What led to the inception of Hitachi Vantara? Can you shed some light on that?
If you look at the development in today’s marketplace, data has become the new currency. Some even refer to it as ‘the new oil’. But data on its own does not add enough value. If you look at today’s problem statement, it is very clearly focused on the usage and monetization of data. We have customers who tell us that they are data rich, but insight poor. In fact, if you look at various statistics from analysts, there is a proliferation of data, but only 5% of it is analyzed, and only 0.5%of that data is operationalized. That is a huge amount of data that is locked in silos, which is why customers are not able to derive enough value from their data.
If you look at our individual businesses - Hitachi Data Systems was focused on providing the best-in-class enterprise data management and infrastructure for customers, Pentaho was focused on providing data integration and business analytics, and thirdly, Hitachi Insight Group was focused on providing IoT solutions for customers. When we looked at it through the lens of the customer, we realized that data proliferates across - business data, human-generated data, as well as machine-generated data. So, there was a need for the creation of a new digital entity. Hitachi Vantara, which unifies all the 3 companies, provides us with a unique proposition of being a data company. Today, we are being viewed as a data management and analytics company and an industry expert in technology and business outcomes that entirely sums up as a great software and solutions company.
What is the kind of a milestone you have set in terms of addressing all those digital transformation demands?
We are positive about the accomplishments and success that we can achieve for our customers and partners. If you look at the Indian market today, there is no clear leader in the IoT space. Given our differentiation, we aim to lead the IoT market. We are already servicing 85% of the top 300 customers for data management and infrastructure. These include customers from the banking, telecom, manufacturing, ITeS, healthcare and government sectors. Our proposition aligns very clearly with the outcomes that customers want to achieve. The 3 big initiatives in India namely, ‘Smart Cities’, ‘Digital India’ and ‘Make in India’ provide the scale and complexity to comprehend, interpret and achieve the desired results. We see a huge opportunity for Hitachi Vantara as we help our customers transform today and prepare them for tomorrow’s problems and challenges. These opportunities present the greatest problems that Hitachi Vantara can solve. Such initiatives are at scale in India, unlike the other parts of the world.
Can you talk about the digital transformation adoption dynamics?
If you were to look at statistics, 40% of customers in India have already embarked on various digital transformation initiatives. Over the last 12 months, we have been collaborating with these customers who have already embarked on their digital initiatives to provide various solutions to achieve significant outcomes. For example, in the banking sector, we are helping customers unify data from disparate applications and infrastructure to create a data link that helps them have a single view of their customers, as well as a 360-degree view of their customers. This helps them make important decisions in terms of how they can automate and create an omnipresent channel to service a particular customer or create new products and solutions personalized for that customer or service.
We are already helping government establishments achieve real-time governance by integrating IT, OT and human-generated data, to derive valuable insights and understand the consumption of citizen services to deliver effective and efficient outcomes. We have already started to deliver these solutions in the Indian market 6 to 12 months back, and the results have started to show. Prior to FY ‘17, we had 50% of software and services, today, it has jumped up to 62% of software and services.
The second part of our business result includes new technologies around analytics and object storage. Object storage is becoming the new data lake, and metadata is becoming the new data. That business is already growing more than 50 % year-on-year. The analytics part of our business is already growing 100% year-on-year, so we see significant traction in the Indian market. The bigger part of the equation is about how we are now enabling digital integrators to create new solutions and services, and cater to new markets with these partnerships and the expertise and technologies that Hitachi Vantara brings.
You mentioned about data being underleveraged. Is it due to the inefficiency of the current BI toolsets, or what are the core reasons that are leading to that?
The first reason is the need to get the right kind of data insight. Data is either tied to an application, infrastructure, organization, or a cloud provider. Therefore, data silos are the number one reason why monetization has not yet happened. The second reason is that there are silos of organizations that exist in the enterprise, because of which data cannot be democratized for usage and monetization. The third reason is the fixed mindsets in organizations. A fixed mindset involves people playing the game to not lose. And then, you have the growth mindset, wherein; it involves people who believe they play the game to win. Both are completely different. In addition, fixed mindsets do not allow the segregation of data, making it independent to be monetized. The fourth reason why digital transformation initiatives have failed in the past is due to the lack of leadership.
Our belief is that if you want to drive successful digital transformation initiatives, you have to first believe that data is the new currency. The second is the need to have control over your data and not for it to be with the cloud provider, app vendor, infrastructure provider, middleware nor the network provider. The third belief is that the outcomes must be very clearly articulated in business terms so that it can be measured and sponsored by the right leadership. These are the 3 reasons that we have understood from our customers.
