 Hey everyone, good afternoon. Welcome back to theCUBE's day one coverage of HPE Discover 2023 live from Las Vegas at the Venetian Expo. Lisa Martin here with Dave Vellante. We are here for three full days. Dave, a lot of coverage. We've talked a lot about AI. We're going to talk a lot about AI and Edge, but one of the most important topics as well as sustainability. Customers need to work with organizations that have clear sustainability goals and targets and can help customers achieve the same. You know, AI is not only a hot topic, it generates a lot of heat. It's hot, it's hot, hot. We're going to be having a great conversation about digital transformation, sustainability, how they can be integrated. We've got one of our alumni back, Dr. John Fry is here, Chief Technologist, Sustainable Transformation at HPE. And Monica Batchelder joins us as well, Chief Sustainability Officer at HPE. Welcome to the program. Great to have you guys. Thanks for having us. Thanks, it's great to be here. Monica, talk about, you know, as Dave said, AI is hot and it's actually hot. What are, from a sustainability perspective, what are some of the common, current customer challenges that they're coming to HPE saying, we need help to dial this down so we can, you know, be carbon neutral by a certain number of years? Exactly, so as you mentioned, our customers have these really ambitious sustainability goals. And what we're seeing is those requirements are starting to trickle down to the IT organizations. So CIOs are now being held accountable for environmental KPIs. Some of the gaps they have is they often don't really have the expertise and the skills in their organization to develop and deliver on those strategies. And they don't have the data and the solutions to actually take action and remove their emissions. And so we're offering them a breadth of different opportunities from data invisibility through to our expertise with our consulting services, through to actually more low carbon offerings that we can give them. John, can you comment on some of the technology challenges that customers are facing, kind of aligned with what Monica's saying. This is what they're coming to us. What are some of the under the hood tech challenges that they're saying, guys, we got to resolve this. Yeah, it's a great question. And it's all actually multifactorial. In many cases, they're starting at the hardware and then trying to build up a solution which isn't the most efficient way. In another sense, we know from data center surveys across the globe that only about half of them have any analytics to look at utilization levels, power consumption, thermal generation. So if you don't have those analytics, it's really hard to optimize. Or if you make a change, it's really hard to see the impact of the change as well. So HPE has set goals. I think Antonio said net zero by 2040. So net zero means no carbon emitted, correct? Versus that's different from carbon neutral, which means you offset, right? So how, what are the stress? First of all, do you even know how you're going to do that? That's right, net zero. I'm curious as to what the path is to get there. I imagine it's a little fuzzy. Parts of it anyway. And then even getting to carbon neutral, what are the paths that people are taking that you recommend? So what net zero essentially means is that across what we emit and then what we eventually will need to draw out of the atmosphere, that's going to net out to zero. So it's not that we're going to reduce emissions to zero. That is essentially impossible. We'll actually need to start drawing carbon out of the atmosphere at some point here to get to our 2040 target. And so really what we're seeing is for HPE, almost all of our carbon footprint is actually generated outside of our direct control. So it's about two thirds customers use of our products and about one third from the supply chain. So that means that the only way that HPE can make progress towards our own goals is to partner across the entire value chain. So we need to work with our suppliers to set their own targets and make progress towards them. We need to deliver more sustainable offerings to our customers to help them bring that down. And then our own operations. In the last two years, we've reduced our own operational emissions by more than 20%. And we exceeded our target three years ahead of schedule to source 50% renewable energy. So we're making a lot of progress in our own direct operations, but there's a lot more we need to do upstream and downstream. So the manufacturing of your products, as you said, like roughly one third and the two thirds is your partner. So you got to partner with them. They have to get sort of aligned. But as well, the technologies that you create can help them. Is that the right way to understand it? Yeah, absolutely. And so when we work with customers, we really help them think about a variety of ways to optimize. First, looking at all of their solutions saying, do you even need these solutions? And in some cases, we have both hardware and applications in their infrastructure that don't even need. And then over 22 years of working with customers to drive these efficiencies, we've come up with five levers, five key areas of focus for them. Equipment efficiency, get the most amount of work from a piece of equipment. Energy efficiency, get the most work per watt of power. Resource efficiency, which is minimize the amount of cooling, power conversion, people that it takes to run the solution. Software efficiency, which is look at your workloads, make sure the code is most efficient, the programming language is most efficient. The workload is designed