Digital transformation insights from the front lines

IT leaders in energy, entertainment, and software discuss digital transformation that led to improved team experiences and customer satisfaction.

Companies in many industries are deploying new digital strategies in an effort to accelerate their businesses, rationalize workflows, and stay competitive. At the recent HPE Discover 2017 conference in Las Vegas, IT leaders in energy, entertainment, and software discussed their digital transformation experiences with Jim Jackson, Hewlett Packard Enterprise's senior vice president for enterprise group marketing.

CenterPoint Energy

At CenterPoint Energy, the digital transformation process started a decade ago when it began deploying smart electric meters, one of the earliest examples of the Industrial Internet of Things, according to Dr. Steve Pratt, chief technology officer at the Texas utility company. CenterPoint Energy replaced the unidirectional information flow of the traditional electric meter with real-time, two-way communications. This smart grid solution helped CenterPoint Energy control and monitor its energy distribution network.

With 2.3 million intelligent devices in the field, one of the biggest issues became the wealth of information collected. Dr. Pratt likened the data flood to the sounds of a newborn baby—lots of noise that requires determining what each sound means in order to respond appropriately.

Once it was able to determine which "noises" needed a response, more accurate analysis using advanced analytics and better, faster decisions followed. From CenterPoint Energy's perspective, increased understanding of the data meant better customer service, which translated to greater business efficiencies and better customer relationships.

DreamWorks Animation

Managing vast amounts of data has always been vital to the production process at DreamWorks Animation. Moreover, the creative freedom of its artists has always been important, according to Kate Swanborg, senior vice president of technology communications and strategic alliances at DreamWorks Animation.

Consider this: A 90-minute animated film contains 130,000 frames in which every element is digitally created. This results in an average of 500 million digital files created over a four-year production process. Making use of a hybrid cloud environment and the latest in high-performance hardware allows DreamWorks Animation to have multiple films in concurrent production, which means that at peak, the studio manages up to 5 billion files in active use.

The studio’s goal is to deliver an environment to employees that seems no more complex than picking up pen and paper. DreamWorks Animation continues to strive toward the reduction of rendering time, to grant artists a nearly real-time view of their work to enable greater creative iterations.

[Also see DreamWorks Animation + HPE = imagination unleashed, an at-a-glance view of the technology DreamWorks Animation uses to maintain a leading position in the animation industry.] 

CallidusCloud

CallidusCloud's goal is to provide software-as-a-service sales tools that can quickly and properly handle sales commissions by providing customers with more effective analytics and a reliable platform, according to Giles House, the company's chief marketing officer and executive vice president of product. Callidus needs flexibility and strives to avoid overprovisioning and associated costs.

The company needs to deliver its SaaS platform in a way that enables customers to get the greatest benefits from the service. This means staying ahead of customer demand for compute and storage. 

Digital transformation: Lessons for leaders

  • Determine the value of additional data—whether environmental or user-focused—and plan how best to use it.
  • Reduce user awareness of the IT process by providing tools they are eager to use.
  • Don't forget that the digital interface (e.g., website, phone, app) sits between you and your customer. Better user experiences increase customer satisfaction.

Related link:

Composable Infrastructure unleashes creativity at DreamWorks Animation studio

Transcript:

THIS TRANSCRIPT HAS BEEN EDITED

Ladies and gentlemen, please welcome Jim Jackson.

Jim Jackson: Good morning, everybody, and welcome to Discover 2017. We're really excited about this Discover and excited about having a great week. One of the main themes that you're going to hear about this week at Discover is digital transformation, but it's not going to be us just talking about digital transformation. It's going to be customers, our customers, actually sharing their experiences, their learnings, their insights, and the outcomes that they're seeing from digital transformation. I'm really excited about this. My role here is really just to tee them up and have you guys have a chance to experience the amazing journey that they're going on.

The way this is going to run is we've got some prepared questions. I'll start with those, but as we go along, if you have some questions we'll actually be taking questions from the audience, so go ahead and get your questions ready. Let me go ahead and first introduce our amazing panel here. First, Dr. Steve Pratt from CenterPoint Energy. Susan Carroll from Merck. Kate Swanborg from DreamWorks Animation. And Giles House from CallidusCloud. Thanks again to all of our panelists. We're really excited to have what I think is just an amazing set of speakers up here. Amazing companies that are really going on this journey. As we get started, maybe I'll ask you, Steve, and everybody just to give a very quick update on your company so the audience has just a little bit more context, and then we're going to jump right into the questions.

Dr. Steve Pratt: CenterPoint Energy is a domestic energy delivery company. We are headquartered in Houston, Texas. We have three primary businesses. We have an electric distribution business with 2.3 million customers, solely in Houston, Texas. We have a natural gas distribution business that runs throughout six states within the United States. Then we also have an energy trading business where we trade energy all over the United States. We're a 135-year-old company but we have transitioned to a digital utility of late, and we'll talk more about that.

Jim Jackson: Excellent. Susan.

Susan Carroll: Yes, hi. Merck is a pharmaceutical company that's been in existence for 125 years. We celebrated our 125th anniversary last year, which was very exciting. As a pharmaceutical company, we're focused in on providing those products that help save lives, and our big focus at Merck is really on research. Our whole focus is on inventing for life, so the whole goal is whether it's for human or whether it's for your companion animal, your pets or out in the farm animals, that we're providing those products, whether it's pills, vaccines, biologics, for being able to save lives for folks.

Jim Jackson: Kate.

