizations. You know, Rob gave that great example of Telenor. You know, their seep, their chief procurement officer created a blueprint and a plan to provide mobile service. I think it was an India is a great example of what an individual can do and when you're that individual and you have visibility and tall your supply base into all of the spend going across your company, it's very, very powerful. >>I saw a survey that Cuba did recently have, I think 253 financial decision makers in the U K and some of the stats were quite shocking that 96% I believe said we do not have complete visibility over our entire spend. Right. Wow. Right. That's because one, some of the things that Rob shared this morning was the massive, massive savings that companies can achieve, but not having that visibility. You've got blinders on. There's a lot of risk there. There's a lot of expenses that probably should be going into procurement, but that was really 96% saying we don't have complete visibility. What's Cooper's answer to that? >>You know, it's, it's an interesting statistic. Right? And I, I gave a presentation I think seven, eight years ago, and I started off that presentation with saying, you know, if you are an HR and you didn't have track of all your employees, you'd be fired. If you're a head of sales and you didn't have an understanding of all of your open opportunities for business, you'd be fired. So why is that different for spend? Right? Why not have visibility and have access to all of the different spin that's happening across your company? And your Rob said it best in his keynote. We talked about what's actually happening in the world today. It's not necessarily around customer relationship management software, CRM, right? It's not necessarily around human capital management, but it's the well capitalized businesses of the world today. And today's day and age and this uncertainty of Brexit, uncertainty of the global climate, us, China trade relations, who's well capitalized to make and withstand what could be some, you know, unsettling times. Now there's another very interesting thing we saw with that same survey. Excuse me. Along with some of the things we saw with the wall street journal with some surveys we did with them, these finance professionals, they want to have that visibility and our answer to them come talk to us. >>So speaking of influence, inspiring, tell me a little bit about how the Coupa community influenced or is influencing the evolution of Coupa pay for example was Hey, we've got to have Amex virtual cards integrated with Coupa pay. Was that something that came from the voice of the community? Yeah, so we, >>you know, all across Koopa ever since the inception of the company, it's always around partnering with our customers, with our community to really listen and understand what they, what they're looking for. But doing it in the guy in the, within the framework of our core values as a customer, as a company. And the first one that I mentioned earlier, ensuring customer success. So we want to listen to our customers, we want to better understand them. So around virtual cards, you know, how do we choose to do an Amex or a Barclaycard? And to us it's actually pretty simple. We wanted to make sure that we're able to cover 80 to 90% of our customers with these large issuers. And we've been able to do that over the past year in negotiating these agreements, figuring out the technology components. And so we've been executing and delivering on that over the past, uh, over the past year. >>And if I understand that the press release correctly, KUKA pay with Amex virtual court integration is launching first in the UK and Australia. Correct. Can you tell me a little bit about those markets and what were some of the deciding factors? They said, Hey, well we'll go, we'll parlay on your title of acceleration. Is this, are these the right markets to launch and to accelerate copay? >>Yeah. Um, you know, there's obviously a lot of different ways and opportunities that American express has to go to market, massive company, great company to partner with. And so what we saw with them is from a technology standpoint, starting off in the UK and Australia made the most sense. We also have existing demand with customers that are ready to get going and really help us make sure that we create the right experience. You know, we expect this partnership to be really big and so as part of that, we want to make sure that we're able to deliver in certain markets first before we expand this and make this a much bigger thing. American express has a very prestigious brand. We want to respect and support that and we have our own brand that we want to support with our customers. We want to make sure we do it right. >>Well, Ravi, last question. I know that you're keynoting tomorrow. Yes. What are the couple of takeaways that you're going to leave the audience with tomorrow during your keynote? >>Yeah, it's a great, good question. I think the, the takeaways for tomorrow is we want to share some stories. You know, going back to inspiration, it's all about storytelling. Do we have stories to tell our customers such that they can relate to it and fall back on that? So we have three great customer speakers tomorrow. Really excited about the stories that they're going to share about Cooper pay and their journey with it. And my take away for our are the audiences. How do those stories relate to your business and is there a way that we can help you streamline your payment process? >>Awesome. Robbie, it's been a pleasure. You back on the cube. Best of luck at your keynote tomorrow and we'll see you at the next inspire. Yeah, absolutely. Thank you. All right. For Ravi talker, I'm Lisa Martin. You're watching the cube from London. Coupa inspire 19.

(upbeat music) >> Announcer: From London, England, it's theCUBE. Covering Coupa Inspire'19 EMEA. Brought to you by Coupa. (gentle music) >> Hey, welcome to theCUBE. Lisa Martin, on the ground in London, at Coupa Inspire'19. Very pleased to welcome to theCUBE for the first time, we have Dean Henry, the EVP of Business Financing and Supplier Management from American Express. Dean, welcome to theCUBE. >> Thank you, happy to be here. >> So let's talk about payments. Those of us in our day lives as consumers, the B2C transactions, they're so easy these days, right? You can transact from your phone, from your watch. We're doing everything. We're paying bills, we're buying things. Yet in the B2B space, business payments haven't had as rapid as innovation, as we've seen on the consumer side. Talk to me a little bit about the business-to-business payments industry from AMEX's perspective, before we get in to what you guys are doing with Coupa. >> Yeah well, first comment on the innovation you're absolutely right. The innovation that's happening in retail payments, hasn't made it's way to B2B payments. I think that's mostly a function of a consumer having the ease to try something new. Download an app, and change the way that they transact a bit at a store. Or, a bit with whomever they're paying. Whereas, a big business has a lot of processes that drive their business spend. And the way that they manage it, and systems. As we're here talking with Coupa today, the processes that they automate, that they bring, are critical to making payments happen. Because of that, there's just barriers to entry, that make B2B payments harder to mirror the speed, that you see in the retail side. That said, there's a lot of exciting things happening. B2B payments is a $127 trillion market globally. It's a big profit pool that a lot of players are innovating in. And when you look into the landscape and you consider who's playing out there. There's the traditional big banks, that have been sort of the stalwarts of global payments. There's obviously a large and growing fintech community, with new companies everyday that are in the media, offering new capabilities to clients. And then there's players like American Express. And I think we're actually uniquely positioned in that landscape, with not too many exactly like us. And when you look at the big banks and some of the challenges that they have. When I talk to our customers about fees, and processes that take awhile. Or money that moves with relative uncertainty, in terms of, how much is actually going to show up in the beneficiary's account, based on lifting fees, as money moves between banks. And then you look at the fintech community. That's new innovative solutions, but you're not sure that they're always going to be around, after the next funding cycle. I think we're trying to play in the middle. Where we're a great alternative to the fintech community. We're a global platform for payments. We're a global platform for lending. So we can really do all the things that a fintech can do. All the things that a bank can do, in many instances. And do that with the brand, and the certainty, that is AMEX. So we're excited about the space. And we're investing a lot of time, and energy. And partnering where we need to, in order to make sure our customers can transact where they want us to help them facilitate commerce. >> Right, that point of enabling a customer to transact where they want. What influences are you, is American Express, seeing and being able to infuse into your partnerships, from the consumer side? From that consumer who buys something with a click, or a swipe on Amazon, and wants to be able to do something similar, in their business day job. Tell me about the influence that American Express is seeing. And what that position that you just described, is allowing you guys to say, all right this is the direction that we're going to go in. Because we know we need to meet you, Mr. Customer, where you are. >> Right, well look I think part of it is demographics to be perfectly honest with you. Look at Gen Y, and Gen Z. They're more of the decision makers in today's management. They will be even more in tomorrow's management. And so they, to your point, have that expectation that their business life shouldn't be that much more complex, than their personal life. So, what we're trying to do is find the partners that have the best user experience. And make sure our solutions work seamlessly there. That's step one, that's what we're doing here with Coupa. Step two, is we're also trying to make sure that our capabilities on Amex, a digital real estate works just as easily as a our retail side of our business. And we're doing that with the unifying principles of American Express, which is the trust, and the service, and the brand that we offer to our clients. But then, also the merchant rewards. So there's a rich history of American Express providing a differentiated value proposition, with the credit card rewards that exist. And we take that capability into our business relationships, and make sure that it's a value add to those customers that want it. >> So let's talk about what American Express is doing with Coupa. What was just announced with Coupa Pay? >> So yeah, Coupa Pay, I was impressed by the stats that Rob put up there. They're growing quickly, and we want to be part of it. We're candidly following the requests of our clients who want American Express, as a payment option inside Coupa Pay. We offer a tremendous value prop inside of Coupa Pay. The data that flows with a payment, the data that we're able to collect, that differentiates us from our competition. Helps our clients reconcile their payments, eliminate the paper, realize the efficiencies that Coupa's clients are excited about. And so, we're there simply enabling American Express to be a payment option. And my hope, and I think Coupa's hope, is that that's step one of a partnership. And we'll be able to do more together, to serve our collective clients. >> So this is enabling American Express virtual cards to be available as a payment option, within Coupa Pay? >> Dean: Yes. >> And what is a virtual card? >> So a virtual card is a virtual credit card number. It can be a one-time use, or multi-use. >> Okay. >> Our clients use it for several different reasons. Buyers of goods use a virtual card, in order to make the payment of a supplier easier. To get more data, along with the transaction, so that they can reconcile a payment to a purchase order, and to associated invoices. The suppliers get benefit as well. In that, they too get enhanced data to reconcile a payment, that they receive on their end. There's also working capital benefit. In that, if a buyer chooses to pay early an invoice, we can extend financing, and pay the supplier earlier. So that they have more working capital to operate their business. So it's a real balanced value prop, where both parties are realizing value. >> Is this going to enable a buyer to have benefits, like increased security, with the way the virtual card works? >> Increase security, in so far as a virtual card is encrypted. The fact that American Express stands behind all of our card payments, with our brand and our promise. That differentiates from a traditional bank payment. You know ACH, and other low value clearings, that don't have those guarantees along with it. So that is a big differentiator. But I think candidly, the biggest benefit our clients see is the enhanced data, and the working capital. I think that's where we're trying to enrich both sides of the transaction. Give more data to enable the automation that's happening in the industry. And extend credit, so that businesses can operate more efficiently. And buy the things they need to buy. And hire the people they need to hire. >> Is this also something that will give suppliers, and buyers, more visibility? You talk about enhanced data. Will they now have more visibility over buyers, like different supplier options? Or suppliers, with different ways that they can get paid? >> So certainly, enhanced visibility on when a supplier is getting paid. And relative to the invoice date. And what we're trying to do is work with Coupa, and work with our partners around, well how do we enhance the data so that as Coupa talks about the community of suppliers, that their buyers utilize. How can we be part of that? How do we support the buyers in making decisions? The suppliers in utilizing American Express as a source to be a verified business, that has gone through all the legal checks, that are required in commerce. And bring both of those capabilities, to a transaction on the Coupa network. >> One of the stats that Rob mentioned this morning. I love stats, I really geek out over them, I don't know why. He said there's five million plus suppliers on the Coupa platform. Is that an advantage, that American Express sees, to help extend the footprint of your virtual cards? >> Absolutely, what I'm candidly more excited about is the millions, and millions, of suppliers that are on the American Express network. And that's an asset that I see personally, as something that we can work with Coupa, and other partners, to bring the businesses that are already verified. That are on our network, that we personally talk to every year. And bring those verified profiles to the commerce networks, like Coupa, so that it's easier to transact on Coupa, if you have an American Express card. >> Got it, and then last question for you is if we look at this partnership, what was announced today, this is launching in the UK and Australia first. And then, you'll roll it out more globally. Can you tell me a little bit about why those two regions? When that's going to be available for customers to use? >> So the honest answer is we wanted to be fast to market, quick out to our customer base. The UK and Australia, are two very important geographies for us. So we're launching first in those places, by the end of the year. And then, looking at rolling out in the US in early 2020. And then, from there expanding alongside Coupa globally. >> Tell me, as we're sitting here in London. Some of the interesting things going on, it's a lot of geopolitical challenges. Everybody knows about Brexit, and the election coming up, on the 12th of December. Tell me a little more about the UK market for American Express. What were some of the market dynamics that Amex said, hey there's an opportunity here for, I'll use a word that Coupa uses, acceleration, like accelerated time to market. Give me a little more about that. >> Yeah I mean candidly, like the geopolitics haven't really played into our launch. But the UK has been a strong market for Amex, for a very, very long time. Brighton, where we have a very big presence with the local football team in Brighton. That's just a metaphor for the broader extension, and client base, and employee presence that we have here. And so we wanted to make a big partnership announcement, in an important place. And the UK felt like the right market to do it in. >> Excellent, well Dean thank you for joining me on theCUBE this afternoon. Sharing what's new, with Amex and Coupa. We appreciate your time. >> Thank you so much. I'm really happy to be here. >> Oh excellent. For Dean Henry, I'm Lisa Martin. You're watching theCUBE, from Coupa Inspire London '19. Thanks for watching. (gentle 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 .Next Copenhagen Nutanix. I'm your host Rebecca Knight, co-hosting alongside of Stu Miniman. We're joined by Craig Routledge, he is the vice president HPE GreenLake Sales. Thank you so much for coming on theCUBE. >> Yeah, good afternoon. >> So why don't you start by telling our viewers a little bit about HPE and GreenLake. >> So HPE is the part of the old HP empire that's focused specifically on the hybrid computing world. So in the data sensors, the hybrid cloud world, and the edge and we're providing technology and services to our customers and our channel partners. And will continue to do so. And the announcement that we've made this week here in Copenhagen, is the announcement of GreenLake for Nutanix. >> So I'm not sure how much of our audience is very familiar with it. I've got plenty of experience with the various HP cloud initiatives over the years. But this is you know, at it's core, as a service as my understanding and help us understand where that fits in a customers over all kind of cloud portfolio. >> Yeah if you kind of take it back to the go back to real basics, actually almost before cloud. The customers access HP technology and infrastructures through capital purchase, through leasing, and some cases through subscription models, as the industry calls them. And then GreenLake was born about nine years ago in fact to help customers match cost to revenue. So it's a pay-per-use model. And that's where it was originally born. Before really the cloud was almost it was kind of around but not really in any scale. And then over the years, we've adapted GreenLake to be the private cloud solution for many direct customers then for channel customers, for service providers and partners. And now we've added the Nutanix partnership as well which, we've been announced as being ready for sale today onstage. Which is great timing by my engineering team I'm pleased to say. They were up late last night finishing it off. So its gradually evolving but were not just doing the private world, we're increasingly working in an environment where the equipment is installed in a colo. But it's still dedicated to that customer. Its not a shared service. And we're also increasingly, through out analytics portal, connecting to the public cloud world. So we've announced we have significant partnerships with the public cloud providers. And we can meter and monitor the customers usage in that solution. So we can provide a single tool set that gives them the private cloud usage and who's using it, and connect them to the public cloud world so they can get the same functionality in the pubic cloud. So they can see how much our marketing department are spending on computing storage, and networking and virtualization et cetera. >> It's a very different way for customers to think about it and many ways it should become more natural. If I got it right, I heard you say, its by the VM, or the container or by a certain flash increment. Maybe explain that a little bit? And you know, when and where would a customer say, "Oh well I need an increment of something that underneath "has