 From around the globe, it's theCUBE, presenting Cube on Cloud, brought to you by SiliconANGLE. Hello everyone and welcome back to this special presentation from theCUBE, where we're exploring the future of cloud and its business impact in the coming decade, kind of where we've come from and where we're going. My name is Dave Vellante and with me is a CIO slash CTO slash COO and longtime colleague, Dan Sheehan. Hello Dan, how you doing? Hey Dave, how you doing? Thank you for having me. Yeah, you're very welcome. So folks, Dan has been in the technology industry for a number of years. He's overseen large, multi tens of millions of dollar ERP application development efforts. He was a CIO of a marketing direct mail company and that's Dan, we met at Advo, seems like such a long, long time ago. Yeah, that was a long time ago back in Connecticut, back in the early thousand days. And then, but pretty serious data for back then, you know, early 2000s and then you did a six year stint as a EVP and CIO at Duncan Brands. I remember I came out to see you when I was starting Wikibon and trying to understand you know, what the CIO's cared about. You were so helpful and thanks for that. And that was a big deal. I mean, Duncan 17,000 points of distribution. I mean, that was sort of a complicated situation, right? So great experience. I mean, when you get involved with franchisees and trying to make everybody happy, yes, that was a lot of fun. And then you had a number of other roles. You were C, one was a CIO, COO at Models and then fast forward Beacon Health. You were EVP and CIO there. And you also, it looked like you had kind of a business and operational role. You helped the company get acquired by Anthem Blue Cross. So awesome, congrats on that. That must have been a great experience. It was a year of my life, yes. You're still standing. So anyway, you can see Dan, he's like this multi-tool star. He's seen a lot of changes in the technology business. So Dan again, welcome back, Dan Sheehan. Oh, thank you. So when you started in your career, you know, there was no cloud, right? I mean, you had to do everything. It's funny, I remember I was, you probably know Bill Russi, CIO Hart from Steam Boiler. I remember we were talking one day and this again was pretty cloudy. He said, you know, I'm thinking, do I really need to manage my own email? I mean, back then we did everything. So you had a provision infrastructure so you could write apps. And that was important that frustrated CFOs, but it was a necessary piece of the value chain. So how have you seen that sort of IT value contribution shift over the years? Let's start there. Well, I think it comes down to demand versus capacity. If you look at where companies want to go, they want to do a lot with technology. Technology has taken on a larger role, it's no longer and has not been a, so to speak, cost center. So I think the demand for making change and driving a company forward or reducing costs, there are other executives, peers to the CIO, to the CTO that are looking to do more. And when it comes to doing more, that means more demand. And you step back and you look at what the CIO has for capacity, looking at quick solutions that are solutions in the cloud is appealing. And there are, you know, times where other functions talk to a vendor and see that they can get a vertical solution done pretty quickly. They go off and take that on, or it could be a service now capability that you want to implement across the company. And you do that just like an ERP type of rollout. But the bottom line is there are solutions out there that have pushed, I would say the IT organization to look at their capacity versus demand. And sometimes you can get things done quicker with a cloud type of solution. So how did you look at that shadow IT as a CIO? Was it something that kind of ticked you off or like you sort of implying that it made you better? Well, I think it does ultimately make you better. But I think you have to partner with the functions because if you don't, you get these types of scenarios and I've been involved in these just as well. You are busy with fulfilling your objectives as the leader of IT and then you get a knock on the door from, let's say, marketing or operations and they say, hey, we just purchased this X solution and we want to integrate it with A, B and C. Well, that was not on the budget or on the IT roadmap or the IT strategy. That was linked to the business strategy and all of a sudden now you have more demand versus the capacity and then you have to go start reprioritizing. So it's more of, yeah, kind of disrupted but at the same time it pushed the need of the company forward but it's all about just working together to make it happen and that's a lot of hard conversations when you have to start reprioritizing capacity. Well, so let's talk about that alignment. I mean, there's always been a sort of a schism between IT and its ability to deliver, manage demand and the business. Well, I always want you to go faster. They want IT develop the systems, of course for less and then they want you to eat the cost of maintaining them. So there's been that tension. So, but in many ways that CIO's job is alignment and I wonder, it seems to me anyway that schism has certainly narrowed