Kate Swanborg: At DreamWorks Animation, we're not about saving lives, but we certainly are hoping to make them more enjoyable. We make CG feature animated films such as "Shrek" and "Madagascar," "How to Train Your Dragon," and "Kung Fu Panda." We have been in business for a little over 20 years, and it's been one of the most enjoyable parts of my life.

Giles House: CallidusCloud is all about helping salespeople make more money faster. Maybe not the most noble cause, but one that's important for all companies. We help drive sales performance and make them more productive, whether it's putting together an offer or making sure they get paid the right commissions. That's what we do, and we're very passionate about it.

Jim Jackson: OK, excellent. Let's go ahead and jump right in. Let's talk about digital transformation. Digital transformation is not easy, but we're seeing a lot of progress here on this panel. So, Dr. Steve, let's start with you. You guys have 2.3 million sensors out there. How do you translate all of that data into insight? What was your thought as you guys started on your digital transformation journey?

Dr. Steve Pratt: Digital transformation to us as an organization is really about extending our reach. Extending our reach to our customers. Extending our reach to our employees in ways that perhaps we have not done before. And so what we wanted to do is position ourselves to maximize the use of technology to allow us to extend that reach, to achieve our goals, but also to develop almost independent or individual relationships with our customers through the recognition as CenterPoint as a brand that remains extremely reliable in the delivery of energy services to them.

As I mentioned earlier, we are a 135-year-old energy delivery company, but 10 years ago, we decided that we needed to mature in that space. And so we went down the path of developing a digital grid or a smart grid solution to allow us to apply technology in a way that we've never applied technology before. The 2.3 million analog meters, which basically were unidirectional communication devices, are now smart meters. They can communicate back to us. They can share the state of their health. They can tell us things about an individual customer and what's happening in terms of their energy consumption in a way that's meaningful, in a way that's real time, in a way that we can actually utilize that information to make better decisions for them or allow them to make better decisions.

Then we can extend those same capabilities to smart grid devices throughout our distribution and use the data that's provided by those smart devices in ways that we've never used those before to ultimately drive towards maximizing the availability of the services, the energy that we deliver to our customers, but also beyond that to establish new ways of communicating with our customers such that they feel like we have a one-on-one relationship with them. So our digital transformation really was about extending the reach of our organization, applying technology in intelligent ways to provide for a greater reliability and a better way to communicate with our organization.

Jim Jackson: Excellent. Susan, you guys have been capitalizing on digital transformation as well, compressing supply chains, really looking at your R&D process. Talk a little bit about the driver behind your transformation and what you're seeing.

Susan Carroll: Within the pharmaceutical industry, our focus has been for decades on how you're going to have that next tablet, that next pill come to market as one product gets developed after the small molecules, then the bigger molecules. But as now we're going forward, thinking beyond the pill and then becoming a world-class digital healthcare company is really what our focus is. When you think beyond the pill, you think I have a certain disease, and let's use diabetes as an example, you have to be able to take your medication at the right time. But how do you really track what's going on within your body and yourself to be able to stay up with managing that disease? Well, with technology today, we at Merck can develop adjacencies using technology such as an application to help you track through what you are doing with our own products. But then if we extend that reach even further now that you can capture more data, get more real-time interaction in that personal relationship with the patient, we can then really focus in on truly digitizing what we can do to provide those services.

Let me give you an example in the world of clinical trials. An old-world clinical trial is you as an individual may be part of a clinical trial, let's say, whether it's diabetes or it's cancer, HIV. You can walk through the gamut of diseases. The old days was you're given a notebook. I'm tracking what I did. I weighed this much. I ate this much. Here's what I did. Here's what the weather was around me. So I can then have data to be able to work through that clinical trial. Well let's fast-forward as we said, as we think beyond the pill, but now let's advance even further. How can I collect enormous amount of data easily to really understand an entire customer experience with that product?

You can use your Fitbit to know what your exercise is. You can use MyFitnessPal, which knows everything you ate down to the vitamins and your nutrition. You have the weather app that can say here was the weather where you're at, how much pollen you were consuming. You can pull information from the government to know what kind of chemicals that were in your water. So now we can collect enormous amount of information to help us create better products, safer products, and bring them to market faster and then really tie back to that patient even all the way through a sales cycle when the product is in the market. And how do you get that social media data to tie back? What are people experiencing using the product?

So now we completely generate a digital trail of information to develop the best products, and then advance that even further. How do you then take that data and start saying how do I collapse that time using data to bring a product to market? That's a huge shift in the pharmaceutical industry, and again, it's to save lives. The sooner you bring the product to market and the safer it is, the more valuable it is.

Would you mind putting the teaser and witty headline in the body field at the top of the article?  Great story. Giles, quick one for you. As you guys have been on your digital transformation journey, it's really about using technology differently to accelerate, to deliver as a service models, to be a lot faster. Just give the audience a little insight into the experience from Callidus.

Giles House: Sure. I think to set the scene, sales is going through a big transformation. We've just heard from Susan about the pharmaceuticals and the clinical trials. In every industry, virtually, there is a different way of doing something. There's a different way of providing a service, and there are more products coming to market much, much faster, and sales is really struggling to keep up, to be honest.

I'm sure if we did a poll of the audience, there will be a lot of people here that get sales calls from salespeople quite often, and I'm sure many of them are unwanted and I'm sure many of them are pretty terrible. I know I get them, and they're useless. You get people phoning you up to sell you something you've already got, and sometimes you know more about it than they do. So, it's difficult for sales to really keep up, and that's what we're all about. We're helping them drive that knowledge transfer, helping that drive that productivity. And to be honest, the challenge has been getting the mindset shifted.