Nutanix." >> Ah well it's interesting, you make in interesting point there actually. It is about customers buying work clothes, its the same way you buy a film on Netflix, or you buy a series or you might choose to buy episodes two, three, five, ten and 12 but not the whole book effectively. Not the whole library. And you buy that by the units of measure. So in Netflix, its a video or something. In the GreenLake world, its by virtual machine, at the VRAM level effectively. It could be by container, so it's the actual kubernetes container level. It can be at the gigabyte of high performing storage level. So we've disconnected the linkage between infrastructures. So the customer doesn't choose that infrastructure. The customer gives us a workload, and then we specify how that workload is designed. We have some recommended architectures. We're just about to launch the second dissertation of our quoting tools, so that a customer can get a quote on their smartphone, or our sales people in the pilot stages will be able to produce a quote on the phone. Now when that moves into operation, its our service team that are monitoring the customers usage 24 by seven. We own the metering and the management technologies. So we can snapshot the customers usage in their infrastructure environment, as often as we need to. So on Black Friday, you can guarantee we snapshot every retail customer in our portfolio at least every 30 minutes. And if there's a financial services crisis, as various presidents pick a fight with a global trade war. Share prices bounce up and down >> Not naming names. >> And dollars go in different directions and the RMB goes you need to meter the usage very rapidly, very accurately, and very often. And that's what our metering technology does. Now the service part of this, is not only do we kind of make sure that's all running 24 by seven, part of our service is to do the capacity management for the customers. So we take that responsibility off them. And if we think that the portal is telling us and the intelligence built into the portal, and into the experienced service managers saying, "You need an upgrade, we need to upgrade this piece." Then we can produce a change control note, one or two days, sign it, and then we can get some more infrastructure capacity rolled in of the chosen architecture for that customer. >> Just describing what you were saying about the retailers on Black Friday, and then watching the currency fluctuate based on whatever our world leaders are tweeting about. How has this in your mind changed the way the business world works today? Just the fact that we can see all this information this real time data. >> Its changed the speed and I think it it's the change of speed at which companies like ourselves have got to operate. And I think it's changed the speed at which the IT teams inside the end customers got to operate. And they get, I think they probably got the harder job than we have. An IT manager in an organization these days, not only has to watch those macro factors, the dollar going up and down, Britain finally sorts out its position on Brexit, we won't go into that one. And the IT team have got to look at that and see the impact on the business. But they also got to cope with the very rapidly changing environment. And a whole user base, I mean I don't know if any of you I presume you had to download the app on your smart phones. You press it, and if it doesn't download in three seconds, you're going, "Is something wrong here?" and that level of expectation in terms of the delivery of new application requests, is inherent in the user base now. Particularly the younger people are coming through in the wave of early stage employees and our customers. They expect instant gratification almost. They want a new app. They're a bit vague about how they want it to run, but they want it today. Now. And they want to pay a low volume price per click basis. So that's kind of, we're partly reacting to many of those trends. Part of our solution is in fact we provide, if we think the initial sizes, lets just say we need 500 Vms. Or we need 400 Nutanix and GreenLake licenses. We always provide a buffer. And in the early stage, lets say its 20 percent buffer. And that gives the customer some overflow room. So not only when we provision above their utilization but without a buffer to de-risk it for them. At our risk. And that's to make sure the service is seamless. And that's something that IT departments are not used to. But it matches the expectation of the internalized, I call them the IT consumers really, in business. Or customers of a bank. You know you dial your bank up on your app and you want to know what your balance is. And if you want to move money from that account to that account, you want it to go straight away. But I had a chasting experience on Sunday. My bank, they've got the app is online on Sunday. But they don't move money on the weekends. Am I'm like what? (chuckles) That was a bit stunning. And so my expectation is fueled by this kind of instant society that we live in. Yeah. >> So its order able now? >> Craig: Yes. Its order able now, we finished it >> Available? >> Available within 30 days. I mean, we think we'll have it available by the end of the month for delivery. >> Great and from a customer standpoint, will the customer be asking for Nutanix GreenLake? How does it, how do you give them the decision tree or is it a customer saying, " I wanted Nutanix." >> We have some people that are far more technically oriented than I am, technically literate than I am. We have some pre sales specialists inside the Nutanix team and inside the HP team. And we have some sizing tools as well to help us. So if the customer comes to us and says they want a particular workload, because we've expanded the choice, if they are talking to HP we'll look at what's the right solution. And if its Nutanix, then we use the Nutanix pre sales teams to help us. And that seems to be a very popular message in the marketplace. And is resonating very well. So we're helping the customer make a choice and obviously in a indirect motion, the partners will be helping the customer make that choice. And then coming us to, they'll specify the technology solution and they'll come to us with a specification. We'll turn that into a detailed specification. And a detailed cost and contract. >> So just GreenLake has been around for nine years now is this the first HCI based offering in the GreenLake portfolio? >> We've been working on the, we've had GreenLake on SimplyVity, which is the HP owned HCI solution. Two and a half, maybe three years now. And very successfully, its working very well in a few large cases. But it works different it works at a different level with different scaling parameters. So this is actually, the Nutanix partnership, and the reason why the two CEO's were excited, was this gives the customer another choice. And it gives them another choice other than the default virtualization engine, which everybody uses. And it also brings in the Nutanix expertise in end user computing, they call it VDI as I would call it. But that expertise and in the database world, it brings their expertise in that space is very valuable to us. So it augments our portfolio, and it brings two solutions to them. Not just the GreenLake solution, pay per use solution. But it also bring the proven HP server technology into their appliance portfolio. >> And the alignment on the optionality ] is really what is also driving this. >> Yes. And it is, we're both genuinely believe in customer choice in options. If the customer only got one choice, A: you've only given what the customer one choice and you might win or might lose, but you're going to have a resentful customer. If the customer says they want to go with HP and we only give them one choice, or can only give them one choice. Doesn't make for a long term relationship. And certainly I think both companies, HP clearly we believe having you know, lifetime we value a customer for its lifetime relationship with us. So its very important that we offer the customer choice, then narrow down to the right solution, refine that solution and draw it up into a contract. >> Excellent, so it's the right choice. Craig Routledge you are now a Cube alum. Thank you so much for coming on theCUBE. >> Thank you very much Thank you. >> I'm Rebecca Knight for Stu Miniman. Stay tuned for more of theCUBE's live coverage from .Next.

>> From the Silicon Angle Media Office in Boston, Massachusetts, it's The Cube. Now, here's your host Dave Vellante. >> Hi everybody. Welcome to this Cube Insights powered by ETR. In this breaking analysis we're going to look at recent spending data from the ETR Spending Intentions Survey. We believe tech spending is slowing down. Now, it's not falling off a cliff but it is reverting to pre-2018 spending levels. There's some concern in the bellwethers of specifically financial services and insurance accounts and large telcos. We're also seeing less redundancy. What we mean by that is in 2017 and 2018 you had a lot of experimentation going on. You had a lot of digital initiatives that were going into, not really production, but sort of proof of concept. And as a result you were seeing spending on both legacy infrastructure and emerging technologies. What we're seeing now is more replacements. In other words people saying, "Okay, we're now going into production. We've tried that. We're not going to go with A, we're going to double down on B." And we're seeing less experimentation with the emerging technology. So in other words people are pulling out, actually some of the legacy technologies. And they're not just spraying and praying across the entire emerging technology sector. So, as a result, spending is more focused. As they say, it's not a disaster, but it's definitely some cause for concern. So, what I'd like to do, Alex if you bring up the first slide. I want to give you some takeaways from the ETR, the Enterprise Technology Research Q4 Pulse Check Survey. ETR has a data platform of 4,500 practitioners that it surveys regularly. And the most recent spending intention survey will actually be made public on October 16th at the ETR Webcast. ETR is in its quiet period right now, but they've given me a little glimpse and allowed me to share with you, our Cube audience, some of the findings. So as I say, you know, overall tech spending is clearly slowing, but it's still healthy. There's a uniform slowdown, really, across the board. In virtually all sectors with very few exceptions, and I'll highlight some of the companies that are actually quite strong. Telco, large financial services, insurance. That's rippling through to AMIA, which is, as I've said, is over-weighted in banking. The Global 2000 is looking softer. And also the global public and private companies. GPP is what ETR calls it. They say this is one of the best indicators of spending intentions and is a harbinger for future growth or deceleration. So it's the largest public companies and the largest private companies. Think Mars, Deloitte, Cargo, Coke Industries. Big giant, private companies. We're also seeing a number of changes in responses from we're going to increase to more flat-ish. So, again, it's not a disaster. It's not falling off the cliff. And there are some clear winners and losers. So adoptions are really reverting back to 2018 levels. As I said, replacements are arising. You know, digital transformation is moving from test everything to okay, let's go, let's focus now and double-down on those technologies that we really think are winners. So this is hitting both legacy companies and the disrupters. One of the other key takeaways out of the ETR Survey is that Microsoft is getting very, very aggressive. It's extending and expanding its TAM further into cloud, into collaboration, into application performance management, into security. We saw the Surface announcement this past week. Microsoft is embracing Android. Windows is not the future of Microsoft. It's all these other markets that they're going after. They're essentially building out an API platform and focusing in on the user experience. And that's paying off because CIOs are clearly more comfortable with Microsoft. Okay, so now I'm going to take you through some themes. I'm going to make some specific vendor comments, particularly in Cloud, software, and infrastructure. And then we'll wrap. So here's some major themes that really we see going on. Investors still want growth. They're punishing misses on earnings and they're rewarding growth companies. And so you can see on this slide that it's really about growth metrics. What you're seeing is companies are focused on total revenue, total revenue growth, annual recurring revenue growth, billings growth. Companies that maybe aren't growing so fast, like Dell, are focused on share gains. Lately we've seen pullbacks in the software companies and their stock prices really due to higher valuations. So, there's some caution there. There's actually a somewhat surprising focus given the caution and all the discussion about, you know, slowing economy. There's some surprising lack of focus on key performance indicators like cash flow. A few years ago, Splunk actually stopped giving, for example, cash flow targets. You don't see as much focus on market capitalization or shareholders returns. You do see that from Oracle. You see that last week from the Dell Financial Analyst Meeting. I talked about that. But it's selective. You know these are the type of metrics that Oracle, Dell, VMware, IBM, HPE, you know generally HP Inc. as well will focus on. Another thing we see is the Global M&A across all industries is back to 2016 levels. It basically was down 16% in Q3. However, well and that's by the way due to trade wars and other uncertainties and other economic slowdowns and Brexit. But tech M&A has actually been pretty robust this year. I mean, you know take a look at some examples. I'll just name a few. Google with Looker, big acquisitions. Sales Force, huge acquisition. A $15 billion acquisition of Tableau. It also spent over a billion dollars on Click software. Facebook with CTRL-labs. NVIDIA, $7 billion acquisition of Mellanox. VMware just plunked down billion dollars for Carbon Black and its own, you know, sort of pivotal within the family. Splunk with a billion dollar plus acquisition of SignalFx. HP over a billion dollars with Cray. Amazon's been active. Uber's been active. Even nontraditional enterprise tech companies like McDonald's trying to automate some of the drive-through technology. Mastercard with Nets. And of course the stalwart M&A companies Apple, Intel, Microsoft have been pretty active as well as many others. You know but generally I think what's happening is valuations are high and companies are looking for exits. They've got some cool tech so they're putting it out there. That you know, hey now's the time to buy. They want to get out. That maybe IPO is not the best option. Maybe they don't feel like they've got, you know, a long-term, you know, plan that is going to really maximize shareholder value so they're, you know, putting forth themselves for M&A today. And so that's been pretty robust. And I would expect that's going to continue for a little bit here as there are, again, some good technology companies out there. Okay, now let's get into, Alex if you pull up the next slide of the Company Outlook. I want to start with Cloud. Cloud, as they say here, continues it's steady march. I'm going to focus on the Big 3. Microsoft, AWS, and Google. In the ETR Spending Surveys they're all very clearly strong. Microsoft is very strong. As I said it's expanding it's total available market. It's into collaboration now so it's going after Slack, Box, Dropbox, Atlassian. It's announced application performance management capabilities, so it's kind of going after new relic there. New SIM and security products. So IBM, Splunk, Elastic are some targets there. Microsoft is one of the companies that's gaining share overall. Let me talk about AWS. Microsoft is growing faster in Cloud than AWS, but AWS is much, much larger. And AWS's growth continues. So it's not as strong as 2018 but it's stronger, in fact, much stronger than its peers overall in the marketplace. AWS appears to be very well positioned according to the ETR Surveys in database and AI it continues to gain momentum there. The only sort of weak spot is the ECS, the container orchestration area. And that looks a little soft likely due to Kubernetes. Drop down to Google. Now Google, you know, there's some strength in Google's business but it's way behind in terms of market share, as you all know, Microsoft and AWS. You know, its AI and machine learning gains have stalled relative to Microsoft and AWS which continue to grow. Google's strength and strong suit has always been analytics. The ETR data shows that its holdings serve there. But there's deceleration in data warehousing, and even surprisingly in containers given, you know, its strength in contributing to the Kubernetes project. But the ETR 3 Year Outlook, when they do longer term outlook surveys, shows GCP, Google's Cloud platform, gaining. But there's really not a lot of evidence in the existing data, in the near-term data to show that. But the big three, you know, Cloud players, you know, continue to solidify their position. Particularly AWS and Microsoft. Now let's turn our attention to enterprise software. Just going to name a few. ETR will have an extensive at their webcast. We'll have an extensive review of these vendors, and I'll pick up on that. But I just want to pick out a few here. Some of the enterprise software winners. Workday continues to be very, very strong. Especially in healthcare and pharmaceutical. Salesforce, we're seeing a slight deceleration but it's pretty steady. Very strong in Fortune 100. And Einstein, its AI offering appears to be gaining as well. Some of the acquisitions Mulesoft and Tableu are also quite strong. Demandware is another acquisition that's also strong. The other one that's not so strong, ExactTarget is somewhat weakening. So Salesforce is a little bit mixed, but, you know, continues to be pretty steady. Splunk looks strong. Despite some anecdotal comments that point to pricing issues, and I know Splunk's been working on, you know, tweaking its pricing model. And maybe even some competition. There's no indication in the ETR data yet that Splunk's, you know, momentum is attenuating. Security as category generally is very, very strong. And it's lifting all ships. Splunk's analytics business is showing strength is particularly in healthcare and pharmaceuticals, as well as financial services. I like the healthcare and pharmaceuticals exposure because, you know, in a recession healthcare will, you know, continue to do pretty well. Financial services in general is down, so there's maybe some exposure there. UiPath, I did a segment on RPA a couple weeks ago. UiPath continues its rapid share expansion. The latest ETR Survey data shows that that momentum is continuing. And UiPath is distancing itself in the spending surveys from its broader competition as well. Another company we've been following and I did a segment on the analytics and enterprise data warehousing sector a couple weeks ago is Snowflake. Snowflake continues to expand its share. Its slightly slower than its previous highs, which were off the chart. We shared with you its Net Score. Snowflake and UiPath have some of the highest Net Scores in the ETR Survey data of 80+%. Net Score remembers. You take the we're adding the platform, we're spending more and you subtract we're leaving the platform or spending less and that gives you the Net Score. Snowflake and UiPath are two of the highest. So slightly slower than previous ties, but still very very strong. Especially in larger companies. So that's just some highlights in the software sector. The last sector I want to focus on is enterprise infrastructure. So Alex if you'd bring that up. I did a segment at the end of Q2, post Q2 looking at earning statements and also some ETR data on the storage spending segment. So I'll start with Pure Storage. They continue to have elevative spending intentions. Especially in that giant public and private, that leading indicator. There are some