 Live from San Francisco, it's theCUBE. Covering Oracle Open World 2016. Brought to you by Oracle. Now, here's your host, John Furrier and Peter Burris. Come back everyone, we are live here in San Francisco. This is SiliconANGLE Media's theCUBE. It's our flagship program. We go out to the events and extract the signal from noise. I'm John Furrier, CEO of SiliconANGLE Media. Join my co-host Peter Burris all week, three days of wall walk. He's the head of research with SiliconANGLE Media Inc, as well as the general manager, Wikibon Research. Our next guest is Roddy Martin, VP of SC Supply Chain, cloud product marketing at Oracle. Welcome to theCUBE. Thank you very much for the opportunity to look forward to the discussion. Thanks for coming on. Really want to hear your thought leadership around the supply chain transformation because it might be a little bit bumpy depending upon your perspective. But there's a huge opportunity going on in every single theater where software used to be a point solution. The cloud is now an opportunity for customers to think differently and it's a catalyst for essentially a business model change as well as a fundamental data-driven change. Your thoughts on this, what do you see going on? What are the key inflection points? So it's a very interesting, so part of my background is I came out of the brewing industry in South Africa and then I led the supply chain practice at AMREsearch, which today is gotten. And we did a lot of studies on what are companies doing to lead this transformation because it's a transformation of the end-to-end business operating model of a company. This is not stitching data together in the traditional supply chain system sense. So one of the very first foundations that is really fundamental and Gartner's done a great job of carrying this research forward is the idea that every company progresses to an end-to-end operating model in five stages of capability and every one of those builds on the other. So they're either reacting in stage one to problem and never saw the shortage coming and so I run out of product. Stage two is I performance improve around projects. Stage three is I drive functional excellence. And stage four I start working as an end-to-end outside-end operating model. In other words, I'm driving the business from what's happening in the market and I'm making sure that supply is matching demand. So it's very interesting and it's very important to consider that as the base foundation for this whole discussion. So the outside-end's interesting. We've heard this before. A lot of people are going that way but there's no shortcuts. Can you talk about, because you talk about the end point is then outside-end. Right, because when you're operating as a demand-driven end-to-end supply chain or operating model, you can't run out of supply, right? So if you saw a change happening in the marketplace but there's nothing to supply, you've really just messed up the business. And so each of these stages builds on every other stage. So functional excellence says, am I good at planning? Am I good at product management? Am I good at logistics? Because those are the foundations for operating in the end-to-end business model. And this is why the oracles of supply chain in the cloud and in fact, all of Oracle's developments in the cloud are so important because you're effectively building a new process-orientated operating model that spans the entire business. If I started off with ERP systems and then I put the logistics systems in place and tied the data together, there's all sorts of disconnects in the business. And when you pick it up in cycle times, you pick it up in disconnects sometimes. They don't see changes in the marketplace for weeks. So this overarching end-to-end supply chain operating model in the cloud is a fundamentally amazing. So how do you gauge a customer? I mean, first of all, I buy everything that you said, but I want to bring up a point because it seems to me the theme of Oracle OpenWorld, that traditional applications, and I won't say, I'll just say the word silo just to use it at the point, has been a specific domain-specific thing. But to be end-to-end and to be outside in, which is the end-game, you have to now talk and integrate with other systems, which might have been a problem if you built the most bad-ass end-to-end system. Right, well that's part of the challenge. And in fact, a lot of companies that I've worked with over the 15 years I've been researching this, they get stuck for that very reason. In other words, this is a re-engineering of the whole IT infrastructure versus having a thousand consultants come in and tie all my data together over a question of four years and move 15 instances of whatever system you want to one. So my question on the journey thing, and you mentioned thousands of consultants, which customers are now seeing, they want faster mile posts, they want to see faster agility, but a lot of the customers actually outline the journey for the customer. So they are saying, here's your journey, and they shorten the mile posts for the deliverables, vasterics, but they're the one getting paid for it. So is that the right model? They should be outlining the journey for the customer. And they are, it's been very interesting because I was a partner with a major global consulting company for four years, and I've been mixing with them here. They suddenly recognizing that this path to the cloud is something they better get on the bandwagon because they're not going to have a thousand consultants deploying whatever ERP system you want to talk about as the future of IT. So what's happening is the business is having much more of a say in this fast deployment, fast time to value, putting these new systems- So they're driving the journey for parameters. They are gearing up for this new journey the consultants are. Well, so let's get to the fundamentals behind all this and ask a question about it. At the end of the day, digital technologies give customers an option to do their journeys very differently, whether in the