With data being the new currency, is it going to jumpstart IOT? Also, can you also talk about your new IoT platform – Lumada?
I completely agree with the statement that data is really going to jumpstart IoT. If you look at IoT, there are 3 important principles. The first is that you should be able to measure all the data to analyze it. The second principle is the management of data to give it the right structure, security, and analysis mechanism. Lastly, the third principle is the improvement cycle, which must be measured or benchmarked against the best quality of a device, product or a service –and that is where the industry expertise comes in.
We have leveraged these 3 important capabilities to design our IoT platform. I refer it to as the ‘IoT Platform’ because this industry is going through a rapid transformation and acceleration. Therefore, designing a product to help customers address the IoT marketplace would not be the right approach because of the rapid rate at which technologies change. The second approach is to put together a service. One does not need to have the industry expertise and experience to record measurement and improvement. What we did was that we came up with a platform approach, called IoT Lumada. Lumada in Japanese means ‘illumination with data’. This platform, which consists of 5 pillars, helps our customers bring different types of data together to achieve business outcomes.
The first pillar is the Lumada Foundry. It is the foundation for preparing a customer to achieve the desired business outcomes. It could be a decision around on-premise deployment, cloud deployment or a hybrid deployment, and with that comes the need for appropriate security architecture. The second pillar is what we call as the Lumada Edge Analytics, which focuses on identifying the asset, collecting data from the asset, processing that asset, securing it and moving it to the third pillar, which is the Lumada Core. This pillar prepares the digital twin of that physical asset. For example, if I am servicing a train, I can create a digital entity of the train and various sub-components of the train in Lumada Core. This helps me execute asset management and undertake asset utilization that blends edge data, business data, and human data. The fourth pillar is called Lumada Analytics which applies the appropriate analytics algorithm, whether it be business analytics, data processing, artificial intelligence, machine learning algorithms, cognitive analytics or even a form of augmented reality.
Once the required analytics is done, we can benchmark it with the various solution cores that are essentially industry templates that we built over the last 107 years. When you have a benchmark, descriptive, predictive, and prescriptive analytics is possible and all at the same time in the fourth pillar, which is the Analytics pillar.
The fifth pillar is the Lumada Studio. It is nothing but a beautiful set of widgets which help you visualize data at the point of decision making. With the Lumada Studio, we let businesses dictate how they want to visualize data of the physical asset through a digital avatar. So, they can see and visualize the motto in various parameters and the insights that have been derived. For example, I earlier referred to the train as an IoT entity. But for me to successfully execute the outcome in terms of improved safety and improved revenue, I need different people in the organization to view that data. Be it an operation manager who would be interested in predictive maintenance and eliminating control, or the Chief Safety Officer who would be interested in looking at patterns of the past and any alignment to the current trajectory that they are doing. The CFO would be focused on how much traffic is coming and going out, as well as in understanding the revenue metrics. That is why Lumada Studio helps you visualize data in the form that you need during the decision-making process.
Overall, that is what the Lumada platform is all about and it is how we can go ahead and help customers accelerate their business outcomes.
So, to finally look at it, in order to leverage Hitachi Vantara as a brand, are you recalibrating your processes and competencies?
Well, this was a journey that was well planned. We already had that journey traverse very efficiently before we started out. It has been a couple of years since we started to make decisions around our revenue portfolio and decided to go beyond storage and IT.
Therefore, our revenue composition went beyond storage to include IT technologies and solutions. We started to engage with various other constituents outside of IT especially around the lives of business, operational resources, finance department and most importantly the CEO himself. Therefore, that journey has already been initiated and accelerated over the last 36 months. If you look at our approach today, the revenue has moved to business functions that are looking at how they can reduce money, how they can go ahead and find new revenue streams and how they can find new markets faster than their competitors. Although IT is a part of our conversations, the focus has shifted to business outcomes.
What would be your top priorities for the next 12 months for India?
The priorities are very clearly going to be on enhancing the acceleration of our software and services. We have already executed that very successful. As I said we moved from 50% to 62% of software and services. That has started to reflect in the results that we have shown, for both object storage, which is growing more than 50%, and analytics which is growing more than 100%.
The third priority is to understand how we can take these solutions, co-create it with our digital integration partners and enhance their existing portfolio to go to new markets or start to co-create new solutions by leveraging our Lumada Platform. Those would be the top 3 priorities for us.