storage market headwinds. The storage market generally is still absorbing that all flash injection. I've talked about this before. There's still some competition from Cloud. When Pure came out with its earnings last quarter, the stock dropped. But then when everybody else announced, you know, negative growth or, in Dell's case, Dell's the leader, they were flat. Pure Storage bounced back because on a relative basis they're doing very well. The other indication is Pure storage is very strong in net app accounts. Net apps mix, they don't call them out here but we'll do some further analysis down the road of net apps. So I would expect Pure to continue to gain share and relative to the others in that space. But there are some headwinds overall in the market. VMware, let's talk about VMware. VMware's spending profile, according to ETR, looks like 2018. It's still very strong in Fortune 1000, or 100 rather, but weaker in Fortune 500 and the GPP, the global public and private companies. That's a bit of a concern because GPP is one of the leading indicators. VMware on Cloud on AWS looks very strong, so that continues. That's a strategic area for them. Pivotal looks weak. Carbon Black is not pacing with CrowdStrike. So clearly VMware has some work to do with some of its recent acquisitions. It hasn't completed them yet. But just like the AirWatch acquisition, where AirWatch wasn't the leader in that space, really Citrix was the leader. VMware brought that in, cleaned it up, really got focused. So that's what they're going to have to do with Carbon Black and Security, which is going to be a tougher road to hoe I would say than end user computing and Pivotal. So we'll see how that goes. Let's talk about Dell, Dell EMC, Dell Technologies. The client side of the business is holding strong. As I've said many times server and storage are decelerating. We're seeing market headwinds. People are spending less on server and storage relative to some of the overall initiatives. And so, that's got to bounce back at some point. People are going to still need compute, they're still going to need storage, as I say. Both are suffering from, you know, the Cloud overhang. As well, storage there was such a huge injection of flash it gave so much headroom in the marketplace that it somewhat tempered storage demand overall. Customers said, "Hey, I'm good for a while. Cause now I have performance headroom." Whereas before people would buy spinning discs, they buy the overprovision just to get more capacity. So, you know, that was kind of a funky value proposition. The other thing is VxRail is not as robust as previous years and that's something that Dell EMC talks about as, you know, one of the market share leaders. But it's showing a little bit of softness. So we'll keep an eye on that. Let's talk about Cisco. Networking spend is below a year ago. The overall networking market has been, you know, somewhat decelerating. Security is a bright spot for Cisco. Their security business has grown in double digits for the last couple of quarters. They've got work to do in multi-Cloud. Some bright spots Meraki and Duo are both showing strength. HP, talk about HPE it's mixed. Server and storage markets are soft, as I've said. But HPE remains strong in Fortune 500 and that critical GPP leading indicator. You know Nimble is growing, but maybe not as fast as it used to be and Simplivity is really not as strong as last year. So we'd like to see a little bit of an improvement there. On the bright side, Aruba is showing momentum. Particularly in Fortune 500. I'll make some comments about IBM, even though it's really, you know, this IBM enterprise infrastructure. It's really services, software, and yes some infrastructure. The Red Hat acquisition puts it firmly in infrastructure. But IBM is also mixed. It's bouncing back. IBM Classic, the core IBM is bouncing back in Fortune 100 and Fortune 500 and in that critical GPP indicator. It's showing strength, IBM, in Cloud and it's also showing strength in services. Which is over half of its business. So that's real positive. Its analytics and EDW software business are a little bit soft right now. So that's a bit of a concern that we're watching. The other concern we have is Red Hat has been significantly since the announcement of the merger and acquisition. Now what we don't know, is IBM able to inject Red Hat into its large service and outsourcing business? That might be hidden in some of the spending intention surveys. So we're going to have to look at income statement. And the public statements post earnings season to really dig into that. But we'll keep an eye on that. The last comment is Cloudera. Cloudera once was the high-flying darling. They are hitting all-time lows. They made the acquisition of Hortonworks, which created some consolidation. Our hope was that would allow them to focus and pick up. CEO left. Cloudera, again, hitting all-time lows. In particular, AWS and Snowflake are hurting Cloudera's business. They're particularly strong in Cloudera's shops. Okay, so let me wrap. Let's give some final thoughts. So buyers are planning for a slowdown in tech spending. That is clear, but the sky is not falling. Look we're in the tenth year of a major tech investment cycle, so slowdown, in my opinion, is healthy. Digital initiatives are really moving into higher gear. And that's causing some replacement on legacy technologies and some focus on bets. So we're not just going to bet on every new, emerging technology, were going to focus on those that we believe are going to drive business value. So we're moving from a try-everything mode to a more focused management style. At least for a period of time. We're going to absorb the spend, in my view, of the last two years and then double-down on the winners. So not withstanding the external factors, the trade wars, Brexit, other geopolitical concerns, I would expect that we're going to have a period of absorption. Obviously it's October, so the Stock Market is always nervous in October. You know, we'll see if we get Santa Claus rally going into the end of the year. But we'll keep an eye on that. This is Dave Vellante for Cube Insights powered by ETR. Thank you for watching this breaking analysis. We'll see you next time. (upbeat tech music)

(upbeat music) >> Female: From our studios, in the heart of Silicon Valley, Palo Alto, California, this is a Cube conversation. >> Hey welcome back everybody. Jeffrey here with The Cube. We're in our Palo Alto studios today for a Cube conversation. Again, it's a little bit of a let down in the crazy conference season, so it gives us an opportunity to do more studio work, and check in with some folks. So we're really excited to have our next guest. We'd love to talk to practitioners, people out on the front lines that are really living this digital transformation experience. So we'd like to welcome in, all the way from Toronto, the NBA champion, Toronto, home of the Raptors, he's Phillip Armstrong, global C.I.O., and E.V.P. from Great-West Lifeco. Philip, great to see you. >> Thanks, Jeff, good afternoon. >> And I got to say congrats, you know, you took the title away from us this year, but a job well done, and we all rejoiced in Canada's happy celebration. I'm sure it was a lot of fun. >> Lots of excitement here in Toronto for sure. >> Great, so let's jump into it. A lot of conversations about digital transformations. You're right in the heart of it, you're running a big company that's complicated, it's old. So first off, give us a little bit of a background just for people that aren't familiar with Great-West Lifeco in terms of how long you've been around, the scale and size, and then we can get into some of the challenges and the opportunities that you're facing. >> Sure, I'd love to. Actually, one of probably the world's best kept secrets. So Great-West Lifeco is a holding company, and underneath that company, we have a number of companies. So for example in the U.S., you may have heard of Putnam Mutual Funds out of Boston, or Empower Retirement Services, the second largest pension administration company in the United States out of Denver. We have companies called Canada Life and Irish Life. We operate in Europe, the U.S., and Canada. We were formed in 1847, so we're 170 odd years old. Very old, established company, in fact, the first life insurance company to get its charter in Canada. So we were certainly not born digital, we were not born in the cloud. In fact, we weren't even born analog. I think our history goes back to parchment, green ink, and "I" shares. So this has been quite the digital transformation for our company. >> So when you think about digital transformation, insurance companies are always interesting, right? Because insurance companies, by their very nature, they created actuarials, and you guys have always been doing math, and you've always been forecasting, and building models. What does digital transformation mean for you, and that core business in the way you look at insurance and the products that you offer your customers? >> It's been massive, it's had a massive impact right across our company. We have 30 million customers around the globe. Customers' expectations are rising every single day. They want online access to their information. We're an insurance company, but we're also a wealth management company, so we're open to market timing and exposures to the market. Our pace in our business has accelerated dramatically. So just the expectation, the other companies, digitally-native companies are setting with our customers, has forced us to completely re-examine our traditional business models that have served us so well, almost to the point where you have to take a hand grenade and just blow it up and start again. This is very, very difficult when you've got actuarial tables that are working, that are built on hundreds of years of experience. We're moving into a completely new world now. We've come from a world where security has always been very important to us. We manage 1.4 trillion dollars of other people's money. We have traditional business models and traditional data centers, and we operate at a certain level, a certain pace, and all of that, all of that, now has to change. We have skill sets and people who are very, very technical in nature, in their jobs, and have we got the right skills to take us into the future? Can we future-proof our business? This has been, not just a technology transformation, but a massive cultural transformation for our company. A reinvention of all of our business models, the way we look at our customers. A lot of our business is done through advisors. We have half a million advisors around the world that give financial planning and advice to people, and allow them to have some financial security. Our relationship with them has to change, and their expectations in using technology has to change. So this digital transformation is only a thin sliver of the transformation that our company has been going through globally over the last few years. >> That's interesting, you talked on so many topics there I want to kind of break it down into three. One is the consumerization of IT that we've talked about over and over and over, and people's experience with Yahoo and Amazon, and shopping with Google and Google Maps, really drives their expectations of the way they want to interact with every application on their phone when they want to, how they want to. So that's interesting in terms of your customer engagement. The other piece I want to go in a little bit is your own employees. You've been around since 1847, the expectations of the kids that you're hiring out of college today, and what they expect in their work environment, also driven in a big part by the phones that they carry in their pockets. And then the third leg of the stool are these, I forget the word that you used, but your partners or associates, or these advisors that you are enabling with your technology stack, but they're, I assume, independent folks out there just like you see at the local insurance office, that you need to enable them in a very different way. You're sitting in the middle. How do you break down the problems across those three groups of people, or contingencies, or constituencies? That's the word I'm looking for. >> Let's start with our advisors. We have many relationships with advisors. We have a relationship with an advisory force that is almost like a tied sales force that is positioned just to sell our products. We have advisors who are quite independent, and yet they sell our products. And then we have advisors that occasionally sell our products, and everything in between. Companies that are advisors, sort of managing general agents. We have bank assurance arrangements. We have all kinds of distribution arrangements around the globe, with our company to distribute our products. But the heart of what we do is an advice-based channel with many variants. So what do those advisors want? The want tools, online tools, they want safe connectivity, they want fast access to the internet, they want to be able to pull in advice, they want video conferencing, they want to be able to be reachable by their customers, and really leverage technology to allow them to provide that timely advice and be responsive to market changes. Almost delivering a bespoke service to each individual, in yet a mass way that's simple and timely. When you look at our employees, our employees pretty much want the same thing. They want safe access to the internet, they want safe access to the cloud and our applications. We've had to go through massive amounts of cultural change and training and education to bring our employees into the new world with new skills and equip them, just ways of working. Video, introducing video into our company, upgrading our networks. The change behind all of this different way of working has been phenomenal. I wish you could see the building we're sitting in today, that I'm coming to you from today. It's a stone building that was built in the early 1930s, a prominent landmark here in Toronto. And from the outside, it looks archaic. When you walk into the lobby, it's all art deco and beautiful. They can't make buildings like this today. But in many ways, it epitomizes our company, because then you go up the elevators and walk onto the floors, and it's all open plan, all digitally enabled. We have Microsoft Teams in every meeting room. The floors are all modern and newly decorated and designed to allow us to collaborate and create new solutions for our customers. It's a real juxtaposition . And that, I feel, is a good analogy for our company right now, and what we're going through. >> So let's talk about how it's changed in terms of the infrastructure. Your job is to both provide tools to all these different constituents you talked about as well as protect it. So it's this interesting dynamic where before, you could build a moat, and keep everybody inside the brick building. But you can't do that anymore, and security has changed dramatically both with the cloud as well as all these hybrid business relationships that you described. So how did you address that? How have you seen that evolve over the last several years, and what are some of the top of mind issues that you have when you're thinking about I've got to give access to all these people. They want fast, efficient tools, they want really a great way for them to execute their job. At the same time, I've got to keep that $1.4 trillion and all that that represents secure. Not an easy challenge. >> Not easy at all. A few years ago, it was pretty trendy to say we're going to move everything to the cloud. I think now, especially for large, complex companies like ours, a hybrid cloud is the way to go. I think we're starting to see a lot more CIOs like myself say, yes I'd love to take advantage of the cloud, and I'm certainly moving a lot of my footprint to the cloud. To start with it was because of cost, but now I think it's because of agility and access to new technologies as well. But when you move things to the cloud, you have to be very cautious around how you do that. We have in-house data centers that we have systems, administration systems that are obfuscated from our clients by fancy front ends and easy-to-use experiences. And they're running on pennies on the dollar, and you can't make a business case to move that to the cloud. So a hybrid cloud is the way to go for us. But what we realized very quickly is that we need to push our Cyrus security and defenses out to the intelligent edge, out to the edge of the internet. Stop bad things happening, stop malware, stop infections coming into our organization before they even come into our organization. The cloud has complicated that. We're reducing our surface areas. I heard just the other day a colleague of mine said yeah the cloud is fabulous, it's a faster way to deliver your mistakes to your customers and in many ways, it is, if you're not careful with what you're doing. We've deployed technology like Zscaler and other types of sand-boxing technology. But it's always a cat and mouse game. The bad guys are putting artificial intelligence into their malware. We saw the other day a piece of malware coming into our organization through email, and when it was exploded, the first thing it did was try to check signatures to see if it was in a virtualized environment. And if it was, it just went back to sleep again and didn't activate. The nice thing about Zscaler and some of the technologies that I'm deploying is that they're proprietary. They don't have these signatures. And so we can screen out, we literally get hundreds of thousands, close to millions, of malware attempts coming into our organization on a daily basis. It is a constant fight. What we've also found is that organizations like ours are big targets. What companies are trying to do is not steal our data, because they know that we won't pay ransoms. What we'd like to do is spend that money protecting our customers with credit monitoring, or changing their passwords and helping them deal with if there is a breach. So the bad guys have changed their tactics. Instead of stealing our data, they'd like to try and penetrate our networks and our systems and cripple us. They would really like to bring us down. And that determines a different strategy and protection. >> You touch on so many things there, Philip. We could go for like three hours I think just on follow-ups to that answer. Let me drill in on a couple. One of them, I'm just curious to get your perspective on how you finance insurance. You made an interesting comment, you don't pay ransom, and you have a budget that you spend on security within all the other priorities you have on your plate. But you can't spend everything on insurance, you can't get ultimate 100% protection. So when you think about your trade-offs, when you think about security almost from like an insurance or business mindset, what's the right amount to spend? How do you think about the right amount to spend for security versus everything else that you have to spend on? >> That's a great question, and I've been talking to my peers around what is the right amount of money? You could spend tons and tons of money on Cyber and still be breached. You can do everything right and again, still be breached. You just have to be very pragmatic about where you direct your resources. For us, it was hardening the perimeter was the start. We wanted to stop things getting in as best we could, so we went out to the cloud and put defenses right at the edge, right at the intelligent edge, and extended our network out. Then we went and said, what is our weakest link, and through social engineering and through dropping things onto people's desktops and them trying to breach into our network, we got some pretty sophisticated technology in end point detection. We monitor our devices using our SIM, we have a dedicated monitoring center that is global, that is in-house and staffed. We've built up a lot of capabilities around that. So then it becomes prioritizing your crown jewels, your most sensitive data, trying to put that most sensitive data into protected zones on your network, and clustering even more defenses around that most sensitive data. I'm a big believer