Thanks everyone. Good afternoon. Thanks for joining us at Penfuse 2018 in Las Vegas. This is OpenText Annual Security Digital Investigations and New Discovery Conference. The product teach in today for investors will include in presentations and an interactive Q and A with Mark J.
Barreneche, OpenTech's Vice Chair, CEO and CTO and so as Mili S. Zhoob, EVP, Engineering and Cloud Services. Today's presentation is being recorded and will be available for replay. Presentation materials as well as a conference call replay can be accessed on the Investor Relations section of our website. I'll also point investors to Slide 2 of today's presentation for our safe harbor statement.
Please note, during today's presentation, we may make statements related to the future performance of open text 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 ks and 10 Q and our other public filings. In addition, our discussion today may include certain non GAAP financial measures. Reconciliations of 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.
And with that, I'd like to introduce our presenter, Marc Barreneche, OpenText's Vice Chair, CEO and CTO.
Thank you. And thanks for joining us today, here in Vegas, as well as those on the phone. And we position today to be more of a kind of a technology kitchen. And I just want to thank you traveling in. I know we all make priorities and are spending we spend time away from our families to make a trip like this.
And 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. So 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 to get to know the company better, whether it's 30 minutes, an hour and a half or longer. So 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 am going to use a few slides from my keynote yesterday.
And ultimately, I think there are 2 points I'd like everyone to come away from on this technology event. The first is, there are 6 key areas. In terms of our market and product strategy, and we're not on financial strategy and we can talk about those things today too, of course. But from a go to market, a product, that $100,000,000,000 market that we talked about, there are 6 key areas, and we're talking about one of them today. You have our platform.
Our platform includes all our content services from content from capture to information archive, content management, content suite, Documentum, all those platform technologies, which is our heritage. That's one of 6 areas. 2nd area is a newer area for us, but of the 6 squares 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 3rd area I'll talk about, whether those applications be case management, contract management, quality management system, 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 us through time on our application strategy. It'll be a big part actually of enterprise world. The 3rd area of our 6 is our network. EZLINK, GXS, ANX, Covalent 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 4th area, we just call security. And I think it's security, it's information forensics, it's privacy, it's discovery, but we give it a simple word of security. And we think a lot of these topics, and go through a few today, are coming together. The 5th area is AI. We think business needs to be AI driven.
And we got to get the automation right, which is the platform, the apps, the network, the automation right. But 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, very easily. But we're very focused on the applied side of AI, providing insight, and I'll give a few use cases here today.
The 6th area, which is still a young area for us. So if it's platform, apps, my first takeaway that I like from today is there are 6 areas. It's the platform, it's our apps, it's our network, security, AI and the last is the developer. And the developer is important, the information developer, because what we need to do is API driven. And if you have an API, you just program to it.
The API is useless and you write a program on top of it. And I'll make an observation that what differentiates the large from the very large software companies is a developer network. And this is my observation. I think it's I look forward to input on it. But what differentiates the large to the very large is being able to attract in mass developers, developers on top of your network to APIs, developers on top of your information forensic platform for APIs.
And this is why a tool like AppWorks and APIs are so important to our go to market strategy. So 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 6 go to market areas that are strategic for us that our $100,000,000,000 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, but we talk total growth in action here at Enfuse. We are 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. What 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, right.
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. So, at the most macro level, before we kind of get into a recap of the keynote, Mui is 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 6,000,000 squares on the chessboard that are strategic for us.
We're talking really about 1 today, not all 6. We can go anywhere you'd like. 2nd, I think you are seeing total growth in action with the acquisition of Guidance and our ability now to bring those products into our installed base. And I'd be remiss if I didn't mention fiscal 2021 and our medium term target of generating $1,000,000,000 in operating cash flow as we exit 2021, our emphasis on ARR and the margin for the AOM profile that supports that. So I just wanted to make those key points upfront before I kind of get into first my recap.
And feel free to ask questions along the way. No need to wait to the end. Yes, please. Please go ahead. So you mentioned the
different areas that form the $100,000,000,000 market. What would you say security represents of that entire $100,000,000,000
We haven't broken out each of the areas. But I would say directionally, when we look I'm just going to the yes, right there, that the gap between I've sort of thought about us in phases from a search company to ECM to EIM to the information company. And security is sort of in that $50,000,000,000 to $100,000,000,000 jump. I mean, it's got it's you pull a TAM from Gartner, you're probably looking security between $15,000,000,000 $20,000,000,000 as a market size. It's in that very significant range.
