Open Text Corporation · TSX:OTEX
Open Text — Investor Day (May 2016)
68 slides from Open Text's investor day presentation, May 12, 2016
Slide 1: On Digital
Slide 2: ON DIGITAL
ON DIGITAL A Small Book on a BIG Idea Mark J. Barrenechea OpenText President & CEO
Slide 3: Publication and copyright information
Barrenechea, Mark J. ON DIGITAL First Printing, November 2015 Printed in Canada First Edition ISBN 978-0-9936047-5-1 Published by Open Text Corporation 275 Frank Tompa Drive Waterloo, Ontario, Canada N2L 0A1 (519) 888-7111 info@opentext.com www.opentext.com Copyright ©2015 Open Text Corporation. Ope
Slide 4: Mark J. Barrenechea
Mark J. Barrenechea Mark J. Barrenechea joined OpenText™ (NASDAQ: OTEX, TSX: OTC) as President and Chief Executive Officer (CEO) in January 2012 and also serves as a member of the board. Under Mr. Barrenechea’s direction, the company has grown both organically and through strategic acquisitions into
Slide 5: Contents
CONTENTS 1. Digital or Die. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . .1 2. Hyperscale. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6 3. Disruption. . . . . . . . . . . . . . . . . . .
Slide 6: Digital or Die
#1 Digital or Die The Hernán Cortés conquest of the Aztec Empire was not going well in 1519. After disease, famine, failed alliances, and lack of advancement, his troops only saw one way forward—and that was to sail back home. Before they could, one fateful evening, Cortés burned his fleet and gave
Slide 7: Digital or Die: forces converging
It was true for Cortés, and it is true for Business Leaders today. There is only one path forward. Today’s choice is Digital or Die. This is not hyperbole, it is reality. Let me explain. There is a nexus of forces that are converging to create the greatest business disruption of modern times. New wi
Slide 8: The workplace and business models have changed
The workplace has changed. Over the next few years, Millennials will make up 50% of the workforce.2 Millennials do not follow traditional social structures. They expect highly personalized products and services, they want immediacy, and they are omni- channel. They learned computing using one finger
Slide 9: Topics explored in the book
Together, throughout this book, we will explore a collection of topics on digital. We can learn a lot from those companies who are emerging as Digital Leaders, but one differentiator that stands out for me is Hyperscale. Could you ever imagine having a billion subscribers? Their services are intenti
Slide 10: Trust, security and the digital mindset
Success relies on Trust and Security. In the old world, one disgruntled customer would tell five. In the digital world, one bad experience leads to 1,000 shares—and lost customers, broken trust, and deflated valuation. The Experience of Community is critical. This all requires a New Digital Foundati
Slide 11: Hyperscale
#2 Hyperscale Digital is a “bit” grab, that is, an Internet land grab. The theory being that the largest survive: Google, Facebook, Netflix, Apple, Alibaba, Tencent, Uber, and Airbnb. Scale insanely fast, build exactly what customers want, hire the best people, and don’t run out of money! What do th
Slide 12: Defining hyperscale
Do a search on “hyperscale”. You will get a definition (on Wikipedia) along these lines: “Hyperscale is the ability of an architecture to scale appropriately as increased demand is added to the system. This typically involves the ability to seamlessly provision and add computers, memory, networking,
Slide 13: Digitalization is redefining scale
Heck, even my refrigerator is trying to talk to me. Digitalization is redefining scale. Scale requires a network effect for competitiveness and differentiation. Scale creates captive ecosystems. Scale creates barriers for competitors. Will Digital redefine “bigger vs. better”? It will for those who
Slide 14: Disruption
#3 Disruption A common thread of Digital Leaders is their ability to disrupt an incumbent, a market, or a business model. Compared to “web” disruption, digital disruption has 10x the innovators, it is 1/10th the cost, and 100x the power. Digital advances our thinking on competitive theory. To compet
Slide 15: Digital disruptors and being ubered
The Internet tore down and rebuilt entire value chains. Products and services could be distributed more cheaply with greater reach. Barriers to entry in many markets were obliterated. And the Internet was the foundation and early experience that has enabled digitalization, and what I like to say, is
Slide 16: The middleman is gone
Let me share a story. I have raised chickens in the past. They are fun. When you let a chicken out in the yard, and you chase them to get them back into the pen, the chicken will sometimes stick its head in the grass or a shrub, with its rear sticking out in plain sight. The chicken thinks it is hid
