 Live from Las Vegas, it's theCUBE, covering HPE Discover 2017, brought to you by Hewlett Packard Enterprise. Okay, welcome back everyone, and we're here live in Las Vegas for theCUBE's exclusive three days of coverage for Hewlett Packard Enterprise Discover 2017, also known as HPE Discover. I'm John Furrier with SiliconANGLE, I'm here with my co-host Dave Vellante with wikibond.org, our next guests are Jeff Carlisle, Senior Director Solutions, go to market for HPE, Internet of Things, and Tushar Halegale, who's the IOT Senior Manager at Deloitte. These guys putting together all the solutions. Welcome back to theCUBE, great to meet you, thanks for joining us. You bet, it's great to be here, great to see you guys again. So one of the things that'll see digital transformation, which is really overblown, we all know we're in this digital transformation wave, but the thing that we've been hearing on theCUBE over the past, I'd say six months of event coverage, the consistent theme of digital transformation is business transformation, and really people putting it into action, and that really is whether it's a service provider we've heard from earlier, and also just business is trying to get their value chains and reconstruct their architectures at a business level, but then having their infrastructure be responsive to that, and that's cool, but really IOT has kind of changed the equation, right? So you guys, that's what you guys are doing, so I want to just dig right into it. IOT wave that's hitting here, your thoughts on the impact to customers in real time to their world. I mean, obviously they have refreshed cycles, they're going through all kinds of infrastructure, they have apps and cloud native on the horizon, hybrid cloud, what's the impact to their business? How has IOT changed the game for the customers? Well, I'll start and you can add on. First off, IOT brings the promise of changing the game, but not everyone is really realizing that yet. First off, because right now there's still many, many business challenges for companies of all size. The lack of internal corporate sponsorship to do a massive transformation change, or the organization and the culture within, because you're talking a full lifecycle digitization rather than investing or dropping new applications. Technology-wise, we've got problems. IOT represents IT merging with OT, so you've got this partnership and your solutions and offerings need to transcend your core data center and your IT technologies with the traditional operational technologies. You're talking companies that have been Bosch and national instruments and folks that have been in the marketplace for some time, but so it's harder, it's heavy lifting, and there's limitations in the customer environment around the current IT architecture. So, first and foremost, to get the benefit, you've got to get them across the chasm to be able to deliver that new transformation. Tishar, I want you to weigh in on this, because the question, I'm also kind of digging in here a bit, kind of subtext to the original questions. Where's the mindset of the customer? I mean, are they having a wake up call moment? Are they beyond that? Where are they in the progress bar, if you will, on the IOT? Yeah, they've had some pre-existing infrastructure, operational technology, sensors. Is it a wake up call? Where are they? Yeah, so I mean, I think what's happening really is that a lot of organizations are now beginning to look into business outcomes and what technology does for them, right? A lot of them are saying, well, why should we invest on anything else? So, companies are becoming really focused on top line growth, you know, bottom line cost optimization, and ultimately margin improvement for their shareholders. So, as industry lines are blurring, as new entrants are coming into markets and new threats are being created, there's more pressure from shareholders to come up with new growth opportunities. IOT is a field that sort of encapsulates and takes all these different technology domains and puts it all together. Clay's case and example, I mean, since 1970 to 2010, the worldwide productivity for manufacturing was about 4% every year, and then it just dropped 1%. That's a really big deal, right? Manufacturing costs are about 18 to 20% of the cost of goods sold for a manufacturing client. So, how do you increase the productivity because any impact on the productivity or reduced downtime for a manufacturing client not only has costs on revenue, but also a lot on the profit margin, right? The same thing around retailers. Because of the online presence and because of the sales that are increasing over there, retail margins have reduced from 10.5% to about 9%. So, retailers are asking, well, how do we increase our sales in the in-store channel where 85% of their sales are coming? So, IOT is a huge component in delivering that. You bring up a good point. I mean, what I love about the IOT and some of the stuff you guys are doing is that it's the confluence of big data meets real infrastructure. That's right. And what you're referring to, and we hear this in the ad business all the time, I don't know where my spend's going and it's an instrumentation game, right? So, talk about that impact because now it's actually not an art. It's actually science as well. Like, you can actually instrument it and focus on those areas. Yeah. I mean, absolutely. I mean, just to build on the marketing story that you just talked about, that's a huge piece in retail, right? So, if you have a multi-brand retailer, you want to be able to not only see what your customers are doing, but also try and monetize the data. So, one channel is to look into who your marketers are, advertisers are, and then be able to place the ad at the right place in the right context with the consumer that you might have in your store. And a lot of this is about in-store data attribution, right? What is the ROI that marketers and the advertisers are getting back for the spend that they have? And so, ROI with the help of beacons and codes and Wi-Fi, all these technologies is able to sort of capture all of that location data, the contextual data, behavioral data of the clients, along with wireless infrastructure data, put it all together and create that picture. And what I'm seeing, I'm seeing the customers are kind of one of two camps. Those that understand they grok it, but they don't know where to start. How do I truly start digitizing? Then the other ones are, they don't fully realize, they don't fully realize the value and the necessity to start transforming or they're going to be out of business. I mean, go look at a lot of examples of your brick-and-mortars, talk about your retails. I think this is where we're