And you can see it on the slide of what sort of brings us up a scale from $50,000,000,000 to $100,000,000,000 It's mid market security, AI and a few other things. So it's a big marketplace. And I think you can find value assets as we did with guidance and we'll continue to. So just on the conference, I welcomed, it was our first opportunity to kind of in mass welcome guidance customers to OpenText. We had approximately 1500 attendees, close to 600 companies, 100 sessions, 40 countries were represented here, 3 days and we really wanted to send one message to guidance and the majority the big product area of EnCase is that we're all in, in the security market.
So 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 pour. And I used it here and it's intentionally complex. And it's a digital makes business very complex today.
There are a lot of priorities for CIOs, a lot. And 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. But I really have never seen it that complex, a changing workforce. Next couple of years, Gen Y and Z will be majority of workforces.
New business models, gig economy, every company is looking to become a software company and I think companies do struggle with that. Data scientists, the new job. Cloud AI, well, 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 are 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. And 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. And 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. So there's just a lot of complexity on the table.
So what we what I tell what I tell my employees and what I tell our customers, we thus need to prioritize. It's not going to get slower. Again, I'm kind of 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. So if we look at a graph kind of describing the 6 areas, there are going to be a little more than 6 levels here on the chart, But I think it's one graph that is sort of encompassing our answer to that complexity, which is the intelligent and connected enterprise. We have our digital information platform and our digital apps. And 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 to outsourced IT. They can't find the right IT individuals. So 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.
And 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. And then obviously right off that platform is security, forensics discovery and security, which were the key messages here in the conference.
On the other side are applications, right, in the kind of the style of applications that we're building, our customer experience applications, our employee engagement apps, people center, new application we brought to market, asset utilization, supplier efficiency, our active app family that's gone now through its 3rd generation since we acquired it from GXS. It's called it's the active family. And 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.
So we do very well in MRO scenarios where we need content services and an application for assets, suppliers, invoices, orders. So these are the big areas of information we follow. Then at the center is our digital core and artificial intelligence. So this is kind of the one picture, if you will, to describe our product strategy. So I'm going to really kind of focus a little more on the security side, but again, kind of giving a recap of the keynote.
I think there are 2 things. And certainly in this audience at Enfuse, we didn't have to educate them on how the velocity of attacks continue. But the nature is kind of interesting. I'm going to get into the nature of a few of them. The nature and the type of data is changing.
And thus the need to have content services and endpoint security. You look at Boeing and it's too early to tell 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. So I think the it's not just that the velocity is increasing, it's the nature of the data that is changing. And again, to kind of 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 and let's put it up in my keynote. The one here is on the left is from the World Economic Forum. It's their 2018 report.
So they come out with a global risk landscape. And they're pretty good thinkers. And I like how they think and how they publish. There were if we look at the top four risks according to the World Economic Forum, one category is acts of God, I spelled God with lowercase g, acts of nature, climate, weather, acts of 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 Fund. I think we all need to pay attention to this. And 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. So 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 we're building these platforms, discovering them, so we can do information forensics and security as well.
Verizon published a 2018 report. We can make both of these available. I'll provide you links to them. But I also thought interesting was if we looked at the nature of breaches, that 72% are external and 28% are internal. So insider threats or the internal threats are demonstrable.
And we can help more on the inside threats than the outside through information governance, policies and platforms. So I no one wish it's not a wish of ill on anything, But 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 and Louis is 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.
And from that snapshot, we do information forensics. We'll do an investigation. We can do electronic discovery. But from that snapshot, we can also do threat hunting. So we capture enough artifacts, that were used in scenarios of threat hunting.
The next, the progression of this universal agent is to be able to real time, be able to send information back to look at behaviors and then be able to through AI and algorithms be able to talk to security systems real time about threats and behaviors. So this is why the endpoint management for us is so important because we believe it's about that behavior is centralized content management. But it stems around what we think is a big going to be a big demand driver for us, which is the internal threats. And so if we look at what the hackers and it's interesting, there are like there's multiple audiences for OpenText. What are the hackers looking for and what are the investigators looking for?
