>> Announcer: Live, from San Francisco.
It's The Cube, covering Oracle Open World 2016.
Brought to you by Oracle.
Now, here's your host, John Furrier and Peter Burris.
>> Hey, welcome back everyone,
we are live here in San Francisco.
This is SiliconANGLE Media's The Cube.
It's our flagship program, we go out to the events
and extract the signal from the noise.
I'm John Furrier, the CEO of SiliconANGLE Media,
joined by co-host Peter Burris all week.
Three days of wall-walk of day three.
He's the head of research at SiliconeANGLE Media Inc.,
as well as the general manager of Wikibon research.
Our next guest is Roddy Martin,
VP of SC Supply Chain Cloud Product Marketing at Oracle.
Welcome to The Cube.
>> Thank you very much for the opportunity.
I 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 is a huge opportunity going on
in every single theater of where software used
to be a point solution.
The cloud is now an opportunity for customers
to think differently, and is 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 a very interesting part of my background
is I came out of the brewing industry in South Africa.
and then I led the supply chain practice
at AMR Research, which today is Gartner.
And we did a lot of studies on,
what are companies doing to lead this transformation?
Because it's a transformation of the interim
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 has done a great job
of carrying the search forward,
is the idea that every company progresses
to an interim operating model in five stages of capability,
and every one of those builds on the other.
So they're either reacting in stage one's problem
and never saw the shortage coming and ran 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 engine outside an 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 that outside is interesting, we've heard this before,
a lot of people are going that way,
but there's no shortcuts.
Can you talk about, cause you talk about the endpoint
is then outside-in.
>> Right, when you're operating
as a demand-driven interim supply channel 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 is:
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 interim business model.
This is why the Oracle's blanching in the cloud,
in fact all of Oracle's developments in the cloud are so
important because you're effectively building
a new process oriented operating model that
spins the entire business.
If I started off with ERP systems and then I put
logistics in place and tied it together, there's all
sorts of disconnects in the business.
When you pick it up in cycle times, you pick it in
disconnect sometimes, they don't see changes
to the marketplace for weeks.
So, this overarching end to end supply chain operating
model in the cloud is a fundamental enabler.
>> So how do you gauge a customer?
First of all, I buy everything that you said, but I want
to bring up a point, because it seems to me that the
theme of Oracle OpenWorld that traditional applications
and I won't say, I'll just say the word Silo just
to use it as a point, has been a specific
domain specific thing.
But to be end to end and be outside-in, which is the end
game, you have to know how to talk and integrate
with other systems which might have been a problem
if you built the most badass end to end system.
>> That is a 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, if I question on the journey thing, 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're saying, here's your journey and they shorten
the mile posts for the deliverables.
But they're the one getting paid for it so is that
the right model, should they 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've
better get on the bandwagon because they're not going to
have a thousand consultants deploying whatever ERP
system you 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--
>> So they're driving the journey for parameters?
>> They are gearing up for this new journey,
the consultants are.
>> 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 a 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 with that data
in business are now, we're not figuring out how
that impacts business design, process design,
and offering design.
>> So, that's stage 4S, what we talk about is
people, process, and technology versus, in the past,
when you had stage one, two, and three.
People as one set of projects, process as another set
of projects, and technology as another set of projects.
>> Yeah, I may or may not take some middlings with
the model you put out, but it does 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 you,
the dominant consideration was assets.
Where is the physical asset, where are the materials,
where is the machine, and we'll focus our returns
on this 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 talk 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 ragweed's busting and they say, do we have the
right levels of inventory, and they're moving inventory
to make sure that people who aren't on Facebook are
saying we can't buy this particular product.
They're moving inventory, that's the difference.
>> So, they're sharing data amongst themselves.
>> Yes, and they're collaborating between retailers.
>> Arguably a similar example, and a retailer that's
actually not moving inventory but moving pointers
and offering new channel options so that someone
decides 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 and 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.
And 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.
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 their
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:
cause supply chain has been very instrumentation drive,
okay, and that certainly is transforming but now
you mention Procter and Gamble.
We are living in an era where, in the history of business,
you can actually now potentially measure everything.
So how does that impacting the reconfiguration
of the business model?
I mean, Procter and Gamble has those moments of truth,
every company will have a moment of truth which is,
everything is 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.
>> Peter: 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 that shelf.
So the point is, data is everywhere and now these,
the consulting and the BPM organizations supporting
and companies doing their own business process 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.
>> So, this is really awesome, 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.
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.
>> Roddy: That's why the cloud is so important.
>> John: 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?
>> Well, first of all, these transformations are being
lead by the C level executive team in a business.
This is now longer somebody who decides to buy
a new IT system and plug it in to 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 intent 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 going to happen.
>> So what's the progression?
What's the progress bar look like when you have that
moment of an epiphany and say, you know, I'm the CEO--
>> What's the earning point of the business?
If it's Procter and Gamble, I want X number
of one billion dollars brands.
If you're a pharmaceutical company, you want to launch
brand new drugs and you want to do it at half
the price and half the speed that you're used to.
It's the business articulating, this is why the leadership
teams are so fundamental, articulating what's the
burning platform and then translating that back
into the capabilities--
>> So you get a reverse engineer.
>> Outside-In. >> Outside-In, I love it.
>> The way our research says it, and it's very similar
but I want to test this because it's,
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 going to
do it with and identify the capabilities that are
going to delight that community.
So it's context, community, and capabilities.
>> Now here's the context, further 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 got to 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,
supplies connected into supply chain, everybody sharing
that information and the fact that not many people,
they don't know how to do it.
The culture of business is not yet at the points--
>> That's why the measurement thing I brought up,
I mean Procter and Gamble, they used to say to their
agencies, we know that 50% of our advertising is good,
we don't know which half.
So now they can measure it all just like in every
other aspect so this is where the business model--
>> You also have to be careful about whether or not,
again going back to 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 insides 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 the approximate one: IOT.
IOT is, has many many applications.
Certainly turning analogue data into digital data
so you can build models is a crucial piece of it.
But it also has another implication in how you enact
the output of that model back into the real word.
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 the supply chain, two things come up.
One is visibility and the other is analytics.
Right, so there's tons of data available,
to your point just now.
That data could cause massive noise to the business
unless you know what you're looking at.
I know companies that will say, 95% visibility of changes
on their demand side is good enough but I'm good enough
on the supply side to be able to adjust.
But you 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--
>> Peter: Analyze 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 side.
>> So you're a great foil for my second question.
My second question is you look back at the history,
or the recent history let's call it, of 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 that you
want to play to get to that position.
Very asset oriented, we're 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 market place.
>> Peter: But you're not going to base it on just the assets.
>> No, we're not going to base it on the assets unless
you've 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.
There are, that's why I say it's a reconfiguration
of those same principles but flexible enough to meet demand.
>> So how does, how does the world of design and the
world of strategy start to come together in C suite?
>> 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 Saint 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.
>> So, I would suggest keep Guinness the way it is
because it's damn good the way it is, so personally
I would agree on the Guinness comment.
No green Guinness.
>> So, what's the South Africa beer?
>> Castle Lager.
Well, SAB, South African Brewery, has been bought by
Anheuser-Busch InBrev, a massive big giant.
>> We love beer and if there's any beer sponsors
out there, we're happy looking for our Budweiser.
We want a, maybe an IPA in there.
Roddy, thanks for spending the time,
coming in with you, appreciate it.
Some thought leadership here on Reconfiguration
and looking at some of the nuances that are really
going to impact the buyers here on The Cube.
Oracle Open will be back with more live coverage
from SiliconANGLE's The Cube after this short break.