 Live from the FIIA Barcelona Grand Via Compensator in Barcelona, Spain, it's The Cube at HP Discover Barcelona 2014. Brought to you by headline sponsor HP. Here are your hosts, John Furrier and Dave Vellante. Okay, welcome back everyone. We are here live. We're winding down day two of three days of wall-to-wall coverage with The Cube, SiliconANGLE and Wikibon's flagship program. We go out to the events and strike the signal from the noise. I'm John Furrier, my co-host Dave Vellante. Our next guest is a famous return of our famous Cube alumni, Alan Nance, who's just with us earlier this year at the BDC, the big data conference from the Vertica users group. You had that epic video that went viral. I mean, it went, our interview that we did went super viral thanks to some nudging by Dave Vellante saying must see on LinkedIn. We pumped it up on Twitter, but it really resonated with the folks. Certainly we were super impressed. Really timely good content in the moment, very relevant. Welcome back. Thank you for having me. It's really cool. So I know you're busy, so just stop by to share some thoughts. So now the cloud consumption is in place for you guys. Give us the update. You're now an HP customer. You couldn't really talk about that in the last interview. Give us the update. What's going on with the cloud? What's in production? What's not? What's the highlights? A couple of things. First of all, I do want to thank you guys for the last video. It's the first tech interview I've ever done that was the subject of conversations at birthdays and parties. So that was a huge hit. People coming up to me all over the place, hey, that was a great video. I don't know what it was about, but I saw it too. Really cool. Where are we now? So we have just done a true up of expenditure. And for 2015, we were aiming at moving about 30 million of run rate revenue to the consumption-based cloud. We are now well over 100 million, pushing against 130 million. So from our goal of revenue synchronicity, we're really pushing ahead. We've still got another good 400 million or so to go, which is going to come in in 2015. We're going to work on that. And we've also started to move legacy. So last time we spoke, I did say we were only looking at new stuff. Since then, we've moved with HP. We've moved a legacy BI application at considerable cost savings and flexibility from our legacy system to a new cloud-based platform. So I'm very excited about that as well. In terms of the HP contracts, we've signed contracts with HP to really start to co-create three very critical areas for us. One is orchestration. We can come back to that. Orchestration, I see, is a very big topic with a short-term and a long-term view. Second thing is shoring up our unified threat platform with the HP security knowledge. And the third is we did sign up for the analytics. So the analytics, we are now starting to roll out. We've taken a decision today on the first proof of concept on machine-to-machine using the HP analytics platform. So when you talk about 130 million in revenue going through the consumption-based model, you're talking about revenue that Phillips transacts? So you're talking about the budget that you're now using? No, for our budget. So taking budget that we were using either in the sunk cost in our own environment or a budget that was yet to be consumed that's now consumed by a consumption-based model. And you guys have an enormous IT budget, as I recall? It's a significant, it's who you compare it to. But the total amount we're looking at is about five or six hundred million of addressable spend that I'd like to put into this model. So you're moving very rapidly to that model. We've talked about this last time in August, but the majority of your spend is going to be in this consumption-based model over the next ten years, whatever it is. Absolutely. Okay, and now you also told us that many of your vendors didn't sign up for the model. I didn't say many. There's a few. Sorry, I said a couple of key ones I'll say. Has that changed? So this is interesting because the message is getting out there. They thought you were kidding at first. So I know that there are vendors today that use your video and cut to the point that I make very clear distinctions about ELAs and they're using it as sales training techniques on things we shouldn't be doing. Well, you're an awesome customer reference because what's happening is you're now basically coming public and saying, this is the consumption that we need to be successful. You're essentially defining your agenda, laying out an architecture and pushing that requirements onto the vendor community, which is a way to do it. So kudos for you. I think that's one of the reasons why I think that video for me and others I talked to felt compelled was it was just a very logical way to run things and I think putting out the consumption strategy of saying sign on the line that's dotted, this is how we work, is a great way to do business. That's very cloud-like. What I would say, which I think is very cool, is that the suppliers