There's so much data out there now about what our buyers are doing, what we're looking at, all our web behavior. There are companies now that can predict your intent and your likeliness to buy, so we've really got to be looking at that data and helping sales understand it and focus their time on where are they going to be. So, this crunching of data, this digital transformation that we're in, we have to be keeping up with that. Our customers are demanding more and more performance from our systems. They're demanding to put more data through it and demanding it to become more scientific, and so being able to catch up with that and have an agile platform is>absolutely critical. The software needs the hardware to run and vice versa. It's been a great journey, and it gives us the flexibility that we need to run this.

Jim Jackson: Excellent. Kate, we all know and love the characters that you guys bring into our homes, into our movie theaters. How has digital changed your industry and what you guys are able to do?

Kate Swanborg: One of the most interesting things about a CG feature animated film, they're cartoons, right? They're deceiving, however, regarding how much high-performance compute is necessary to actually bring them to market. If you think of one of our movies that are about 90 minutes long, films run at 24 frames a second, so that's 130,000 frames. Now in each one of those frames, every character that you see, every strand of hair, every piece of fur, every leaf on a tree, it's all digital. It's all crafted from the ground up. It's not like live action where you can take a camera out and film something. Every single element in the film actually has to be crafted. It has to be geometrically modeled, surfaced, textured. There's environmental effects like water, wind, dust. There's character effects like fur and clothing that move with the characters.

What all this really means is that by the time that we're done making one of our movies, we've typically crafted half a billion digital files. That's 500 million digital files per film, and we typically have at least four or five, sometimes as many as 10 films, in active production. So, you're dealing with 5 billion active digital files being worked on in a hybrid cloud environment by hundreds and hundreds of artists, and these films take four years to make. All of a sudden you start to realize that our world of digital transformation isn't about bringing digital into the world. It's about managing the digital that's inherent in the world.

When we moved from hand-drawn animation to CG filmmaking back in the late 1990s, what we did was we introduced digital into a world that simply was not ready for it at that time, so the artists took the burden of that. The artists were the ones that had to wait for the imagery or had to deal with applications that were incredibly unintuitive in order to craft these films. What we're looking to do today is absolutely harness the power of compute in a much more simplistic and straightforward way so that artists' inspiration can be realized in real time. That's what's going to lead us to better products and a faster time to market.

Jim Jackson: Awesome. Susan, let's go a little bit deeper and go to the next phase. Great overview from everybody in terms of how you guys thought about digital transformation and the journey you're on, but talk a little bit about the cultural shift. How did you align what you needed to drive with the business and the need for the business to be aligned in terms of the transformation that you had to drive from a technology perspective? Talk a little bit about that and give the audience some insight there.

Susan Carroll: Well, besides the business having to shift, we in IT especially around all of our compute and storage areas, have to start shifting as well. The business wants to be able to drive all their changes in real time and start leveraging that technology faster. So, getting back to that clinical trial example, the business has to rethink how they're going to process their information. When you send in your documentation to a government entity to say, "I'm ready for you to say this product can come to market," it's an enormous amount of paper. It can stand as tall as me, and I'm not that tall, and fill a whole pallet. So think about the entire process that you're used to as a scientist and putting all that down on paper, and now you're going to completely digitize that and show all this analysis that people now can look at versus consuming by paper.

The same thing with your lab equipment. That equipment's now highly digitized and pulling that together. That's a huge change in business process, but also a huge change is what Kate was saying, is you're consuming your technology at a rate much faster. So how do we on the IT side begin to change how we look at what we do and how we do? Not only are we looking at the business and helping them say how you can leverage technology for a business process, we on the infrastructure side are saying we need to start thinking of who we are differently.

We are an IT infrastructure supply chain. We have products. We have to be able to manage those products. We need to deliver those products at a price point that folks want to pay. We need to get them 24/7, because that's when our business is moving and we want to be able to constantly be pivoting. Pivoting to where they're trying to get through their one experiment at a time as the same way in the drug cycle and being able to continuously pivot, but we can't get there with that old technology. So we're modernizing our infrastructure base to allow us to drive those pivots.

At the same time, we think about who we are and what we do and how we do that as individuals, which then feeds back into the business process also changing, and it's marrying more of those things up together to achieve that broader end result. So just that mind-shift change as thinking of ourselves as an IT infrastructure supply chain helps us know how to transform ourselves better for the business transformation.

Jim Jackson: Excellent. Dr. Steve, let's come back to you. You have 2.3 million sensors. You're collecting an incredible amount of information, but information by itself is really not that useful. So how do you translate that information into insight and ultimately into action? How are you guys doing that?

Dr. Steve Pratt: I'm going to use an analogy, if I may. I have a 5-month-old granddaughter, and she makes a lot of noise but you don't really know what she's saying or what she's thinking. She's not able to tell you anything, and my wife always says, "I really can't wait so she can talk so I know what she's saying." I said, "Well, there's a problem with that." I said, "Once they start talking, they never quit talking, and sometimes they tell you things you don't actually want to know." Sensors are the same way. They used to be one directional, so there was no communication back to us that said, "Hey, this is what I know about the state of my health. This is what I know about delivery of that energy service to your customer."

When we installed smart meters, and they became bidirectional and they were able to communicate with us, we said, "That's a great thing." But the problem is they were all talking at once, and you take 2.3 million meters and they all talk to you in real time at once, it begins to create a lot of data. So you don't want to just have to manage that data. You want to be able to utilize that data or realize the intelligence in that data. We began to build out an analytics capability that allowed us to take all that data in real time and begin to apply it or leverage it in ways that we've never been able to do before. If we take the sum total of all that data today and we run analytic scenarios against it, we can look at the entire health of our distribution grid at any given moment in time. And what that allows us to do is make decisions, sometimes in an automated way, as to how to deal with potential problems that may be occurring within our distribution.