Or what are the compliance and internal audit teams look for when they deploy our technology, right? So it's an interesting two sides of it. But the picture here on the left is a cover from The Economist. And The Economist came out with a cover story here over the last few months that information is now the world's most valuable resource. And you know what, I kind of believe them.
I'm about to kind of 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. And 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 4 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. The getting inside and dwelling, this dwell there's a concept called dwell time. When you have to assume that the bad actor is already in and they are 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.
And second, the data hasn't shown up on a dark web. So it's often some other place, probably a nation state, but it hasn't shown up on the dark web. If 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 or you should be able to share and collaborate with confidence in an online system. And you never want 75% of your endpoints infected, but you certainly don't want that information to be then destroyed and you can never get it again.
So we think this is a relevant example of how our platform can help Swift, this is Bangladesh Bank there, but that's where the breach started. This is a Swift breach. And this is where there were $81,000,000 was stolen, maybe even more off the Swift network, evidenced erased and this is the insider threat. Again, we think with good content platform strategies, this could have been avoided. And the last example is the Joint Strike Fighter, where again it was not a professionally managed environment in our view from what we read.
And if we had that digital platform in place with the endpoint management, aircraft design, airframe, engine, weapon systems, takeoff landing, cockpit design, all that has been stolen. And we think again with a professionally managed platform, this could have been avoided. So there is a need and we have a platform that can help answer this. So this is a little bit of a condensed slide and maybe there is a better visual, but there's not going to be a better point. I think we could be the point of trust.
The first is to provide endpoint security and forensics via our end case product. The second is, look, the best way to get security design it in and to have a professionally managed content service environment. And 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 or Hightail. And you should be able to collaborate securely in that way.
But we have a role to play there. We in a company we purchased, ICG, has a whole set of redaction technologies. And that plays a role that even as we manage and secure things, we need to redact information. And so ICG, the product is named Bravo. When you do need to recover, this is where our discovery in Recomind comes into place, again, as part of that point of trust.
And we think we can feed Magellan in our AI tool from artifacts. I'm going to go through a couple of examples of how to go from, as Director Comey spoke about today, millions of documents down to just a handful that's needed and our discovery technologies and Magellan can do that. Next is InfoFusion of enterprise search. And then lastly, Covisint Identity and an Internet of Things. We think Identity and Access Management, every person, device or machine needs an identity.
And we talked about AAA recently as a win. There's a combined win of Identity Access Management and the Internet of Things for connected cars and identities. So we've been building a portfolio to bring us into again, of those 6 boxes, we're just talking security, to bring us into the information security space. And this is the main product lineup to be able to do that. So 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. And let's think of the endpoints.
And this is a solution we've put in place. On the left side are endpoints. Let me just keep teeing me up the example here. This is a customer who is automating biotech, who is automating clinical trials. And their view is if they can accelerate a clinical trial for a new drug, a new therapy, a new protocol from 4 years down to 2 years or 4 years down to 18 months, it's a massive competitive advantage for them in the marketplace.
And 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. And in there, we've deployed our suite to enrich the data, alerts notifications, workflow, evidence support using Magellan, both for analytics and a little bit of algorithmic work, a bit of data model transformation, event management. And these are all things that, it's a hospitalist lab, it's a wearable, all in clinical trials, sending trusted information into our cloud.
We then manage that, process it and then push it back to them. We push it back to them through our cloud again into their ERP system, into the quality management system, their ECM system, their CRM system and their compliance system. We're then able to receive information back and push it to regulators, FDA and device manufacturers like Philips. And this is how we think that being able to manage the endpoint, some of the unstructured information, clinical trials, IoT pushing it into our cloud, going off and that B2B connectivity into enterprise and then 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. So 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. And this is a great example. Here's a second example. And this is in fact a, call it, a Fortune 1000 in the U.
S. About a security breach and needed to respond to that through their legal process. And this is a Rack of Mind example, using our search products, using Accelerate and the OpenText Cloud. We needed to collect in this particular investigation, 48,000,000 pages of data, 48,000,000 pages. So we went out and collected 48,000,000 pages.
We then had a call through in an automated way, automated collection of processing, getting that down to roughly 13,000,000 pages. We then through our service, we have humans that then augment that and got that human review down to 645,000 pages, then apply the redaction technology and got this down to 141,000 pages. And then ultimately in the legal matter, ended up only producing 142 pages for the client. So this again is our forensics, our discovery, our redaction and the power of our cloud. How does a client actually get you 142,000,000,000 pages?