and the cloud's been part of that but what do you see is that trajectory over the years and where do you see it going? Well, I think it's going to continue to move forward and depending upon the service, companies are going to take advantage of those services. So yes, some of the non-mission critical capabilities that you would want to move out to the cloud or have somebody else do it, so to speak, that's going to continue to happen because they should be able to do it a lot cheaper than you can. Just like you mentioned a few moments ago about email. I did not want to maintain exchange service and keeping that all up and running. I moved quickly to Microsoft 365 and that's been a world of difference. But that's just one example but when you have mission critical apps, you're going to have to make a decision if you want to continue to house them in house or push them out to an AWS and house them there. So maybe you don't need a large data center and you can utilize some of the best and brightest around security, around managing size of the infrastructure and getting some of their engineering help which can help. So it just depends upon the application, so to speak, or function that you're trying to support. And you got to really look at your enterprise architecture and see where that makes sense. So you're going to have a hybrid I see and I have managed towards a hybrid way of looking at your architecture. Okay, so obviously the cloud played a role in that change. And of course you were in healthcare too, so you had to be somewhat careful with the cloud but you mentioned this hybrid architecture. I mean, from a technologist standpoint and a business standpoint, what do you want out of a, you know, you hear hybrid, multi, all the buzzwords. What are you looking for then? Is it a consistent experience? Is it consistent security? Or is it sort of more horses for courses where you're trying to run a workload in the right place? What's your philosophy on that? Well, I mean, all those things matter but you're looking at obviously cost. You're looking at engagement. How does these services engage whether it's internal employees or external clients who you're servicing? And you want to get to a cost structure that makes sense in terms of managing those services as well as those mission critical apps. So it comes down to looking at the dollars and cents as well as what type of services you can provide. In many cases, if you can provide a cheaper and increase the overall services, you're going to go down that path. And just like we did with service now, I did that at Beacon and also at DentalQuest to healthcare companies. We were able to remove duplicated, so to speak, ticketing systems and move to one and allow a better experience for the internal employee. They could do self-service. They can look at metrics. They can see status, a real-time status on where their request was. So that made a bigger difference. So you engage the employee differently better and then you also reduce your costs. Well, how about the economics? I mean, is cloud, is it your experience that cloud is cheaper? You hear a lot of the legacy players will say, oh no, cloud is super expensive. We didn't get that Amazon bill. Well, what's the truth? Well, I think there's still a lot of maturing that needs to go on because unfortunately, depending upon the company, so let's use a couple of examples. So let's look at a startup. If you look at a startup, they're probably going to look at all their services being in the cloud and being delivered through a SaaS model. And that's going to be an expense. That's going to be most likely a per user expense per month or per year, however they structure the contract. And right out of the gate, that's going to be a top line expense that has to be managed going forward. Now you look at companies that have been around for a while and two of the last companies I was with had a lot of technical debt, had on-prem applications. And when you started to look at how to move forward, you had CFOs that were used to going to buy software, capitalizing that software over five years, sometimes three years, and using that investment to be capitalized and that would sit below the line, so to speak. Now, don't get me wrong. You still have to pay for it. It's just a matter of where it sits. And when you're running a company and you're looking at the financials, not having that cost on your operational expenses, so to speak, if you're not looking at the depreciation through those numbers, that was advantageous to a CFO many years ago. Now you come to them and say, hey, we're going to move forward with a new HR system. And it's all increasing the expense because there's nothing else to capitalize. Those are different conversations and all of a sudden your expenses have increased. And yes, you have to make sure that the business is behind you with respects to an ROI and supporting it. Yeah, so long as the value is there, then that's a part of the alignment. I want to ask you about cloud pricing strategies because you mentioned service now, sales forces in there, work day. If you look at the way these guys price, it's actually, it's really not true cloud pricing in a way because they're going to have you sign up for an annual license. A lot