That takes a lot of computational power. It takes a lot of storage-type capability to do that. So as technologies such as the HPE technologies have begun to evolve, we've been able to take more and more advantage of the data that we create each and every day to apply it in those new ways. Mostly in the form of advanced analytics and mostly in the form of, how can we make better decisions faster for our customers and our employees?

Ultimately, at the end of the day, we're really trying to achieve two things. We're trying to make sure that we deliver energy services in the safest way possible for both our customers and our employees. And secondarily, we want to maximize the satisfaction of our customers relative to the services that we deliver to them, and we believe we're able to do that by drawing on this vast amount of data that we create in real time and intelligently assessing it and applying it in ways that we've not been able to do before.

Jim Jackson: Awesome. Excellent. Kate, how do you strike the balance between creative storytellers who have grand ideas with the fact that--500 million, as you're looking at each of your sessions here--you're creating so many files? How do you balance that from an IT perspective with the creative element that needs to come out in this digital world?

Kate Swanborg: It's interesting because when you say the word "balance," you might think that what we're actually looking for is an equal set there. We're not. What we're actually looking for is an imbalance circumstance in which we're able to say yes to all of their creative ideas. We want the opportunity for our filmmakers and our storytellers to be able to realize any of the ideas that they have in their inspired imaginations.

Now that doesn't mean that all of those are going to make it to the screen. What it does mean is that we're going to be able to consider all of those and embrace them and review them and talk about them and collaborate on them. We can't do that if they're never realized, and so the balance we're looking for is actually a world in which our infrastructure and our digital enterprise is completely in service to that. Meaning that to them, we want it to be as invisible as possible. We actually want them to be able to go to work every day and harness this incredible amount of compute. To give you a sense, one of these films will require 80 million CPU hours to render the images.

Jim Jackson: 80 million?

Kate Swanborg: 80 million over the course of the four years, but of course that doesn't happen equally every day. In the beginning it's relatively small, and then in the last six months, it's exponentially bigger. We can't provision for that or we're going to overbuild like crazy, so we have to harness the cloud. We have to be able to burst outside of our own walls, but we have to do that in a way that's incredibly secure and, frankly, pretty invisible to the artists so that they're not worried about where they're files are or how they're dealing with it. Our whole world is incredibly intentionally imbalanced to make sure that the technology is completely in service to the storytelling.

Jim Jackson: Excellent. Giles, question to you. You guys are a fast-growing cloud leader. Technology plays a big role in that. Talk a little bit about the underlying cloud platform and how that's enabling you to really accelerate and differentiate your business.

Giles House: It's a similar situation as what Kate just described. In the cloud, we have a lot of telcos that pay commissions to their salespeople, their channel partners, and all that sort of stuff. So every time you send a text message, every time you make a phone call, every time you surf the Internet, somebody somewhere is having some kind of impact on their commissions check. And so there's petabytes of data that we have to crunch through for these customers, and as the year goes on, more and more of that data comes into the system. They want to do year-to-date runs and things like that, so you end up with millions and millions of transactions, whereas at the start of the year, it's hundreds of thousands.

That volume for us, it's critical that we can grow that as we need to but of course we don't want to overdeploy at the start of the year and have a lot of unused hardware sitting there. So the flexibility that we've got from the platform, the ability to spin up machines, change configurations between database and app servers and things like that all at the touch of a button, it's a complete game changer.

The infrastructure team was used to waiting months to stand up new hardware, and we just couldn't be that agile. Now we can serve hundreds and hundreds of customers on the same machine and be sure that we got enough headroom to handle it all. And if something changes, you know what, they have a spike in transactions at the end of the month, we can log into that single pane of glass and then just make tweaks on the fly to adjust the hardware. It's an incredible business advantage to be able to do that versus the old school way of having to stand up a box and put a database on it, and you're constrained by that individual piece of hardware.

For us, it's absolutely critical. We preach agility. We preach transformation to our customers, and they expect that right back from us, so having the infrastructure there to help us do that is absolutely critical.

Jim Jackson: Excellent. Get your questions ready. We're going to come out to the audience here in just a minute, but I want the panelists to talk a little bit now about experiences, learnings, insights along the journey. As I started out by saying, digital transformation is not easy, so it's a great opportunity for all of you to get a chance to learn from some of their insights and some of the things that they've seen along the way. Giles, I'll come back to you here. What advice do you have for your peers on digital transformation? Especially maybe as it gets to the platform looking for flexibility, deciding on what's core, what's not core, etc.

Giles House: It's difficult to know where to start, but I think as with everything, pick the easiest, lowest hanging fruit, to quote the cliches, but start there and start small and run fast. We follow these agile methodologies for developing our products. A lot of people follow them now for their projects, and it's a good proxy for some of the journeys that we're all going through. There's so much that we can pick off. We can get our sensors talking to our machines, and we've got customers that are looking to connect hundreds of thousands of machines up to do ordering. Automatic failover, order the replacement part and schedule someone to come and fix it, all in milliseconds done without any human interaction. Those are big goals, big hairy projects, so it's important to pick the easy ones, start small, learn the lessons, and then go on to the bigger ones. That's our biggest advice.

