Speaker 1: The global appetite for data is growing faster than ever,
Speaker 1: and no matter what statistics you use to describe it,
Speaker 1: big data is big business. We believe hundred and fifty
Speaker 1: billion devices will be connected by and more than a
Speaker 1: hundred zetabytes of data will be created every eighteen month.
Speaker 1: The data that is produced by the world is we
Speaker 1: started talking about petabytes and exibites and now we're talking
Speaker 1: about zetabytes. It's a near unimaginable explosion in data and
Speaker 1: companies just don't know how to manage and secure all
Speaker 1: this new information. There's also a growth in the nature
Speaker 1: and location of data as well, you know, expanding beyond
Speaker 1: structured data unstructured data. We're looking at five hundred plus
Speaker 1: billion in revenue in the market that several years ago
Speaker 1: or a decade ago didn't really exist, and that's going
Speaker 1: to three acts through one point by trillion. And are
Speaker 1: there room for more players? And what has spent on
Speaker 1: already pretty competitive space. What you see right now is
Speaker 1: that the big players are the biggest names in tech.
Speaker 1: You have the hemous like Microsoft, Google, Amazon is the
Speaker 1: big three. But the great thing about cloud and the
Speaker 1: public clouds the private clouds is that it allows a
Speaker 1: lot of innovation to happen. HP is a big name
Speaker 1: tech company with a mission to innovate and compete in
Speaker 1: the cloud. CEO Antonio Nari told Romaine Bostick why he
Speaker 1: chokes Turk Robrioti CFO to drive this transformation. When you
Speaker 1: play sports, you want different type of skills and capacities
Speaker 1: in many ways that they all together can deliver a
Speaker 1: better performance. And it starts by will to win. And
Speaker 1: when I became CEO, I realized I need a different
Speaker 1: type of CFO. Someone is way more strategic, not just
Speaker 1: on the accounting side, but I really think about how
Speaker 1: we can deliver the value in a different way. Are
Speaker 1: the days where the CFO is just as scorekeeper. I
Speaker 1: think our role as CFOs is to be the person
Speaker 1: who assists. The CEO changed the score well he had
Speaker 1: that attracted me was about the transformation experience obviously has
Speaker 1: more than two decades as a as a global leader.
Speaker 1: We're both in taliens by the way the core, which
Speaker 1: I think is a benefit that we can communicate the
Speaker 1: same and we can argue against each other, but always
Speaker 1: in a constructive way. As CFO, um I would assume
Speaker 1: that you're always in a position where sometimes you have
Speaker 1: to say no to him? Do you say no to him? Ultimately,
Speaker 1: decision making ownership is he's He's the CEO of the company.
Speaker 1: Here's the boss. Is my boss. At the same time,
Speaker 1: I want to make sure that I watched his back.
Speaker 1: Turk Robrioti is hp s chief financial officer and also
Speaker 1: oversees the company's strategic function. Being the head of Strategy,
Speaker 1: he does a lot of the mad scanning looking at
Speaker 1: the trends. Uh, you know whether it's three or five
Speaker 1: TI years. And that's why we combine both the CFO
Speaker 1: with the head of strategy because in the end has
Speaker 1: to deverstion holder value and then we gone into what
Speaker 1: are the big trends were to play and have to win.
Speaker 1: Think about it this way, we are like biologists. We
Speaker 1: need to deeply understand the financial DNA of our company
Speaker 1: and we need to take the practice steps that prevented
Speaker 1: it from aging. Finance is the lifelood of any organization.
Speaker 1: Just like for a human being, you have to have
Speaker 1: your heart functioning. We have to be there providing the
Speaker 1: information that allows us to continue to create value for
Speaker 1: our shareholders and making sure that our customers get what
Speaker 1: they want. The Hewlett Packard Corporations split into two separate companies.
