Thanks everyone. Good afternoon. Thanks for joining us at Enfuse 2018 in Las Vegas. This is OpenText's Annual Security, Digital Investigations, and e-Discovery Conference. The product teach-in today for investors will include presentations and an interactive Q&A with Mark J. Barrenechea, OpenText Vice Chair, CEO, and CTO, as well as Muhi S. Majzoub, EVP, Engineering and Cloud Services. Today's presentation is being recorded and will be available for replay. Presentation materials as well as the conference call replay can be accessed on the investor relations section of our website. Also point investors to slide two of today's presentation for our safe harbor statement. Please note during today's presentations, we may make statements related to the future performance of OpenText that contain forward-looking information.
While these forward-looking statements represent our current judgment, actual results could differ materially from a conclusion, forecast, or expectation in any of the forward-looking statements made today. We undertake no obligation to update these forward-looking statements unless required to do so by law, and specifically refer you to the risk factors contained in our Forms 10-K and Form 10-Q and our other public filings. In addition, our discussion today may include certain non-GAAP financial measures. Reconciliations of the non-GAAP financial measures to their most directly comparable GAAP measures may be found within our public filings and other materials, including today's presentation, which are available in our website. With that, I'd like to introduce the first presenter, Mark Barrenechea, OpenText Vice Chair, CEO, and CTO.
Great. Thank you. Thanks for joining us today here in Vegas, as well as those on the phone. We positioned today to be more of a kind of a technology teach-in, and I just want to thank you traveling in. I know we all make priorities, and we spend time away from our families to make a trip like this. I'm personally and professionally thankful for you taking the time to spend with us here in Vegas and get to know OpenText and the team a little better. I always try to describe inside out who we are, and I just think it's so invaluable when you can spend time inside the company. With that, I know we have an hour and a half put aside today. We're happy to fill that hour and a half. If not, that's fine as well.
I hope we can spend the time just having you get to know the company better, whether it's 30 minutes, an hour and a half, or longer. I'm going to just start with a few slides, and Greg, I believe we posted these on opentext.com, the IR section on opentext.com. Great. I'm going to use a few slides from my keynote yesterday. Ultimately, I think there are two points I'd like everyone to come away from on this technology event. The first is there are six key areas in terms of our market and product strategy. We're not on financial strategy, and we can talk about those things today too, of course. From a go-to-market, a product, that $100 billion market that we talked about, there are six key areas. We're talking about one of them today.
You have our platform, and our platform includes all our content services from capture to information archive, content management, Content Suite, Documentum, all those platform technologies, which is our heritage. That's one of six areas. Second area is a newer area for us, but of the six areas that we want to own is the application space. The applications that sit on top of that platform and our network, which will be the third area I'll talk about, whether those applications be case management, contract management, quality management systems, electronic invoices, product catalogs. There's a whole application family that we believe is relevant sitting on top of our platform, and you'll hear more through time on our application strategy. It'll be a big part, actually, of OpenText World. The third area of our six is our network. EasyLink, GXS, ANX, Covisint, and more to come.
Our Trading Grid, our B2B business network, our connectivity of ERP to ERP, cloud to cloud, machine to cloud as a third area for us. The fourth area, we just call security. I think it's security, it's information forensics, it's privacy, it's discovery, but we give it a simple word of security. We think a lot of these topics, and go through a few today, are coming together. The fifth area is AI. We think business needs to be AI driven. We got to get the automation right, which is the platform, the apps, the network to get the automation right. AI needs to drive into that automation for more insight, for augmented intelligence. Through time, there are many different scenarios of self-directed AI, autonomic type decisions. We can put our sci-fi hats on very easily.
We're very focused on the applied side of AI, providing insight, and I'll give a few use cases here today. The sixth area, which is still a young area for us, so if it's platform apps, my first takeaway that I'd like from today is our six areas. It's the platform, it's our apps, it's our network, it's security, AI, and the last is the developer. The developer is important, the information developer, because what we need to do is API-driven. If you have an API, you need to program to it. API gives a list, and you write a program on top of it. I'll make an observation that what differentiates the large from the very large software companies is a developer network. This is my observation.
I look forward to input on it, what differentiates the large to very large is being able to attract en masse developers. Developers on top of your network to APIs, developers on top of your information forensic platform for APIs. This is why a tool like AppWorks and APIs are so important to our go-to-market strategy. I'd say the first takeaway, I just want to make sure before I get into any slides, if you will, is that these are the six go-to-market areas that are strategic for us, that our $100 billion market strategy fits underneath. The second, and it might sound repetitive, but it's okay to be repetitive, is I think you see total growth in action, what we talk total growth in action here at Enfuse. The centerpiece to our total growth is our acquisition strategy. We are a consolidator.
We'll continue to be a consolidator. We are growing organically. We will continue to acquire. You see here both of those elements. We acquired Guidance, and you can see the customers that we're bringing to OpenText, the adjacent strategy we're bringing to OpenText, and the ability to cross-sell. Being able to bring the Guidance portfolio, and EnCase sort of dominates the conference here a little more than other tools, but our ability to bring this and cross-sell it back into our install base. At the most macro level, before we get into a recap of the keynote, Muhi's going to walk through the product. I'm sure we'll have a spirited conversation. Those are the top two things. I just want to emphasize that there are six main squares on the chessboard that are strategic for us. We're talking really about one today, not all six.
We can go anywhere you'd like. Second, I think you are seeing total growth in action. With the acquisition of Guidance and our ability now to bring those products into our install base. I'd be remiss if I didn't mention fiscal 2021 and our medium-term target of generating $1 billion in operating cash flow as we exit 2021. Our emphasis on ARR and the margin, the ALM profile that supports that. I just wanted to make those key points up front before I get into first my recap. Feel free to ask questions along the way. No need to wait to the end.
On that note-
Yeah, please. Please go ahead.
You mentioned the six.
Yep
areas that form the $100 billion market. What would you say security represents of that entire $100 billion?