Jim Jackson: Excellent. Dr. Steve, back to you. What advice would you share with the audience in terms of your digital transformation journey? Because you guys have done a lot. You have an SAP HANA environment, an HPE reference architecture. There's a lot of different things that you went through on your journey, so maybe just talk a little bit about that and some of those learnings and insights that you had.

Dr. Steve Pratt: I would agree with some of the comments that Giles made, particularly around how big you have to start. A lot of times there's just so much change, so much churn in the technology world and in your own business, and how do you bring the two together and evolve those into optimal solutions? Often what happens is we try to boil the ocean and sometimes we just need to fill the bathtub. I think it's really important that when you start down a digital transformation journey that you remember the business that you're in, what your business does best, and begin to apply the available technologies into doing what you do best better.

So we started. We did work with HPE in a variety of spaces to develop roadmaps and developing reference architectures and choosing the right types of technologies to apply not to the world of things, not necessarily to the Internet of things, but to those things that we need to do better as a business. So I think the lessons learned really come back to having a plan, working with good partners, choosing the right technologies, and executing the plan.

The other learning I would say is you can have all of those things, but if you think because you do it's going to go extremely well and it's going to be perfect. It's just not going to happen that way, so those plans and those capabilities you develop need to be open. They need to be flexible. You need to be able to adapt, because as soon as you make a decision, something's going to change and it's going to lessen the value of that decision and you're probably going to have to make another one.

Jim Jackson: Excellent. Kate, you talked a little bit about this but maybe expound a little bit more on the business outcomes that you're seeing now, and especially how technologies relating to that in terms of provisioning, speed, acceleration, and what that ultimately means for getting a movie out the door.

Kate Swanborg: Well, it's so important I mention that these films take four years to make. That's not useful. We don't like the fact that it takes that long. Some of that's the creative juice that needs to happen. Some of that is the inspiration of actually coming up with these characters, but some of it over the course of our history has simply been the manufacturing of those frames.

The fact of the matter is that if we can reduce that time frame by 25%, that's a massive savings. If we can take out 25% of the crafting time of that film, not because we're taking anything away from the artist but because we're actually giving them back their imagery in a real-time setting, that's a massive savings for us, and it's critical that we're able to harness the power of our compute.

We have it sitting there. The key is to make sure that it's actually performing in a way that is useful to the storytellers, and one of the most important ways that we've gone about doing that is to look at technology as an investment in our company. We do not look at it as a cost center. We do not look at it as something that is difficult for us or onerous. We actually look at it in the same way that we invest in artists, we invest in their tools and their technologies in order to get the films that we want.

Jim Jackson: Has that changed as you've gone on your digital transformation journey? Have you seen that more broadly across the organization, where the perception of technology is different now? Talk a little bit about that.

Kate Swanborg: Absolutely. It's been so fascinating because so many of our artists come from a traditional background. They're illustrators. They're hand-drawn animators, and as we brought the tools into their world, again in the late 1990s, early 2000s, they were so cumbersome and so difficult to work with. There really was a transition period at that time in which we lost a lot of good artists because they simply didn't want to put up with how difficult the digital transformation was. We have been on a journey to make their world be as effortless and as tactile and as responsive as taking a beautiful pencil on a sheet of paper was all of those years ago. What we've seen of course is that the artists who are brilliant in their own right, they've started to embrace the technology and make it their own. They now come to us going, "Here's what we want. Here's how we want to work. Here are the workflows that will work for us," and they're essentially designing the technology that we're crafting on their behalf.

Jim Jackson: Awesome. Susan, talk a little bit about how digital transformation has really enabled you guys to free up space for innovation, to accelerate what you need to do at Merck. Talk a little about that. You had an amazing story when we were chatting the other day.

Susan Carroll: As part of the overall transformation, we think about the business side. They used to a certain process in the way they've done things for a very, very long time. It's a highly regulated industry, so you have set guidelines and rules you have to work with. So how do you help the business partners reimagine what they're trying to accomplish in a whole different way using that data? If you're used to one process, how do you then start leveraging that data in the work that you do with your new computerized equipment at the same time to achieve those different outcomes? That part is where we really drive a lot of those education sessions and really look at process reinvention, and just start seeing how could we then reset the stage but also cross-tier in IT. We have to rethink who we are and what we do and how we go about doing it.

As I mentioned before, there's that whole mind-shift change of thinking of ourselves as an IT infrastructure supply chain, but also focusing in on what's the end customer and what are our processes going to be so we can have the ultimate customer experience. We think in terms of a rethink of how do we have the perfect order? So if our customer wants to be able to get their compute power, what they need for today for this activity, how do we stand it up there so I always have the perfect order in terms of those business processes and what we look at?

That change of thinking allows us as individuals to start saying, "Who am I and what I need to do to provide that service?" As we were talking about before, so many folks in infrastructure, and I'm sure many here in the room can relate to this, is I'm a Linux person. I'm a Unix person. I'm a storage person. I'm the cloud guy. But now you have to think of, I am software first, infrastructure second, that has to rethink how I'm going to provide these services to have that perfect order at the right price point to drive those business processes that the business is reinventing, at the same speed that they have to go after that.

It's the same idea as what Steve was talking about earlier--now you have all this data that's chatting at you. How can you process that and make it real? We have to make it real for IT, and we have to make it really exceptionally real through the whole invention cycle with our scientists and back with our sales force. Because guess what. All of us as patients, we want to have a different interaction with our physicians. We want to think about things differently. As an example, my sister runs a series of clinics and hospitals in the state of Minnesota. She doesn't want to have the pharmaceutical guys come in like they used to before with the pamphlets and the materials. She drives virtual meetings back with the pharmaceutical companies to walk through the products.