coming together to really deliver and make it easier for those clients and those customers. It's the classic case of early adopters, believers and non-believers, and the believers kind of go jump in the deep end, waffle around and learn how to swim, and then the non-believers become believers because they get bitten in the butt with costs or some sort of impact. Or are they out of business? But it's a really hard problem for organizations. I mean, you mentioned it before, is that companies have to go through their digital transformation, but they have to fund it. And it's hard to fund it if you have to grow your top line and cut the cost of your legacy systems. Okay, so part of the problem is you talk about digital transformation, it's all about technology, it's all about data. Certainly IOT plays into that, as John pointed out. But people really don't understand the value of their data, the accounting industry doesn't recognize value of data on the balance sheet. There's really no standards. People don't know how to monetize data. So how can you guys help customers through those really gnarly problems? Where do you start? Well, I mean, we started with this first, which is an industry-focused view, right? So Deloitte goes to the market by industry. So let's take retail and manufacturing, whichever the case might be. And what we really are looking into is an industrial digital value chain transformation story. So we'll take the value chain of an industry, break it down into processes, and then break that down further into use cases. We'll look at a use case, look at the value drivers of the use case, see what economic impact or the outcomes of the business outcomes that might be derived out of those use cases. And then when you aggregate all of them, it starts creating a shareholder value impact. And that's becomes really interesting. So case and example for a retailer, you can look at improving the basket size or in store conversion or improving the footfall traffic. All of that improves the growth, increases the revenue. You talk about asset efficiency or improving the resources or the associates, their utilization of store, the supply chain operations improvement, all of that improves the cost optimization and together impacts the margin. So we put that picture together for our clients to see in real economic terms. And data sits at the center of that analysis, right? Well, correct. And so the enablement of the use cases happened through technology and as the various facets of technology, the ERP system, the CRM, the point of sales, the beacons, the Wi-Fi all work together, the data is generated to create 360 degree views of the customer, which then leads to all of these outcomes. Just talk about the value chain piece on that because I think that's indicative of IoT's impact as well as other things that are digitally connected. What is the difference between the digital value chain in terms of its configuration, its value versus non-digital, how they used to approach it from a management perspective. And obviously digital is a little bit different. Is there any characteristics you can point out that you've seen in your observations and with your engagement with customers that jump out? Sure, I mean the traditional value chain, I think is very linear, right? If you take a manufacturing value chain, for example, a lot of it was let's do R&D, come up with a product, then let's go procure the product, the raw materials, then make the product, then you ship it, logistics, and then you do after sales services. It's very linear one after the other. With the advent of data and the way you can capture it at every stage of the value chain, well different stages now talk to one another. So as a machine is about to break, you can then create a new order and then it improves the production. So it's less linear and more interrelated. And so the value chain is no longer very simple, it's very complex. But by showing visibility into each stage of the value chain, that's where value is created and captured from. And the data model is very complex too. You've got external data, now you've got a whole new data quality challenge and data access challenge. Okay, so back to John's question about where are we on the maturity meter? Is it sort of second inning here? The game is just starting? National anthem? Well hey, for certain industries, I think we're on second inning. You go look at areas like oil and gas. I mean there's a lot of historical work going on around machine learning, AI. Go look at the automotive autonomous vehicles, semi-autonomous vehicles. I think that's advancing and advancing rapidly. But I'll guarantee there are many, many industries that they don't even realize how much data they have. And yes, they're maybe tagging two to 3% of that, that it's going to, this is a new wave. I mean this is really, really exciting time. So Jeff, on that point, you're finding that that makes a lot of sense actually. For if people have existing operational technology so they have some legacy experience in some systems, it may not be connected to IT, so they have some legacy with respect to that piece. Perfect example. Part of our joint partnership and the announcement that we're making together around IoT is not only to deliver the consultative, the advisory services, but we're delivering pre-packaged offerings specifically for vertical use smart. As that maintenance and monitoring, we're coming together, bringing together our edge line capabilities. We're bringing together a PTC and national instruments from the center, bringing all this together in a consortium, building an appliance and it's going through the consultative nature of proof of concepts to show and prove through proof of concepts the value that a customer can achieve by harnessing all that data and being able to actually drive predictive analytics and then, wow, once that they see the benefits of that, the value, the proof and the pudding, they will expand that across their entire production lines and it's just going to go. All right, talk about the relationship with Deloitte. Like you guys that just take us through a day in the life of a use case on how someone would envision and engage with you guys. Obviously Deloitte, well-known on the services side, you guys got total great credibility and track record. Obviously with you guys with IoT, new market. How do you guys engage? What does the joint relationship look like? Take us through an example. Well, I'll start, you know, first up we're building off of 20 years of joint partnership together and day in the life is we strategically sit down and we take the assets we can bring to the table as the new HPE and that spans heavily the infrastructure and some of the