to run on the hardware that it's running on top of and can take full advantage of it. And finally, data efficiency. We knew that our customers collect a lot of data. In fact, they're data hoarders, but they don't use all of that data. So how do they think in a different way before they develop a business application about the data they need in the first place, collect only that data so they get value from all of it and then make better storage decisions and data destruction decisions where they no longer need the data. So we find that when customers do those five things, they can make dramatic improvements in IT efficiency. It sounds like sustainability being integrated or woven into digital transformation strategy from a customer is really the way to go. Yeah, absolutely. And you can't optimize from a sustainability perspective and isolation either. You've still got to consider resiliency factors, latency issues, cybersecurity issues, but you need to have sustainable IT as part of your overarching strategy. And so many customers have said they don't have that. So one of the things we did a couple of years ago is developed a customer workbook called Six Steps for Developing a Sustainable IT Strategy to walk them through step by step how to do that. Because we know when they implement a sustainable IT strategy as part of digital transformation, they tend to outperform their market, they tend to have better results. And frankly, it optimizes their technology infrastructure all the way through. It's a significant benefit. I remember back in like 2006, 2007, there was the big green IT movement and the CIOs didn't pay the power bill, so they didn't care. That's right. And so now it's changed, right? Everybody has ESG objectives. You're saying the CIOs are being held accountable. How are they responding to that? How are they working with facilities and other parts of the organization, folks with roles like yourself that exist within those organizations as a complete mindset change, isn't it? Yeah, and a lot of people don't recognize that the IT operations can actually be a huge component of operational energy costs, as you said, and of operational carbon emissions, especially for really large enterprises. But reducing carbon equates with efficiency, right? And that equates with optimizing and reducing costs. So what we're really seeing among our CIO community is the shift in mindset, their rethinking sustainability from being sort of a cost center, as it was considered in the past, to actually being an enabler of their business goals and their digital transformations as well. That key word that you just mentioned, Monica, is enabler. And you mentioned the workbook, because I was wondering with the two thirds that you said, two thirds in terms of energy emissions and things that's out of HPE's control, you have to work with the ecosystem of customers and partners. How important is awareness? I imagine it's absolutely critical these days for customers to really fully be aware of what sustainable IT means and what it can deliver to a business. Absolutely, that's what John's team does every day, so I can let him speak to that one. Yeah, it is, and some customers, we don't have to make aware. With the war in the Ukraine, for example, our European customers saw their power bills double or triple almost overnight. They were acutely aware that they needed to take it for their actions. Other customers have made brand commitments to their customers, or their customers are requiring them to take certain steps. But the other thing that you find happening is boards are now asking questions of CIOs and CEOs. Customers are asking those questions. Institutional investors, Monica spends a lot of time with our investors helping them understand why we take the strong measures that we do and the business value, and that's the key. Sustainability historically was viewed as a reputational item. It's absolutely a revenue driving opportunity. It's a cost savings opportunity. It's a business efficiency opportunity. So what we find in our varied customers around the world, one or more of those aspects bring this to the forefront in their minds. So I asked earlier, do you even know how you're going to get to net zero by 2040, and I think you gave a good answer. First of all, you got to work with your ecosystem, you got stuff, you control a third. Two thirds is sort of not completely outside of your control, but it's, you got to have partnerships to do that. My question is, are those five vectors that John mentioned, the path to get there, and how do you think about the countervailing effects of GPUs and AI sort of offsetting this? Like every time we get a new iPhone, it runs faster, but there's more data on it so you don't notice kind of thing. Yeah, so we believe those are the right five levers and they're very in intensity for each customer and they apply, by the way, from the public cloud all the way to the edge. So we think those are the right five things and as we get increasing use of accelerators and higher core count processors, they're even more important. So for example, we'll find customer workloads that can use one core, running on a piece of hardware with a GPU and a 64 core processor in it, that's really inefficient. So the situation's going to get more critical that we take these five levers and then we're even encouraging customers on both ends of that spectrum. One is if they're going to use renewable energy and we know that renewable energy generation is not constant all hours of the day and all days of the week based on climate conditions and things. So we can move workloads around actually and run them when we have