Speaker 1: Eight P Inc. Primarily makes devices from desktop and laptop
Speaker 1: computers to printers, tablets, and point of sales systems. Hewlett
Speaker 1: Packard Enterprise, or HP, provides information technology solutions. In CEO
Speaker 1: Antonio Nary announced that the company would pivot from a
Speaker 1: focus on servers and on site storage systems to its
Speaker 1: cloud software as a service platform, green Lake. HP calls
Speaker 1: it a hybrid cloud platform, not just storing data in
Speaker 1: the cloud, but managing it across myriad locations. When I
Speaker 1: became CEO in two thousand eighteen, I said that the
Speaker 1: enterprise of the future will be edge centric, meaning where
Speaker 1: we live, where we work, cloud enabled, in data driven.
Speaker 1: And one of the things that we saw through the
Speaker 1: pandemics that the enterprise became way more distributed, people working everywhere,
Speaker 1: and at the same time data became the most important
Speaker 1: asset that customers have explained for a second. The difference
Speaker 1: between the edge there why that is sort of more
Speaker 1: useful and the idea of a more centralized sort of
Speaker 1: cloud system that I thought a lot of companies, at
Speaker 1: least at one point, we're embracing it well, if you
Speaker 1: think about we live now in a hyper connected world.
Speaker 1: Everything is connected. To digitize your enterprise, you need to
Speaker 1: be connected. Is cheaper to move the cloud to the
Speaker 1: data and by the way, more secure then moving data
Speaker 1: to the cloud. And that's where we as a company,
Speaker 1: we're creating the capability to consume cloud services at the
Speaker 1: edge in your data center on a bigger cloud. There
Speaker 1: was a view and there still is that view that
Speaker 1: the whole world is going to move to the public cloud.
Speaker 1: We think the world is fundamentally going to be hybrid.
Speaker 1: The edge is where everything happens, is where people generate
Speaker 1: data or company generate data. Think about, for example, logistics companies,
Speaker 1: how much data is being generated in harbors, in railroads,
Speaker 1: in warehouses and the world we're living we'll be a
Speaker 1: world which will be much more automated than ever before.
Speaker 1: So warehouses are going to fundamentally change. They're going to
Speaker 1: be powered by robots. Those robots will be very quickly
Speaker 1: picking up the items in the warehouse that are required
Speaker 1: and then reshuffle what's in the warehouse. That actual processing
Speaker 1: requires data analysis locally where the action happens, transmission of
Speaker 1: that data or a secure network onto a central point
Speaker 1: or multiple central points for that matter, and made sense
Speaker 1: of right. So that is the whole, the whole idea
Speaker 1: that we're after. With more data to organize in more places,
Speaker 1: businesses are moving swiftly to digitize their information infrastructure. Corporate
Speaker 1: spending on it sword in and even if global growth slows,
Speaker 1: that trend is not likely to reverse. How do you
Speaker 1: operate that environment If we are facing recessionary headwinds. Where
Speaker 1: we're seeing with I T spending is we're expecting flattening
Speaker 1: to single digit growth. But cloud computing will largely be
Speaker 1: unaffected by that. Given the explosive nature of data, organizations
Speaker 1: simply need cloud. Companies that once invested heavily in devices
Speaker 1: and data center servers may now seek more flexibility from
Speaker 1: software that can be upgraded as new needs arise. That's
Speaker 1: the bad HP is making as it pivots to software
Speaker 1: as a service. When you hear the word as a service,
Speaker 1: so many companies throw that out. Something as a service?
Speaker 1: Is that just a buzzword? At the core, it's a
Speaker 1: different business model. At the heart of it, there is
Speaker 1: this contract with a service level agreement that ties the
Speaker 1: two parties for a specific solution. The solution allows the
Speaker 1: customer to manage the infrastructure and secure specific business outcome
Speaker 1: under certain performance conditions. We manage infrastructure on your behalf.
