 Live from Washington D.C., if the Cube. Covering Inforum DC 2018, brought to you by Infor. Good afternoon and welcome back to the Walter Washington Convention Center where At Inforum 2018, here live on the Cube, John Walls with Dave Vellante. And it's a pleasure now to welcome the CEO of Infor, Charles Phillips with us. Charles, good to see you. Good to see you guys again another year. It's great. You are a man in demand, aren't you? Tell me about the week so far for you, how it's gone and just your overall thoughts about the show. It's been a fun Inforum for 2018 here. Great attendance and a lot of energy level. And the common feedback we get is that you guys just keep innovating and bringing new things. This is great and that's why they come. They want to see what we're working on and kind of dream of the art of the possible. And we know what we think you did a couple of years ago but if we don't have someone pushing us and paying a picture of what we could be doing and then we just think we might be missing it so we want to hear it firsthand. So that's what the conference is about and hopefully they got that. Certainly thematically, human potential. You talk about that. You see that on the keynote stage that's been a very consistent theme. With our guests here, we've heard that a lot. You hear it down on the show floor. Talk about the theme if you would a little bit in terms of its development where that came from and how you think that's being expressed here this week. Well, we're one of the few companies that build mission-critical operational systems be it manufacturing or hospital operations but we're also in HCM in a big way. And so we were talking to both sides of the house for some applications. You're talking to the line of business manager but for HCM you're talking to the CHRO and rarely were those two people talking and we saw obvious synergies. Don't you want to know how your people are doing, how to allocate people and how they're performing and how they're changing the outcomes on a manufacturing floor in a hospital. And a lot of HR directors weren't thinking like that because they think of HR and they have their own world. They go to HR conferences and that's it. And the manufacturing guys do the same thing. And so we're trying to bring these two worlds together and say actually you're in the same business, same goals and you actually can help each other a lot. And so by focusing on putting the employee at the center of all these applications and mapping all these operational processes to HR data, it's a different way of thinking about the role of HR. They can actually help drive the business, not just be an administrative function. And so it's resonating with a lot of the CHROs we've met with because they want to sit at the table, they want to be more strategic and this is a way for them to do that. At the same time, the operational people want to know how other people are doing and want to develop talent and want to know what are the tools out there I could be doing differently and how am I doing and which employees are working the best. So I think we can bring both sides together. So I first met Infor through AWS at Reinvent, Pam Murphy came on and we were like, Infor, back then it was I think 2012? Yeah, yeah. It was kind of Infor who? And then we were invited to New Orleans and then started to learn more about your micro vertical strategy and a little bit about the platform it was somewhat opaque to me and now fast forward last year and this year it's really starting to come in to view. DOS, the platform vision, the burst acquisition and of course Coleman and I'm a sucker for platform plays especially when there's real R and D behind it that's actually having a business impact. So I wonder if you could talk about that piece of the strategy, I love the stack and I mean was that sort of always your vision and now you're getting aggressive in it did it sort of come together serendipitously? How'd we get here? Having our own stack and a platform was always a vision but it's a lot harder to do than it sounds like and it takes time and so when we arrived almost eight years ago there were different applications all had their own separate stacks and we say this is not going to work. So we need to just to be able to scale to be able to serve multiple industries with different products. We can't have every development organization building their stack as well. So we set about taking that away from the development groups we're going to do this as a shared service but it takes time and as we build it you will adopt components of it. So what's changed is we built out the entire stack. So starting with ION with integration then we had a document management workflow analytics now AI and a lot of other services Mongoose platform as a service on and on and on a collaboration. Those things took time. They're all on a single platform federated security single sign on across it all and now it makes the developer's job who's developed the app so much simpler. So they have and for all as for the immediate platform for cloud services they have AWS I don't have to worry about any of those things anymore just go develop industry functionality. So it's coming together nicely but the fact that we had the time to do it and the money to do it and we weren't public and we told our investors this is the only way this is going to scale and this is a future and it'll pay off later you just got to trust us. And now that we've gotten there they're seeing this synergy and go okay now we see why you did that. So Michael Dell's been on theCUBE many times we used to talk about the 90 day shot clock obviously seeing what he's done in terms of transforming but I want to talk about your business a little bit