I would say directionally, when we look, I'm just going to the Yep, right there. I've sort of thought about us in phases, from a search company to ECM, to EIM, to the information company. Security is sort of in that $50 billion-$100 billion jump. You pull a TAM from Gartner, you're probably looking security between $15 billion-$20 billion as a market size. It's in that very significant range. You can see it on the slide of what sort of brings us up a scale from $50 billion-$100 billion. It's mid-market security AI and a few other things. It's a big marketplace. I think you can find value assets as we did with Guidance, and continue to.
Just on the conference, it was our first opportunity to en masse welcome Guidance customers to OpenText. We had approximately 1,500 attendees, close to 600 companies, 100 sessions. 40 countries were represented here. Three days. We really wanted to send one message to Guidance and the big product area of EnCase is that we're all in the security market. It was a key message for us. I think you can see that around the halls. I used this slide and this message when I was in Europe a few weeks ago on our information tour, and I used it here. It's intentionally complex. Digital makes business very complex today. There are a lot of priorities for CIOs, a lot. I've been in software for, I don't want to sound like an old person. I'm not an old person, but 30 years.
I feel 20 at heart. I really have never seen it that complex. A changing workforce. Next couple of years, Gen Y and Z will be the majority of most workforces. New business models, gig economy. Every company is looking to become a software company, and I think companies do struggle with that. Data scientist is the new job. Cloud, AI. I know we're going to talk a little bit about GDPR and the U.S. CLOUD Act as well. I think a key thing that we're seeing is the roles of a CIO, the role of a chief information security officer, CISO, a chief data officer, those keeping master data management clean, and a chief data protection officer, a DPO. Then you have those who are doing governance and compliance. They need some center. They need some organizing principle. They need something to trust in the center.
Our heritage of automating systems around governance and compliance gives us a voice at the table around discovery, information privacy, and I think the endpoint as well. There's just a lot of complexity on the table. What I tell my employees and I tell our customers, we thus need to prioritize. It's not going to get slower. Again, I'm doing a summary of the keynote. Part of the message is it's not going to slow down. It's going to keep moving, probably even at a faster pace. Therefore, we need to prioritize. We need to prioritize into security right now, and we need to prioritize security as a digital platform, and we need to prioritize into AI. If we look at a graph describing the six areas, there are going to be a little more than six bubbles here on the chart.
I think it's one graph that is encompassing our answer to that complexity, which is the intelligent and connected enterprise. We have our digital information platform and our digital apps, then off that platform, we have the developer. We have our managed services, which I'll talk a little more later in the slide deck. Customers are struggling finding the best security experts. A lot of them have outsourced IT. They can't find the right IT individuals. We're here to say, "Let us solve security for you. Let us solve the privacy challenges for you. Let us become the experts in that cloud platform." This is why we're going faster into our cloud platform and managed services right now. We think we have an opportunity. Our business network, and we broke out IoT.
I have an example in this slide deck of talking about a biotech customer and how they're bringing all the pieces together in a clinical trials example. Then obviously right off that platform, it's security, forensics discovery, and security, which were the key messages here in the conference. On the other side are applications, and the style of applications that we're building. Our customer experience applications, our employee engagement apps, People Center, a new application we brought to market. Asset utilization, supplier efficiency, our ACTIVE app family that's gone now through its third generation since we acquired it from GXS. It's the ACTIVE family. The organizing principle over here on apps is very simple. We follow the big data sources. Employees, big data source. Assets, big data source. Assets such as engines, airframes, fleets.
An engine has 100,000 parts. We do very well in MRO scenarios where we need content services and an application for assets, suppliers, invoices, orders. These are the big areas of information we follow. At the center is our digital core and artificial intelligence. This is the one picture, if you will, to describe our product strategy. I'm going to really focus a little more on the security side, again, giving a recap of the keynote. I think there are two things. Certainly in this audience at Enfuse, we didn't have to educate them on how the velocity of attacks continue. The nature is interesting. I'm going to get into the nature of a few of them. The nature and the type of data is changing, thus the need to have content services and endpoint security.
You look at Boeing. It's too early to tell, but this is around assets and parts and how the security of that information is managed. Maersk is around a bill of ladings and that type of content information. I think it's not just that the velocity is increasing, it's the nature of the data that is changing. Again, to build on, this is going to be a long-term theme for OpenText in the market. GDPR is a long-term theme. Security is a long-term theme. I found these two reports very interesting, thus put it up in my keynote. The one here on the left is from the World Economic Forum. It's their 2018 report. They come out with a global risk landscape. They're pretty good thinkers, I like how they think and how they publish.
If we look at the top four risks According to the World Economic Forum, one category is acts of God. I spell God with a lowercase G. Acts of nature, climate, weather, from a legal and insurance standpoint, acts of God. The other one is machines, cyber attacks. It's now in the upper right-hand quadrant as the official risk index, high and right in the World Economic Forum. I think we all need to pay attention to this. We have a point of view that we should be taking engine designs off our laptops and put into content management platforms. Endpoints need to be secured. We're going to put OpenText in the middle of this discussion, because we think this is a long-term driver from our customers, that if we're building these platforms, discovering them, we can do information forensics and security as well.
Verizon published a 2018 report. We can make both of these available, provide you links to them. What I also thought interesting was if we looked at the nature of breaches, 72% are external and 28% are internal. Insider threats or the internal threats are demonstrable. We can help more on the inside threats than the outside through information governance, policies, and platforms. It's not a wish of ill on anything. As this internal number and behaviors become more known, I think we have a role to play to decrease these. For example, in our CAB, our Customer Advisory Board here, we talked about the next generation of EnCase, where today we take snapshots. Muhi's going to talk a little bit about this. We take snapshots from an endpoint. I'll talk about a lot of endpoints coming up here in a minute.
From that snapshot, we do information forensics. We'll do an investigation. We can do electronic discovery. From that snapshot, we can also do threat hunting. We capture enough artifacts that were used in scenarios of threat hunting. The progression of this universal agent is to be able to real time, be able to send information back to look at behaviors, then be able to, through AI and algorithms, be able to talk to security systems real time about threats and behaviors. This is why the endpoint management for us is so important because we believe it's about that behavior is centralized content management. It stems around what we think is going to be a big demand driver for us, which is the internal threats. It's interesting, there's multiple audiences for OpenText.