Slide 17: Digital disruption is faster, cheaper, stronger
These and other disruptors are part of a digital ecosystem that’s growing. With more individuals and organizations interacting and sharing ideas and information, the pace of innovation is increasing exponentially. The formula is 10x the innovators at 1/10th of the cost and 100x the power.12 Today’s
Slide 18: The Subscription Economy
#4 The Subscription Economy If you had any doubt, we are officially in The Subscription Economy. The model pioneered by magazines is now everywhere. Customers want the choice: to own the asset or have access to it. A subscription model is no longer optional. Shifting to a subscription model requires
Slide 19: Subscription as a required model
Pre-digital, subscription was for periodicals, newspapers, cars, and book-of-the-month clubs. Today, it is a required part of businesses. If you do not have a subscription model in your business, you need to—and it is not easy to do. Every business must have a subscription model. Millennials expect
Slide 20: Challenges of moving to subscription
There are also challenges in making your products or services available as a subscription. You have to move from one-time transactions to multiple transactions. You also move from receiving value up front to receiving a lifetime of value. And the greatest determinant to long-term value and loyalty i
Slide 21: New Barbarians
#5 New Barbarians Alaric led the Visigoths in the 410 A.D. sacking of Rome. “Why ruin a good thing?” I say. Digitalization is going to sack 50% of today’s incumbents in the next five years. They are called the Millennials and they are led by immediacy. Let us get to know the New Barbarians at the Ga
Slide 22: Millennials at the gates
There is a large and powerful group hammering at the gates. Unlike Alaric and his barbarians, they aren’t demanding gold or silver, and they aren’t looking to take over Rome. They are, however, disruptors. They are taking over the workplace and looking to change the world. They have usurped the Baby
Slide 23: Millennials in the marketplace
Their influence extends beyond the enterprise. Millennials are making demands in the marketplace too. Being hyper-connected has created an “anytime, anywhere” expectation. As consumers, convenience and instant gratification are key—otherwise they’ll find another brand that can satisfy their expectat
Slide 24: The New Barbarians exert influence
These are the New Barbarians at the Gate and they are exerting their influence. They are young. They are powerful. They are passionate. And they will not be ignored. They are the future. The Millennials are here and will sack the gates. 19
Slide 25: It Only Takes a Finger
#6 It Only Takes a Finger It has the power to create, it can also be your flying fickle finger of fate. To disrupt at scale, it needs to be available everywhere, on all devices, always on, with a wildly compelling user experience. Wildly compelling. The days of training, manuals, demos, and multiple
Slide 26: Digital engagement is required
As the little girl in Poltergeist said, “They’re here!” Touch screen computers have been around for nearly ten years. My niece recently went up to my TV and said the “swipe” wasn’t working. When I read her a children’s book, she asked, “What’s a radio?” New college graduates have been completely rai
Slide 27: Customers are savvy and fickle
Customers are growing increasingly savvy and fickle, and their loyalty must be earned. Every unnecessary click or irrelevant message aggravates, pushing your customer into the welcoming arms of your competitor. The Digital Leaders know this. That’s why they’re already innovating and creating wildly
Slide 28: The Customer Journey
#7 The Customer Journey In the sharp mountains of Digital, your Sherpa is always “The Customer Journey”. Never lose your guide and never follow false profits (ha!). Your Digital Sherpa is defining and creating a simple and complete holistic customer journey. Keep it front and center for your organiz
Slide 29: Know your customer by mapping journeys
Peter Drucker was right when he said, “The purpose of a business is to create and keep a customer”.16 This is the goal of every business: to create and keep customers. This principle survives Digital. Digital helps you keep this focus by giving you more ways to know your customer better. Know Your C
Slide 30: Moments of truth
With Digital, there is greater potential to learn more about your customers. The more that people consume online, the more touchpoints they use and the more information they share. Digital consumers are very transparent about their brand preferences, experiences, and sentiments. Your Digital Sherpa
Slide 31: Sold? But I Never Started the Sales Cycle!