in a defense in depth strategy, so I would have multiple layers of cyber security that overlap. So if you can manage to circumvent some, you might get caught by others. And really that's about it. It's been a struggle. We have a lot of people who specialize in risk-management in our company. So everyone's got an opinion, but I think this is a common challenge for global CIOs. >> I'll share you a pro-tip in a couple of the security shows. It seems HVAC systems are ripe for attack, and the funniest one I've every heard was the automated thermometer in a lobby fish tank at a casino that was the access point. So IOT adds a different challenge. >> Or vending machines. >> Yeah, but HVAC came up like five times out of ten, so watch our for those HVAC systems. But, we're here as part of the Zscaler program, and you've already mentioned them before, their name is on this screen. You've talked before about leveraging partners, and Zscaler specifically, but you mentioned a whole host of really the top names in tech. I wonder if you could give us a bit more color on how do you partner? It's a very different way to look at people in a relationship with a company and the reps that you deal with, versus just buying a product and putting in their product. You really talk about partnering with these companies to help you take on this ever-evolving challenge that is security. >> That's a fabulous question. I know that I cannot match the research and development budgets of some of these very large tech companies. And I don't have the expertise. They're specialists, this is what they do. We were the first company I think to install Zscaler in Canada. We have a great relationship with that company, and Jay's onto something here. He's a thought leader in this space. We've been very pleased with our cooperation and support we got from Zscaler in helping us with our perimeter. When we look inside our company, the network played a big part of delivering cyber security and protection for our customers. We placed a phone call over to Cisco and said come on in and help us with this. We need to completely revamp our network, build a leaf and spine architecture, software-defined network, state of the art, we really want the best and the brightest to come in and help us design this network globally for us. So Cisco has been a superb partner. Cisco has one North American lab, where they try out their new technologies and they advance their technologies. It's just down the street here in Toronto, so we've been able to avail ourselves with some pretty decent thought-leadership in the space. And then also FireEye has been absolutely superb working with them, and we developed pretty close relationships with them. We support their activities, they come in and help us with ours. We've used their consulting agency, Mandiant, quite a bit, to give us advice and help us protect our organization. And I think aligning yourself with these quality companies, Microsoft, I have to call out Microsoft, have been superb, starting from the desktop and moving us through, vertically aligned into the cloud, and providing cyber security every step of the way. You can't rely on one vendor, you have to make sure that these suppliers are partners. You turn vendors into partners and you make sure that they play well together, and that they understand what your priorities are and where you want to go. We've been very transparent with them around what we like and what we don't like, and what we think is working well and what isn't working well. We just build this ecosystem that has to work well in this day and age. >> Well Phillip I think that's a great summary, that it's really important to have partners, and really have a deeper business relationship than simply exchanging money for services. The only way, in this really rapidly evolving world, to get by, because nobody can do it by themselves. I think you summarized that very, very well. So final question before I let you go back to the open floor plan, and all the hard working people over there at Great-West Lifeco. What are you priorities for the balance of the year? I can't believe it's July already, this year is just zooming by. What are some of the things, as you look down the road, that you've got your eye on? >> Well we're certainly watching some of the geo-political activities. We have large operations in Europe, from my accent you can probably tell I'm a Brit. So we're watching Brexit and how that plays out. We're certainly trying to develop new and innovative products for our customers, and certain segments are interesting. The millennial segment, the transference of wealth from people in the later generations into earlier generations, passing wealth down to their kids. Retirement is a really big category for us, and making sure that people have good retirement options and retirement products. And of course, we're always kicking tires, and we're looking out for any opportunities in the M&A market as well, as our industry consolidates and costs rise. So that's kind of what's keeping us busy, and of course rolling out really cool technology. >> All right well thanks for taking a few minutes in your very busy day to spend it with us, and give us your story on the global transformation, the digital transformation and Great-West Life Company. >> You're very welcome, Jeff. Nice chatting with you. >> You too, thanks again. So he's Phil, I'm Jeff, you're watching The Cube. Just had a Cube Conversation out of Palo Alto studios. Thanks for watching, we'll see you next time. (upbeat music)

(energetic music) >> Announcer: From our studios in the heart of Silicon Valley; Palo Alto, California. This is a CUBE Conversation. >> Hi everyone, welcome to this special CUBE Power Panel recorded here in Palo Alto, California. We've got remote guests from around the Internet. We have Evan Anderson, Mark Anderson, Phil Lohaus. Thanks for comin' on. Evan is with INVNT/IP, an organization with companies and individuals that fight nation-sponsored intellectual property theft and also author of the huge report Theft Nation Almost a 100 pages of really comprehensive analysis on it. Mark Anderson with the Future in Review CEO of Pattern, Computer and Strategic New Service Chairman of Future in Review Conference, and author of the book "The Pattern Future: "Find the World's Greatest Secrets "and Predicting the Future Using Discovery Patterns" and Phil Lohaus, American Enterprise Institute. Former intelligent analyst, researcher at the American Enterprise Institute, studying competitive strategy and emerging technologies. Guys, thanks for coming on. This topic is, is industrial IoT the new battleground? Mark, you cover the Future Review. Security is the battleground. It's not just a silo'd space. It's horizontally scalable across every single touch point of the Internet, individuals, national security, companies, global, what's your perspective on this new battleground? >> Well, thank you, I took some time and watched your last presentation on this, which I thought was excellent. And maybe I'll try to pick up from there. There's a lot of discussion there about the technical aspects of IoT, or IIoT, and some of the weaknesses, you know firewalls failing, assuming that someone's in your network. But I think that there's a deeper aspect to this. And the problem I think, John, is that yes, they are in your network already, but the deeper problem here is, who is it? Is it an individual? Is it a state? And whoever it is, I'm going to put something out that I think is going to be worth talking more deeply about, and that is, if people who can do the most damage are already in there, and are ready to do it, the question isn't "Can they?" It's "Why have they not?" And so literally, I think if you ask world leaders today, are they in the electric grid? Yes. Is Russia in ours, are we in theirs? Yes. If you said, is China in our most important areas of enterprise? Absolutely. Is Iran in our banks and so forth? They are. And you actually see states of war going on, that are nuisances, but are not what you might call Cybergeddon. And I really believe that the world leaders are truly afraid. Perhaps more afraid of that than of nuclear war. So the amount of death and destruction that could happen if everybody cut loose at the same time, is so horrifying, my guess is that there's a human restraint involved in this, but that technically, it's already game over. >> Phil, Cybergeddon, I love that term, because that's a part of our theme here, is apocalypse now or later? Industrial IoT, or IIoT, or the Internet, all these touch points are creating a surface area that for penetration's purposes, any packet can get in. Nation-states, malware, you name it. It's all problem. But this is the new war battleground. This is now digital Cybergeddon. Forget the wall on the southern border, physical wall. We're talking about a digital wall. We have major threats going on to our society in the United States, and global. This is new, rules of engagement, or no rules of engagement on how to compete in a digital war. This is something that the government's supposed to protect us for. I mean, if someone drops troops in California, physical people, the government's supposed to stop that. But if it's a digital war, it's packets. And the companies are responsible for all this. This doesn't make any sense to me. Break it down, what's the problem? And how do we solve this? >> Sure, well the problem is is that we're actually facing different kinds of threats than we were typically used to facing in the past. So in the past when we go to war, we may have a problem with a foreign country, or a conflict is coming up. We tend to, and by we I mean the United States, we tend to think of these things as we're going to send troops in, or we're going to actually have a physical fight, or we're going to have some other kind of decisive culmination of events, end of a conflict. What we're dealing with now is very different. And it's actually something that isn't entirely new. But the adversaries that we're facing now, so let's say China, Russia, and Iran, just to kind of throw them into some buckets, they think about war very differently. They think about the information space more broadly, and partially because they've been so used to having to kind of be catching up to America in terms of technology, they found other ways to compete with America, and ways that we really haven't been focusing on. And that really, I would argue, extends most prominently to the information space. And by the information space I'm speaking very broadly. I'm talking about, not just information in terms of social media, and emails, and things like that, but also things like what we're talking about today, like IIoT. And these are new threat landscapes, and ones where our competitors have a integrated way of approaching the conflict, one in which the state and private sectors kind of are molded or fused or at least are compelled to work together and we have a very different space here in the United States. And I'm happy to unpack that as we talk about that today, but what we're now facing, is not just about technical capabilities, it's about differences in governing systems, differences in governing paradigms. And so it's much bigger than just talking about the technical specifics. >> Evan, I want you to weigh in on this because one of the things that I feel strongly about, and this is pretty obvious from the commentary, and experts I talk to is, the United States has always been good at defending itself physically, you know war, in being places. Digitally, we've been really good at offense, but terrible on defense, has been the metaphor. I spoke with former four-star General Keith Alexander, who ran the NSA and was first commander of the cyber command, who is now the CEO of IronNet. He and I were talking on-camera and privately and he's saying, "Look it. "we suck at defense digitally. "We're great at offense, we can take someone out "on the offense." But we're talking about IoT, about monitoring. These are technical challenges. This is network nerds, and software engineers have to solve this problem with the prism of defense. This is a new paradigm. This is what we're kind of getting to. And Mark, you kind of addressed it. But this is the challenge. IoT is going to create more points that we have to defend that we suck now at defending, how are we going to get better. This is the paradox. >> Yeah, I think that's certainly accurate. And one of our problems here is that as a society we've always been open. And that was how the Internet was born. And so we have a real paradigm shift now from a world in which the U.S. was leading an open world, that was using the Internet for, I mean there have been problems with security since day one, but originally the Internet was an information-sharing exercise. And we reached a point in human history now where there are enough malicious hackers that have the capabilities we didn't want them to have, but we need to change that outlook. So, looking at things like Industrial IoT, what you're seeing is not so much that this is the battlefield in specific, it's that everything like it is now the battlefield. So in my work specifically we're focused more on economic problems. Economic conflicts and strategies. And if you look at the doctrines that have come out of our adversaries in the last decade, or really 20 years, they very much did what Phil said, and they looked at our weaknesses, and one of those biggest weaknesses that we've always had is that an open society is also unable necessarily to completely defend itself from those who would seek to exploit that openness. And so we have to figure out as a society, and I believe we are. We're running a fine line, we're negotiating this tightrope right now that involves defending the values and the foundational critical aspects of our society that require openness, while also making sure that all the doors aren't open for adversaries. And so we'll continue to deal with that as a society. Everything is now a battlefield and a much grayer area, and IoT certainly isn't helping. And that's why we have to work so hard on it. >> I want to talk about the economic piece on the next talk track of rounds. Theft, and intellectual property that you cover deeply. But Mark and Phil, this notion of Cybergeddon meets the fact that we have to be more defensive. Again, principles of openness are out there. I mean, we have open source. There is a potential path here. Open source software has been, I think, depending on who you talk to, fourth generation, or fifth, depending on how old you are, but it's now mainstream enough now. Are we ever going to get to a formula where we can actually be strong in defense as well as just offense with respect to protecting digitally? >> Phil, do you want that? >> Well, yeah, I would just say that I'm glad to hear that General Alexander is confident about our offensive capabilities. But one of the... To NSA that is conducting these offensive capabilities. When we talk about Russia, Iran, China, or even a smaller group, like let's say an extremist group or something like that, there's an integration between command and control, that we simply don't have here in the States. For example, the Panasonic and Sony examples always come to mind, as ones where there are attacks that can happen against American companies that then have larger implications that go beyond just those companies. So and this may not be a case where the NSA is even tracking the threat. There's been some legislation that's come out, rather controversial legislation about so-called hacking back initiatives and things like that. But I think everybody knows that this is already kind of happening. The real question is going to be, how does the public sector, and how does the private sector work together to create this environment where they're working in synergy, rather than at cross purposes? >> Yeah, and this brings up, I've heard this before. I've heard people talk about the fact that open source nation states can actually empower by releasing tools in open source via the Dark Web or other vehicles, to not actually have, quote, their finger prints, on any attacks. This seems to be a tactic. >> Or go through criminals, right? Use proxies, things like that. It's getting even more complicated and Alexander's talked about that as well, right? He's talked about the convergence of crime and nation-state actions. So whereas with nation-states it's already hard-attributed enough, if that's being outsourced to either whether it's patriotic hackers or criminal groups, it's even more difficult. >> I think you know, Keith is a good friend of all of ours, obviously, good guy. His point is a good one. I'd like to take it a little more extreme state and say, defense is worth doing and probably hopeless. (everyone laughs) So, as they always say, all it takes is one failure. So, we always talk about defense, but really, he's right. Offense is easy. You want to go after somebody? We can get them. But if you want to play defense against a trillion potential points of failure, there's no chance. One way to say this is, if we ignore individuals for a moment and just look at nation-states, it's pretty clear that any nation-state of size, that wants to get into a certain network, will get in. And then the question will be, Well, once they're in, can they actually do damage? And the answer is probably yeah, they probably can. Well, why don't they? Why don't they do more damage? We're kind of back to the original premise here, that there's some restraint going on. And I suspect that Keith's absolutely right because in general, they don't want to get attacked. They don't want to have to come back at them what they're about to do to your banks or your grid, and we could do that. We all could do that. So my guess is, there's a little bit of failure on our part to have deep discussions about how great our defenses either are, or are not, when frankly the idea of defense is a good idea, worthwhile idea, but not really achievable. >> Yeah, that's a great point. That comes up a lot where it's like, people don't want retaliation, so it's a big, critical event that happens, that's noticeable as a counterstrike or equivalent. But there's been discussion of the, I call it "the slow bleed" where they push the line of where that is, like slowly infiltrate, and just cause disruption and inconvenience, as a tactic. This has become something we're seeing a lot of. Whether it's misinformation campaigns on fake news, to just disrupting operations slowly over time, and just kind of, 1,000 paper cuts, if you will. Your guys' thoughts on that? Is that something you guys see out there that's happening? >> Well, you saw Iran go after our banks. And we were pushing Iran pretty hard on the sanctions. Everybody knows they did that. It wasn't very much fun for anybody. But what they didn't do is take down the entire banking system. Not sure they could, but they didn't. >> Yeah, I would just add there that you see this on multiple fronts. You see this is by design. I'm sure that Mark is talking about this in his report but... they talk about this incremental approach that over time, this is part of the problem, right? Is that we have a very kind of black or white conception of warfare in this country. And a lot of times, even companies are going to think, well you know, we're at peace, so why would I do something that may actually be construed as something that's warlike or offensive or things like that? But in reality, even though we aren't technically at war, all of these other actors view this as a real conflict. And so we have to get creative about how we think about this within the paradigm that we have and the legal strictures that we have here in this country. >> Well there's no doubt at least in my non-expert military opinion, but as someone who is a techie, been on the Internet from day one, all my life, and all those tools, you guys as well, I personally think we're at war. 100%, there's no debate on that. And I think that we have to get better policy around this and understand it better. Because it's happening. And one of the obvious areas that we see in the news everyday, it's Huawei and intellectual property theft. This is an