So simple through the cloud. How do we process it in our cloud? So I think this is just a great kind of a customer in action of and it happened to be a security event, having to go to 48,000,000 pages down to the 142 that were used in evidence of using our cloud and our technology. So 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 center, service level agreements, a whole playbook, time to go live, lessons learned. We've done it 2,000 times now and near a $1,000,000,000 business. So 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 want to we're providing as a managed service. We'll be responsible for security. We're offering 4 nines of availability in our cloud today. We offer this on a global basis, whether your data zone is Europe, UK, Canada, U.
S, Latin America, Japan, Southeast Asia, Australia, New Zealand, we offer 4 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 are all based on standards, NIST, ISO, stock, GDPR. We provide one contract and one service level agreement back.
And just to put this in scale, we have over 1 exabyte under management right now. Amazon recently was asked how much data they have under management, Amazon. And they said, we think it's an exabyte. I'll tell you, for us, it's a little larger than exabyte. And I do this just to kind of put the sense of scale that we have in place of the data that the size of the data that we're managing.
So we think another answer to security and compliance and privacy is outsourced to OpenText Cloud. So, 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. But we're going to tap the gas a little faster to be able to grow this space for us. Yes. A lot of them are hybrid.
I'm sorry? That's fine. So the question is, are a lot of these customers completely in the cloud or hybrid? And the answer is many, many of them are hybrid. We many, I could rattle off a lot of examples where we may have an ADI supply chain app in the cloud, but content management on-site.
Or we may have customer experience management on in the cloud or just lack of management in the cloud, but discovery on-site. So 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 of notes on AI and Magellan. And there's really just one point and I think it's in the deck. Just allow me.
Yes, 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 the year for 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 from 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. And 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 to EIM.
So this notion of non integrated, independent, standalone, very expensive, slow to move AI tools, I think just as flawed from a design standpoint. I think the AI has got to be deeply integrated into the automation. And that's a technology decision we've made and everything we see is right. And that's why I think Leonardo will do well going into the SAP installed 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.
So that is a learning over the 1st year, which is great. The second learning is customers want to experiment, right? They want to move quickly. They want to be able to 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. So in our 1st year, that's why I kind of call it an AI powered business. So 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, a lot of there's a this is a very known use case, 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, big U. S. Again excerpts my keynote yesterday, a big U. S. County.
They have state regulations, local regulation. This is a big county, we're again 100,000 plus employees. And if they don't respond to an employee case within a certain amount of time, they get fined. And they're being fined about $15,000,000 a year right now through case management, through employees. And they think by applying AI into their case management, they can shrink that fine down close to 0.
Over a 5 year window, it's $75,000,000 of fines that if we can deploy Magellan and reduce that by 80%, we're in a pretty good place. And now security, looking at behavior, log events, data movement and real time detection. So these are some of the high value use cases that we're seeing from Magellan. So in summary, and then, Muhi is going to walk through the products a bit more specifically. We see a growing information market.
Courtesy, security, compliance and governance is a topic that is coming together. And we think that's going to be a great trend for OpenText. And that's the CIO, CISOs, Chief Protection Officers and Chief Data Officers. We're taking a comprehensive, this is a market, it's one of the 6 squares on the chessboard that are strategic to us. And we're taking a comprehensive approach, security, identity, forensics, discovery, search and collections, right?
And this is what we've built through our total growth strategy over the last 3 years. We've got key solutions available today that not just for what we acquired, but to bring into our installed base. And 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 and 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.
So Mohit, I'll hand it over to you for a second.
Thank you, Marcia.
Thank you.
Good afternoon and welcome. It's great to see all of you. So let me dive a little bit deeper into the product areas and where engineering is focused. Again, guidance is only 8 months with OpenText. But I hope if you attended the event earlier this morning and yesterday's keynote, you see the value that guidance brings.
But 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. And 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. 2nd, identifying as always with every acquisition that we brought 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. Then 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 Covesend in the platform with identity access management and IoT device management and integrating it with in case 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 human. But 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. And 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. So Amazon now have their own airline fleet. I would encourage you to research it and see if you go to evenimages. Google.com, you will see pictures of these airplanes.