What are the hackers looking for and what are the investigators looking for? What are the compliance and internal audit teams look for when they deploy our technology? There's an interesting two sides of it. The picture here on the left is a cover from "The Economist." "The Economist" came out with a cover story here over the last few months that information is now the world's most valuable resource. You know what? I kind of believe them. I'm about to go through a list of threats from customer information. What are the hackers looking for? Employee information, product designs, payment orders, invoices, IoT, machine data, and more. If we look at a series of breaches and why our technology can help customers be more secure, how they can harden their platforms, avoid the insider threats, I just listed four examples.
Equifax, I think this goes to how records are actually stored and if there's a professionally managed content platform, we can be helpful. I would note a couple additional things that are very unique in this particular breach. One is it was a 90-day breach. Getting inside and dwelling, there's a concept called dwell time, when you have to assume that the bad actor is already in, and they're dwelling and looking for the right moment to act. In this case, it was a 90-day breach, which most reports show that was going on for 90 days. Second, the data hasn't shown up on a dark web. It's often some other place, probably a nation-state. It hasn't shown up on the dark web.
We look at Saudi Aramco, this was a 200-day breach and attacked desktops, shut down desktops through the Shamoon virus, and basically wiped away 70% of all data on PCs. Our view, of course, is that should be professionally managed on an enterprise side in a content services platform. You should be able to share and collaborate with confidence in an online system, and you never want 75% of your endpoints infected. You certainly don't want that information to be then destroyed, and you can never get it again. We think this is a relevant example of how our platform can help run an organization. SWIFT, there's Bangladesh Bank there, but that's where the breach started. This is a SWIFT breach, and this is where $81 million was stolen, maybe even more, off the SWIFT network. Evidence erased. This is the insider threat.
Again, we think with good content platform strategies, this could have been avoided. The last example is the Joint Strike Fighter, where again, it was not a professionally managed environment, in our view, from what we read. If we had that digital platform in place with the endpoint management, aircraft design, airframe, engine, weapons systems, takeoff, landing, cockpit design, all that has been stolen. We think, again, with a professionally managed platform, this could have been avoided. There is a need, and we have a platform that can help answer this. This is a little bit of a condensed slide, and maybe there's a better visual, but there's not going to be a better point. I think we can be the point of trust. The first is to provide endpoint security and forensics via our EnCase product.
The second is, look, the best way to get security, design it in, and to have a professionally managed content service environment. That's where Content Suite and Documentum comes in. If you need to share files and to collaborate, we think it should be done through OpenText Core Hightail. You should be able to collaborate securely in that way, but we have a role to play there. A company we purchased, ICG, has a whole set of redaction technologies. That plays a role that even as we manage and secure things, we need to redact information. So ICG, the product is named Brava! When you do need to recover, this is where our discovery in Recommind comes into place, again, as part of that point of trust. We think we can feed Magellan in our AI tool from artifacts.
I'm going to go through a couple examples of how to go from, as Director Comey spoke about today, millions of documents down to just the handful that's needed, and our discovery technologies in Magellan can do that. Next is InfoFusion of Enterprise Search. Lastly, Covisint Identity and Internet of Things. We think identity and access management, every person, device, or machine needs an identity. We talked about AAA recently as a win. It's a combined win of identity access management and the Internet of Things for connected cars and identities. We've been building a portfolio to bring us into, again, of those six boxes, we're just talking security, to bring us into the information security space. This is the main product lineup to be able to do that. Let me walk through and bring some of that technology together.
I want to talk about a customer, a pharmaceutical customer. We haven't done a press release with the customer at this point, so I'm not going to speak to the name. It's a major pharmaceutical customer. Let's think of the endpoints. This is a solution we've put in place. On the left side are endpoints. Let me just keep teeing you up the example here. This is a customer who is automating biotech, who's automating clinical trials. Their view is if they can accelerate a clinical trial for a new drug, a new therapy, a new protocol from four years down to two years, or four years down to 18 months, it's a massive competitive advantage for them in the marketplace. They have a vision of doing that of connected endpoints. These are connected endpoints.
Sites, labs, wearables, emerging technology, and laptops are using our Internet of Things gateway, connecting into the OpenText Cloud to our managed services. In there, we've deployed our suite to enrich the data, alerts and notifications, workflow, evidence support using Magellan, both for analytics and a little bit of algorithmic work, a bit of data model transformation, event management. These are all things that it's a hospital, it's a lab, it's a wearable, all in clinical trials, sending trusted information into our cloud. We manage that, process it, and push it back to them. We push it back to them through our cloud again, into their ERP system, into their quality management system, their ECM system, their CRM system, and their compliance system. We're able to receive information back and push it to regulators, FDA, and device manufacturers like Philips.
This is how we think that being able to manage the endpoint, some of that unstructured information, clinical trials, IoT, pushing it into our cloud, going off and that B2B connectivity into the enterprise, and pushing it back out to device manufacturers and regulators. On top of this is a set of custom apps through our APIs as well. I probably should add that to the diagram, using our APIs. I think this is a great example of some of our component in motion at work, delivering from endpoints to our cloud, Magellan, for our customer solution in clinical trials. I think it's a great example. Here's a second example, this is in fact a, call it a Fortune 1,000 in the U.S., who had a security breach and needed to respond to that through their legal process.
This is a Recommind example using our search products, using Axcelerate and the OpenText Cloud. We needed to collect, in this particular investigation, 48 million pages of data. 48 million pages. We went out and collected 48 million pages. We had to cull through in an automated way, automated collection and processing, getting that down to roughly 13 million. 13 million pages. Through our service, we have humans that augment that, and got that human review down to 645,000 pages. Applied our redaction technology and got this down to 141,000 pages, and ultimately, in the legal matter, ended up only producing 142 pages for the client. This, again, is our forensics, our discovery, our redaction, and the power of our cloud. How does a client actually get you 142 million pages? Simple. Through the cloud. How do we process it?