economic impact. I mean just look at what's happening in Brexit in the U.K. If that was essentially manipulated, that's the ultimate smart bomb, is to just destroy their financial system, which ended up happening through that misinformation. So there are economic realizations here, Evan,that not only come from the misinformation campaigns and other attacks, but there's real value with intellectual property. This is the report you put out. Your thoughts? >> There's very much an active conflict going on in the economic sphere, and that's certainly an excellent point. I think one of the most important things that most of the world doesn't quite understand yet, but our adversaries certainly understand, is that wars are fought for usually, just a few reasons. And there's a lot of different justification that goes on. But often it's for economic benefit. And if you look at human history, and you look at modern history, a lot of wars are fought for some form of economic benefit, often in the form of territory, et cetera, but in the modern age, information can directly and very quite obviously translate into economic benefit. And so when you're bleeding information, you're really bleeding money. And when I say information, again, it's a broad word, but intellectual property, which our definition, here at INVNT/IP is quite broad too, is incredibly valuable. And so if you have an adversary that's consistently removing intellectual property from what I would call our information ecosystem, and our business ecosystem, we're losing a lot of economic value there, and that's what wars are fought over. And so to pretend that this conflict is inactive, and to pretend that the underlying economy and economic strength that is bolstered or created by intellectual property isn't critical would be silly. And so I think we need to look at those kinds of dynamics and the kind of Gerasimov Doctrine, and the essential doctrine of unrestricted warfare that came out of the People's Republic of China are focused on avoiding kinetic conflict while succeeding at the kinds of conflict that are more preferable, particularly in an asymmetric environment. So that's what we're dealing with. >> Mark and Phil, people waking up to this reality are certainly. People in the know are that I talk to, but generally speaking across the board, is this a woke moment for tech? This Armageddon now or later? >> Woke moment for politicians not for tech, I think. I'm sure Phil would agree with this, but the old guard, go back to when Keith was running the NSA. But at that time, there was a very clear distinction between military and economic security. And so when you said security, that meant military. And now all the rules have changed. All the ways CFIUS works in the United States have changed. The legislation is changing, and now if you want to talk about security, most major nations equate economic security with national security. And that wasn't true 10 years ago. >> That's a great point. That's really profound, I totally agree. Phil. >> I think you're seeing a change in realization in Washington about this. I mean, if you look at the cybersecurity strategy of 2018, it specifically says that we're going to be moving from a posture of active defense to one of defending forward. And we can get into the discussion about what those words mean, but the way I usually boil down is it means, going from defending, but maybe a little bit forward, to actually going out and making sure that our interests are protected. And the reason why that's important, and we're talking about offense versus defense here, obviously the reason why, from what Mark was saying, if they're already in the networks, and they haven't actually done anything, it's because they're afraid of what that offensive response could be. So it's important that we selectively demonstrate what costs we could impose on different actors for different kinds of actions, especially knowing that they're already operating inside of our network. >> That's a great point. I mean, I think that's again another profound statement because it's almost like the pin in the grenade. Once they pull it, the damage is done. Again, back to our theme, Armageddon, now or later? What's the answer to this, guys? Is it the push to policy conversation and the potential consequences higher? Get that narrative going. Is it more technical protection in the networks? What's some of the things that people are talking about and thinking about around this? >> And it's really all of the above. So the tough part about this for any society and for our society is that it's expensive to live in a world with this much insecurity. And so when these kind of low-level conflicts are going on, it costs money and it costs resources. And companies had to deal with that. They spent a long time trying to dodge security costs, and now particularly with the advent of new law like the GDPR in Europe, it's becoming untenable not to spend that defensive money, even as a company, right? But we also are looking at a deepening to change policy. And I think there's been a lot of progress made. Mark mentioned the CFIUS reforms. There are a lot of different essentially games of Whack-A-Mole being played all around the world right now figuring out how to chase these security problems that we let go too long, but there's many, many, many fronts that we need to-- >> Whack-A-Mole's a great example. The visualization of that is just horrendous. You know, not the ideal scenario. But I got to get your point on this, because one of the things that comes up all the time in our conversations in theCUBE is, the government's job is to protect our securities. So again, if someone came in, and invaded my town in Palo Alto, it's not my responsibility to fight for the town. Maybe defend my own house. But if I'm a company being attacked by Russia, or China or Iran, isn't it the government's responsibility to protect me as a citizen and the company doing business there? So again, this is kind of the confusion that people have. If somebody's going to defend their hack, I certainly got to put security practices in place. This is new ground for the government, digitally speaking. >> When we started this INVNT/IP project, it was about seven years ago. And I was told by a very smart guy in D.C. that our greatest challenge was going to be American corporations, global corporations. And he was absolutely right. Literally in this fight to protect intellectual property, and to protect the welfare even of corporations, our greatest enemies so far have been American corporations. And they lobby hard for China, while China is busy stealing from them, and stealing from their company, and stealing from their country. All that stuff's going on, on a daily basis and they're in D.C. lobbying in favor of China. Don't do anything to make them mad. >> They're getting their pockets picked at the same time. And they're trying to do business in China. They're getting their pockets picked. That's what you're saying. >> They're going for the quarterly earnings report and that's all. >> So the problem is-- >> Yeah so-- >> The companies themselves are kind of self-inflicted wounds here for them. >> Yes. >> Yeah, just to add to that, on this note, there have been some... Business to settle interest. And this is something you're seeing a little bit more of. There's been legislation through CFIUS and things like that. There have been reforms that discourage the flow of Chinese money in the Silicon Valley. And there's actually a measurable difference in that. Because people just don't want to deal with the paperwork. They don't want to deal with the reputational risk, et cetera, et cetera. And this is really going to be the key challenge, is having policy makers not only that are interested in addressing this issue, because not all of them are even convinced it's a problem, if you can believe it or not, but having them interested and then having them understand the issue in a way that the legislation can actually be helpful and not get in the way of things that we value, such as innovation and entrepreneurialism and things like that. So it's going to take sophisticated policy-making and providing incentives so that companies actually want to participate and helping to make America safer. >> You're so right about the politicians. Capitol Hill's really not educated. I mean I tell my kids, and they ask the same questions, just look at Mark Zuckerberg and Sundar Pichai present to the government. They don't even know what an Android phone versus an iPhone is, nevermind what the Internet, and how this global economy works. This has become a makeup problem of the personnel in Capitol Hill. You guys see any movement? I'm seeing some change with a new guard, a new generation of younger people coming in. Certainly from the military, that's an easy when you see people get this. But a new generation of young millennials who are saying, "Hey, why are we doing this the old way?" and actually becoming more informed. Not being the lawyer at law-making. It's actually more technically savvy. Is there any movement, any bright hope there? >> I think there's a little hope in the sense that at a time when Congress has trouble keeping the lights on, they seem to have bipartisan agreement on this set of issues that we're talking about. So, that's hopeful. You know, we've seen a number of strongly bipartisan issues supported in Congress, with the Senate, with the House, all agreeing that this is an issue for us all, that they need to protect the country. They need to protect IP. They need to extend the definition of security. There's no argument there. And that's a very strange thing in today's D.C. to have no argument between the parties. There's no error between the GOP and the Democrats as far as I can tell. They seem to all agree on this, and so it is hopeful. >> Freedom has its costs and I think this is a new era of modern freedom and warfare and protection and all these dynamics are changing, just like Cloud 2.0 is changing application developers. Guys, this is a really important topic. Thank you so much for coming on, appreciate it. Love to do a follow-up on this again with you guys. Thanks for sharing your insight. Some great, profound statements there, appreciate it. Thank you very much. >> Thank you. >> Thanks for having us. >> It's been a CUBE Power Panel here from Palo Alto, California with Evan Anderson, Mark Anderson, and Phil Lohaus. Thank you guys for coming on. Power Panel: The Next Battleground in Industrial IoT. Security is a big part of it. Thanks for watching, this has been theCUBE. (energetic music)

>> live from Boston, Massachusetts. It's the Cube covering A W s reinforce 2019 brought to you by Amazon Web service is and its ecosystem partners. >> Okay, welcome back. Everyone's two cubes Live coverage here in Boston, Massachusetts, for AWS reinforce. This is Amazon Web services Inaugural conference around Cloud security There first of what? Looks like we'll be more focused events around deep dive security to reinvent for security. But not no one's actually saying that. But it's not a summit. It's ah, branded event Reinforce. We're hearing Mark Ryland off director Office of the Sea. So at eight of us, thanks for coming back. Good to see you keep alumni. Yeah, I'm staying here before It's fun. Wait A great Shadow 80 Bucks summit in New York City Last year we talked about some of the same issues, but now you have a dedicated conference here on the feedback from the sea. So as we've talked to and the partners in the ecosystem is, it's great to have an event where they go deep dives on some of the key things that are really, really important to security. Absolutely. This is really kind of a vibe that how reinvents started, right? So reinventing was a similar thing for commercial. You're deep, not easy to us. Three here, deeper on Amazon. But with security. Yeah, security lens on some of the same issues. One thing that happened >> and kind of signal to us that we needed an event like this over the years with reinvent was consistently over the years, the security and compliance track became one of the most important tracks that was oversubscribed in overflow rooms and like, Hey, there's a signal here, right? And so, but at the same time, we wanted to be able to reach on audience. Maybe they wouldn't go to reinvent because they thought I'd say It's all the crazy Dale Ops guys were doing this cloud thing. But now, of course, they're getting the strong message in their security organizations like, Hey, we're doing cloud. Or maybe as a professional, I need to really get smart about this stuff. So it's been a nice transition from still a lot of the same people, but definitely the different crowd that's coming here and was a cross pollination between multiple and I was >> just at Public sector summit. They about cyber security from a national defense and intelligence standpoint. Obviously, threesome Carlson leads That team you got on the commercial side comes like Splunk who our data and they get into cyber. So you started to see kind of the intersection of all the kind of Amazon ecosystems kind of coming around security, where it's now part of its horizontal. It's not just these are the security vendors and partners writes pretty much everyone's kind of becoming native into thinking about security and the benefits that you guys have talk about that what Amazon has to have a framework, a posture. Yeah, they call it shared responsibility. But I get that you're sharing this with the ecosystem. Makes sense. Yeah, talk about the Amazon Web service is posture for this new security >> world. Well, the new security world is if you look at like a typical security framework like Mist 853 120 50 controls all these different things you need to worry about if you're a security professional. And so what eight obvious able to do is say, look, there's a whole bunch of these that we can take care of on your behalf. There's some that we'll do some things and you got to do some things and there's some There's still your responsibility, but we'll try to make it easy for you to do those parts. So right off the bat we can get a lot of wins from just hey, there's a lot of things will just take care of. And you could essentially delegate to us. And for the what remain, You'll take your expertise and you'll re focus it on more like applications security. There still may be some operating systems or whatever. If using virtual machine service, you still have to think about that. But even there, we'll use we have systems Manager will make it easy to do patch management, updating, et cetera. And if you're willing to go all the way to is like a lambda or some kind of a platform capability, make it super easy because all you gotta do is make sure your code is good and we'll take care of all the infrastructure automatically on your behalf so that share responsibility remains. There's a lot of things you still need to be careful about and do well, but your experts can refocus. They could be very you know like it's just a lot less to worry about it. So it's really a message for howto raise the bar for the whole community, but yet still have >> that stays online with the baby value properties, which is, you know, build stuff, ship fast, lower prices. I mazon ethos in general. But when you think about the core A. W. S what made it so great Waas you can reduce the provisioning of resource is to get something up and running. And I think that's what I'm taking away from the security peace you could say. We know Amazon Web service is really well, and we're gonna do these things. You could do that so us on them and then parts to innovate. So I get that. That's good. The other trend I want to get your reaction to is comments we've had on the Cube with si SOS and customers is a trend towards building in house coding security. Your point about Lambda some cool things air being enabled through a B s. There's a real trend of big large companies with security teams just saying, Hey, you know what? I wanna optimize my talent to code and be security focused on use cases that they care about. So you know, Andy Jazz talks about builders. You guys are about builders you got cos your customers building absolutely. Yet they don't want Tonto, but they are becoming security. So you have a builder mindset going on in the big enterprises. >> Yes, talk about that dynamic. That's a That's a really important trend. And we see that even in security organizations which historically were full of experts but not full of engineers and people that could write code. And what we're seeing now is people say, Look, I have all this expertise, but I also see that with a software defined the infrastructure and everything's in a P I. If I pair up in engineering team with a security professional team, then well, how good things will happen because the security specials will say, Gosh, I do this repetitive task all the time. Can you write code to do that like, Yeah, we can write code to do that. So now I can focus on things that require judgment instead of just more rep repetitive. So So there's a really nice synergy there, and our security customers are becoming builders as well, and they're codifying if you moment expression in code, a policy that used to be in a document. And now they write code this as well. If that policy is whatever password length or how often we rode a credentials, whatever the policy is where Icho to ensure that that actually happening. So it's a real nice confluence of security expertise with the engineering, and they're not building the full stack >> themselves. This becomes again Aki Agility piece I had one customer on was an SMS business. They imported to eight of US Cloud with three engineers, and they wrote all the Kuban aged code themselves. They could have used, you know, other things, but they wanted to make sure it's stable so they could bring in some suppliers that could add value. So, again, this is new. Used to be this way back in the old days, in House developers build the abs on the mainframe, build the APS on the mini computers and then on I went to outsourcing, so we're kind of back. The insourcing is the big trend now, >> right in with the smaller engineering team, I can do a lot that used to require so many more people with a big waterfall method and long term projects. And now I take all these powerful building blocks and put an engineering team five people or what we would call it to pizza team five or six people off to the side, given 34 weeks, and they can generate a really cool system that would have required months and not years before. So that's a big trend, and it applies across the board, including two security. >> I think there's a sea change, and I think it's clear what I like about this show is this cloud security. But it's also they have the on premises conversation, Mrs Legacy applications that have been secured and or need to be secured as they evolve. And then you got cloud native and all these things together where security has to be built in. Yeah, this is a key theme, so I want to get your thoughts on this notion of built in security from Day one. What's your what's your view on this? And how should customers start thinking >> about it? And >> what did you guys bringing to the table? Well, I think that's just a general say maturation that goes on in the industry, >> whether it's cloud or on Prem is that people realize that the old methods we used to use like, Hey, I'm gonna build a nap And then I'm gonna hand it to the security team and they're gonna put firewalls around it That's not really gonna have a good result. So security by design, having security is equal co aspect of If I'm getting doing an architecture, I look a performance. I look, it cost. I look at security. It's just part of my system designed. I don't think of it as like a bolt on afterwards, so that leads to things like, you know, Secure Dev ops and kind of integration teams through. This could be happening on premises to it's just part of I T. Modernization. But Cloud is clearly a driver as well, and cloud makes it easier because it's all programmable. So things that are still manual on premises, you can do in a more automated getting into a lot of conversations here under the covers, A lot of under the hood