That's an entire different process. That means a lot from us in infrastructure. I have to make sure that the infrastructure, at least we in IT, is the network bandwidth going to be there? Are the tools going to be there? Can you render the information they need at that moment in that meeting so you don't lose credibility? How do you then tie back that research to a research scientist so they can look at the actual results and know there's a good efficacy with the drug? Plus, as I said, all the adjacency. Here's the app. Here's how you use the app to track your diabetes. This is how you can use that with your client and then make an overall difference. Those are all the changes, but we in IT have to change how we think about what we're doing at the same rate of speed, and thus we're software first, infrastructure second, and I'm providing a huge service on the supply chain. Big change of thinking.

Jim Jackson: Amazing story. Digital business is technology. That's the reality. Let's take some questions from the audience. You guys have had a chance to hear some pretty amazing stories here. We would love to understand what questions you might have or what areas you want to flag.

Audience member: Hello. I run a local municipality in Florida. We happen to have the best beach in the U.S., just an FYI. My question is budgeting. I have an operating budget, and that budget is for me to run my day to day. How do I get the resources to do the digital transformation, and how long does it take? How complicated is it? To embark on something like this, to change my current workflows, it's a phenomenal undertaking. And it makes sense on paper, but if you don't have the financial backing ... I know I don't have the budget of the names that are up there on the screen and I think a lot of us in the audience do not either. So how do I embark on this transformation with a limited budget?

Dr. Steve Pratt: I'll start. Budget is certainly one of my favorite subjects. I think the first thing is when you are talking to anyone within your organization that has the power to make a decision about investment, don't talk to them about saving money. Talk to them about increasing value. Which means that you have to walk in there with a solid business case, and I say this only because if you can't create a business case, then you shouldn't be asking for money. So I think it's very, very important that whatever business you're in and whatever it is you're trying to get funded, then you start with the idea of increasing value, not with the idea of reducing cost. Because then it's a very, very different discussion that you're having.

Second, I think when you have those discussions, if there is an element of risk that can be introduced into the discussion such that whatever it is that you're asking to be funded can demonstrably show that there will be a reduction in risk, that is another big item that plays into the decision-makers and funding things.

The third thing is, and in our case and you said you're a municipality, we are a regulated entity. So we have to work with our public utility commission, the energy regulatory commission to convince them that we can add value to our customers, reduce risk, whatever the business case might be. And we have the advantage of being in an area that distributes critical infrastructure and delivers energy that has very, very severe weather conditions, such that you can see why it would be in the best interest of the public to support further investments in digital grids and digital utilities.

Jim Jackson: Excellent. Anybody else want to comment?

Giles House: I think pick something that's small and you can show some quick wins. People are afraid of big transformational projects. Afraid of the unknown. Are we really going to get the value that we think we're going to get? If you can try and start with one little project, figure out what the success metrics are before you start and then try and complete it in a quick period of time. Then it's easier to go back and say, "You know what? This was just the tip of the iceberg. The results were phenomenal. This is the journey we've got to go on. This is the roadmap we've got to take to get there, and it's going to take a little bit of time. It's going to take budget cycles." There's other priorities of course, but having the wins under your belt are a great way of demonstrating and giving confidence that the money's in the right place.

Jim Jackson: I would just add that we've had thousands of engagements through our Pointnext services organization, and we can come in and actually help you understand how others have gone along their journey and the business case that they have used to sell that transformation internally, so that's something we can bring as well. Next question. Right here.

Audience member: As you begin this transformation, what did you do and what are you doing going forward really to protect your environment, your intellectual property, the utility, your processes from all these attacks? Ransomware, destroying data. What did you do then as you were making the transformation, and what are you doing to further protect it so basically you can build a shield around your IT?

Jim Jackson: Excellent question. Would you want to start, Susan, maybe?

Susan Carroll: It's a very good question, because at the same time you're going through a transformation, we have to keep the business running every day. You can't lose your core. The business can't afford for technology to be down, but in a sense now, as we're going through this transformation--and some of it's very large and significant--we in IT are sometimes being asked, and this is what I shared before, was we're having to be an arsonist. Blow everything up. At the same time, we have to be fire preventers and keep things very calm and safe for everyone.

That's a balance between the two. It's not necessarily easy while you're putting on your fire suit with a blowtorch and what you go do. So what we have found is we've always stuck back to keeping our core and focused in on what we need to run from an operational perspective, but how do we make those process more effective? How do we leverage that data ourselves in what we need to go do, but then set up the programs of this is where we're going for the future. Build them and then transition each piece along the way. That meant us really examining our data and staying true to what we do every day with changing those processes, but that meant leveraging our data and being smarter.

Plus helping the individual change what they're thinking about, because it's not easy. Don't let me say, "Oh, it's easy going to these items," when you're asked to be such a dichotomy of that arsonist and a fire preventer, and you're Smokey the Bear and an arsonist. But we have found it to be very effective to really look at that data, know what we can go fix, and shore things up one step at a time. And we've actually improved our end result because of that.

Jim Jackson: How's that for a sound bite? An arsonist and a fire protector. Dr. Steve, do you want to maybe comment given your industry and the regulations and some of that?

Dr. Steve Pratt: Yeah, I said budget was one of my favorite subjects, but security is probably right up there, too. We invested a tremendous amount of time and effort and continue to invest a tremendous amount of time and effort in not trying to position ourselves as a company with data that could be used in a malicious way and with assets that could be damaged and impact the public, not believing that we could ever control that in such a way that we could completely inhibit any type of incident, if you will.