Speaker 1: We grow and expanded infrastructure as your need to grow
Speaker 1: and expand in turn, and so the degree of customer
Speaker 1: intimacy is a quantum leap above the transactional world. With
Speaker 1: a different business model comes a different metric for measuring success.
Speaker 1: Annualized run rate or a r R has become the
Speaker 1: focus for Touric Robrioti and his finance team. The R
Speaker 1: is critically important. The RR is actually measuring the amount
Speaker 1: of our revenue that is locked in and recurring with
Speaker 1: our customer base, and to the extent that they are
Speaker 1: r R is going fast. The more robust the future
Speaker 1: of the company is. Then on green Lake. We have
Speaker 1: to grow customers. We have to grow the revenue we
Speaker 1: make from those customers, and the r R is the
Speaker 1: annualized run rate of revenue that you have from one
Speaker 1: period to the next. If your offer has a perennial future,
Speaker 1: it translates into a growing er. This is the way
Speaker 1: for us to truly understand that we remain relevant for
Speaker 1: our customers over the long term. What about margins. When
Speaker 1: you hear from some of these analysts, these investors here,
Speaker 1: there's still dialed in on gross margin some of the
Speaker 1: more traditional metrics. Gross margin for me is the most
Speaker 1: important metrics in our sector right. It's fundamentally if you
Speaker 1: think about our our business, which comes from a hardware
Speaker 1: heritage moving into as a service with hardware commoditizing, you
Speaker 1: have to have a focus on gross margins. And as
Speaker 1: you can see from our results over the past nine
Speaker 1: ten quarters, our gross margins have been expanding very very solidly.
Speaker 1: That actually tells you that your customers are willing to
Speaker 1: pay a premium for what you have to offer. And
Speaker 1: so what you want to see is a combination of
Speaker 1: a r R with gross margin expansion and the are
Speaker 1: are composition becoming richer and richer with more differentiation thanks
Speaker 1: to software. That's the journey that we are all. You
Speaker 1: need to remind people that of our profits are a deer,
Speaker 1: which means we don't need the imperiate profit to deliver.
Speaker 1: So that's an opportunity because we have an amazing profit
Speaker 1: pool called hp point x now being supplemented with hpgree Lake,
Speaker 1: which we already have more than six billion dollars in
Speaker 1: the balance sheet, growing at the hundred plus percent of record.
Speaker 1: Supply change challenges and geopolitical turmoil have weight on earnings
Speaker 1: in two but with demand for its software continuing to
Speaker 1: grow and a record breaking backlog of orders, HP has
Speaker 1: caused for optimism. Meanwhile, Surgeon Inflation remains a wild card
Speaker 1: is the company tries to attract subscribers and maintain margins.
Speaker 1: We have had to think about inflation permeating across what
Speaker 1: we do, in what we purchase and whether it's goods
Speaker 1: or services. We've seen rising costs. We had to therefore
Speaker 1: be much more disciplined on pricing than ever before. This
Speaker 1: is not easy, and this is also something that has
Speaker 1: to adjust because you can keep pricing increasing all the time,
Speaker 1: so you've got to be very dynamic in the way
Speaker 1: you think about pricing. Moving forward, HP chief financial Officer
Speaker 1: Tarik Robriotti originally trained as a scientist, earning a master's
Speaker 1: degree in nuclear physics and electronics. He told Romane Bostick
Speaker 1: how those studies set him on his professional path. It
Speaker 1: did prepare me in terms of my analytical capabilities, but
Speaker 1: there was a moment in my career where I felt
Speaker 1: he was really important that I hold my financial skills,
Speaker 1: and then eventually I had to do an MBA majoring
Speaker 1: in finance and strategic analysis and entrepreneurship. I discovered finance
Speaker 1: as a discipline. I loved it and ever since then
Speaker 1: I became a finance person. Highlights from Robiotti's resume include
Speaker 1: a stint with Lehman Brothers in London and later experiences CEO,
Speaker 1: first with the telecommunications firm CSL in Hong Kong and
Speaker 1: then with Australian financial services company Flexi Group. He came
Speaker 1: to the US to serve as cfo it's sprint, leading
Speaker 1: the company's turnaround efforts. That was very lucky. I had
Speaker 1: the opportunity to work in Europe, Um, Australia, New Zing,
Speaker 1: and Asia in the United States, so I'm truly a
Speaker 1: global citizens. People ask me where at home. I answer
Speaker 1: to that question is home is where I'm not. Home
Speaker 1: for HP is now just outside Houston, Texas, where the
Speaker 1: company opened its new global headquarters this spring. For CEO
Speaker 1: Antonio Nary. The campus is a passion project. I love design,
Speaker 1: I love art, and I felt this was a unique
Speaker 1: opportunity for me to start with a blank sheet of paper.