of times you're going to pay up front or you want a discount, you're going to have to sign up for two years or three years. But now you see guys like Snowflake coming in, big, high profile IPO. They actually charge you on a consumption based model. What are your thoughts on that? Do you see that as sort of a trend in the coming decade? No, I absolutely think it's going to be on a trend because consumption means more transactions and more transactions means more computing. And they're going to look at charging it just like any other utility charges. So yes, I see that trend continuing. Did a big deal with Ultimate, Ultipro HR. And yeah, that was all based upon user headcount, but they were talking about looking at their payroll and changing their costing on payroll down the road with their merger or they went from being a public company to a private company and now looking to merge with Kronos. I can see weird time and attendance and payroll will stop being looked at as a transaction. It's a weekly or bi-weekly or monthly, however the company pays. And yes, there's dollars to be made there. Well, so let me ask you as a CIO and a business, you know, COO. One of the challenges that you hear with the cloud is okay, if I get my Amazon bill, it's something that Snowflake has talked about where, you know, to me it's the ideal model, but at the other hand, the transparency is not necessarily there. You don't know what it's going to be at the end of the month. Would you rather have more certainty as to what that bill is going to look like or would you rather have it aligned with consumption and the value to the business? Well, you know, that's a great question because yes, I mean, budgets are usually built upon a number that's fixed. Now, don't get me wrong. I mean, when I look at the wide area network, the cost for internet services, yes, sometimes we need to increase and that means an increase in the overall cost. But that consumption, that transactional, that's going to be a different way of having to go ahead and budget. You have to budget now for the maximum transactions you anticipate with a growth of a company and then you need to take a look at that when you're budgeting, you know, if you're budgeting, I know we were on a calendar fiscal year, so we started our budgeting process in August and we finalized it sometime in the end of October, November for the preceding year and if that's the case, you need to get a little bit better on what your consumption is going to be because especially if you're a public company going out on the street with some numbers, those numbers could vary based upon a high transaction volume and the cost and maybe you're not getting the results on the top end, on the revenue side. So I think, yeah, it's going to be an interesting dilemma as we move forward. Yeah, so I mean, it comes back to alignment, doesn't it? I mean, I know in our small example, you know, we're doing now, we used to be physical events with theCUBE, now it's all virtual events and our Amazon bill is going through the roof because we're supporting all these users on these virtual events and our CFOs like, well, look at this Amazon bill, you say, yeah, but look at the revenue it's supporting. And so to your point, if the revenue is there, if the ROI is there, then it makes sense. You can kind of live with it because you're growing with it, but if not, then you really got to question it. Yeah, so you got to, you got to need to partner with your financial folks and come up with better modeling around some of these transactional services and build that into your modeling for your budget and for your top line and your expenses. So what do you think of some of these SaaS companies? I mean, you've had a lot of experience really coming at it from largely an application perspective, although you've managed a lot of infrastructure too, but we've talked about service now, they've kind of mopped up in the ITSM. I mean, there's nobody left. I mean, service now is sort of taken over the whole time. You know, Salesforce, I guess sort of similarly, sort of dominating the CRM space. You hear a lot of complaints now about, you know, service now pricing. Somebody the other day called them the Oracle of ITSM. Do you see that potentially getting disrupted by maybe some cloud native developers who were developing tools on top? You're seeing like, for instance, Datadog going after Splunk and logging, and there seem to be examples popping up. What's your take on all this? No, absolutely, I think, because you know, when we were talking about back when I first met you and I was at the Advo, I mean, Oracle was on its rise with their suite of capabilities and then before you know it, other companies were popping up and took over, whether it was first being PeopleSoft Workday and then other companies that just came into play. Because it's going to happen because people are going to get frustrated. And yes, I did get a little frustrated with service now when I was looking at a couple of new modules because the pricing was a little bit higher than it was when I first started out. So yes, when you're good and you're able to provide the right services, they're going to start pricing it that way. But yes, I think you're going to get smaller players and then