What we really work towards is building a plan before we begin to expose more of our data, before we begin to apply newer technologies. We invested time and effort in a security plan that allowed us really to do three things for every new device and every new piece of data that we created, and first is to recognize that there is an event occurring in our system that may be some type of security event, whether that's an intentional event or some other kind of event. The second is to contain that event, and the third is to eradicate that event but then apply technologies that keep it from occurring again.

So every scenario for every new type of technology, whether it be a sensor, whether it be a meter, whether it be a new server with a new operating system, it goes through a complete security analysis based on the same fundamental goals of any security methodology, and that is to do the best you can to ensure that it doesn't have a widespread impact to your business, and that's what we do. We do it each and every day and tying it back to the budget. That's where we spend the majority of our budget on any effort today is in that security space, and we've been lucky so far.

Jim Jackson: Kate, anything you want to add there?

Kate Swanborg: There's no doubt that certainly in the film industry, security is always top of mind. I think that we've got a number of different strategies about how we go about that, but your question is great because as you're changing your infrastructure, how are you ensuring that you are keeping all of those plans that you've put in place in tune? And the key for us is a multilayered approach, so that there isn't a solution for a part of the infrastructure or a solution for a part of the workflow or the process. It's always a multilayered approach.

One of the ways that we've been successful in doing this is partnering, because frankly, we're filmmakers and even our great engineers are engineers in the filmmaking space. They're creating the niche technologies that are needed for our artists and our storytellers, so what we want to do is actually partner with companies in which security is their top of mind. It's what they're thinking about every single day, and we have them come in and help us create a multilayered approach so that when we're going in and we are adjusting things for the effects artists or adjusting things for our rendering cycles or our cloud, that they're actually standing side by side with us so that we've got a second or even a third set of eyes on everything that we're doing. We don't try to go it alone. It's just too important.

Jim Jackson: Nice question. Couple options. OK, right here. We'll get you next.

Audience member: I'd just like to piggyback on the original budget question. I assume you guys have all been faced ... you talked about building a business case, presenting value, and been denied budget. So what strategies do you all employ to still keep your vision, your innovation moving forward while cutting cost elsewhere within the budget? Do you guys leveraging any sort of maintenance cost reductions, sweating assets longer? Just curious of those strategies.

Jim Jackson: Susan, you want to ...

Susan Carroll: We all love to talk about our budget and how we're going to work our way through all of this, and we too when we're looking through a whole transformation, I'm always asked how you're going to keep reducing your overall operational cost. And as I mentioned before, we too have to know our data. How much is it costing for each server, each gigabyte of data? We've changed looking at the budget, or at least in the process of changing, to look at everything we do as if it's a product. If I'm a platform, how much is my product pricing? Each server--small, medium, large--each gigabyte of storage, your backup in here. How much is that cost, and then what are the cost drivers? So it's a product costing model, so then therefore as we look at the business case, we can come back and say, "If I drive this I can increase quality and improve speed." It's the animation ...

Kate Swanborg: I know, right? Ta da!

Susan Carroll: Captain Underpants is arriving. Watch out. Because guess what. A cost also is interior amortization. That then drives an operational cost. So if you start to understand your data yourself with your budget and where you're spending it on, now you can start talking the language of business. How then that the impacts that you have are going to pull other levers versus just being a cost reduction. But that means knowing your assets, knowing your data, and I've found the changing to be a much more powerful conversation as Steve was saying, because then it's about the value of what you're providing, plus driving cost dimensions. Which we know capital costs and investments can also increase the impact of your operational costs due to depreciation.

How do you manage that more effectively? And I think that's what Kate was talking about. She couldn't stand up huge quantities of infrastructure. You can't afford it. The budget would be astronomical. Leverage the cloud, but she changed the conversation in terms of, how do I leverage the funds I have for the business problem I want to come together? I find having the conversations that way with real data makes for real meaningful conversation and great buy in with all your partners.

Jim Jackson: The other thing is there's a lot of new as-a-service models, consumption flexibility, so as we engage with a lot of our customers these days that conversation comes up, and we're really giving them that flexibility to consume technology from us in multiple different ways that is aligned to the business model they're trying to drive. Question. I think there was one in the back there.

Audience member: Good morning to all speakers. Thank you so much for sharing your time with us. My question is primarily for Kate. I really loved your example around imbalance. Very often ... well, because I remember it, so a very effective speaker there. I was curious if you could speak more to how you track that, because your passion comes through. Very clearly you have a deliberate strategy. How do you measure that in terms of your illustrators and artists and then bring that back as business value, because that's clearly coming out as a theme with us this morning, to other executives?

Kate Swanborg: It's a great question because in a creative environment, it's tricky. It's tricky in every environment to metric what you're doing and to provide that type of feedback. In a creative environment, you are even more challenged because so much of the value that we're getting we're trying to put on screen. However, there's a couple of ways that we've gone about this, and to the budget question, we're not allowed to spend frivolously. In fact, our business wants to spend the majority of its money on the artists, and so any money we're not spending on the artists is highly scrutinized. So to answer both of your questions, one of the ways that we succeed in our strategy is to not be our own voice. We actually work very hard to have the artists, the storytellers, and the filmmakers speak about what the technology is meaning to them, and not try to do that on their behalf.