Speaker 1: This was a piece of Latin nothing. There was nothing
Speaker 1: here and it's a remarkable In two years were able
Speaker 1: to build these five hundred thousand square feet side with
Speaker 1: a unique experience digitally enabled in everything we do. HP
Speaker 1: has an abandoned Silicon Valley. A number of employees and
Speaker 1: business units remain based in the Bay Are Yeah, but
Speaker 1: nary in Roboti believe the expanded presence in Texas strengthens
Speaker 1: the company operationally, financially and culturally. We felt that we
Speaker 1: have a lot of opportunity to streamline and make the
Speaker 1: company were more efficient. The reason to move here is
Speaker 1: to get the best of both words. Having a presence
Speaker 1: hid in Texas allows us to recruit and retain talent,
Speaker 1: particularly on the diverse side of the house. People don't
Speaker 1: realize that Houston, Texas is the most diverse city in
Speaker 1: the United States. In this side, we have a twenty
Speaker 1: five megawatts data center where a lot of the development
Speaker 1: gets done from all over the world. The energy costs
Speaker 1: is significant cheaper here than California. I will now be
Speaker 1: able to sustain that in California. What we're seeing in
Speaker 1: a more macro environment is that corporations are looking at
Speaker 1: locations that have a healthier business environment from taxation regulation.
Speaker 1: They're looking for places that they can find new talent
Speaker 1: anti talent is scarce. What we're finding is that access
Speaker 1: to talent is still the biggest bobbleneck to productivity, and
Speaker 1: so companies on an increasing basis, whether it's Texas or
Speaker 1: other places in the United States or even globally, are
Speaker 1: working more towards this hub and spoke model where they
Speaker 1: might have a center of excellence or or a hub
Speaker 1: in one individual city outside of the main headquarters. And
Speaker 1: increasingly we're finding that is happening outside of Silicon Valley.
Speaker 1: It was a big decision, but it actually if you
Speaker 1: put it in the context as to why we made
Speaker 1: the decision, it actually made sense. So we had a
Speaker 1: longstanding presence here in Houston for the past i would
Speaker 1: say twenty some years since the Compact merger. We bought
Speaker 1: a piece of land, we started building this building, and
Speaker 1: in doing so, we had to also recalibrate how we
Speaker 1: were building it because the pandemic hit us, and we
Speaker 1: thought about recreating a work environment that is very, very different,
Speaker 1: that is catered for this new structural way of working,
Speaker 1: which we call edge to office where people don't always
Speaker 1: come to the office to work, can work remotely from
Speaker 1: their homes, their edges, but have to come back to
Speaker 1: the office for specific reasons such as team meetings, customer meetings,
Speaker 1: and in general collaboration. With regards to the hybrid work model,
Speaker 1: do you see that's something as something that will persist
Speaker 1: longer term when the pandemic is long gone. Yes, no question,
Speaker 1: this will persist. And I think we are witnessing right
Speaker 1: now a societal change in the way we work are
Speaker 1: You're no longer going to measure productivity in the same
Speaker 1: way as in the past. You're gonna be focusing on outputs.