those smaller players will start grabbing up so to speak, market share and get into it. I mean, look at Salesforce. I mean, there are some pretty good CRMs. I mean, even ServiceNow was getting into the CRM space, big time, as well as a company like Sugar and a few others that will continue to push Salesforce to look at their pricing as well as their services. I mean, they're out there buying up companies, but you just can't automatically assume that they're going to integrate day one and it's going to take time for some of their services to come and become reality, so to speak. So yes, I agree that there will be players out there that will push these larger SaaS companies and hopefully get the right behaviors and right pricing. I've said for years, Dan, that I've predicted that ServiceNow and Salesforce are on a collision course. It didn't really happen, but it's starting to because ServiceNow, the valuation is so huge. They have to grow into other markets much in the same way that Salesforce has. So maybe we'll see McDermott start doing some acquisitions. It's maybe a little tougher for ServiceNow given their whole multi-instance architecture and sort of their own cloud. That's going to be interesting to see how that plays out. Yeah, yeah, you got to play in those type of, that type of architecture, let's put it that way. Yes, it'll be interesting to see how that does play out. What are your thoughts on the big hyperscalers? Amazon, Microsoft, Google, what's the right strategy there? Do you go all in on one cloud like AWS or you're more worried about lock-in? Do you want to spread your bets across clouds? How real is multi-cloud? Is it a strategy or more sort of a reality that you get M&A and you got shadow IT? What's your take on all that? Yeah, that's a great question because it does make you think a little differently around, we had to put all your eggs and it's getting tougher because you do want to distribute those eggs out to multiple vendors, if you would, ServiceProviders. But, for instance, we had a situation where we were building a brand new business intelligent data warehouse and we decided to go with Microsoft as its core database and we did a bake-off on business analytic tools. We had like seven of them at Beacon and we ended up choosing Microsoft's Power BI and a good part of that reason, not all of it, but a good part of it was because we felt they did everything else at the tableaus and others did, but Microsoft would work to give additional capabilities to Power BI if it's sitting on their database. So we had to take that into consideration and we did and we ended up going with Power BI. With Amazon, I think Amazon's a little bit more, I'll put it horizontal whereby they can help you out because of the database and just kind of being that data center, if you would, and be able to move some of your homegrown applications, some of your technical debt over to that, I'll say cloud, but it'll get interesting because when you talk about integration, when you talk about moving forward with new functionality, yeah, you have to put your architecture in somewhat of a center point and then look to see what is easier, cheaper, cost-effective, but what's happening to my functionality over the next three to five years. But it sounds like you'd subscribe to A Horses for courses approach where you put the right workload in the right cloud as opposed to saying, I'm going to go all in on one cloud and it's going to be same skill sets, same security, et cetera. You really sort of, it seems sounds like you'd lean toward the former versus going all in with a mono cloud. Yeah, I guess, again, when I look at the architecture, there will be major breaks if you would. So yes, there is somewhat of a movement to go with one horse, but I could see looking back at the beacon architecture that we could lift and put the claims adjudication capabilities up in Amazon and then have that conduct, the left to right claims processing and then those transactions could then be moved into Microsoft's data warehouse. So there is ways to go about spreading it out so that you don't have all those eggs in one basket and that you reduce the amount of risk, but that weighed heavily on my mind. So I was going to ask you how much of a factor lock-in is. It sounds like it's more spreading your eggs around, as you say, and reducing your risk as opposed to worried about lock-in. But as a CIO, how worried are you about lock-in? Where is that fit in the sort of decision tree? I mean, I would say it's out there, but unfortunately there's no number one. There's number, there's like five number ones, if you would. So it's definitely up there and it's something to consider when you're looking at, like you said, the cost, risk integration, and then time. Sometimes you're up against the time. And again, security, like I said, security is a big key in healthcare. And actually security overall, whether you're retail, you're going to always have situations no matter what industry that you got to protect the business. Yeah, so I want to ask you about security. That's the other number one. And I don't think, well, you might have been a de facto CISO, but kind of when we started in this business, you sort of, security was the problem of the security teams and