In our cloud. I think this is just a great kind of a customer in action of It happened to be a security event, having to go to 48 million pages down to the 142 that were used in evidence of using our cloud and our technology. I thought that would be helpful to put up here as well. We also think, as we talked about on the last earnings call, we're tapping the gas a little bit to go a little faster in the OpenText Cloud. Here's a few observations. Customers are struggling for resource and expertise, just in IT itself. They have a lot of demands, as I put up on a previous slide. They're struggling with delivering compliance, GDPR, and security, and we have an answer to that. Outsource your process to us in the OpenText Cloud. Outsource your content platform to us.
We've done it near 2,000 times. We've built confidence, procedures, protocols, referenceability, global platforms, data centers, service level agreements, a whole playbook, time to go live, lessons learned. We've done it near 2,000 times now, and near a billion-dollar business. It's time to go faster. We're going to go a little faster. We're going to lean into this a little more for customers to outsource both their content platforms, their customer engagement platforms, their supply chains, their discovery platforms, all those major six boxes we're providing as a managed service. We'll be responsible for security. We're offering four nines of availability in our cloud today. We offer this on a global basis, whether your data zone is Europe, U.K., Canada, U.S., Latin America, Japan, Southeast Asia, Australia, New Zealand. We offer four nines of availability of moving into our cloud.
We also have a service that you never have to upgrade again. Once you come into service, we'll do the upgrade for you. We do it all based on standards, NIST, ISO, SOC, GDPR. We provide one contract and one service level agreement back. Just to put this in scale, we have over one exabyte under management right now. Amazon recently was asked how much data they have under management, Amazon. They said, "Eh, we think it's an exabyte." I'll tell you, for us, it's a little larger than exabyte. I do this just to kind of put the sense of scale that we have in place and the size of the data that we're managing. We think another answer to security and compliance and privacy is outsourcing the OpenText Cloud.
We need to invest a little more. Within our current expense envelope, we're investing a little more on a bit more automation, a bit more infrastructure, and we need to just make some short-term investments, all within our current expense envelope. We're going to tap the gas a little faster to be able to grow this space for us. Yep. Are some of them hybrid or completely cloud? A lot of them are hybrid. I'm sorry? Hybrid cloud. Oh. The question is, are a lot of these customers completely in the cloud or hybrid? The answer is, many, many of them are hybrid. Many. I could rattle off a lot of examples where we may have an EDI supply chain app in the cloud, but content management on-site.
Or we may have customer experience management in the cloud, or digital asset management in the cloud, but discovery on-site. It really is quite a hybrid. Quite a hybrid, which I think is really, really strong for us. Really strong. I'm just going to make a couple notes on AI and Magellan. There's really just one point, and I think it's in the deck. Just allow me. Yep. Okay, it's the next slide. We introduced Magellan at Enterprise World last year, and it hasn't been a year yet, and our learning is way up, being in the market not even a year. Our learning is way up on how we can help customers. I'm going to share some of those learnings on the next slide. I think on a market position, you have the automation, right?
We got to automate content. We got to automate a quality management system. You have to automate contract management. You need good automation, but you also need the insight that comes out of it. That's why I think Leonardo would do well with SAP, because it's deeply integrated to the automation. I think Einstein will do well at Salesforce because it's deeply automated to the integration. We're going to win our install base with Magellan because we're deeply integrating it into EIM. This notion of non-integrated, independent, standalone, very expensive, slow-to-move AI tools, I think just is flawed from a design standpoint. I think the AI's got to be deeply integrated into the automation, and that's a technology decision we've made, and everything we see is right. That's why I think Leonardo will do well going into the SAP install base.
Einstein will do well going to Salesforce install base, and we're going to go win our install base with Magellan understanding the EIM data. That is a learning over the first year, which is great. The second learning is customers want to experiment. They want to move quickly. They know their business, they know their data, and they want a data scientist to sit down, take out their EIM data, maybe take out some data from a few other third-party sources, run a transformation, apply an algorithm, and they want an answer. They want to experiment. They want to iterate. It is innovation through iteration. These are not 1-year-long projects or 2-year-long projects. They can turn into bigger transformations, but customers want to have the ability to experiment, get it right, then go larger.
In our first year, that's why I kind of call it an AI-powered business. Here are some use cases, close to 100 proof of concepts that we've gone through, and our learning is way up. In financial services, regulatory filings, know your customer, fraud prevention. Customer experience, product recommendation, segmentation. Asset industries, this is a very known use case, a high-value use case for AI, predictive maintenance, resource scheduling. We're seeing a lot of activity in where we store HR information on hiring, retention, potential, and case management. We have a customer we're working with, again, excerpts from my keynote yesterday, a big U.S. county. They have state regulations, local regulations, and this is a big county. We're looking at 100,000-plus employees. If they don't respond to an employee case within a certain amount of time, they get fined.
They're being fined about $15 million a year right now through case management through employees. They think by applying AI into their case management, they can shrink that fine down close to zero. Over a 5-year window, that's $75 million of fines that if we can deploy Magellan and reduce that by 80%, we're in a pretty good place. On security, looking at behavior, log events, data movement, and real-time detection. These are some of the high-value use cases that we're seeing from Magellan. In summary, and then Muhi is going to walk through the products a bit more specifically. We see a growing information market. Privacy, security, compliance, and governance is a topic that is coming together, and we think that's going to be a great trend for OpenText. That's the CIO, CISO, chief protection officers, and chief data officers.
This is a market. It's one of the six squares on the chessboard that are strategic to us, and we're taking a comprehensive approach: security, identity, forensics, discovery, search, and collections. This is what we've built through our total growth strategy over the last three years. We got key solutions available today, not just for what we acquired, but to bring into our install base. I think we have the opportunity to be the point of trust as the information company on this. There's this long arc of trust. Being the trust point for identity, the trust point for content services, the trust point for an endpoint, or that trust point for an application like clinical trials, I think gives us a strong entry into what we call security. Muhi, I'll hand it over to you for some comments.
Thank you, Mark.
Yeah, thank you.