because you've had that patient capital you're a quasi public company in the sense that you do report so we can see the numbers in the income statement but the income statement doesn't really tell the whole story. It's about three billion in revenue you got several hundred million dollars in the balance sheet and if you look at the SaaS component of it it looks rather small maybe I don't know 25% of the business but from a booking standpoint I'm sure it's much, much larger than that so how should we interpret the income statement in terms of the momentum in your business? Where is all the action? So as a percentage of our sales is the highest of any of our competitors so about 70% of our new sales are on SaaS we have about our $700 million SaaS business so it's growing and if you it's not that we can do about the maintenance piece of it which was related to perpetual so if you take that out it's a big percentage of our business and over time the maintenance will turn into SaaS so that's one of our big opportunities to look at that maintenance space and say move those over to cloud customers and that's usually a financially a lucrative thing for us to do because we do even more for them because they usually add on four or five other products when they move they replace these third-party products and so we get a bigger suite of products when if they decide to move to the cloud so that's part of the strategy that's what UpgradeX is let's move you from on premise so that maintenance revenue will turn into SaaS revenue but bigger SaaS revenue over time So let me make sure I understand so it's not the classic case where you see a lot of software companies that are going from a perpetual model to a ratable model you're going from a maintenance model which is ratable to a ratable model which is SaaS but there's cohort sales which increase the top line is that correct? Exactly because usually because of what we do we're doing something mission-critical so if you're going to take that then you should do HCM and financials and you peel all the other things around it so why would I move to core and leave the edge on premise so by almost by definition we have to do the whole suite so when we do that it expands the deal because on premise we may have been one vendor with 30 other ones existing but the whole reason they want to get out of all of that is to move to cloud and simplify so we can't take all that with us so we have to have the full suite so we built that now so now we can move them but it expands the size of the deal because we're replacing all these other products Okay and then some of the stats just correct me if I don't get this right your SaaS business growing 50% faster than Oracle's growing at a rate, let's say two X SAPs in a rate comparable to work day are those correct? Those are correct and profitable Oh, and profitable Yeah, that's it Throw that in Right, so, okay and then so you guys last year Koch Industries invested so you kind of recapped the company you've made a big deal about that one of the things that we've noted is you're seeing a tailwind there in terms of guys like Accenture and CapChem and I we've asked them do you guys service Koch Industries? They said, yep they helped us see the opportunity and they said look for something substantive we're not going to try to force you to do something but we want you to take a look so that's been helpful talk about that and maybe other things that Koch has brought to the table Yeah, I would say the relationship with the integrators is evolving probably was not a plus for us in the first four or five years more recent years we've won enough deals where they had to say okay, we can't keep losing these deals and where they wanted to get engaged Koch helped because they had relationships and they wanted to run that businesses where they're implementing our products globally and so they're a large customer for all of these guys and one of the largest for Deloitte for instance but it was really more, that helped but it was more of what was happening in the market that the fact that we're winning liberty still and replaced SAP or they were running a Travis Perkins and deviated SAP and Microsoft so if you're on the wrong side of those deals enough time, your manager starts to ask you what's going on and you got all these people on the bench here okay, we train them for info if they're winning in that region or in that industry so we just had to earn our way into it our initial strategy was not one that at least on the surface looked like it was integrator friendly because we were trying to take all those mods that they like to do and put them in the product and that was the whole thesis that let's take the vertical industry features and let's put them in there once I don't want everybody customizing my apps we do that and so now they've had to move up okay, we can do other things configuration, change management, SAI these are things you can do but you're not going to do that so now that they've accepted that there's a basis for us to work together and it just had to take time to get there what can you tell us about where you want to go with this I mean you've presided over public companies before you know that business well you're a rockstar analyst is there a advantage to being a public company is that something that you eventually want to do? I would say there are pluses and minuses our board is evaluating that that's going to be their call the upside is it would solve probably our biggest challenge which is brand recognition almost instantly because this would be a top 10 tech IPO it makes it a little easier to hire people because they can see public currency they can value more quickly and it gives you some acquisition currency so those