support, point next, services capability and we bring that in with the capabilities to Deloitte and we build these offerings and we build a comprehensive program to take it to market and have those discussions at the right level of the organization and hold their hand through this whole transformation process. Don't worry, we got you covered. We can help you get through this and we can demonstrate the value on the returns. So yeah, I mean, I'll just build on this. So I mean, some of the offerings that we've built together now, right? So as we get a client who is let's say interested in IoT, what we would actually do is sort of work with them and say, let's do an IoT workshop, right? It might be a one day workshop. We might get our industry experts that are very focused on the vertical. We might get our technology experts. We might get our ecosystem partners who are doing startups and things of that sort. So they kind of know what's going on in the marketplace. Well, together with them we'll sit down, we'll figure out what's a value chain transformation story. What are the things, let's say a manufacturing client, just take for example, needs to do to go from a modern factory to connected factory to a smart factory to do that manufacturing transformation story, right? What are those 50, 60 use cases that they need to go through? And out of that, what are the one or two use cases that they need to do today that will deliver near-term tangible value? So for those 50, 60, let's create the business case that delivers the enterprise shareholder return. Today, what do they need to do to get that quick win? Take those two through use cases, the offerings that Jeff spoke about. Let's take those offerings and within eight weeks, let's deliver a proof of concept that shows the client, I can take one of your assets, connect them, get the data out, show the insight, and then create the roadmap for scaling it out to make it a reality. Start small, think big, and scale fast. That's what we said. All right, that's a great point. I'm glad you brought that up. I want to ask the tough question, because this is the bottom line. I mean, we hear a lot of, thought a lot of customers through our research Wikibon team, and we get tons of barriers in front of me. So I want to ask you, what are the barriers and how do I get all those obstacles? But also privately, a lot of CXOs say to us, look at, this is like a four-year sports contract. If I'm not up and running in four years, I'm out of a job. So the notion of bringing the consultant and HP, and we're going to do a focus group, and we're going to play this out. The old days back in the early ERP days, those time cycles were 18 months. Just to get going and then do the organizational transformation, they need proof on the table immediately. So the Ford CEO was replaced, not saying that was because of this, but people have a short tenure. They need to see results immediately. So the psychology of the pressure with the work that needs to get done are two huge issues. How do they come, what are the obstacles, and then the psychology of showing the results immediately? I think in terms of some of the business challenges that we have, a lot of visitors around just leadership and sponsorship, do you have a tech-focused culture in the company? Is there a collaboration between business and IT? Do you have expertise for IoT within the business or within the enterprise and outside? Those are some very basic, it's people, people, people all the time. From a technology standpoint, a lot of this is around the whole IT, OT, a convergence piece of things. This is very complex domain. Nobody has all the knowledge base, so how do you get that to work? And traditionally, IT hasn't played well with OT and vice versa. So how do you get that? Standards are evolving around security, privacy, things of that sort, right? So how do you keep up with that? And then finally, there are so many different solutions. How do you make sense out of that? Procurement is painful, right? And that's where some of the solutions, like Jeff talked about, we made the solutions where the procurement cycle becomes really simple. There's tons of choices out there. That's an obstacle in there itself. Exactly. So how do we deal with these sort of these challenges and how do we jumpstart the story? If you take the principles of agile and software development, that's what we have pulled into our offerings, right? Instead of spending three, four, six months in trying to figure out what the universe is going to look like and how things will change, it's not like that. We've taken sprint approaches to our delivery, like I shared earlier, it's about that one day IoT journey workshop. Quickly get that done, get it out of the way. Not a lot of waterfall, which that prolongs that organizational transformation. And in its constant recalibration, that's what we want to focus on. Let's show some quick wins in eight-week increments. And I'll guarantee as we show, as we are showing these quick wins in certain verticals, they're dropping like dominoes because when they see their competition, all of a sudden gain efficiencies and provide a greater experience for their clients or their customers, believe me, everyone wants a piece of that. Yeah, bottom line is obstacles to your point, move fast, start small, think big, move fast. I love that. And again, there's psychology out there, it's real. And bringing agile, the waterfall kind of, it takes too long. That's correct. All right guys, thanks so much for sharing the insight on IoT, congratulations. Avan here, what do you think? What's going on for you guys real quick? We'll end the segment. Final word, 2017 Discover, what's your takeaway? So far. Well, my takeaway is, I mean, we're just at the cost fair. I mean, this is, I mean, this year in IoT, we're still in the, I would call it the crawl stages of this. IoT is going to be huge. Very exciting times coming and it's going to impact every industry. Yeah, and my parting word, I love to see the partner-first mentality we have in here. The fact that we're here with all our SIs, our OT partners, I also love to see, we are now building and designing innovation such as the HPE Edge Line Converged Systems from the ground up, specifically for IoT and what IoT. Same thing with the Ruba portfolio. So we got a great set of tools and a great set of partners to work with. We didn't bring up a Ruba, I don't know if we had a big conversation on that earlier. Tishaar, Jeff, thanks so much for sharing the insight, Internet of Things, Industrial Internet of Things. This is theCUBE, the video of things here at HPE Discover 2017. I'm John Furrier, Dave Vellante. We'll be back with more coverage after this short break. Stay with us.