But 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 1A point to AB 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, maybe drones, other robot driverless vehicles that will come and deliver and and guidance together is a big opportunity for us. Let's look at the 4 areas and look a little bit deeper. Today, there are 2 areas in guidance that are very important, the In case 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. And you'll see 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 OpenTextCo. An opportunity for us to look at going deeper into making these stronger in feature set. Few example, today, in case, do snapshot discovery. So 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 20 fourseven continuous discovery of all the information. And then bring these 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 Mac OS 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, 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 2 very big areas that we're looking at in case. And 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, it's 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, and this is where bringing EIM together is a great thing because in the future guidance couldn't leverage a great product like Accelerate that came to us from Recomind. And Mark gave the great example where 800 gigabyte translated all the way down to 2.4 megabytes and several 100 pages that were needed out of millions of pages at the end.
Integrating In case into Accelerate, where In case does the discovery, In case does the analysis piece and then pass it on for processing in Accelerate, processing review and then elimination of the content and focusing bringing that funnel smaller and smaller to where they come together and you're able 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% to 15%. That's also another area of opportunity. We have already started developing plans and putting a road map for this work. At Enterprise World this year in Toronto in July, I promise you, 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, it's a huge opportunity for us.
And 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 and then write a simple algorithm and let Magellan go after the data, analyzing the information and 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 2 teams together between Magellan and EnCase to work on putting the roadmap for these products. And again, at Enterprise World, you will hear a lot more of that information. Mark touched on Covisint.
Covisint brings to us 2 things in IoT and Identity Access Management. And I'll give you one example of where we see Identity Access Management very, very important for EIM. Our business network today has millions of identities and millions of users, 100,000 plus customers. Making every customer that interacts and conduct business and commerce in our business network and identity in one place in our system where we can monitor, monitor their access controls, monitor the permissions they have and understand the tasks and the transactions that they're executing is very, 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 management with OTDS today, our OpenText directory services, and be able to deliver single sign on across multiple platform, whether it's Covesent, Identity Access Management, Covesent IoT, Identity Access Management or in case security or any of the other platform, business network, content services, media services and others becomes important and be able to deliver directory services for all of these through one place in Identity Access Manager. And then integrating and delivering statistics and insight about who is accessing what. So 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 3 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 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. So 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.
And 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, in case it's 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. So 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 data center 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. And let me pause and see if you have any questions.
Feel free to take a seat and love to take any questions. Thank you, Mali.
Just a few 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 time line by the time we are in a price world that we can communicate to our customers. Yes, this is one of the top features. The continuous discovery plus the macOS support are to do 2 top features that we're looking at.
And we can and we 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, right, versus a pulse, we think is a kind of a breakthrough for us. 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 are sort of defining this?
Yes. Great question. So, where there is big pieces of information and we have adjacency, I think we have the permission to secure it. And so one aspect is the enterprise platform. So 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. Now we won't be a malware company, right, that's or a SIEM company. We'll feed SIM providers, but we want to be able to incorporate and endpoints are changing. They're not just our PCs, if you will. And as Louis said, we need more OS support.
We need to collect more artifacts. So the nature of device is changing. So 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. So 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.
And I'd probably put a third element there, which is our which isn't kind of 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. And we have over 1,000,000 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
a fair game for us.
So I think it's a little easier to answer where we want to go versus everywhere we don't but malware, I mean, would not be where we'd want to go.
Two questions. They're related though.
The first one is, so
when you mentioned the platform and scalability, the one of the developments of Red Oxygen was integrating all
the different pieces together, but
I imagine there's still a lot of different code bases. So is that a inhibitor scalability as you add more pieces on? Or do you have enough in place with the APIs? And then related to that from an R and 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 5 years ago?
So, again, great set of questions. First question is, integration will never be done. We'll never be done integrating. And we've set as a goal that when we buy a company, well, first of all, we will weed out companies, we don't ever think we can integrate them. So we're not interested we actually we don't weed out targets based on culture.
We'll weed out targets based on platform. And I know the world doesn't see all the things we say no to, but we obviously say no a lot. And there are reasons to say no financial, cultural, technology. But we've said as a rule, we'd like to have anything we purchase integrated within the 1st 2 years of operations. And that may take us 2 releases.