a higher intensity of renewable generation on the front end. On the back end, the number one waste in technology is heat. And historically, we've just thrown it back to the atmosphere to get rid of it. Well actually there's value in heat and so we have customers, particularly in Europe, that are saying let's recover that waste heat and in fact if we need to make it a little higher we can tweak some settings in the IT infrastructure to generate a little more heat, particularly where we have liquid cooling and then we can sell that heat as a product either for district heating, sustainable aquaculture greenhouses or various things like that. So all of a sudden we're taking what was a waste and now making it a saleable revenue product. And that visibility for organizations is critical that they didn't have before. I'm curious, you mentioned the workbook. I imagine you talk with a lot of investors, as John was saying. What about customers from like a customer committee perspective? Did you work with customers to develop those five levers that you talked about? How are they involved in helping HPE get to net zero, like they were saying, how are you going to get there? Yeah, absolutely. We take feedback from customers. We actually update those workbooks probably about every two years to make sure they're current. We ask customers for feedback. We ask them for what other white papers and resources they want from us to be able to make an impact. And then we're actually embedding it across our offerings too. So John mentioned renewable energy. One of the things we're announcing here is HPE GreenLake for large language models. That's actually going to be run on incolocation centers that have nearly 100% renewable energy. So yes, we have to offer them more sustainable solutions, but how that IT is powered is just as important. I saw a stat in one of the slides. I think locating it in a facility that has 290 days of essentially winter weather. So it's pretty cool. So you can use ambient air. I'm still trying to get my head around how you sell heat. What do you have to heat the heat to make sure it doesn't lose heat? Thermodynamics, but how does that work? Is it a pipeline? That's amazing. Yeah, it is. And I'll give you a real life customer example. So Dan Foss is a big customer of HPEs. They were early GreenLake customer. And in fact, their data center sits in a, in essence, a shipping container. We call it a performance optimized data center. So it's on a gravel pad, out by their headquarters with some of their manufacturing facilities nearby. The IT is all liquid cooled. So that liquid cooling loop, and when we say liquid cooled, we really mean almost 30 degree water or even higher. So by the time it comes out of the IT stack, it's even warmer than that. Well, they're co-located with a village that has districating. So much like other utilities, there's a heating grid that goes through the entire village. So they actually take that warm liquid coming off the IT stack, extract the heat. That's one of the businesses they're in is these heat pumps that extract that heat and provide that as a saleable product to the district. So they provide the heating for that whole village around their corporate headquarters. That's so clever. And increasingly, there's more and more opportunities to do that around the world. And so what we love about that relationship is Dan Foss has come to HPE and added this whole perspective around heat reuse. They build the technologies to do that and partner with us. In the same way, they leverage HPE's sustainable technology solutions like HPE GreenLake, many of our professional services. So it's a great symbiotic relationship that turned into new market opportunities for both companies. That was a word that just popped into my mind is symbiosis. Fantastic. Latest out here with some of the key future trends that you're thinking, as Dave was talking about, with the emergence of AI, large language models announced with this morning, AI as a service. I think Antonia even said something like, and I've heard this from other leaders before, if you're not already using AI in your business, you're already behind. So what are some of the future trends that you're seeing that HPE from a sustainability lens can help its customers tackle? Yeah, so if you think about customers growing demand for compute resources, that makes sustainability all the more important, right? As you scale that IT, you're going to hit constraints like power, space, cooling. And so you really need to be developing a sustainable IT strategy that's holistic. You know, a lot of our customers are taking actions. They're doing a few things. Very few have a holistic IT strategy that looks across their edge-to-cloud, hybrid IT, multi-vendor estate. And so we're really focused on helping them give them solutions to help them manage that bigger picture. Yep, and it's all about that visibility to have that bigger picture as you talked about. Sustainable IT is now such an important component to businesses. It's a board-level conversation. It's for every business and every industry. John, Monica, thank you so much for joining Dave and me on the program, talking about what HPE is doing from a corporate perspective, from a technology perspective, and how you're really being symbiotic with customers and partners. We appreciate your time. Thanks for having us. Thanks, guys. Thanks. Our pleasure. For our guests and Dave Vellante, I'm Lisa Martin. What's up next, you ask? Brandon Whitelaw of Chemulo. It's going to be here talking about industry position, HPE partnership, and why scale anywhere is the new thing. Stick around. We'll be right back.