Speaker 1: Never mind what people do in their private times. It
Speaker 1: doesn't really matter to a company as long as the
Speaker 1: output appears there. HP launched its edge to office hybrid
Speaker 1: work initiative in the fall of the new campus is
Speaker 1: designed without flexible model in mind. We have to admit
Speaker 1: that the pandemic has had its toll on mental health
Speaker 1: in the workforce across the world, and so it's really
Speaker 1: incumbent on us employers to make sure that we create
Speaker 1: an environment where our employees feel at ease to come
Speaker 1: to work, they feel supported and That's why we created
Speaker 1: the environment that you see between this the indoor with
Speaker 1: two amazing builders and our door amenities. We have a
Speaker 1: truly um you know, experience for their employees that they
Speaker 1: can host customers, they can innovate, they can collab, what
Speaker 1: they can socialize, and we have so many events. And
Speaker 1: I will say the one difference between here in California,
Speaker 1: this is way more community driven. So we have a
Speaker 1: lot of events here like the famous chili cook event.
Speaker 1: HPS annual Chili cook Off allows hard Grobrioty to indulge
Speaker 1: in one of his favorite hobbies. The finance chief is
Speaker 1: also an average chef. Cooking has a lot of parallels
Speaker 1: with finance and being a CFO. There's a lot of
Speaker 1: indirect satisfaction. You know, you you only you only know
Speaker 1: that you're doing a good job when you see other
Speaker 1: people recognizing it. And there's nothing better than when you
Speaker 1: serve a nice meal to your friends or family who
Speaker 1: come over. I'd love to do that. It's hard work,
Speaker 1: but it's nice. As HPE moves forward with its strategy
Speaker 1: to deliver software as a service and gain subscribers on
Speaker 1: the green Lake platform, it's growth and customer demand is encouraging,
Speaker 1: but supply chain disruptions have slowed the company's ability to
Speaker 1: fulfill those orders. It's a problem that's plagued many industries
Speaker 1: since the onset of the pandemic, compounded by the war
Speaker 1: in Ukraine. Nobody, including HP is going to have an
Speaker 1: easy time with the supply chain. I mean, we started
Speaker 1: the just in time concept in the seventies and it's
Speaker 1: taking years for organizations to back their way out of
Speaker 1: that and find a more distributed supplier based and more
Speaker 1: local supplier. Taric Robioti can't wave a wand and clear
Speaker 1: the backlog all at once, he told Romaine Bostick. He's
Speaker 1: focused on long term solutions. The world is no longer
Speaker 1: flat and that's the practical reality we have to reckon.
Speaker 1: And in that context, therefore, it's really important that we
Speaker 1: get closed to where our customers are, and so we
Speaker 1: have to rethink our network of manufacturing plants. We have
Speaker 1: to rethink our network of our suppliers, and I think
Speaker 1: the whole world and the whole ITEA industry has to
Speaker 1: find a new equilibrium with supply chains that are designed
Speaker 1: for speed, resiliency, and costs as opposed to just be
Speaker 1: inefficient and designed around cost. Our goal is to create
Speaker 1: a supply chain that is very much designed for optimal
Speaker 1: visibility at every point in time of where components are,
Speaker 1: where the working progress products are, and have the ability
Speaker 1: to shift production and materials in different continents where we operate. So,
Speaker 1: for example, we invested in a manufacturing plant in the
Speaker 1: Czech Republic because it made a lot of sense for
Speaker 1: us to have a presence in Europe. This is really
Speaker 1: a new reality that we have to navigate. It's not
Speaker 1: like we went backwards and capacity. In fact, capacity has
Speaker 1: been added. The issues that demand has outpays any capacity
Speaker 1: that we ever imagined, so now we need to add capacity. Also,
Speaker 1: we need to transition some of the technology just to
Speaker 1: the um notes and that takes time. Turk Roboti will
Speaker 1: play a key role for HP as it retools to
Speaker 1: face new challenges. Romane Bostick asked him what skills the
Speaker 1: CFO needs to truly succeed is the chief Future officer?