And if we're thinking of a release every year, it's sort of a 2 release cycle where we'd like to be on a common user interface, common technology stack, pieces of data that are key to be integrated. So that framework is helpful. 2nd, we're not breaking out right now kind of our R and D spend per new feature versus maintenance. So I can't get into maybe any insight there. And maybe there's another thing you're going at there.
Well, another point you mentioned though is that I think it was yesterday you mentioned in a couple of years 50% of your staff would be overseas like in India and Philippines. Obviously, significant growth, I think it's 0 when Maria arrived around that. How important is that to the R and D spend and your efficiency in R and D spend?
It's very important. We have a point of view of how we want to scale our R and D and our cloud operations. And that's why they are both in Moody's World. So I don't know the precise count, but when I started around the same time, maybe we had a couple of 100 employees in Southeast Asia. Today,
a third, a little greater than a third
of our workforce is in Southeast Asia, India and Philippines. And I would look over the next few years, we're probably half the company from a workforce standpoint. So even though our R and D spend, I think, is between 11% 13% of total revenues, our headcount is growing. And our headcount is growing in India and it's growing in the Philippines. So our headcount is growing.
And our ability to deliver features for organic growth is growing. So I don't see us spending beyond the 11% to 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? Yes. Well, the proof of concepts have sort of kind of come full cycle into EP4, where we've taken a lot of those learnings and put them into EP4. And new learnings will roll and go in to EP5 and just continue on Release 16. So that cycle of learning and then getting in the product is actually we've completed we've circled the track once with bringing Magellan to market, doing proofs of concept, getting feedback, putting the next version out.
So we're now looping the track a second time with more feedback making the product stronger. So it's great to see that loop working. And EP4 is an example of closing that. We'll talk about wins, and we've had wins. We've and we are winning business.
So we haven't quantified it. So I feel a little hampered there. But I would say that the cycle is working and it's demonstrated with EP4 and positive organic growth in Q3.
Maybe a follow on to that one, just in terms of cross selling. So you've obviously got these fixed products that you're focused on. Can you kind of talk a bit about cross selling and how the sales team has been centered around that?
So we look at our sales force and they have a number that they need to make and that number is made up of a blend of MCV or I don't know what that noise is, so it sounds ominous. We'll assume it's not. An AE's quota is made up of MCV or subscription, license and maintenance. And they have a number. And we don't restrict what they can sell.
They need to know their accounts. They need to bring in experts, subject matter experts from presales or professional services to kind of help close that sales cycle. But we don't have product level incentives. We I've always felt that and the sales leadership obviously fails as well. It's hard back at corporate to tell an AE in Toulouse, France, right, 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. And 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.
And we've demonstrated organic growth in our last three quarters. And I think we're actually seeing some of those cross sells work.
Hi 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 any experience with it. You'll have 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?
Can you talk about the profile of those deals?
Yes. Quite right. I didn't mean to jump in too quickly there. I think there are kind of a variety of vectors as we scale, right? And we've I spent a lot of time thinking about scaling, right?
I mean, winding back to when we used to do $50,000,000 or $100,000,000 quarters and you're doing $600,000,000 $700,000,000 That's scaling a leadership team. It's scaling your approach to communications. And we still have a lot to learn, right? We're far from perfect in how we scale the company, but 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. I'll continue to scale at the pace, I would say, not beyond, but continue the pace of scale that we're on. So 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 a lot to learn from them, a lot to learn from conglomerates as well.
But how they manage their top 200, 300, 400 accounts and have that strategic account overlay. And then you have the subject matter expertise as well, where we have very strong pockets of today. So I think our thinking is a little more on maybe the verticals and top accounts, but knowing we always have that subject matter expertise today that we can draw on. I know that was a medium winded answer, but I wanted to maybe give 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 6 areas is the developer and how it differentiates a large company from a very large company.
Can you speak to some
of the initiatives you are taking to grow that developer base?
Sure thing. And we have a point of view here as well. I would mention 2 big things, AppWorks. AppWorks has come a long way and it's now our tool of choice of building applications. So, People Center, completely built in AppWorks.
Our new Contract Center, completely built in AppWorks. Our new business network apps completely built in AppWorks. And I know it's going to be a central point of what Mui and I show in July. So I'd say that's 1. 2 is it's an API driven world.
On a slide I used at kickoff yesterday, I thought about us in this cognitive era. And 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.