Good afternoon, and welcome. It's great to see all of you. Let me dive a little bit deeper into the product areas and where engineering is focused. Again, Guidance is only eight months with OpenText, I hope if you attended the event earlier this morning and yesterday's keynote, you see the value that Guidance brings. Let's look at the areas that are important to us. First of which is taking EnCase as a solution, both the software from an investigation and approach, and the hardware units that we provide also part of the Guidance portfolio, and improving on those. I'll share with you a little bit more detail and tell you where the opportunities that we see that in the past, Guidance did not act on.
Identifying as always with every acquisition that we brought in, and this is, I believe, acquisition 14 since I started working for Mark in June of 2012. With every acquisition, you will see there is a purpose to it, and there are opportunities where we bring other pieces of the portfolio and very quickly and easily integrate. I'll also give you a few examples there. Integrating into AI, and Mark touched on that quite a bit. The last area is an area that I believe is very important to me, is the integration into IoT and bringing some of the knowledge and the technology and the IP in Covisint, in the platform with identity access management and IoT device management, and integrating it with EnCase to secure and protect these. Let me build this quickly since you've seen the slide before.
I think what's very important here, OpenText, the information company, is with every acquisition, we brought great pieces to complete a platform that today no one in the industry can come and compete at the same level and check every checkbox that OpenText can deliver. Security falls very, very well. If you think of today, everything EIM has done in the past 15, 20, 25 years since OpenText existed, is managing humans and managing information generated by humans. We all know with a trillion devices coming to be on the internet executing and pushing data, we know the machine is going to play a big part of the next 20 to 30 years and beyond. For us, that's where it's important.
If you look at our business network today, interacts with human a lot, but in the future, it is all going to be machine communicating with machines, pushing orders, pushing logistics information. One example that really made me think on the flight down to Vegas from Northern California, this trip I flew out of Sacramento International, and on the runway next to the flight I was in was a Prime, Amazon Prime airplane. Amazon now have their own airline fleet. I would encourage you to research it and see if you go to even images.google.com, you will see pictures of these airplanes. It made me think because now Amazon has these airplanes that are assets of the company.
They are generating gigabytes of data every time that aircraft takes off from one A point to a B point, delivering goods, integrated fully back into the warehouse in that location where point B is, integrated directly into these fulfillment vans, trucks, whatever form of media in the future may be drones, other robot driverless vehicles that will come and deliver your merchandise to you. All of these are now connected and securing these become more and more important. Bringing IoT and Guidance together is a big opportunity for us. Let's look at the four areas and look a little bit deeper. Today, there are two areas in Guidance that are very important. The EnCase software and then the hardware units that comes that law enforcement agencies, government agencies have learned to rely and use as the gold standard in what they do.
You saw many examples at the conference if you attended, hopefully this afternoon. In the demo area, you will see many examples of these customers really coming to learn and absorb some more and give us feedback. Earlier this week in the customer advisory board with Mark, they gave us a lot of feedback of where they'd like to see OpenText go. An opportunity for us to look at going deeper into making these stronger in feature set. Few examples today, EnCase do snapshot discovery. I schedule or I execute a discovery at a point in time, and it will go against the connected devices and bring some data back, that I can analyze and make some decisions against.
Continuous discovery is one of the big opportunity for us, meaning a company or an agency or a law enforcement department can do 24/7 continuous discovery of all the information. Then bring this information into massive Hadoop, Spark, Apache clusters where they can put Magellan or tools like Magellan to analyze and do predictive of security breaches, do prediction of fraud, do prediction of failures or maintenance, or any other things that are important into the area. That's one area of opportunity. Another area that is very important that Guidance today, when we acquired Guidance, didn't have support was for macOS and the iOS devices, iPads and iPhones.
Those are another area of focus for engineering to very quickly put project plan and team to go after building these solutions and bringing them to where EnCase not only works very well on Windows, but can work equally on a Mac, equally in the future on a Linux environment, and then all the iOS and Android devices that comes with these platforms. These are the two very big areas that we're looking at in EnCase. Of course, listening to our customers, making sure we understand the need, making sure we understand where they believe the product can be improved, whether it's usability, whether it's opening the UI. Mark touched a little bit in his keynote on the universal agent.
That is at the end, in the back end is all API work that we have to do to really open up the access where the device today may be law enforcement and government agency related, but the future, the device could be a ship. The device could be containers that you have an electronic device on every container that is giving you certain telemetry and certain data back at regular times so you can ensure the security and the safety of these equipment and these devices. In the future, the devices can be driverless vehicles and all the sensors on them. We want to be able to integrate and secure any of these IoT devices in the future.
Another area of opportunity, this is where bringing EIM together is a great thing because in the future, Guidance couldn't leverage a great product like Axcelerate that came to us from Recommind. Mark gave the great example where 800 GB translated all the way down to 2.4 MB and several hundred pages that were needed out of millions of pages at the end. Integrating EnCase into Axcelerate, where EnCase does the discovery, EnCase does the analysis piece, then pass it on for processing in Axcelerate, processing, review, and then elimination of the content and focusing, bringing that funnel smaller and smaller to where they come together and the investigators are able to look at subset of the data, letting the machine do majority, 80%-90% of the work and allowing the human to focus on the remaining 10%-15%. That's also another area of opportunity.
We have already started developing plans and putting a roadmap for this work at OpenText World this year in Toronto in July. I promise you will hear a lot more detail about the roadmap and the committed dates of when these capabilities and innovation will be brought into the product. Taking all the data that EnCase generate during its process of investigation and discovery and integrating Magellan into it's a huge opportunity for us, we're already talking with several customers at the conference here that have come in and met with engineering and product management with the goal to give us some feedback of where they see the need for that integration.
To be very easily able to take the massive amount of data, bring it to Magellan, then write a simple algorithm and let Magellan go after the data, analyzing the information, then producing either prediction or producing some analysis plus some trending data showing you historical information of that. That's a huge opportunity for us. That's also another thing that we are doing is bringing two teams together between Magellan and EnCase to work on putting the roadmap for this product. Again, at OpenText World, you will hear a lot more of that information. Mark touched on Covisint. Covisint brings to us two things in IoT and identity access management. I'll give you one example of where we see identity access management very important for EIM. Our business network today has millions of identities and millions of users, 100,000+ customers.