Speaker 1: The first quality you need to look for a CFO.
Speaker 1: It's almost able stakes, right, It's integrity, and it's not
Speaker 1: about being honest or or dishonest. Of course we're all honest,
Speaker 1: but it's integrity. Of thought in the way you present
Speaker 1: the fact base, which is the data. If you don't
Speaker 1: have that in a CFO, stop looking move on right.
Speaker 1: That's the first and foremost thing. The second most important
Speaker 1: thing is the ability to be strategically agile. It's absolutely
Speaker 1: critical to be injecting in the work. That is CFO
Speaker 1: performs strategic thinking. The third I would say, if you
Speaker 1: think about it in these terms, we are a little
Speaker 1: bit the stewards of the resources of the company. For
Speaker 1: the company and for the CEO, we've got to make
Speaker 1: sure that resource allocation is up to scratch and that
Speaker 1: we are allogating resources where there is the biggest return possible.
Speaker 1: And finally, we also have to be coaches. We have
Speaker 1: to coach our colleagues and team members, and my job,
Speaker 1: the way I think about it is we have to
Speaker 1: shine the spotlight on their strength but also at the
Speaker 1: same time make sure that we understand our weaknesses and
Speaker 1: are clear about the areas that we need to improve.
Speaker 1: So a lot of the CFO job is to distill
Speaker 1: what I simply would say is tough love. It's about
Speaker 1: being tough right matters, and also be encouraging in other circumstances.
Speaker 1: What's the opportunity here for HP over the next ten years.
Speaker 1: The opportunity for HP over over the next ten years
Speaker 1: is to redefine the industry. And because we firmly betive
Speaker 1: with Antonio that the future of the industry is extra
Speaker 1: cloud and I think that there will be a growing
Speaker 1: acceptance and it starts already. You have evidence of it
Speaker 1: that the future is hybrid and that the future of
Speaker 1: an enterprise is to become essentially a digital service provider.
Speaker 1: The pandemic has taught us that the enterprises who formed
Speaker 1: the best during that period, we're the ones who have
Speaker 1: digitized their business models. And for an enterprise to digitize
Speaker 1: their business models, they have to think about it edge
Speaker 1: to cloud and where the company to help them doing. So,
Speaker 1: what do you think is going to be the main
Speaker 1: challenge for HP over the next ten years. Well, I
Speaker 1: would say the main challenges ourselves. We have to really
Speaker 1: be recognizing that the opportunity is there for the taking
Speaker 1: and we have to go after it resolutely and and
Speaker 1: fact we can't really wait, be complacent and not execute
Speaker 1: aggressively to capture the opportunity. So it's not to us
Speaker 1: really and we think with with the right focus and
Speaker 1: with the right team, we can get there. How do
Speaker 1: you expect your role as CFO to change over the
Speaker 1: next ten years. My role is constantly in change mode.
Speaker 1: If you start with a view that the world is
Speaker 1: in constant change and you have to adapt, you have
Speaker 1: to anticipate on what comes next, strategic thinking is vague.
Speaker 1: He for that purpose, you also have to make sure
Speaker 1: that your team is geared towards it, that you understand
Speaker 1: the demands that this constant change puts on the team.
Speaker 1: And then you also have to continue to polish your stamina,
Speaker 1: build a grid that you need to continue to navigate
Speaker 1: the journey. For someone who maybe got promoted to CFO today,
Speaker 1: what would you tell them, just for the first day
Speaker 1: on the job. What's the best advice you can give them?
Speaker 1: Enjoy it. It's wonderful. You have a unique vantage point
Speaker 1: in any company to truly understand what's going on. No
Speaker 1: one else in the company has access to the data
Speaker 1: that tells you what's going on. Have fun for Romaine Bostick,
Speaker 1: I'm Taylor Regg's. This is Bloomberg