#8 Sold? But I Never Started the Sales Cycle! Bingo. That is correct. Consumers of digital do not want a sales rep. They do not need a sales call, they need a compelling digital experience to take them from need to sold—regardless of the complexity of the product. Stores, configurators, demos, video
Slide 32: Digitalization is the most direct route to market
Digitalization is the most direct route to market. Consumers expect highly personalized products and services, delivered in real time. Instant gratification means no more waiting in long lines, no more trudging through shopping malls, no more cash purchases. Even tangible goods are fading into servi
Slide 33: The purchasing journey isn't a straight line
The purchasing journey isn’t a straight line anymore. Consumers jump from videos to reviews to success stories to free trials. They’re not necessarily there to buy, they’re also there to learn. So much so, that it’s only once they’ve done their research and are ready to buy that they reach out to a
Slide 34: Forget the funnel
Sales in the funnel are aggregate; whereas using the orbital metaphor, sales are individualized or customized, with the customer at the hub. This means that each lead has to be individually managed throughout the entire customer lifecycle. The good news is, communities of buyers are the people you c
Slide 35: Innovation Redefined
#9 Innovation Redefined Digital radically redefines how we innovate, regardless of industry. How do we collect requirements? What products and services are really being used? Delivering new products and services happens instantly, globally, and across all users. Feedback is immediate. Waterfalls and
Slide 36: New rules of innovation
It used to be that a startup would raise capital, hire employees, and purchase physical equipment all to produce version 1 of a product. And this process would take years. While this worked ten years ago, in a digital world, it would end in catastrophic failure. Today, this process involves rented c
Slide 37: Innovation is a race; crowdsourcing
When you think about it, innovation is a race. There’s no time for Waterfall methods and Mythical Man-Months, and Agile just isn’t agile enough. Sprints are becoming hyper-connected dashes. Innovation cycles are faster, compressed, and even approach the spontaneous. Would you ever turn your business
Slide 38: Digital technologies accelerate innovation
New digital technologies are contributing to the accelerated pace of innovation. It’s estimated that by 2020 the number of mobile phones will surpass the human population17—which is phenomenal when you consider that smartphones and tablets haven’t even been in wide circulation for a decade. The next
Slide 39: It is a Network, Not a Chain
#10 It is a Network, Not a Chain A chain is a series of connected links: slow and vulnerable. A network is a multi-path set of links: fast and reliable. Transactions need to move at the speed of digital. It is a network, not a chain. The Digital Experience requires a network, trading partners, extre
Slide 40: The supply chain is a network
In the digital world the supply chain is not a chain, it’s a network. The network is made up of connections between businesses, suppliers, partners, and customers. The customer sits at the hub of this network, driving the supply chain, assembling goods and services from a variety of vendors. Partici
Slide 41: Analytics and IoT enrich the network
The entire network is enriched through analytics and the Internet of Things (IoT). There is visibility at all nodes in the graph. Analytics move beyond contributing to supply chain optimization, revealing customer preferences and new paths to value. Better decisions can be made, so that better produ
Slide 42: The Internet of Things
#11 The Internet of Things If a refrigerator talks to the Internet, but no one is there to listen, does it make a sound? The Internet of Things (IoT) is an opportunity for all businesses to have products communicate to their customers and to themselves—from insurance companies with devices in cars t
Slide 43: IoT will transform the world
The IoT will transform the world as we know it, creating a giant, global network of devices and machines that are connected, communicating, and exchanging data. Current estimates find that in the next decade, the IoT will add trillions of dollars to the global economy.19 The rapid growth of the IoT
Slide 44: Self-monitoring appliances and the quantified enterprise
Thanks to the IoT, many of our everyday appliances will have the ability to self-monitor and communicate with a network— think Marge’s fully automated “Ultrahouse 3000” in the Simpsons. Over one-third of U.S. consumers already have IoT devices like the Nest Learning Thermostat and smart TVs in their
Slide 45: Information security in a connected world
Information security will be an issue as grids get smarter and processes that underlie infrastructure increasingly rely on machine-to-machine communications. The U.S. national power grid is already under constant cyberattack. The convergence of technology and the Internet has created a perfect storm
Slide 46: A New Asset Class Emerges. Data.
#12 A New Asset Class Emerges. Data. Oh I love the smell of fresh clean Data in the morning. As an executive, I could not make decisions without knowledge (some confuse this with micromanagement). Imagine billions and billions of pieces of data a day, to inform and guide a digital organization. How
Slide 47: Information is the new currency
We live in a digital world. A testament to this new reality is the growing value of digital content: we design complex products, manage our pipelines, transfer cash, procure trillions, hire employees—all in the form of digital content. This is the new digital reality. Information is the new currency
Slide 48: Data as legal tender and analytics
Data is new digital legal tender and everyone’s getting in the game. As it is commoditized in its various formats, businesses will have to find ways to reward customers in exchange for their data. Marketers will have to be more sophisticated in their use of personal data. Individual consumers will s
Slide 49: The Chief Data Officer
But how will governments and regulators monitor and protect personal data that is stored in the Cloud? As more personal data is shared, and the Internet propagates a faster pace of crime, businesses will need to focus on the development of governance policies, standards, and systems to prevent ident