are the positives but then you're on the 90 day cycle but we're kind of on that anyway because we report publicly and we have publicly traded bonds and so for us it's in some sense we have the worst of all worlds right we have the discipline of being a public company and the scrutiny without the capital that they're branding so I think that's what everybody's evaluating every bank on Wall Street's visiting us telling us to go now the window's great you have the numbers so we could do it I just don't know what the decision is going to be there's advantages to being private as well you have a little more flexibility obviously and we don't need the capital we have plenty of capital coming from Koch and others who want to invest well the flip side of that too is you get to write your own narrative right I mean we're talking about the nuances of the income statement the street is obviously right now hooked on the growth heroin and if you have a transition in the base you can't, it's not, it doesn't become a tailwind so no rush from that standpoint I want to pivot to the theme of this event which is the human potential my understanding is you sort of were instrumental in coming up with that H.C.M. this year got a big play on stage yeah where's that come from yeah I just as I talked to CEOs who are struggling to find talent like I mentioned on stage 6.7 million jobs that are unfulfilled not like we don't have people here we have people here with their own skills so you're not going to fill those jobs any other way we're not doing immigration to any degree in scale anymore that's been shut down we have an aging population with the baby boomers so the most logical thing you would do is train people who are already here who want to work and let's take people who have jobs that they probably aren't thrilled about and give them different skills so they can fill these 6.7 million jobs so to do that you have to make these applications easier to use and I felt like we're probably in the best position to do it because we actually know what they do for 11 because we wrote all those last mile features in those industries we understand what they do and if you just donate your application to financials you actually have no idea what they do so we had to learn those jobs to automate those jobs and so we can find ways to use our ACM applications to better train people professional development coaching take all these HR skills and put them as part of the applications in the context of why you're working we had been at it on just a little bit ago and talking about really a test case you know that you can be for yourself and so how are you putting these things to practice yourself and how are you working out maybe some kinks before you take them out to somebody else and so you can leverage your own success for your own success and also learn from mistakes too I would say we do so we have this program called N4 to N4 where everything we do we want to be on an N4 product which is not the case when we arrive at like every a lot of companies a mishmash of different things and so we've implemented our own HR financials of course burst but the big innovation has really been talent science that every employee we hire has to take that test and all the executives have taken it as well and what we've discovered is is that when people hire and go against the talent science recommendation 68% of the time they end up being wrong so it's better at judging people than people are sometimes and you can't use it exclusively but it'll tell you these are the things you should look into some questions you might want to ask here's how they rate on certain skill sets they're very well matched for this job they look like these are best performance in this area but ask these questions and so people don't know how to interview kind of think about this and so having a guide to go into an interview is actually very helpful we hire much better people now by using that so it's like strings finder in a way I mean the no it's different from that this is AI it's kind of money ball for business people so you're talking well you're talking about that today yeah so it's 39 personality attributes behavioral attributes we call them so empathy, resistance to authority do you have ambition or not and depending on the job you think all those things are good it depends on the job so you know for some jobs it's actually better to have low ambition because a lot of our customers who have low wage fast food service jobs people have ambition are going to leave in four months right they're not going to stay so okay we're not going to be here long at least know that going in and know who wants to get promoted and other people will find with it and so it depends on the mix of skills it's like I say at 39 attributes and for that job role you tune it to the people who like that job they look like this and we've also found that it's 60% more diverse when you hire using science because you don't know that when you're looking at the data right what they look like must have been super interesting getting those reports it's fascinating yeah I took it how'd you do nobody ever likes their I was going to say I bet you I would be really defensive about this oh no no no that's right this can't be right I am not like that every person on the executive team said the same thing but you know that's what it's for you have certain perceptions even about yourself and it calls it out and there's no gaming in the system because the questions have no right or wrong answers it just puts you in scenarios that you answer what would you do how do you feel about this and you're not clear what they're trying to get at and you only have 27 minutes or 22 minutes to do the test you can't game it