 Live from Washington D.C., it's theCUBE, covering Oracle Cloud World. Brought to you by Oracle. Now your hosts, John Furrier and Dave Vellante. Okay, welcome back everyone. We are live here in Washington D.C. for the special presentation of theCUBE at Oracle Cloud World. This is theCUBE, Silicon Angles flagship program. We go out to the events and extract the signal from the noise. I'm John Furrier. We're my co-host Dave Vellante. Our next guest is Mark Johnson, Senior Vice President, North American Sales from the public sector for Oracle. Welcome to theCUBE. Thank you. We are in public sector land. This is like the epicenter of all public sector action. The government, which we all know has been moving aggressively to a digital transformation of their own. The website crashed, I couldn't get it working. They bring the guys from California in. Couple developers, millennials probably, banging on some new code. Bottom line, huge legacy transformation. You guys have a big customer base there in public sector. What's the vibe like? What's the orientation? Are they like huddling? They understand where they're trying to go? Give us the update. Yeah, basically what's happened is with the IT budgets continuing to flat line or shrink, more and more of these government agencies are trying to consolidate data centers, consolidate their spend, try to drive spend out of the infrastructure that they have so they can acquire new technologies such as cloud. But I think from my perspective, when you look at the public sector, it's about the agencies using a lot of their IT dollars today to reinvest in their old sustainment systems and they don't have enough money to put on the front end which is net new modernization efforts. So we're seeing that. That's a classic. Dave always talks about it from an analyst perspective. 70% of your budgets used to operate not create new opportunities. In the feds it's about 80%. So 80% of the money is spent for O&M or sustainment. The other 20% is for let's call it net new initiatives but you got to parse that out. And certainly the digital servicing of having value for the audience, the citizens of the agencies is now going to be more developer for APIs, cloud computing, you're seeing cloud be a perfect fit but it's almost like it's a perfect use case for the whole inside out Oracle cloud machine because you want to provide agility and development, rapid deployment, but yet you got a ton of compliance checkboxes. Well, in the government, let's just talk federal government, there's let's say 3,500 data centers. Let's call 3,000 data centers. They're consolidating a lot of those and it's very difficult for a lot of the new cloud services to actually move their legacy proprietary systems into a private cloud. So the Oracle cloud machine actually is a perfect opportunity for Oracle to bring our private cloud into their data center and actually run their systems and actually maintain and support it. So talk a little bit more about the digital transformation specifically in the context of the government. A lot of push and consolidation is that a cost savings that can then shift into the digital transformation. So what does that mean for the government and how is that being funded? Yeah, basically the agencies right now, let's call it they have flat IT budgets. Some are up a little bit, some are down, but with sequestration, I would say they're flat to maybe slightly negative from an IT perspective. So what they're trying to do is what I've seen is there's less modernization efforts and the net new efforts, let's call it the digital government type or the net new modernization efforts are. There's very few of those right now. So basically they're trying to squeeze dollars out of their infrastructure and apply that to new initiatives and it's very difficult right now. We're seeing very few new starts. We're seeing most of their money going to sustainment, not as much going into net new programs. So when you look at the cloud, you have softwares of service, you have all the platform and infrastructure services. It's an area we're focused on, but it's a slow move, you know, the risk averse and we're not seeing them do a heavy adoption yet on that. So early days of cloud, the government, I don't know government in particular, I don't see any of them coming home early from coming to cloud, kind of made it a mandate. Cloud person. Yeah. Was that unsuccessful in terms of leading the objective and obviously going to save money and do more of that. And it's sort of, I don't want to say backfire of them, because did it not meet the expectations? You know, the cloud first initiative came out, I think around 2011. Right. They basically took the non-mission critical, like email, things like that, things that are non-mission critical. Safe stuff. Yeah, safe stuff. And they started moving those to the cloud. So in the end, they did move a lot of those systems, those applications to the cloud. And you're continuing to see them take, let's call it non-mission critical systems or applications and offload those to a third party cloud provider. As for the mission critical business, that's yet to be uptick in. But I guess, from my perspective, when you look at it, a lot of the savings comes from people. And in the government, as you know, the people are still there. So basically you have legacy systems, they need to move them off to a third party cloud provider and they need to retire the systems in order to save money. And that's the part that I don't know if we're realizing the savings in the federal government yet, but ultimately they will as they retire these older legacy systems, you know. It was a very difficult thing to do. Yeah, it is. I mean, if you essentially run up the government on those legacy systems, it's kind of hard to uncook them, right? Yeah. I'm trying to understand the Oracle play there, which is if you look at something like what we saw today announced the Oracle Cloud Machine, it's essentially a cloud. I can bring that into my data center and create a cloud-like experience. Yeah, here's the Oracle play. So one is, there's 95% of what the government has today is on-premise systems, okay? There's only maybe, let's say, 66% of it's in a cloud provider. So those systems, what we're doing is we're consolidating them, we're modernizing them, we're bringing in engineered systems. So the engineered systems are coming in and we're driving a consolidated play in the data centers to drive their costs down, let's say 50% in many cases on these applications and the statement dollars. And those dollars we're trying to reapply for net new initiatives like cloud and things like that. Okay, so Mark, we're going to break away for the keynotes in a few minutes. We've got a couple more minutes left. I want to ask obviously about the elephant in the room, so to speak, kind of a big data reference, I guess, with security, cybersecurity, huge issue, certainly for the government, not just for enterprises, but everything, what are you guys doing? What does Oracle have? I'll see the bars high for you guys. Yeah, we need to do all of them, I like to ask. Yeah, I got to tell you, Oracle runs most of the government databases. Not all, but we have a big market share. So what we do, my organization does, we have a whole security suite. I actually bring in, I have a team of security experts and basically we have a non-invasive script we run against the systems. We actually put together a profile of their strengths and weaknesses and we actually coach the government agencies on how to make their environments more secure. So it's not just technology, it's just practices as well. And it's not about selling new software in many cases, about they already own the software and the services and we're trying to make them more security aware from a layer perspective. Okay, we got a break for the keynotes. Sean Price is up next on the keynote stage. Mark Johnson here on theCUBE, breaking it down, seen by President and Federal sales for the government, public sector I should say, not federal, but all public sector. It's theCUBE, we'll be right back with more live action from DC after this short break.