So I'd say the 2 very demonstrable things is rapid progress in AppWorks and quite clearly the proliferation of APIs that we're delivering.
Yes. I mean 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. So AppWorks is both an application development platform and a mobile gateway.
And through the integration between the 2, 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.
So that's from the technology perspective. But then how do you grow the mindset of developers and newcomers into the programming world? We are tapping into our internship program. So 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. So for example, in Silicon Valley, we're bringing 2 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 applications, take their feedback to bring it back into our engineering process to improve AppWorks. And 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. But 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. So we have a customer that we a very big customer in the oil and gas that is sending engineers to time 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, very big company that has 7 or 8 global locations, including Saudi Arabia and the U. S.
And several others. But those are three examples of how we will grow the mindset to want to use Upworks in our customer base.
I think it's a and that's why we call it out as one of the top 6 squares with a lot of pre thought. And I don't think I can say it any better than saying, I think it differentiates large and very large companies. And I would maybe put those our combined thoughts maybe into like a continuum. The first is, it's good enough for us and we've met that threshold and it's really exciting. In enterprise world, you'll see a fun center.
The next is customer usage. And 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 percent there if we can embed our business network into the app they want to write. So 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.
So 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 of partners who just say we have just this API, we can write this app that could help you. And then third, I think is what people then lastly, the 4th part of that continuum is where you can attract new apps from 3rd parties that are just available in the marketplace. So, 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 and customers and partners and then an Apple, and we're beyond stage 1.
Mark, different topic, but one of your slides earlier, you had GDPR as a long term opportunity for the company. There is a hard deadline in a couple of days. And 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 an enforcement?
The thinking is maybe it doesn't get enforced or? No. So I see it as a long term driver. I think the May I get the privilege of talking to a lot of companies, including my own, of how they're looking at GDPR. So obviously, there's GDPR in Europe, there's GDPR companies doing business in Europe, and then I think GDPR is coming to North America.
And companies have really looked at their privacy policies, compliance, security and they're kind of wrapping it all into 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 24, there's a light switch that goes on and we're done. There are things you need to do for May 24. 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. And there's some other things that you must do by May 24. But the best run companies are going, what is that long term compliance strategy and how is it automated? What is the where do I really need to architect an information platform strategy?
So yes, I mean, there is short term need, but the best run companies are looking 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. So there are things you need to do from A24, but I think there are multi quarter and multi year demand drivers that companies are looking at.
But 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.
So I'm actually optimistic that's going to help us over the coming quarters and not just be a light switch on May 24, which is tomorrow, I guess.
Just on AI, so it's one
of the 6
areas. The in a lot of the panels or discussions here, there's a lot of interest to see in Magellan and sort of is
at the theoretical stage.
So At what point does it move from theoretical like so when should we expect products other than what you have in the with the POCs and the standalone, when would it be integrated in other OpenText products? And then how do you monetize it? Like is it a free feature in new versions or
I don't know. Yes. So, I'd expect over the next year to see the next wave of products. So, I think by EP5, we're going to see the next set of products. So 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 and I'd expect that over the next year. Monetizing it, 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 kind of embed it into the price.
It will be a standalone add on product or add on capability, but we don't intend to give it away. And the big piece is that taking the endpoint and having continuously talk And that continuous talk, I mean, just easy to conceptualize, imagine 10,000 endpoints all continuously talking, sending artifacts, streaming into Magellan, Magellan running an algorithm, real time detection. I think we expect that over the next year. First, taking a snapshot and snapshotting it off every 30 minutes.
I'm going to go to the other end of the spectrum here. When you're 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?
Yes. So, I'll start with the cross selling opportunities. So being able to bring extended ECM into the documents and installed base. So that is a clear cross sell opportunity for us. 2nd, we have a great relationship.
It remains incredibly strong and we completely support the SAP cloud. So if you want to run a managed service at OpenText, we support that. But if you want to take our SAP solution and run it in the SAP cloud, this is a new certification and new support. We fully support it. So those would be 2 examples.
The third is, I'll stop at those 2. Yes, I'll stop at those 2. We think of SAP as an endpoint and we're at an endpoint conference. That is a longer term opportunity as well. So can we provide a better secure endpoint for the 1 100,000,000 endpoints of an SAP app.
All right. Well, thank you very much. And that will conclude today's call. Thank you for attending. And we'll speak soon.
Thank you.