you can't game it and data doesn't lie and we built the science we know when someone's trying to game it they're taking too long and multiple chains are answers too much so it's and now I think we've tested some 200 million people over time over years so we have 20 years of data about people that's right I mean sounds unique I've certainly unique in terms of being infused into enterprise software I've not seen anything like this from another enterprise software company can you confirm that or yeah so we're the only ones that do this at scale there's a few startups trying to do it but they're trying to do it all facial recognition which is we think pretty ridiculous that's we're trying to get away from physical attributes not use that so there's a company out there doing that depending on your facial movements but this is we're eliciting responses about your personality in response to situations that we give you and have a bunch of scientists that quench the data and they basically shape it to the job role and they test your best performance and you get a DNA profile for your best performance for that job role and then that's what you're matching and it's highly accurate so we had a company on the Las Vegas strip use it because they have to hire in volume a lot and essentially what they wanted to do was get blackjack dealers and somebody's good at math good under pressure not too emotive and don't give away anything and so we did that fine tune the test they called us back nine months later and said we need you to change the test we said we did exactly what you wanted what happened and said well you know the winnings went up 30% but everybody's leaving the hotel in 24 hours because they lost all their money so we don't need them to be that good tile it down a little bit yeah yeah which we didn't so that's part of the service is we fine tune it you tell us what your goals are we will tune to that that's a great story the other surprise for me this week has been the emphasis on robotic process automation it's a space that we've kind of looked at and a lot of people are scared about software robots replacing humans when you talk to people who are using RPA they love it it's taking away these mundane tasks I didn't realize that you guys had such capabilities yeah so we built that as part of a Coleman RPA platform and not only can we automate we can use our pay for ourselves but we've built a whole development environment for our customers to build their own because we can't think of every process that they might want to automate and we gave that platform to our partners as well so while we don't want them doing database schema work anymore and they used to get paid for that there's other things you can do up the stack in AI here's what we want you to focus on so we had that meeting on Monday with the partners and they all agreed that's what we're going to do but there's tons of mundane things that people shouldn't be spending time on and they can be much more productive makes them more loyal to the company they're enjoying their job more and they're thinking and innovating more so I don't see it as replacing people it's making people better and giving that engagement that I talked about doing the keynote they're engaged now because they can do things that are more value-added so back to New Orleans next year that's where we first the first inform that theCUBE was ever at was in, was in New Orleans and jazz, you like jazz obviously right? I like jazz I met with the mayor when I was down there Mitch Landro at the time and he became a customer after that meeting so the city of New Orleans runs on in-force software so there's another reason to go there so thank you, yeah thank you Mitch and so that worked well and so as they thank you we're going back down there they're a big customer now and it's always fun, New Orleans, you know it's great just, and before you go you mentioned I was watching the keynote this morning Brooks Kepka yes so you're working with him I do a little bit of work on the golf side as well so I was just intrigued because he's not the well he's not Tire, right? yeah US Open Champion twice over what was the attraction to him and can you play in the golf world a little bit and with those brands and have, is that an entry into that world? well we always like the bed on the scrappy guy the up-and-coming next generation guy and that's kind of our brand that's what we are that's what we're the Brooklyn Nets someone who's not quite there yet but they're moving up that's kind of our scrappiness that's why we like the whole Brooklyn image as well and we started talking to him like I said before we won the US Open because he was ranking pretty high moving up it wasn't well-known but a quiet guy very personable when you meet him we thought he'd be good in front of the clients let's bet on his career and we were going to work with him and then literally three weeks later he went to the US Open okay we'll take him there so we didn't think it was going to happen that quickly and now he's a rock star so we were planning on hosting a CX event with him and you know we're not sure how many people are going to come but when that happened now all the everybody RSVP'd right away of course so now it's it's doing exactly what we wanted do you play golf I don't play golf I just started playing because we were doing these golf tournaments with customers over the last year but I haven't had enough time to get out there yet I bet Brooks can give you a lesson or two yeah a lot of people want a lesson from him Charles thank you all right thank you guys great show see you in New Orleans thank you congratulations wonderful week here in Washington DC back with more live on the Cube here from DC right after this