are now pushing it. The suppliers that are most successful in the model are pushing it. So there's one here, not HP but ATOS, and they tell me everywhere I turn up, they get four customers calling them after saying, hey, we want that too. So even the suppliers are now getting more and more enthusiastic because I think there was always a long theoretical debate. Is this the right model? But now they're seeing revenue coming in, they're seeing growth, they're seeing interest from other customers. That I think is, at some point in time, we're going to flip through escape velocity. It's a recognition of the inevitable. There's no reason why vendors can't make money in this model. Absolutely. The only thing you have to be cognizant of is that there is a transfer of risk from us to the supplier. So the supplier is better off when they have the scale of multiple contracts because they're taking a lot of risk. Yeah, if it's a one-off, then they're exposed. Well, there's always been shared risk. Now the shared risk shifts to a different platform. So I think, to me, companies either set up day four or they're not. And I think, if you're smart enough, you just figure it out and you'll know pretty quickly if you're set up for it. So again, that's why some people might be scared because it's a threat to their existing revenue lines. They're not set up for it, but HP apparently is, so they did do the deal with you. Yep, HP has done a deal with us, ATOS has done a deal with us, and IBM has done a deal with us as well. Some of them are finding it a little easier than others because I'll be honest with you, anybody who engages us for the first time is like, how do I sell this back at the base? And so I think there is, back in the corporate headquarters of these larger traditional companies, I think there's still a lot of soul searching going on, but we're certainly pushing ahead. But you had mentioned your large SAP shop, obviously, and I think you deliver now SAP through AON as one. Through ATOS and now through HP. So the SAP HANA as a service is coming through HP. Okay, so HP is part of that deal. And then you mentioned the risk. When you read Amazon's SLA, it's very clear that they're not willing to absorb too much risk because of the massive volume that they have. When you think about the public cloud, aka Amazon, will you allocate only certain workloads there or will you stay away from it because of that? No, so the compliance discussion has become very complicated, especially around privacy. So I think from an FDA activity, we're fine. We're absolutely fine on the public cloud, and we're still okay for a lot of privacy regulations. But I think we spoke about this last time, that's a moving target. So a lot of countries are trying to come up with very specific rules, and we're going to have to figure out whether that is going to require an adjustment. I don't think we're going to not use public cloud, but it may limit the choices of where and which. And what you put on it. Exactly. Okay, well so, I'm almost awestruck at this conversation because you guys, you took what was theoretical, what you just called theoretical, and everybody sort of knew this is the direction that the market was going. You said, all right, let's act. Let's act now. And the catalyst was your, I believe, CEO. Yeah, the CEO has been a big pusher of this. But also, you know, now in our health tech group, the CEO of our health tech informatics software services team is also a big believer. He honestly said, he said it in an interview the other day, I just cannot believe that we can make enough progress fast enough if we don't do it this way. So you were talking earlier about a data warehouse, I believe, an enterprise data warehouse. And you were talking about significant savings. We've seen in our Wikibon customer base, people have started to baseline their traditional EDW, trying to figure out what to do, playing around a little bit with the new stuff. It sounds like, again, you were a little bit more aggressive there. Well, I don't think we are aggressive yet because I think if you look at our strategy, it's still, we still have a very strong terror data commitment for enterprise data warehouse. And I think there are certain things that we need to continue there. There is a discussion opening up based on things that AT&T, for instance, are doing, that there are certain workloads that we believe can be used effectively in a more of a big data setting. But to be honest, as I said before, you know, 123 years of Philips history is reflected in a 35 terabyte enterprise data warehouse. So in the grand scheme of things, do you really want to spend time on that when you're looking at a 90 petabyte challenge in the Internet of Things, in the systems of engagement? I don't know how much time you want to spend on that. Yeah, so what I was characterizing that we're hearing from our clients, accurate, in terms of applying to you, and trying to find innovation in other areas, is that pretty much? I think it is, and I think there's always going to be, or there is going to