Making every customer that interacts and conduct business and commerce in our business network an identity in one place in our system where we can monitor their access controls, monitor the permissions they have, understand the tasks and the transactions that they're executing is very important. That's a project underway at OpenText today, where the business network team is looking to consolidate our trading partner grid in one place, one identity for every customer in the trading grid. Being able to do authentication and integrating Identity Access Manager with OTDS today, our OpenText Directory Services, be able to deliver single sign-on across multiple platform, whether it's Covisint, Identity Access Manager, Covisint IoT, Identity Access Manager, or EnCase security, or any of the other platform, business network, content services, media services, and others becomes important.
Be able to deliver directory services for all of these through one place in Identity Access Manager. Integrating and delivering statistics and insight about who's accessing what. OpenText, for the last year and a half, we've been introducing, leveraging the Magellan tools to build dashboards for Content Suite. We are building similar dashboards for Documentum and media management that allow you to access and predict certain patterns or behavior. I'll give you an example. We want to know if there is a user account in our content services platform with multiple failures of login, because it means the identity may have been stolen and a bad actor is trying to predict or figure out a password to log into our system. The same thing, we want to be able to understand and predict behavior of users in our platforms.
If a user, for the last three years, has only on the average downloaded a document once a week from our system, and all of a sudden that user is downloading 10,000 documents, we want to trap a notification or an alert in our NOC if it's in the cloud or in our internal IT data center to be able to say, "Something is not right here. 10,000 files are being downloaded in one day. This is a behavior that has never happened before." Quarantine, understand, analyze, and then make a decision whether you stop it or do something else. All of these are things we're introducing in Content Suite out of the box. We introduced a security dashboard last year, and we are working to add to it and to improve it in the coming quarters and the coming releases.
Lastly, being able to predict and analyze the information, but also be able, if you look at the bottom of the screen, as Mark highlighted, we will always be a hybrid company. Today, EnCase is delivered on premise all the time. In the future, we're seeing the need in the market to start introducing certain workload in the cloud. We're looking at the opportunity and what workload can be integrated into EnCase on premise, but be introduced as a service in the OpenText Cloud as a hybrid to allow EnCase to partially play on premise, but also have workload that could run in the cloud and be delivered part of the OpenText Cloud.
Again, the end goal is, with every acquisition, we take the knowledge and the IP that comes with that acquisition to make EIM better, to make the complete platform better to manage information, secure information, govern information. We want to be able to provide a hybrid solution. We want to be able to provide a complete solution that could be modern, scalable, global, can be segmented to support GDPR or Safe Harbor privacy policies and rules, and be able to deliver value to our customers. Let me pause and see if you have any questions.
Feel free to take a seat, and love to take any questions.
Thank you, Mark.
The continuous snapshot, is that going to be on the roadmap?
It is on the roadmap. We are finalizing the development plan and getting them through the approval and hoping to have a timeline by the time we are at OpenText World that we can communicate to our customers. Yeah, this is one of the top features. The continuous discovery plus the macOS support are two top features that we're looking at.
We can take snapshots today, and we can take very frequent snapshots, but it's kind of crossing that chasm to where it's like a dial tone versus a pulse, we think is a kind of a breakthrough for us. Breakthrough.
Mark, if we step back for a second, how should we think about the bounds around security? There's a large market. There's things like network infrastructure. Where should we be drawing a line in our own minds of where OpenText likely won't go or how you're sort of defining this?
Yeah. Great question. Where there's big pieces of information and we have adjacency, I think we have the permission to secure it. One aspect is the enterprise platform. Things around anything that kind of touches that platform of enterprise content services, we feel we have permission to go there for security, forensics, discovery. New market is the endpoint. We won't be a malware company, or a SIEM company. We'll feed SIEM providers, but we want to be able to incorporate. Endpoints are changing. They're not just our PCs, if you will. As Muhi said, we need more OS support. We need to collect more artifacts. The nature of device is changing. A drone we think is fair game for us.
We think a jet engine or a brake system on a train is sort of a nature of the endpoint for us. I would say the boundaries of things that are adjacent to information platforms on the enterprise. The widening nature of what an endpoint in machine means. I'd probably put a third element there, which is in the Enfuse conference today, but it's our network services as well. For example, we have a single database that talks about all trading partners. We have over a million trading partners running on our business network. Things that provide the identity and security, from single sign-on to who you are trading in a digital world, on our Trading Grid, I think is also fair game for us. Yeah.
I think it's a little easier to answer where we want to go versus everywhere we don't want. Malware would not be where we'd want to go.
Two questions. They're related, though.
Yeah.
The first one is on, so Muhi mentioned the platform and scalability. One of the developments of Project Red Oxygen was integrating all the different pieces together.
Sure.
I imagine there's still a lot of different code bases. Is that a inhibitor to scalability as you add more pieces on, or do you have enough in place with the APIs? Then related to that from an R&D perspective, how much of the spend now is on new features and innovations versus maintaining or supporting existing software, and how does that compare versus like five years ago?
Great set of questions. First question is, integration will never be done. We'll never be done integrating. We've set as a goal that when we buy a company Well, first of all, we will weed out companies if we don't ever think we can integrate them. We're not interested We actually will weed out targets based on culture, we'll weed out targets based on platform. I know the world doesn't see all the things we say no to, but we obviously say no a lot. There are reasons to say no, financial, cultural, technology. We've said as a rule, we'd like to have anything we purchase integrated within the first two years of operations. That may take us two releases.
If we're thinking of a release every year, it's sort of a two-release cycle where we'd like to be on a common user interface, a common technology stack, pieces of data that are key to be integrated. That framework is helpful. Second, we're not breaking out right now our R&D spend per new feature versus maintenance. I can't get into maybe any insight there. Maybe there's another thing you're going at there.
Well, another point that you mentioned, though, is that, I think it was yesterday, you mentioned, in a couple of years, 50% of your staff would be overseas-
Yeah
like in India and Philippines.
Sure.
Obviously significant, growing to zero when Muhi arrived, around that.