A good example is about five or six years ago, we released a new set of applications within our business, creative applications for the storytellers. They were the first set of applications that we had actually crafted to take advantage of scalable multicore computing. They were the first set of applications that were actually able to not only use the resources in the workstation, but actually extend into the data center for the real-time feedback sessions. Our animators, who actually move the characters as we're making the films, before that period of time when they were working ... this always blows my mind and I've been working at DreamWorks 20 years. A great week for them, a fantastic, productive week in which they would be lauded by their producers, they were able to produce five seconds of animation. That was an outstanding week. This is why these films take so long.

Once we rolled out these new applications, of course it was costly to do this, there was an enormous pressure from the executives to tell them in advance what type of speedup we were going to get from the artist because five seconds a week's not very fast. Anything above that's going to be helpful. Here's the key. This is going to sound crazy, but we were actually able to pull it off. We said, "We're not going to tell you, because if we tell you that it's going to be 10 seconds, then it won't be 15. And if we tell you it's going to be 15 seconds, it won't be 20." So we actually were able to convince the executives to let it be rolled out onto one project without any specific expectation of ROI in order to allow the ROI to realize itself and allow the artists to come in and say, "Oh, my gosh. I can't believe I finished this entire 25 second shot this week."

So we got incredible returns on that investment because we didn't try to provide the answer in advance and we were actually able to allow it to play itself out. Now keep in mind, had it not turned out that well, we would have been forced to go back in to the applications in order to get that outcome, but the key in all of that is that we absolutely must have metrics, but the business has to speak to it, not the IT department.

Jim Jackson: OK, excellent. We probably have time for one more question. There's a question out there. OK, over here, yep.

Audience member: My question's also geared towards Kate. You talked about how you guys lost some artists because the paper, moving to digital. I have some technology avoiders in our organization too, so I'm just trying to figure out, how did you close that gap and how do you ease them into technology? Or is it worth just letting them go so that you don't have to have that pain point?

Kate Swanborg: It's such a great question, and it's sort of a heartbreaking one, isn't it? Because you have amazing people. It's what all of our businesses invest in are the people, and so I think that the key is that there were certain artists at that time that were willing but it was so onerous, so what we tried to do in those cases is actually create some workflows that were very narrow to their specific situation in order to bridge that gap. There were some artists that they weren't passionate enough about it, and in fairness to them, it was best for them to go off and leave and go do what they wanted to do because in any of our business, if you have employees who have lost their passion, it doesn't matter what tools you put in front of them. It's not going to work.

But where there are artists that still have passion but the digital transformation is not working on their behalf, we doubled down and did everything we could to bridge their specific workflows until we were actually able to get the tools and the techniques to make them feel as though they had a better working set of circumstances.

Jim Jackson: Amazing set of questions. Thank you very much. As we get ready to wrap here, talk a little bit about the role that innovation has played in terms of enabling the transformation you guys have been talking about.

Dr. Steve Pratt: Innovation has a little bit different definition from my perspective, particularly as we speak to technology. The most innovative technology that we use is the technology that we don't remember we have, because it works. It continues to works. It gets more powerful. It allows us more opportunity to leverage data, to use information, to provide the value that we want to provide as a business. We have worked with HP to deploy the latest generations of technologies, the latest capabilities, the latest services, the broadest understanding of things to allow us to concentrate not on the technology and how we get the most out of it, because that's HPE's business, but how we can be a more innovative energy delivery company. We want technology that manages technology. We want technology that just works all the time. More importantly, we just want to be able to forget about the technology and let others worry about that, and we want to concentrate on how we innovate as an energy delivery business.

Jim Jackson: Awesome.

Susan Carroll: When we're thinking about innovation, instead of always thinking about the big innovation, we like to think about the little innovation in terms of all the small experiments and leveraging what you have and continuously making improvements. You bring on a new technology. You may not know every feature, but you can say, "What if I have this experiment? This way I can expand this service." And that is innovation as well, and having the individuals be comfortable wanting to put those ideas out there and giving them that freedom for those small experiments to keep making things better one step at a time to me is innovation, and that allows then even the bigger picture to come into play because now you have confidence in what you can go do. So those little innovations, those little sparks are really magical. We have found in many cases those small sparks have turned into great enormous innovations that are helping us drive many products differently.

Jim Jackson: Excellent.

Kate Swanborg: I think in the world of filmmaking and storytelling, you know innovation's coming. There's no question about it, so from a technological standpoint, what we're constantly looking at is how do we future-proof our world so that when those new techniques arrive, our technological infrastructure and strategies are ready to embrace that. That we don't actually at that moment in time have to start planning for it. The key for us is to constantly be sure that we're future-proofing our environment so that as innovation happens we're ready to embrace it.

Giles House: I think for me, innovation is about always looking to improve the customer experience. If we're not moving the ball forwards there, then we're going backwards fast. And there's so much new technology going on that's driving better ways of doing things that that's what it's all about. We have to be able to offer new ways of doing things, better ways of doing things, otherwise people are going to go elsewhere and they'll spend more money with your competitors. So for us experience, innovation is absolutely critical in delivering that.

Jim Jackson: Well, thank you. On behalf of Hewlett Packard Enterprise, we are thrilled to be partnering with such amazing companies, to be part of the amazing digital transformation that you guys are going on. Let's give a round of applause to our panelists for sharing their story today.

Susan Carroll: And to the moderator.

Jim Jackson: Ah, thank you. I think they did an outstanding job. This ends our session. I want to thank all of you for being here. If you have questions, we're actually going to be up here for the next 10 minutes or so. We would love to take any questions that you have, talk about next steps, talk about opportunities. We have our Pointnext folks here as well so we can engage you if you are interested in some of the things that you heard, and I wish you a great Discover conference. Thank you very much.