conversations here around >> security BC to one of the most popular service is you guys have obviously compute a big part of the mission Land, another of the feature VPC traffic flows, where mirroring was a big announcement. Like we talked about that a lot of talking about the E c two nitro. You gave a talk on that. Did you just unpacked it a little bit because this has been nuanced out there. It's out there people are interested in. What's that talk about inscription is, is in a popular conversation taking minutes? Explain your talk. Sure, So we've talked for now a year and 1/2 >> about how we've essentially rien. Imagine reinvented our virtual machine architecture, too. Go from a primarily soft defined system where you have a mainboard with memory and intel processor and all that kind of a coup treatments of a standard server. And then your virtual ization layer would run a full copy of an operating system, which we call a Dom zero privileged OS that would mediate access between the guest OS is in this and the outside world because it would maintain the device model like how do I talk to a network card? How I talked to a storage device. I talked through the hyper visor, but through also a dom zero Ah, copy of Lennox. A copy of Windows to do all that I owe. So what we just did over the past few years, we begin to take all the things we're running inside that privileged OS and move that into dedicated hardware software, harbor combination where we now have components we call nitro components their actual separate little computers that do dbs processing. They do vpc processing they do instance, storage. So at this point now, we've taken all of the components of that damn zero. We've moved it out into these You could call Cho processors. I almost think of them is like the Nitro controllers. The main processor and the Intel motherboard is a co processor where customer workloads run because the trust now is in these external all systems. And when you go to talk to the outside world from easy to now you're talking through these very trusted, very powerful co processors that do encryption. They do identity management for you. They do a lot of work that's off the main processor, but we can accelerate it. We could be more assured that it's trustworthy. It can it can protect itself from potential types of hacks that might have been exposed if that, say, an encryption key was in the and the main motherboard. Now it's not so it's a long story until one hour version and doing three minutes now. But overall we feel that we built a trustworthy system for virtual. What was the title of talk so people can find it online? So I was just called the night to architecture security implications of the night to architecture. So it's taking information that we had out there. But we're like highlighting the fact that if you're a security professional, you're gonna really like the fact that this system has it has no damn zero. It has no shell. You can't log into the system as a human being. It's impossible to log in. It's all software to find suffer driven, and all the encryption features air in these co processors so we can do like full line made encryption of 100 gigabits of network traffic. It's all encrypted like that's never been done before. Really, in the history of computing, what's the benefit of nitro architectural? Simply not shelter. More trust built into it a trusted root. That's not the main board encryption, off load and more isolation. Because even if I somehow we're toe managed to the impossible combination of facts to get sort of like ownership of that main board, I still don't have access to the outside world. From there, I have to go through a whole another layer of very secure software that mediates between the inner world of where customer were close run and the outside world where the actual cloud is. So it's just a bunch of layers that make things more secure, >> and I'm sure Outpost will have that as well. Can you waste on that? Seem to me to hear about that. Okay, Encryption, encrypt everything. Is it philosophy we heard in the keynote? You also talked about that as well. Um, encrypting traffic on the hour. I didn't talk about what that means. What was talked to you? What's the big conversation around? Encryption within a. W s just inside and outside. What's the main story there? >> There's a lot of pieces to the pie, but a big one that we were talking about this week is a pretty long term project we call Project lever. It was actually named after a ah female cryptographer. Eventually Park team that was help. You know, one of the major factors, including World War Two, are these mathematicians and cryptographers. So we we wanted to do a big scale encryption project. We had a very large scale network and we had, you know, all the features you normally have, but we wanted to make it so that we really encrypted everything when it was outside of our physical control. So we done that took a long time. Huge investment, really exciting now going forward, everything we build. So any time data that customers give to us or have traffic between regions between instances within the same region outside reaches, whenever that traffic leaves our physical control so kind of our building boundaries or gates and guards and going down the street on a fiber optic to another data center, maybe not far away or going inter continent intercontinental links are going sub oceanic links all those links. Now we encrypt all the traffic all the time. >> And what's the benefit of that? So the benefit of that is there. Still, you know, it's it's obscure, >> but there is a threat model where, you know, governments have special submarines that are known to exist that go in, sniff those transoceanic links. And potentially a bad guy could somehow get into one of those network junction points or whatever. Inspect traffic. It's not, I would say, a high risk, but it's possible now. That's a whole nother level of phishing attacks. Phishing attack, submarine You're highly motivated to sniff that line couldn't resist U. S. O. So that's now so people could feel comfortable that that protection exists and even things like here's a kind of a little bit of scare example. But we have customers that say, Look, I'm a European customer and I have a very strong sense of regional reality. I wanna be inside the European community with all my data, etcetera, and you know, what about Brexit? So now I've got all this traffic going through. A very large Internet peering point in London in London won't be part of Europe anymore according to kind of legal norms. So what are you doing in that case? Unless they Well, how about this? How about if yes, the packets are moving through London, but they're always encrypted all the time. Does that make you feel good? Yeah, that makes me feel good. I mean, I so my my notion of work as extra territorial extra additional congee modified to accept the fact that hey, if it's just cipher text, it's not quite the same as unscripted. >> People don't really like. The idea of encrypted traffic. I mean, just makes a lot of sense. Why would absolutely Why wouldn't you want to do that right now? Final question At this event, a lot of attendee high, high, high caliber people on the spectrum is from biz dab People building out the ecosystem Thio Hardcore check. He's looking under the hood to see SOS, who oversee the regime's within companies, either with the C i O or whatever had that was formed and every couple is different. But there's a lot of si SOS here to information security officers. You are in the office of the Chief Security Information officer. So what is the conversations they're having? Because we're hearing a lot of Dev ops like conversations in the security bat with a pretty backdrop about not just chest undead, but hack a phone's getting new stuff built and then moving into production operations. Little Deb's sec up So these kinds of things, we're all kind of coming together. What are you hearing from those customers inside Amazon? Because I know you guys a customer driven in the customers in the sea SOS as your customer. What are they saying? What are they asking for? So see, so's our first getting their own minds around >> this big technical transformations that are happening on dhe. They're thinking about risk management and compliance and things that they're responsible for. They've got a report to a board or a board committee say, Hey, we're doing things according to the norms of our industry or the regulated industries that we sit in. So they're building the knowledge base and the expertise and the teams that can translate from this sort of modern dev ops e thing to these more traditional frameworks like, Hey, I've got this oversight by the Securities Exchange Commission or by the banking regulators, or what have you and we have to be able to explain to them why our security posture not only is maintained, it in some ways improved in these in this new world. So they're they're challenge now is both developing their own understanding, which I think they're doing a good job at, but also kind of building this the muscle of the strength. The terminology translate between these new technologies, new worlds and more traditional frameworks that they sit within and people who give oversight over them. So you gotta risk. So there's risk committees on boards of these large publics organizations, and the risk committees don't know a lot about cloud computing. So s O they're part of what they do now is they do that translation function and they can say, Look, I've I've got assurance is based on my work that I do in the technology and my compliance frameworks that I could meet the risk profiles that we've traditionally met in other ways with this new technology. So it's it's a pretty interesting >> had translations with the C I A. Certainly in public sector, those security oriented companies, a cz well, as the other trend, they're gonna educate the boards and they're secure and not get hacked the obsolete. And then there's the innovation side of it. Yeah, we actually gotta build out. Yes. This is what we just talked about a big change for our C says. That we talk to and work with all the time is that hey, we're in engineering community now. We didn't used to write a lot of code, and now we do. We're getting strong in that way. Or else we're parting very closely with an engineering team who has dedicated teams that support our security requirements and build the tools. We need to know that things are going well from our perspective. So that's a really cool, I think, changing that. I think that is probably one >> of my favorite trends that I see because he really shows the criticality of security was pretty much all critically, only act. But having that code coding focus really shows that they're building in house use case that they care about and the fact that I can now get native network traffic. Yeah, and you guys are exposing new sets of service is with land and other things >> over the top. >> It just makes for a good environment to do these clouds. Security things. That seems to be the show >> in a nutshell. Yeah, I think that's one of the nice thing about this show. Is It's a very positive energy here. It's not like the fear and scary stuff sometimes hear it. Security conference is like a the sky's falling by my product kind of thing Here. It's much more of a collaborative like, Hey, we got some serious challenges. There's some bad guys out there. They're gonna come after us. But as a community using new tooling, new techniques, modern approaches, modernization generally like let's get rid of a lot of these crusty old systems we've never updated for 10 or 20 years. It's a positive energy, which is really exciting. Good Mark, get your insights out. So this is your wheelhouse Show. Congratulations. >> You got to ask you the question. Just take your see. So Amazon had off just as an industry participant riding this way, being involved in it. What is the most important story that needs to be told in the press? In the media that should be told what's as important. Either it's being told it, then should be amplified or not being told and be written out. What's the What's the top story? I don't think that even after all this time that you know when people >> hear public cloud computing. They still have this kind of instinctive reaction like, Oh, that sounds kind of scary or a little bit risky and, you know, way need to get to the point where those words don't elicit some sense of risk in people's minds, but rather elicit like, Oh, cool, that's gonna help me be secure instead of being a challenge. Now that's a journey, and people have to get there, and our customers who go deep, very consistently, say, And I'm sure you've had them say to you, Hey, I feel more confident in my cloud based security. Then I do my own premises security. But that's still not the kind of the initial reaction. And so were we still have a ways, a fear based mentality. Too much more >> of a >> Yeah. Modernization base like this is the modern way to get the results in the outcomes I want, and cloud is a part of that, and it doesn't not only doesn't scare me, I want to go there because it's gonna take a community as well. Yeah, Mark, thanks so much for coming back on the greatest. Be hearing great Mark Mark Riley, direct of the office of the chief information security at Amazon Web services here, sharing his inside, extracting the signal. But the top stories and most important things >> being being >> said and discussed and executed here, it reinforced on the Cube. Thanks for watching. We'll be right back with more after this short break.

>> Announcer: Live from Washington D.C. It's theCUBE! Covering AWS Public Sector Summit. Brought to you by Amazon Web Services. >> Welcome back everyone to theCUBE's live coverage of AWS Public Sector here in beautiful Washington D.C. Springtime in D.C., there's no better time to be here. I'm your host, Rebecca Knight, co-hosting along with John Furrier, always so much fun to work with you. >> Great to see you. >> And this is a very exciting event for you in particular 'cause you've been doing a lot of great reporting around the modernization of IT in government. I'd love to have you just start riffing, John. What's on your mind right now coming into this show? What are some of the questions that're burning? >> I mean clearly the most important story that needs to be told and is being talked about here in D.C. in the tech world is, for this show specifically, is the JEDI contract, the Joint Enterprise Defense Initiative. It's a word that's not being kicked around at this show because-- >> Rebecca: Nothing to do with Star Wars. >> It's literally the elephant in the room because the contract's been waiting, Oracle's been dragging it on and Oracle's been part of apparently, my opinion from my reporting, is involved in some dirty under-handed tactics against Amazon. But it's being delayed because they're suing it. And Oracle's out. They have no chance of winning the deal, it's really Microsoft and Amazon are going to get a lion's share of the business. So you have, that's the biggest story in tech in D.C. in a long time, is the role of cloud computing is playing in reshaping how government, public sector operates. Combine that with the fact that a new generation of workers are coming in who have no dogma around IT technology, how it's bought or consumed and purchased, and the overcharging that's been going on for many many years, it's been called the Beltway Bandits for a reason because of the waste and sometimes corruption. So a new generation's upon us and Amazon is the leader in making the change happen. The deal they did with the CIA a few years ago really was the catalyst. And since then, public sector and the government has realized that there's advantages to cloud, not only for operating and serving society and its citizens but also competitiveness on a global scale. So a huge transformation, that's the story we're following. That's the story that we got into from the cloud side of the business here in D.C. and that is just raging and expanding and compounded by other factors like Facebook. Irresponsibility in how they managed the data there. Elections were tied in the balance. You're seeing Brexit in the UK. You're seeing counter-terrorism organizations using the dark web and other cyber security challenges at the United States. Literally digital war is happening so a lot of people, smart people, have recognized this and it's now for the first time coming out. >> Right, and I think the other thing that we're also starting to talk much more about is the regulation. I know that you're friendly with Kara Swisher and she bangs on about this all the time. But then she said in a column the other day the problem is is that they're now guns ablazing but do they really understand it? And also, is it too feeble, too little too late? >> I mean, Kara Swisher nailed her story in the New York Times and opinion piece. And I've had similar opinions. Look it. She's been around for a long time, I've been around for a long time. I remember when Bill Clinton was president, that's when the internet was upon us, the Department of Commerce did a good job with the domain name system, they shepherded the technology and they brought it out in a way that was responsible and let government and industry have a nice balancing act with each other and the government really didn't meddle too much. But there was responsibility back then and it wasn't moving as fast. So now you look at what's happening now, the government can't just not ignore the fact that YouTube is, in essence, its own state. And it's acting irresponsibly with how they're handling their situation. You got Facebook run by a 30-something-year-old, which essentially could be as large as a government. So there's no ethics, there's no thinking behind some of the consequences that they've become. So this begs the question, as a technology hock myself, I love tech, never seen tech I didn't like. I mean I love tech. But there's a point where you got to get in there and start shaping impact on ethics and society and we're seeing real examples of how this can wildfire out of control, how tech has just become uncontrollable in a way. >> Yes, no absolutely. And so who is going to be the one to do that? I know that on the show later you're going to be talking to Jay Carney who was obviously in the Obama administration, now here at AWS. It's a well-worn path from the public sector to technology. Susan Molinari, a couple of other, David Plouffe. That is the thing though, that these people really need to get it. Before they can lay down regulations and laws. >> Again, back to why we're here and stories we're trying to tell and uncover and extract is I think the big story that's emerging from this whole world is not just the impact of cloud, we talked about that, we're going to continue to cover that. It's the societal impact and this real there there, there's the intersection of public policy and technology and science where you don't have to be a programmer, you can be an architect of change and know how it works. Then being a coder and trying to codify a government or society. I think you're going to see a new kind of skillset emerge where there's some real critical thinking into how technology can be used for good. You're seeing the trends, Hackathon For Good here, you're seeing a lot of different events where you have inclusion and diversity, bringing more perspectives in. So you got the perfect storm right now for a sea change where it won't be led by the nerds, so to speak, but geeky digital generations will change it. I think that's going to be a big story. Not just workforce changeover but real disciplines around using machine-learning for ethics, societal impact. These are the storylines. I think this is going to be a big long 10-year, 20-year changeover. >> But what will it take though? For the best and the brightest of the nerds to want to go into public service rather than go work for the tech behemoths that are making these changes? I mean that's the thing, it's a war for talent and as we know and we've discussed a lot on theCUBE, there's a big skills gap. >> I think it's been talked about a lot on the web, the millennials want to work