that's now a team sport, but in thinking about the cloud and security, how big of a concern is the cloud? Is it just more, you're looking for consistency and be able to apply the corporate edicts? Are there other concerns like the shared responsibility model? What are your thoughts on security in the cloud? Well, it probably goes back to, again, the industry, but when I looked at the past five years in healthcare, doing a lot of work with the CMS in Medicaid, Medicare, they had certain requirements and certain restrictions. So we had to make sure that we follow those requirements and when you got audited, you needed to make sure that you can show that you are adhering to their requirements. So over the past probably two years with Amazon's government capabilities that those restrictions have changed, but we were always looking to make sure that we owned and managed how we managed the provider and member data, because yes, we did not want to have obviously a breach, but we wanted to make sure we were following the guidelines, whether it's state or federal and then in even some cases healthcare guidelines around managing that data. So yes, top of mind, making sure that we're protecting, you know, in my case, we had 37 million members, patients. And we need to make sure that whether if we did put it in the cloud or if it was on-prem that it was being protected. And as you mentioned, recently come off of an app, I'm just going to say Amazon, but it was an acquisition, that company that was looking at us doing the due diligence, they gave us thumbs up because of how we were managing the data at the lowest point and all the different levels within the architecture. So Anthem who did the acquisition, who had a breach back in, I think it was 2015, that was top of mind for them. We had more questions during the due diligence around security than any other functional area. So it is critical. And I think slowly some of that type of data will get up into the cloud. But again, it's going to go through some massive risk management and security measures and audits because how fragile that is. Yeah, I mean, that could be a deal breaker in an acquisition. I got two other questions for you. One is, you know, I know you follow the technology very, technology is very closely, but there's all the buzzwords, the digital transformation, the AI, these new SaaS models that we talked about. You know, a lot of CEOs would tell me, look, Dave, get the business right and the technology is the easy part. It's people, it's process. But what are you seeing in terms of some of this new stuff coming out, this machine learning, you know, obviously massive scale, new cloud workloads, anything out there that really excites you and that you could see on the horizon that could be, you know, really change agents for the next decade. Yeah, I think we did some RPA robotics on some of the tasks that, you know, where, you know, if the analysis types of situations. So I think RPA is going to be a game changer as it continues to evolve. But I agree with what you just said. Doing this for quite a while now, it still comes down to the people. I can get the technology to do what it needs to do as long as I have the right requirements. So that goes back to people, making sure you have the partnership that goes back to leadership and the people. And then the change management aspects right out of the gate, you should be worrying about how this change is going to be, how it's going to affect, and then the adoption and engagement because adoption is critical because you can go create the best thing you think from a technology perspective. But if it doesn't get used correctly, it's not worth the investment. So I agree, whether it's digital transformation or innovation, it still comes down to understanding the business model and injecting and utilizing technology to grow or reduce costs, grow the business or reduce costs. Yeah, usage really means values. All right, my last question. What's the one thing that vendors shouldn't do? What's the vendor no-no that'll alienate CIOs? To this day, I still don't like, there's a company out there that starts with a no. I still don't like it so that every single technology module if you would has a separate sales rep. I want to work with my strategic partners and have one relationship and that single point of contact, that spark, can go back into their company and bring me whatever it is that we're looking at so that I don't get, for instance, from that company that starts with a no, 17 calls from 17 different sales reps trying to sell me 17 different things. So what irritates me is you have a company that has a lot of breadth, a lot of capability and functional that I may want. Give me one person that I can deal with. So a single point of contact and that makes my life a lot easier. Well, Dan Sheehan, I really appreciate you spending some time on theCUBE. It's always a pleasure catching up with you and really appreciate your sharing, your insights with our audience. Thank you. Oh, thank you, David. I appreciate the opportunity. You have a great day. All right, you too. And thank you for watching everybody. This is Dave Vellante for theCUBE on cloud. Keep it right there. We'll be back with our next guest right after this short break.