B2B sense or a consumer sense. And as they use digital technologies, they're also giving data up. And so we have now a combination where customers are getting something out of digital. They are demanding it as part of the engagement model. They are giving up data along the way and the technologies for sensing and doing something in that data in business are now, we're not figuring out how that impacts business design, process design, and offering design. So at stage four, I spoke about is people, process, and technology versus in the past when you're in stage one, two, and three people there's one set of projects, process is another set of projects, and technology is another set of projects. Yeah, I may or may not take some, have some middlings with the model you put out, but it doesn't matter. At the end of the day, what is driving this increasingly is that it used to be that the dominant consideration in, I think, and I'm testing, the dominant consideration was assets. Right. So what is the physical asset? Where are the materials? Where's the machine? And we'll focus our returns on those things and then presume that there's a demand for it. And now we're getting all this data about demand and that is having an impact on how we think about arranging the assets. That is the inside out to outside in. So let me give you an example without mentioning companies. A major retailer and a major pharmaceutical company. They share pollen data, they share weather data, they mine Facebook to find out what are people saying about allergies? Let's say in New England, and the ragweeds busting and they said, do we have the right levels of inventory? And they're moving inventory to make sure that people who are on Facebook are saying, hey, we can't buy this particular product. They're moving inventory. That's the difference. It's not. So they're sharing data amongst themselves. Yes. They're collaborating between retailers. I'll give you a similar example. I love that. And a retailer that's actually not moving in inventory but moving pointers and offering new channel options so that someone the size may not, that they know somebody's going to come into the store. The size may not be there, but they can still get it to them that day. So it's very interesting. Procter & Gamble, who I did a lot of work with, and this is public domain information. The CEO drove two fundamental transformation messages in the business. They called it the two moments of truth. He said, we will always have our product when we say we've got a product. So if we promote a new product, the consumer goes to the shelf, it will be there. The moment of truth, number two, we understand why consumers choose and use our products. And you don't fix number two until you fix number one because if I wanted a small tube of toothpaste, and I went in and there were only big ones, it's the wrong buying signal. So what you're seeing is that whole flip to measuring what the market's looking for and shaping that demand and then making sure that the assets and the supply system is geared to deliver. Right. I want to ask you a question. First of all, I love that point. I love your point about the data, but here's the question. The supply chain has been very instrumentation driven. Right. Okay, and that certainly is transforming. But now you mentioned Procter & Gamble. We are living in an era where in the history of business, you could actually now potentially measure everything. Right. So how does that impacting the reconfiguration of the business model? I mean, Procter & Gamble has those moments of truth. Every company will have a moment of truth, which is everything's now measurable. So advertising to employee things and everything. So let's take the asset story versus the on-shelf thing, right? So when I have assets and I'm getting all the data out of my assets, what am I doing with all of that data, right? Because it's not connected to demand. What I got to know is what demand data do I really want to be able to move my assets to the right place? By the way, the shelf is an asset. Of course it is, yes. It's a sensing point and it's an asset. They own it. They replenish their shelf. So the point is data is everywhere and now the consulting and the BPM organizations supporting and companies doing their own business price and manner, they got to know what data is really important and what data from the outside in is going to allow me to leverage a new operating model for my business and become digital. Okay, so this is really awesome. So I was talking with an Oracle executive last night at one of their customer parties and we had a conversation around this data sharing. This is a new, different behavior, okay? This is a theme of the show that no one's really talking about, but it's in plain sight, which is there is a data sharing aspect of systems and vendors and companies. That's why the cloud is so important. And this is now impacting everything, everything. How do companies go forward and do this? What are you seeing? Is there a best practice? Is there a starting point? Is there a five step process on that or? Well, so first of all, these transformations are being led by the C-level executive team in the business. This is no longer somebody who decides to buy a new IT system and plug it into the business. So the business is saying, how do we change the operating model of the way we work, right? So, and then what are the capabilities? And this is where that five stage model comes in. What capabilities do we need to look at building over the next three years so that we can operate in this end-to-end way? Because you can't wake up tomorrow and go from an inside-out asset-driven business to an outside-in-demand-driven business in two weeks. It ain't gonna happen. So what's the progression? What's the progress bar look like when you have that moment of an epiphany and say, hey, you know, I'm the CEO? What's the burning platform of the business? So if it's Procter & Gamble, I want X number of $1 billion brands. If you're a pharmaceutical company, you wanna launch brand