for a company that's mission-based. What more mission-based can you look for than so unto our public service right now? John F. Kennedy's famous line, "Ask not what your country can do for you, "what you can do for you country." That might have that appeal for the younger generation because we need it! So the evidence is there and you look at what's going on with our government. There's so many inefficiencies from healthcare to tax reform to policies. There's a huge opportunity to take that waste, and this is what cloud computing and AI and machine-learning can do, is create new capabilities and address those critical waste areas and again, healthcare is just one of many many many others in government where you can really reduce that slack with tech. So it's a great opportunity. >> And where would you say, and I know you've been reporting on this for a long time, where is the government in terms of all of this? I remember not very long ago when healthcare.gov was rolled out and it was revealed that many agencies were still using floppy disks. The government is, first of all is not this monolithic thing, it's many different agencies all with their own tech agendas and with their own processes and policies. So where do you place the government in terms of its modernization right now? >> On the elected officials side, it's weak. They're really not that smart when it comes to tech. Most of the people that are involved in the elected side of the Hill are either lawyers or some sort of major that's not technical. So you can see that with Sundar Pichai from Google and Mark Zuckerberg's testimony when the basic kind of questions they're asking, it's almost a joke. So I think one, the elected officials have to become more tech-savvy. You can't regulate and govern what you don't understand. I think that something that's pretty obvious to most digital natives. And then on the kind of working class, the Defense Department and these other agencies, there's real people in there that have a passion for change and I think there's change agents, Amazon's done really well there. I think that is a piece where you're going to see a movement, where you're going to see this digital native movement where people going to be like, "There's no excuse not to do this right." And I think there's new ways to do it, I think that's going to change. So that's that. On the business side, to how the government procures technology is literally like the '80s, it's like that movie "Hot Tub Time Machine" where you get thrown back. Everything is based on 1980s procurement, 1990s procurement. I mean, shipping manuals. So all these things have to change. How do you procure cloud? If you got to go through a six-month procurement process just to spit up some servers, that's not agility. So procurement's got to change. Competitiveness, what does that mean? This Oracle deal with JEDI highlights a lot of flaws in the government. Which is Oracle's using these rules around procurement to try to stall Amazon, it's kind of like a technicality but it's so irrelevant to the reality of the situation. So procurement has to change. >> Well one of the things you said about how there's a lot of pressure to get it right. And that is absolutely true because we are dealing with national security issues, people's lives, health, these really important topics. And yet the private sector doesn't always get it right the first time either. So how would you describe the government, the federal approach to how they start to implement these new technologies and experiment with other kinds of tools and techniques? >> Well I think there's obviously some agencies that have sensitive things. CIA's a poster child in my opinion of how to do it right. The JEDI, Department of Defense is emulating that and that's a good thing. The Department of Defense is also going multicloud as they put out in their statement. Amazon for the JEDI piece which is for troops in the field. I think that every agency's going to have its own workload and those workloads should decide which cloud to use based upon the architecture of the workload. 'Cause the data needs to be in the cloud, it needs to be real time. And to take the military example, you can't have lag in military, it's not a video game, it's real life, people die. Lag can literally kill people in the field. So technology can be a betterment there but technology to avoid fighting is another one. So you have all these things going on, I think the government's got to really design everything around the workload, their mission, their applications, rather than designing around here's your infrastructure, then decide. >> One of the things we talk about all the time, almost ad nauseam, on theCUBE is digital transformation. And so how do you think about those two, private sector versus public sector? What are the big differences in terms of these institutions on their own journeys of digital transformation? >> I think the government's slower. That's an easy one to talk about. I think there's a lot of moving parts involved, you mentioned some of the procurement things, so a lot of processes. It's the same kind of equation. People process technology, except the people that process is much more complicated on the public sector side than private sector, unless it's a big company. So imagine the biggest company in the private sector side, multiply that times a hundred, that's the government. So in each agency there's a lot of things going on there. But it's getting better. I think cloud has shown that you can actually do that, the people side of things going to be addressed by this new migration of new generation of people coming in saying, "I don't really care how you did it before, "this is how we're going to do it today." The processes are going to be optimized so there's some innovation around process improvement that's going to end on the wayside and the technology everyday is coming faster and faster. Recognition, facial recognition software. Look at that. AI. These are things that are just undeniable now, they have to be dealt with. What do you do to privacy? So again, back to process. So people process technology. >> AWS is a behemoth in cloud computing. What do you want to be hearing here at this conference? They're so far ahead of Google and Microsoft but we cannot count those two companies out, of course not. But what are you looking for for key messaging at this show? >> Well I'm looking forward to seeing Andy Jassy's Fireside Chat with Teresa Carlson tomorrow. I'm interested in some of the use cases coming out of Teresa Carlson's top customers in public sector, again it's global public sector so it's not just in North America here in the United States. I'm interested in also understanding what's real and what's not real around the fear, uncertainty and doubt that a lot of people have been putting on Amazon. Because I see Amazon posturing in a way that's saying go faster, make change and it's not so much that they want to monopolize the entire thing, they're just moving faster. And I think Andy Jassy yesterday saying that they welcome regulation is something that they're trying to push the regulators on. So I think they welcome change. So I want to understand if Amazon really wants to go faster or is there an agenda there. (laughs) What's going on? >> I know, methinks these tech titans are asking for a little too much regulation right now. I mean obviously Mark Zuckerberg has also said, "Please regulate us, I can't do this alone." And here we have Andy Jassy yesterday saying those same things. >> Andy Jassy said on stage yesterday with Kara Swisher, "We can't arrest people." So if their tech goes bad, they're only beholden to the consequences as a private entity. They're not the law so this is where again, back to top story here is that, what is the role of government? This change is here. It's not going away, it's only going to get faster. So the sooner the elected officials and all the agencies get out in front of the digital transformation, the sooner the better. Otherwise it's going to be a wrecking ball. >> Well I cannot wait to dig into more of this over the next two days with you, here at AWS Public Sector. >> All right. >> I'm Rebecca Knight for John Furrier, you are watching theCUBE. (upbeat music)

>> Hello, Room. Welcome back to London. You watching the Cube? The leader and tech coverage. My name is Dave Volante. We're here in a special program that we've constructed. It's the day before the eight of US London summit and we wanted to come and talk to some customers, some executives of startups, and really dig into what's going on in the public sector. Chris Heman is here. He's the director of UK and Ireland Public sector for eight of us. Chris, Thanks for coming on the Cube. >> Thanks for vitamins. Christ. >> Yeah. So you guys have a special public sector healthcare pre day that's going on downstairs? What's that all about? >> Yes. So obviously we'LL remain summit tomorrow expecting about twelve thousand people, which is phenomenal today that we could do something with one of our special industries, which is health care. So we've invited a number of customers and executives along for that today to learn more about cloud, how they can get going with the cloud and get, you know, start adopting a pace. So I believe you spoke with the missus about earlier on. So he misses a supplies the n hs, but also people and hs digital and so on her adopting the platform. So that's what today's all about. >> So health care is one of those sectors. It's ripe for disruption. It really hasn't been, you know, disrupted in a big way and digitized and it's starting. But the challenge is, how do you balance the cost of health care? Everybody's sensitized to that with the quality. Yeah, here. And so that's what really the problem. Show yourself. How does he ws in the cloud? Help solve that. >> Yeah, I think across the public sex. Really not just for the healthcare, but, you know, one of the things organizations are trying to do is reduce that large legacy footprint of infrastructure and really deliver against their mission, whether it be patients or citizens or whatever it may be. Ah, good example. In the in the case of the health care is we're working with a partner and I just school Business Services Authority on they have a large call center that was a really, you know, costly experience having traditional call center set up. So they've used our connect platform, our call center platform, and also some voice technologic called Lex. And they're able to reduce they stood up in about three weeks is a phenomenal effort, and they reduce their call volume by forty two percent. So basically getting the computer's towards some of the really easy queries, which, of course, meant that some of the tougher call center queries went to the actual humans and the call center handlers. So you know those sort things, I really think impact the bottom line for the HS and save some cost, but really helping to innovate a swell for for their patients and sis isn't so. >> Let's stay in health care for a second. So any just has, ah, nearly half a billion pound initiative to modernize. So if had they asked me, they didn't ask me. But had they ask me, I say, Well, part of that should be to get rid of the heavy lifting, so moved to the cloud and then really try toe transform your labor force to focus on more value added areas. It's actually helps to solve your problems. Is that essentially, what's happening? >> Understand, so that the contacts into very you know, that the people are now answering fines aren't doing those sort of Monday enquiries were it's just going to take four to six weeks. It's Maur, you know, transferring that. You know that's the computer and letting the humans do the heavy lifting. So I think that's you know, certainly one thing. But I think it's also enabling these organizations to really be closer to their citizens into their patients as well. With free liquor organizations like in the local authority, space, like else prevail. There are also using voice technology with Alexa to enable citizens to answer queries like You know who is my counselor or to update about various things within their sort of council record. And socially public sector organizations love that because they've now got this unique touch point with the sisters and at scale, whereas they would never have been able to do that previously. So that's a really good, you know, close engagement for them. >> So you hear the bromide people say data is the new oil. It's it's the it's the new natural resource. We actually think date is more valuable than oil because you can only use oil in one place. The data you can use many, many places, so data becomes increasingly important. But the problem that most traditional companies have is there, Their data is locked in silos. It's hardened into an application. And so so how are you guys attacking that problem? What do you see? A CZ trends in the customer base in terms of being able tto have sort of, ah, unified data model. And what role does the cloud >> play there? Yeah, I think it's really good questions. So there's a number of things that we're doing. First of all, we're very passionate about public date sets. So we host a number of public day sets like Lanza imagery and these sort of things, you know, fundamentally, we believe data has gravity, so, you know, for overto host and provide this data at scale for researchers and so on. That has tremendous huge benefit. But you're right about public sector organizations, and I silos a good example. Where we've we've worked is with transport for London. Obviously, if you want to get in and around the city of London, typically you go to tear filled look after UK, which runs on a dress, and you'LL say, I want to get from you know, Frank and to Liverpool Street, and that's all kind of running on top of a dress. But the really cool thing is they've opened up all that information so they don't have to develop. Those ups themselves are effectively crowd sourcing the development of those APS. So they've got some four thousand developers now working against all this data. Ah, Delight recently did a study. They reckon it's goingto generate economic benefits of one hundred thirty million pounds per annum just by making this really time data available. So So you're gaining unique business in size. But not only that, you've got organizations like city mapper who can commercialize that data develop, perhaps, and sell those apse on behalf of you know, you took to the community and so on. So you've got double bubble of s on the engagement, but also the public benefit as well. So that's really cool >> now, years ago Ah, in a past life, I had an opportunity when I worked for I d see the research company to run the government business. And when I went around and talked to the heads of military heads, the heads of agencies, there was a common theme. They were trying to close the gap between public sector and commercial. Yeah, and they never quite could get there. The cloud seems to me, Chris, to be changing that. I mean, to me, the CIA deal in twenty thirteen was a seminal moment for just the cloud and need of us specifically. But increasingly, you're seeing innovation. Yeah, it's still very difficult because you get turnover and agencies and administrations and so forth. But what are you seeing in terms of of those trends? Are you seeing public sector organizations leaning in modernizing? And again, what role does the cloud play there? >> Yeah, one hundred cent. I think you're absolutely rise. It is a unifier. In that sense we worked with, you know, we're moving mission systems to the cloud now with our customers. Ah, we worked with Dr Vehicle Stands Agency. So they're responsible for making sure our car's unroadworthy in the UK. They migrated their entire platform, which supports on thirty thousand small businesses. Try the rest in ten weeks. So it's amazing what public sector organizations are able to achieve with the pace of cloud. And a lot of it starts with experimentation. You know, that's the great thing is that you can try something. If it doesn't work, you can turn it off and you haven't lost anything but that that pace of being out to move, even mission systems. So the cloud is happening in public sexual across the board, >> and I mentioned the CIA before they start to be the American sort of parachuting in, and it's obviously a bias that I have. I'm working on my accent. But But But But the CIA was significant because everybody in the early days were so concerned about security that the head of tea in the CIA stood up last year at the D. C. Public sector Summit and said, My worst day of security in the cloud is better, far better than my client server ever. Wass. Yeah. So what about security concerns? Have they abated? They they still there? How is that evolving? >> Well, I think first of always, absolutely right that public sector organizations one hundred percent laser focused on security. But the good news is that we are to you know, its job. Zero for us is absolutely everything that we don't live and breathe by. And I think we've demonstrated that in a number of ways. I mean first of all, just the way in which we operate our physical infrastructure and everything that we do it physical pace, but then above the layer with the kind of the things that are a customer's responsible for. We have something called a shared responsibility model, so the responsibility for kind of everything above the physical infrastructure, but we provide the tools that they just never would've been able to get access to in a in a physical world, you know what our CEO's in public sector organizations do You know every servant you have, you know, just things like that. And they would just be like Now I've got no idea, but with a cloud, you have that visibility. You can see every single thing that's happening in the environment. So you get farm or visibility in control that he ever was ever were able to in a physical world. So I think that's first thing and obviously everything that we do around certification atter stations around. I so certification all the reporting and so on that we do Teo to assure our customers that we do a good job of that level as well. Ministry of Justice actually came out and said you could be more secure in the cloud than on premises and you have to focus on those areas where you're not in the cloud. So I think that was a huge testament by the UK. Come and say, Actually, this is this is secure, and this is fit for purpose, which is which is good. >> One of the things I've observed boat just technology adoption in general. You know, Silicon Valley's unique, obviously, And but, you know, outside of Silicon Valley, maybe technology adoption, you know, twenty years ago occurred more slowly. It seems like cloud adoption is very much consistent across the globe. I wonder if you could talk about that, But then specifically, public sector jobs in the cloud Do you see this Very similar sort of cadence from, you know, us rest of >> world? Yeah, I do. And I think you know, we were doing a fantastic job in the UK, Actually. Really fantastic job. Talked about some of stuff we're doing round. I I am machine learning. You know, some of these things are really leading edge on DH. If you speak to a miss earlier, they're investigating things like Blockchain for their tops of solution. So these sort of things are really pushing the boundary. But Paramount, All of that is this idea that you can experiment to try things. There's no longer there's a kind of is no longer a disparity around. Think something's fundamentally when you when you log into the console, you got access to one hundred sixty five different things and you can get going with you in the UK whether you're in the candor or in North America. So our customers are picking these things up on DH, accelerating a pace, which is which is fantastic trying all different types of things and work lights. >> Okay, if I were to ask Alexa what's gonna happen with Brexit, what would what would you tell me? I think first of >> almost, you know, with the way we think about it is it's just business as usual for us. You know, it's a fairly mundane answer, but fundamentally, you know, organization still need to adapt. This stone is transformed. They still need to evolve, and that's where we're helping and we're leaning in, you know, we're helping them with some of their EU accept programs around tooling and process and things like that. But I still came to adopt cloud a place which is which is also >> so come back to the session that you guys are running downstairs. I saw some of descriptions of it and I think there were three areas of focus. The public payers, the health care providers in the publicly funded research organizations is kind of what you guys are focused on today. So maybe close there and give us a vision for where you see eight of us public sector in the UK and >> I I think this were obviously healthcare's really fast growing vertical for us, which is fantastic upper across the board. Demand has never been greater, which is phenomenal on DH were really pushing the boundaries of what can be achieved. Yeah, we're working with, you know, I talked about some the public sector organizations with working with, you know, partners like he miss, but also small businesses as well as great example. Working with a company called Ad Zuna, which provides job search functionality. They run on a dress and they want a contract for Jobcentre Plus, which part of our department work and pensions. So it's not just the direct engagement we have with our customers. But it's also a ll the partners that we're working with to enable that in tow and functionality, which is which is really good. So we're doing a lot, lots of work in that space. And I could liken see Maura Mohr organizations not just customers in customers, but also partners technology providers coming to talk to us. Ah, and then across the spectrum, in health care, whether it's supplies to the chess or at the NSS himself, an individual trusts and and hospitals and so on, the kind of using our technology. So it's a real broad mixing spectrum of adoption. >> Outstanding, Chris, thanks so much for coming on. The Cube really appreciate it. And they were seeing the growth of a device is a DBS is actually astounding thirty billion dollars run rate company growing at forty plus percent a year. But more importantly, you're starting to see not only region expansion, but you're seeing expansion into specific verticals and ecosystems forming startups. And you guys are doing a great job of attracting these. Thanks very much for coming. Thanks. Thanks. Alright, Keep it right there. Buddy. This is David, Dante and the Cuba right back. Right after this short break. Wait