Sure.
How important is that to the R&D spend and your efficiency in R&D spend?
It's very important. We have a point of view of how we want to scale our R&D and our cloud operations, and that's why they're both in Muhi's world. I don't know the precise count, but when I started, Muhi and I started around the same time, maybe we had 200 employees in Southeast Asia. Today, a little greater than a third of our workforce is in Southeast Asia, India, and Philippines. I would look over the next few years to probably half the company from a workforce standpoint. Even though our R&D spend, I think, is between 11%-13% of total revenues, our headcount is growing. Our headcount is growing in India, and it's growing in the Philippines. Our headcount is growing. Our ability to deliver features for organic growth is growing.
I don't see us spending beyond the 11%-13%, but I do see our headcount growing.
You talked earlier about 100 proof of concepts in Magellan. I was wondering if you could talk a bit about that sales process and how you see those rolling out past that proof of concept stage.
Well, the proof of concepts have sort of come full cycle into EP4, where we've taken a lot of those learnings and put them into EP4. New learnings will roll and go into EP5, and just continue on Release 16. That cycle of learning and then getting in the product is actually, we've circled the track once with bringing Magellan to market, doing proofs of concept, getting feedback, putting the next version out. We're now looping the track a second time with more feedback, making the product stronger. It's great to see that loop working. EP4 is an example of closing that. We'll talk about wins, and we've had wins. We are winning business. We haven't quantified it, so I feel a little hampered there. I would say that the cycle is working, and it's demonstrated with EP4.
Positive organic growth in Q3.
Maybe a follow-on to that one, just in terms of cross-selling.
Yeah.
You've obviously got these six products that you're focused on. Can you kind of talk a bit about cross-selling and how the sales team is incented around that?
We look at our sales force, and they have a number that they need to make, that number is made up of a blend of MCV or I don't know what that noise is, it sounds ominous. We'll assume it's not. An AE's quota is made up of MCV or subscription, license, and maintenance. They have a number. We don't restrict what they can sell. They need to know their accounts. They need to bring in experts, subject matter experts from pre-sales or professional services, to kind of help close that sales cycle. We don't have product-level incentives. I've always felt that in the sales leadership, obviously sales as well, it's hard back at corporate to tell an AE in Toulouse, France that they should sell this product into their patch.
Rather, we give them the flexibility based on the customer's needs to sell what they need. Now, what we focus on at leadership is obviously important because if we're focused on it, they deem it important. We're focusing on a handful of cross-sell plays. Security is one of them. Our SAP solutions is one of them. Information archive is another, for governance and compliance reasons, is another one of the key plays. We've demonstrated organic growth in our last three quarters. I think we're actually seeing some of those cross-sells work.
Tie to that, is there an opportunity for an overlay sales force? Thinking about this, selling managed service, most of the account reps aren't going to have had any experience with it. You'll add either the team from Covisint or GXS. Does it make sense to drop in sort of a selected team to do that on a global basis?
Yeah. Well.
Talk about the profile of those deals. Sorry.
Yeah, no. Quite all right. I didn't mean to jump in too quickly there. I think there are kind of a variety of vectors as we scale. I spent a lot of time thinking about scaling, right? I mean, winding back to when we used to do $50 million or $100 million quarters, and you're doing $600 million, $700 million quarters. That's scaling a leadership team. It's scaling your approach to communications. We still have a lot to learn, right? We're far from perfect in how we scale the company. We're intense listeners, and we've listened a lot over the last few quarters, and thank you for all that feedback.
One of the places to continue to scale, as we think well beyond of our scale today, is do we look at more verticals and really get that subject matter expertise to be able to bring this portfolio to financial services, bring it to healthcare? Do we look at more geographic focus and to be able to scale beyond where we are? Continue to scale at the pace I would say, not beyond, but continue the pace of scale that we are. I think verticals is one dimension. I think geography is another, because we're sort of product unit-focused. I think another dimension, if we take a playbook from Oracle or SAP, we have a lot to learn from them, a lot to learn from conglomerates as well, how they manage their top 200, 300, 400 accounts and have that strategic account overlay.
You have the subject matter expertise as well, where we have very strong pockets of today. I think our thinking is a little more on maybe the verticals and top accounts, knowing we always have that subject matter expertise today that we can draw on. I know that was a medium-winded answer, I wanted to maybe give it a little more shape around continuing the pace of scale is scaling geographically, scaling by key vertical, and scaling on calling out those top accounts.
You mentioned one of your six areas is the developer and how it differentiates-
Yeah
a large company from a very large company.
Can you speak to some of the initiatives you're taking to grow that developer base?
Sure thing. Muhi has a point of view here as well. I would mention two big things. AppWorks. AppWorks has come a long way, and it's now our tool of choice of building applications. People Center, completely built in AppWorks. Our new contract center, completely built in AppWorks. Our new business network apps, completely built in AppWorks. I know it's going to be a central point of what Muhi and I show in July. I'd say that's one. Two is it's an API-driven world.
On a slide I used at the kickoff yesterday, I talked about us in this cognitive era. One of the things that have evolved from a very monolithic world, client server, web services is microservices, and it's all about APIs. Give me an API. Companies want to embed us in what they do, and we're very happy to be embedded in what they do. I'd say the two very demonstrable things is the rapid progress in AppWorks and quite clearly the proliferation of APIs that we're delivering.
Yeah, to echo a little bit. Modernizing the API into microservices is one of the first things to allow our big platform to be able to deliver small mobile application that are very targeted, or develop application that are very targeted. AppWorks today can integrate to any of our platform through these microservices to expose them and to build a simple application, being a business analyst, not a Java or a C developer, and deliver that application, and then at a push button, can create a both iOS and Android mobile app through the AppWorks gateway. AppWorks is both an application development platform and a mobile gateway. Through the integration between the two, we could build the quick application and push one button, and I have an Android and an iOS. An example of these, all of our Trading Grid mobile apps are built on AppWorks.