Slide 50: The Experience of Community
#13 The Experience of Community With 3 billion connected citizens on the same network using a handful of tools, it’s much worse than “Oops, I just replied to all”. It lasts forever: the good, the bad, the ugly. The new Digital Echo Chamber of Twitter, Facebook, LinkedIn, Instagram, Snapchat, WhatsAp
Slide 51: Brand loyalty and the power of community
#thisbrandsucks All it takes is a single tweet or post and a groundswell of followers. Digital consumers are empowered. The Experience of Community can build brand loyalty almost overnight, and it can tear it down just as quickly. What happens when a brand is able to harness the power of its communi
Slide 52: Successful communities
Successful communities recognize that members are real people with real needs (they’re not just Nielsen ratings). In fact, Millennials don’t even have a landline to pick up, so Nielsen can’t get to them. Communities are organically built around a common sense of purpose. And this commonality has to
Slide 53: The Lululemon example
Or how about the Lululemon SNAFU? One of the cofounders blamed women’s bodies for a dysfunctional product line, causing mass outrage from female consumers and contributing to a 20% drop in the company’s stock.26 In the old days, if a customer was dissatisfied with a product they would speak to a man
Slide 54: Trust and Security
#14 Trust and Security If you cannot trust the Internet, it will fail. It is that simple. The Internet is the Autobahn for Digital. The security state of the Internet is fragile, and it is up to companies and employees to take control. If your user base cannot trust your services, you will not succe
Slide 55: Trust on the Internet and cyberattacks
If trust breaks down on the Internet, then the Internet as an economic platform will collapse. From governments to healthcare providers to employers, all of our valuable and highly confidential data floats around behind firewalls, hidden in the Deep Web. On the Public Web, millions of people access
Slide 56: Security back to basics
Most companies forget that security is all about “back to basics”. Employees need education. Fifty percent of all cyber security issues are caused by a lack of education and “naive” employee actions. The next 25% comes from hardware or software assets that are not “up to date”. Are you running an ou
Slide 57: Experimentation at Scale
#15 Experimentation at Scale Dream Big. If you do not, someone else will. An exciting outcome of Digital critical mass will be the ability to experiment at scale. This will require some mind shaping. In the pre-digital world, we may test market an idea or feature with a working group. In the digital
Slide 58: The Web as a research lab
The Web is the greatest and most accessible research lab that ever existed. The ability to rapidly deploy and iterate and reiterate (often in randomized experiments) at mass scale is one of the most significant platforms for innovation in the field of technology today. Large Internet companies are a
Slide 59: Outcomes of experimentation at scale
The outcomes are focused around larger effects based on data and the sheer number of users involved. Experimentation at Scale can make huge leaps forward in innovation. Then there’s the bottom line. Imagine if just a percentage of a percentage of revenue was increased by experimentation, and then mu
Slide 60: New Digital Foundation
#16 New Digital Foundation Was your company born Digital or are you re-born Digital? The re-born Digital can learn from the early pioneers on people, processes, and products. The New Digital Foundation includes extreme automation, centralized and consolidated architectures that are pristine and scal
Slide 61: Digital impacts enterprise IT infrastructure
Digital is impacting every aspect of enterprise IT infrastructure. Achieving balance between supporting new business models (the business) and delivering support and services (technology) is hard. To survive in the digital world, radical shifts will be made in enterprise architecture, core IT compet
Slide 62: Consolidation is key
Consolidation is key. Consolidating different operating systems and applications onto a single platform is one of the most challenging IT projects, but the risk of not consolidating is greater. It could mean obsolescence. Adopting a consolidated, modern platform produces benefits in process efficien
Slide 63: The Digital Mindset
#17 The Digital Mindset Wallace Stevens writes, “One must have a mind of Winter” in The Snow Man. So true. And once you have that mindset, all things follow naturally. One must have a mindset of Digital. And once your organization does, it will move with speed and purpose. The Digital Mindset is dri
Slide 64: Top 10 tenets of the digital mindset
Today’s startups are tomorrow’s Wall Street winners. These are the businesses who are not afraid to risk it all. They are not afraid to fail. They are the game changers, the disruptors, the new thinkers. They are creating a sharing, Subscription Economy based on Digital and information. The Digital
Slide 65: G.O.D.S.
They have adopted a Digital Mindset. And the Digital Mindset stands out in the crowd. You can spot it a mile away. Embrace it. Promote it. Give it freedom from structure and convention. To digitalize or not to digitalize is NOT the question. There is no question. If you do not have the mindset, you
Slide 66: Attracting talent and transforming
To attract and retain G.O.D.S., companies will have to invest in effective capital management and create a culture built on their values. The pace of change in markets underlies the urgency with which the enterprise must transform itself. The time to disrupt business and capture opportunity is now.
Slide 67: Endnotes
ENDNOTES 1 “ Number of mobile connections worldwide from 2008 to 2020 (in billions),” Statista, 2015, http://www.statista.com/statistics/371828/worldwide-mobile- connections/ (accessed October, 2015). 2 “ Millennials at Work Reshaping the Workplace,” PriceWaterhouseCoopers, 2011, https://www.pwc.com
Slide 68: Endnotes (continued)
14 he Millennial Generation: Another Baby Boom: http://www.newstrategist.com/ T store/files/AmGen6SamplePgs.pdf (accessed October, 2015). 15 I nternational Data Base World Population by Age and Sex: http://www.census.gov/ population/international/data/idb/worldpop.php (accessed October, 2015). 16 et