>> live from London, England. It's the key covering a ws summat London twenty nineteen brought to you by Amazon Web services. >> Welcome back to London. Everybody, this is David. Continue watching the Cube. The leader in live tech coverage. We're here at the London A ws sum of twelve thousand people here for one day summit, which is typically the size of a large tech event that we cover in Las Vegas. John Lovelock is here is a vice president analyst that gardeners essentially gardeners Chief Forecaster John, Thanks for coming with huge pleasure to have you. Thanks for >> having me. It's a great show today. Great event. Happy to be here. >> You're in from Toronto. And, uh, yeah, I'm very impressed with the crowd. He obviously a developer crowd. You and I aren't ties. They see us coming. They think we're trying to sell him something. Waseem have >> ah, monopoly on all the ties and the rule. We have a very diverse group here, but they're all very enthusiastic. Could be here. It's been a great conference. >> So everywhere we go, we hear numbers. Obviously people want toe talk about the size of the market, its growth. That's your job to figure that out. I mean, I've heard numbers that it's a multi trillion dollar market now, uh, growing faster than GDP. I'd love to get your your thoughts on that. Where do we start? Top level macro. What's the pick? >> Top level macro cloud in all of its forms is the fastest growing tech the gardener is tracking. There is definitely spending in there. We're in the twenty twenty five percent growth globally. Nothing else comes close. Your overall growth rate for Total I'd spend this year is one point one percent cloud a twenty five percent. It is moving the market. The only way is doing that, of course, it's by taking money away from legacy lines of business. You know, it's about the switch and spending preference from legacy it and moving that into clouded in all of its forms. >> So it's a share shift you see going on. So you've got the total market growing below global GDP. Is that is that a fair statement? >> It's just below global TV >> usually tracks pretty closely. You would think right? I mean, it's logical that it would >> actually this almost no correlation between GDP and spend really It is one of the biggest things that we have to fight again. >> So that's a myth. >> Absolute myth here to tell you it is dead. There is a flight co relation, but there's no causation. Yl move between GDP and spending, just not there. >> So that makes your job even harder. It does. We have to >> watch what the vendors. They're selling off what they hope to spend. But most importantly, it's about what the demand side is doing. What are people doing? Why air they buying what they're buying? How much are they spending on the stuff that they have, what's get retired and what gets replaced with something new? And that's the whole big shift that we're seeing is a lot of things that are being retired out of the CEOs bag of tricks and a lot of new things coming in. So the spending shift that we're seeing it's all down to where is the CEO in their journey? Howie? How quickly are they able to move from legacy? I t to the new it How quickly is their business moving into being a digital business? >> So okay, so it's one plus percent growth on what we're talking two trillion, three trillion. I mean, what's the four trillion >> four trillion dollars by twenty twenty? >> Okay, And you said Cloud computing growing its twentieth twenty five percent. Eight of us, a thirty billion dollars run right business now growing at forty two percent. Inconstant currency. We're going in at nearly or maybe even slightly more than twice the market. That's astounding, that basically adding nine to ten million dollars a year. >> And they are right in the sweet spot for cloud growth. Do >> you think they hit the law of large numbers of people have been predicting that for years. Could get a company that size in your experience. Continue to grow at that pace? >> Absolutely there is. There is nothing stopping a ws from taking advantage of this market. We're nowhere near saturated for cloud changes. Most of software spend is still on legacy and maintenance of of software. On Prem. There's still a great deal of money being spent on servers and infrastructure and networking equipment, and all of that gets bled out into the cloud. Eventually, where they have opportunity to shift is almost limitless. You know the amount of money that is being spent by enterprises on cloud is different around the world. In the US, where cloud basically started where the infection started and it's spreading around the world. Back in twenty sixteen, there were about sixty percent of overall enterprise spend was on cloud. The rest of the world is tracking towards that. We have company countries that air close the U. K Canada one two years behind France Germany three four, most of Europe in the three to five years behind. We have some countries that are lagging a little bit further and several dinner just resisting that are not on track to get to cloud. We don't see them getting to cloud even in the ten year times, fam. But the fact that cloud spend in the U. S. Still makes up over fifty percent of global spending on cloud, but only twenty five percent of global spending on it, a lot of money still left to move over. >> That's interesting that that was the facts that's that suggest that there is a delta and cloud adoption between between United States and rest of world that the vendor narrative would not have you believe that? Am I getting that right? Is it? Is it not only slower adoption? What are they they as sophisticated in their adoption, or is there a delta there as well? >> There is a bit of it. There is a delta also in the sophistication. We know that there's a skill gap when it comes to cloud. Everywhere in the world faces the skill gap of the number of people they need with the new skills and cloud and the people they have with the skills that they have. Many companies are missing the fact that some of their Cobol programmers are the ones that should be developing their new cloud applications because it's about changing the business. And nobody knows their business better than the guys that have been writing the legacy apse that have been running the business for the last twenty years. So the training opportunity is actually with their Kobol programs with their long term programmers. We're not seeing that hitting into the market as much as we'd like. >> So your job very difficult job spent. The consolidation makes your job harder in a way, because part of a squint through companies want to tell you what they want to tell you, but you got to figure out what the truth is. When you think about Cloud, it appears relatively straightforward. It's a pure play. They now report their numbers. That must have helped you a lot. But a lot of vendors will throw everything the kitchen sink, you know, numbers for cloud. So you have to parse through that. You have to come up with common definitions across. I mean, good example. Certainly. IBM Oracle broke it out earlier, but now they sort of consolidate everything. One wonders, OK, Where they trying to hide? Not not to pick on people, but their large, established legacy companies. But they want to show their investors. Oh, we're growing at this. The Sirait. So how do you parse through that and squint through that and then come out the other end with the >> real numbers? Well, we have a lot of advantages of Gardner. We spend millions of dollars every year on surveying out globally. We get, we get responses back from CEOs from around the world. We do the largest CEO survey every single year, so we're getting feedback on where the money is being spent. We also have interviews that we do with our clients every single day. We do over two hundred fifty thousand enquiries with clients every year. So we're getting a great deal of feedback from where the money is being spent. We have to reconcile both sides of it. What the vendors air expecting to be what they're telling us that they're making and reconcile ing that with what we're being told is being spent. So we have multiple sides to get to this angle and again. When you start with a vendor, you start with their global revenue. It has to parse out from They're >> gonna match the income statement somehow. But so you've got the empirical data from your surveys. You've got the vendor data. You bottom up. You could do that. And you've got the anecdotal data from your inquiry. You know, your your corporate memory on kind of putting your job is to put all that together. >> Yeah, and we're tracking what we call our peer inside data. We're asking our clients, you know, when they're making a choice which fenders air, they choosing Which friends are they considering? Why did they make the choices? They are. We have our talent neuron database where we're scraping job postings from around the world. So we have somewhere over four billion job postings covering the last five years. So when a company is telling us that they have a large new division, we could go back and say, I don't see you ever hiring those people. So we do have multiple points of light that all really have to come together. It is a tremendously interesting job in a bit of a challenge, but it's one that keeps me up. >> Okay, I often joke. Well, well, Doctor, Uh, Oz. Sorry, Dr Watson. Replace Dr Welby and the answer comes back. Well, you won't replace Dr Oz because you still have to have that nurturing and that interaction. Do you feel as though machine intelligence Based on what? You know, Gardner analysts, You got experts? Many, I'm sure that Follow artificial intelligence machine intelligence. Do you feel like you guys can start applying? Aye, aye. Deep learning, et cetera. To identify patterns to make your job easier, more effective, more science than art. What? Your thoughts on >> that? Well, we have taken a different road. Artificial intelligence requires a lot of good bad data going into it in order to make the right decision. It is changing so quickly. It's difficult to get enough data points together to train and artificial intelligence. We do do some augmentation way. Do have tools that automates certain processes for us and feed us results from multiple millions of data points. But at the end of the day, it's not about coming up with four trillion dollars. That's interesting to anybody. It's the why is it four trillion dollars? Why is it a different four trillion dollars than last year's three point nine trillion dollars? And what's the changing environment that is going >> on >> and the story behind it? The segments, the share shifts and those other trends that you're seeing? >> Because everybody on this floor, all of these eyes start ups, they desperately want to make my number's wrong. They want to change the market in such a dramatic way that they disrupt all of the spending. I can't train in a eye to watch for that >> is your background in econometrics. You an economist? Do you have a math whiz or you're computer scientist? >> All of that, Yeah, have degrees in economics and statistics. I have forty years almost in computer programming been through this cycle for many, many times. So I did a great job from he has all of my sword skill sets coming together. >> You're obviously not a one man band. You mentioned you do, you know, spend millions of dollars on surveys. Two hundred fifty thousand enquiries, but still hurting all that data and actually making sense of it, is it is. It is a challenge. How do you How do you manage that? How are you evolving your your systems, your models? I mean what you used today The tooling is different than it was ten years ago, and you've gotta stay. Current >> are are forecasting model generically. We call the market dynamic models, and what they do is build out user behavior. Where's demand coming from? How are we fulfilling on that demand? What do we do with the investments that we've already made? The's models run from nineteen eighty through twenty thirty. It takes somewhere in the neighborhood of eight hundred thousand calculations to come up with one segment forecast for forty three countries. We have over two hundred fifty segments that we forecast, so you could see the complexity that we're getting into. There are over two hundred fifty analysts that gardener who are working on from what we call her our technology and service provider research group, to help our vendor clients know where their market is, know where it's going, and the partners that they should be looking >> towards you factor in or how do you factor in if it all your geo political trends? Um, tariffs, things of that nature. What do you say? You know what we're gonna do? A clean forecast on DH. Let the market figure that out. How do you handle it? At >> the end of the day, there's two very important pieces within a model. They break into signal and noise. The signal is the shifting buying patterns. When the demand level changes, there's a signal there when a choice pattern changes. Instead of buying license software, I'm starting to buy Cloud. That's a signal change. Those are the things that we focus on. The stuff that you were talking about the economic situations brexit, terrorists, China. Those were all noise. They're important. They have to be taken account of in the model, but they're not the most important thing. All right, Brexit right now is depressing the US air, the European spending on it. It is below that one point one percent growth rate. Because of the uncertainty. People are keeping their finger, their hands in their pockets when it comes to big changes in it. But the big shift is still happening. We're still seeing movement towards cloud. We're still seeing movement towards digital business. All those big signals air there, there dampened a little bit by the noise of the economy. >> So the rip currents obviously cloud. You mentioned that digital business, which I interpreted is data orientation toward a business a little >> bit more with you. >> But please add some color to that. And what are some of the other rip currents that you're seeing? >> Artificial intelligence is another riptide that is moving through. It is a big trend that is changing what's expected of technology at every level. Digital business is changing what's expected of customer interactions at every level. Digital business ecosystems, where companies air able to interact in a way that moves data from one organization to the other without necessarily having trust, commitment or a contract is a major change that we're seeing it reduces the friction of handoff between one business and the other speeds. The process drops the cost. >> A lot of your clients are large, established businesses, gardeners well known for advising those businesses. Many of those businesses, their data lives in silos. They have legacy infrastructure, technical debt. Call it whatever you want it, and they're getting disrupted by these. You know, the guys who were doing Cloud Native, all the guys out here that want to make your full forecast wrong. How does Gardner see just sort of anecdotally, those guys closing the gap, the traditional, the incumbents closing that gap >> into the source extent they don't have to, right? Certainly their size is going to give them longevity. Whether they make change or not, they will see their influence on the market. Chip away if they don't start to, they don't have the same urgency is the small vendors that are moving quickly. Where we see them doing things is very patiently and incrementally, they're taking different processes and moving them to the cloud. It is very common to see them take something that they're already doing are comfortably doing and moving that to a new platform and improving that small piece incremental change. The world gets better with incremental change. Where we love to see them do something is where they actually change the business model first using the technology that's going to enable that we have the company in China who has managed to get home food delivery cheaper than buying it in a restaurant because they change the business model First. They work with the places that are selling the food they're doing group on their doing direct cash, ordering they're doing guaranteed sale so that they could get food less expensively. They're using artificial intelligence to workout delivery routes and pick up so that multiple deliveries are made at the same time. In most of the world, that's not the That's not been the model. They've changed one part of delivery. We're going to make it easier for you to order food on your phone, and then we're going to charge you for the delivery, and we're going to charge you more for the food that's coming in. That's incremental. It's nice, it's helping. But when we change the model first, the outcome is so much better. >> So last course of U. S. Largest market, right? In terms >> of largest market for fifty eight percent of cloud. Spend >> little nightie spending Generally correct. Correct. China. When do you think Do you think China will overtake The U. S. Is the largest market for I spent >> china right now. Is Scott almost double the growth and cloud spending of the U. S. It is as a percentage of spends still well below. But they're the only country that is breaking the trend of following the US. They're on a much steeper incline. They could be above the US spend by twenty twenty five, even with a growth rate that the U. S. Is on. >> John. Awesome having you on. Thanks so much for having me really a pleasure having you great insights from Gardner analyst John Lovelock. And you're watching the Cube were bringing it all to you live from London this day. Volonte, we're right back right after this short break