Content Suite is built on AppWorks. We are building Documentum on AppWorks. Media Management mobile app is built on AppWorks. That's from the technology perspective. How do you grow the mindset of developers and newcomers into the programming world? We are tapping into our internship program. We now have our interns. We have approximately 150 interns worldwide every year. We're looking to grow that program. We're looking to start targeting interns that will come to do nothing but work on AppWorks. For example, in Silicon Valley, we're bringing two interns this summer to work with us on developing application on AppWorks.
With the goal is we want to understand for this newcomer that has never seen AppWorks, how easy it is for them to adapt and learn and develop application, take their feedback to bring it back into our engineering process to improve AppWorks. This becomes a continuous ongoing cycle that we do. Learn from people who are coming and helping us improve the product and roll it out to more people. Also the goal when they go back to their universities and to their world, they now know about AppWorks. We're also partnering with customers. We have a very big customer in the oil and gas that is sending engineers to come and work for a year at OpenText. They become part of the OpenText AppWorks team. They will work in Silicon Valley.
They will live with us for a year, learn the product with the goal they take AppWorks back into the IT department, and this is a very big company that has seven or eight global locations, including Saudi Arabia and the U.S. and several others. Those are three example is how we will grow the mindset to want to use AppWorks in our customer base.
That's why we call it out as one of the top six squares with a lot of pre-thought. I don't think I can say it any better than saying I think it differentiates large and very large companies. I would maybe put those, our combined thoughts maybe into a continuum. The first is, it's good enough for us. We've met that threshold. It's really exciting and enterprise world, you'll see it front and center. The next is customer usage. We, from customers looking to embed themselves inside of us right now, we're working with a third-party logistics provider, who wants to use all our network APIs. They know the app they want to write, but we can get them 80% there if we can embed our business network into the app they want to write.
Now we have AppWorks talking to our APIs and to our network-driven world. If you know City Connect, as a product, that's all API-driven on our network, as an example. I think that next continuum is driving big customer usage, through the tool and our interfaces. The third is partners. In our customer advisory board meeting here, we had a couple partners who just said, "We have just this API, we could write this app that could help you." Lastly, the fourth part of that continuum is where you can attract new apps from third parties that are just available on the marketplace. We're on this journey of a continuum of we've gone from, if there's 4 levels, I think we've passed level 1, which is very exciting to see.
Us, then customers, then partners, and then an app world, we're beyond stage 1.
Mark
Different topic.
Yeah
One of your slides earlier, you had GDPR as a long-term opportunity for the company.
Yeah.
There is a hard deadline in a couple of days.
Sure.
Maybe we make an example of some big names like Google. Why would you not expect this to be a short-term boost to OpenText? Is it because you don't feel enforcement? The thinking is maybe it doesn't get enforced.
No. I see it as a long-term driver. I get the privilege of talking to a lot of companies, including my own, of how they're looking at GDPR. Obviously there's GDPR in Europe, there's GDPR companies doing business in Europe, and then I think GDPR is coming to North America. Companies have really looked at their privacy policies, compliance, security, and the best run companies are wrapping it into a long-term strategy. It's not like Y2K. I think there's notions around GDPR that May 24th there's a light switch that goes on, and we're done. There are things you need to do for May 24th. You need to have a data protection officer in place. You need to have data protection agreements in place. You need to have the ability to take a call and opt out a third-party consumer or user.
There's some other things that you must do by May 24th. The best run companies are going, "What is that long-term compliance strategy, and how is it automated? Where do I really need to architect an information platform strategy?" Yeah, there is a short-term need. The best run companies are looking Like digital was a top-down strategy, I think companies are looking at this, the best run ones, as a security, privacy, an opportunity for compliance long-term strategy. There are things you need to do for May 24th, but I think there are multi-quarter and multi-year demand drivers that companies are looking at. I don't see it, again, as a light switch. I see it as more like a dimmer control, where there's going to be kind of a continuous GDPR drumbeat, but it's privacy, it's compliance, it's more U.S. companies jumping on board.
It's the same need coming to North America. I'm actually optimistic that it's going to help us over the coming quarters and not just be a light switch on May 24th. Which is tomorrow, I guess.
Just on AI, it's one of the six-
Yep
areas. In a lot of the panels or discussions here, there's a lot of interest it seemed, in Magellan, and sort of it's at the theoretical stage still. At what point does it move from theoretical when should we expect products other than what you have with the POCs and sort of the standalone? When would it be integrated in other OpenText products, how do you monetize it? Is it a free feature in new versions or, I don't know.
Yeah. I'd expect over the next year to see the next wave of products. I think by EP5, we're going to see the next set of products. We have Magellan. We have Magellan integrated into EIM. We need to have EnCase integrated to Magellan, which is what you're hearing at the conference, I'd expect that over the next year. Monetizing it's going to be a feature that we're going to sell. We're not going to give it away. We're not going to embed it into the price. It will be a standalone add-on product or add-on capability, we don't intend to give it away. The big piece is that taking the endpoint and having it continuously talk, that continuous talk, just easy to conceptualize. Imagine 10,000 endpoints all continuously talking, sending artifacts, streaming into Magellan running an algorithm, real-time detection.
We expect that over the next year. First taking a snapshot, then snapshotting it once every 30 minutes.
I'm going to go to the other end of the spectrum here.
Okay.
When we were talking about cross-selling, you mentioned SAP. It's a very long-term relationship you guys have had. Can you give us an update on that and where you think the cross-selling opportunities are?
Yeah. I'll start with the cross-selling opportunities. Being able to bring Extended ECM into the Documentum install base. That is a clear cross-sell opportunity for us. Second, we have a great relationship. It remains incredibly strong, and we completely support the SAP cloud. If you want to run a managed service at OpenText, we support that. If you want to take our SAP solution and run it in the SAP cloud, this is a new certification, a new support. We fully support it. Those would be two examples. The third is I'll just stop at those two. Yeah, I'll stop at those two. We think of SAP as an endpoint, and we're at an endpoint conference. That is a longer-term opportunity as well. It's can we provide a better secure endpoint for the 100 million endpoints of an SAP app. All right.
Well, thank you very much. That will conclude today's call. Thank you for attending, and we'll speak soon. Thank you.