be for the foreseeable future a role for structured data in something like a terror data informatic or environment. But I think if you're looking at the future of the business, I think the focus is going to move elsewhere and it's going to move more outside the enterprise. And I think one of the challenges that we're seeing now, and this is my orchestration I think is going to be important, is we're moving more towards exponential organizations coming in. So there are 3 billion people now connected to the Internet. And I heard a story recently, if you give one Masai warrior in the desert Internet and smartphone, he has more information and connectivity than President Clinton had. Now if you imagine those people now starting to collaborate, there's a huge, I know what the word is, it's a phenomena almost, most people can collaborate with you or against you now. And so a lot of innovation is going to come outside of traditional R&D. So the point of our orchestration for me is not just the orchestration of individual cloud components, that's the first phase. Ultimately you're going to be orchestrating supply chains that are virtualized and then you're going to be connecting to these great new sources of energy and innovation with people you've never even heard of today. Wow, and then as you said, those systems of engagement start to span so much of that. So everything we learned today, I think in 5 years is going to be used in very, very exciting ways. Which way are we going to get started? So has Amazon signed up for you guys? No, we use a lot of Amazon. So you're good with Amazon. Amazon fits the model. Amazon fits the model. Amazon is also changing in very positive ways. Amazon is also working on our health team on more specific stuff. It's not my major concern. So very much tailored around the digital health suite. But what I'm doing, I'm seeing Amazon move in very positive areas around compliance. They're really trying to get their head around it. But as a partner, they're very fast and they're also very proactive. Well, they brought up, I think Arlene and Irina, we talked about Germany. They just launched their new data center, Region, in Germany, in Ireland as well. You highlighted that in your interview. You brought up the EU-Ireland issue. And then boom, what happens? That domino fall. So again, great interview. What's new now on the big data front? Are you secure with your data? What's the security scheme behind it? Is Vertica doing it? So the big data discussion is still ongoing in the company and there are different views. What I'm looking at, the area that I control and that I can drive is, first of all, the security. And that's a five petabyte opportunity that we're looking at with Vertica today. The second one is we're using idle in our university. The third one is we're starting, as I said, machine-to-machine proof of concept. The Digital Health Suite platform is looking beyond that. They're looking at how that integration would be in other areas like using hoarding works, for instance, and stuff like that. So there's a huge discussion going on in the company that will, you know, work its way through in the next few months. But certainly I think there's enough work for us to do, even in the limited scope that we've started to work with. How about activities at the scope? I'm hanging out with a meeting of colleagues, sharing information with peers. I think you did some presenting. Give us the update. I did a session with Colin Mahoney and a session with Robert Young-Johns. And it's the same thing. Where does this go after this? Because even though I say what we're doing is exciting, but there is a second and a third phase five years down the road and it kind of starts now. As I said, how are you going to orchestrate more flexible supply chains? How do we, the big data, transfer into identifying new areas of R&D that could be in places we've never looked at before? You know, I quoted today Bill Joyce, you know, Joyce Law, that it doesn't matter who you are, there's always more people outside your organization than inside their smart. Those people are now connected. How do we identify those people? How do we make ourselves attractive as a learning ecosystem that they want to be part of? And the idea that for 123 years, Philips has been able to survive on its own R&D. Just like an HP, just like an IBM. I believe that the next generation is being an ecosystem of R&D. That's going to change, that's going to require a cultural change, but technology is going to enable that. And this technology is going to enable that. Great vision, great to have you on the Cube again. Thanks for coming on and it's always good when we do an interview and again, it's all about timing. Sometimes you do some great content. It just doesn't hit the right rip currents. It goes out and flies around. So again, timing of cloud, obviously with HP show here is a big deal. You're right ahead of the curve. Congratulations. And great to see you again. We're live here in Barcelona. This is the Cube. We'll be right back after this short break.