new drugs and you wanna do it in half the price and half the speed that you're used to. So it's the business articulating, this is why the leadership team is so fundamental, articulating what's the burning platform and then translating that back into the capabilities that you're gonna reverse engineer. You exactly. Like from the outside-in. Outside-in. The way our research says it, it's very similar, but I wanna test this, is because we say start with context. Yes. What are you going to do with your customer that you have to do better than everybody else? And then identify the community that you're gonna do it with and identify the capabilities that are gonna delight that community. Exactly right. So it's context, community, and capabilities. Now, here's the context for the piece to context. If context changes, how quickly do I sense that change and how fast can I respond to that change? Because if I've got all my asset capabilities and my supply capabilities locked into one set of context and that changes, and I now have to re-engineer my whole business, I may lose the whole show in the process. I gotta see those changes as they are happening, literally in real time. This is where the internet of things, this is where demand shaping, demand sensing, retailers collaborating, suppliers connected into the supply chain, everybody sharing that information. And the fact that not many people they don't know how to do it. The culture of businesses are not yet at the point where they know how to share the data. Well that's the point about the measurement. That's why the measurement thing I brought up. I mean, in Procter & Gamble, they're used to say to their agencies, we know that 50% of our advertising's good. We don't know which half. But now they can measure it all just like in every other aspect. So this is where the business model moment. But you also have to be careful about whether or not, again, going back, context changes, measurements change, data can blow you away. You have to be very smart about how you do it. So a lot of these intelligent things, machine learning, how the models get built, how the insights get delivered, all become very, very important. Very quickly, I have two quick questions for you. One is really approximate to the conversation, one less so, but approximate one. IoT. IoT has many, many implications. Certainly, turning analog data into digital data so that you can build models on is a crucial piece of it. But it also has another implication in how you enact the output of that model back in the real world. How does supply chain and IoT come together? So if you look at the studies that are being done by Oracle and Gartner, et cetera, on what's important to supply chain, two things come up. One is visibility and others analytics. So there's tons of data available, to your point just now. Bad data could cause massive noise to the business unless you know what you're looking at. So I know companies that'll say 95% visibility of changes on the demand side is good enough, but I'm good enough on the supply side to be able to adjust. You've got to know which data to look at. So I'm looking at on shelf. I'm looking at what consumers are choosing and using. I'm looking to see what of my contract manufacturers, how reliable. Very nice key constraints. Bingo, so it's not about, I think what we're all going to have to learn in the internet of things is we need, again, a cloud-based internet of things platform that does the analytics. Because we can rewire things faster. Exactly. You can adjust the business to new scenarios based on what you're reading from the demand side and what you're reading from the supply. So you're a great foil for my second question. My second question is if you look back at the history or the recent history, let's call it a strategy. Very asset-based. Porter said, pick the industry that has the best returns. Pick your position in that industry, then choose your games based on the five-factor analysis you want to play to get to that position. Very asset-oriented. We are in control. That's going to dictate how things change. What you just suggested was a very, very different way of thinking about strategy. Same fundamentals. It's the same fundamentals, but it's allowing yourself to adjust those fundamentals based on what's happening in the marketplace. But you're not going to base it on just the assets. No, no. You're not going to base it on the assets unless you focused on like if you're an engineering company and that's all you make is machines, you can't suddenly start producing toothpaste, for example. So that's why I say it's a reconfiguration of those same principles, but flexible enough to meet them all. So how does the world of design and the world of strategy start to come together in the season? Fundamentally because it's the voice of the customer that starts to count. It's the voice of the customer that dictates the strategy. So if my customers don't want green Guinness for St. Patrick's Day, don't make any because it's going to hang around and get thrown away, right? So the voice of the customer determines what's happening on the demand side and the supply side has to be agile enough to meet that need. Well, I would suggest that keep Guinness the way it is because it's damn good the way it is. So personally, I would agree on the Guinness comment, keep it, no green Guinness. Swagic days. Swagic days. No, I know. Which is South Africa beer? Castle Lager. Well, SAB, South African brewery has been bought by and I was a bush and into booze now. A massive big jump. We love beer and if there's any beer sponsors out there, we're happy looking for our Budweiser but we want to have maybe an IPA in there. Rodney, thanks for spending the time coming in with theCUBE. Thank you very much. Great discussion. Thank you. Some thought leadership here on reconfiguration and looking at some of the nuances that are really going to impact the buyers. Here on theCUBE Oracle Open, we'll be back with more live coverage. I'm still looking at angles of theCUBE after this short break.