Mark Hurd addresses the 8th Annual Global Business Forum at Baylor University. The Global Business Forum is an annual conference hosted by Baylor University and the McBride Center for International Business that assembles specialists from the academic, business, and public policy communities to explore relevant issues concerning the world economy.

The data revolution now touches every aspect of our lives: commerce, education, health care, energy, consumer research, and national security, to name a few. As the volume of useful data grows larger and the world grows smaller, we are encountering incredible new opportunities and difficult challenges.

Below is the transcript for Mark Hurd’s presentation:

Mark Hurd Addresses Baylor University

8th Annual Global Business Forum Keynote: Big Data in a Shrinking World

Mark: This work okay? Wow!  A lot of you here. Hi! You Excited? Well, let me be sure you’re clear. This is on my way – this trip – best compliment I can give to you is on my way nowhere, so…

Audience: (laughter)

Mark: So I am here to see…Yeah, that’s my best material, I’m here to see you, and I’m flying straight back to California, so it’s great for me to be here too. What I thought I’d do, is we’re gonna talk a little bit about big data, all this stuff that we as an industry sort of, I’d start it this way. I’ve been part of this industry, as Terry described, for way too long. And we tend to invent words every few years that will solve all your problems. So, whatever your problem is right now, big data is gonna solve it.

A couple of years ago when you had problems, cloud was going to solve it. Before that, we invented other words, and we’re a very strange industry, and I’ll tell you why that is. We, as an industry, have convinced people to buy lots of little piece parts, and then we convince our customers to put them together and build IT systems. I’m going to tell you about that tonight. And it’s a very strange industry, because, I don’t know, Terry – how you buy a car? Do you ever buy a piston, and a muffler, and have to call Accenture and have them put it together in your driveway? You probably don’t. You buy a car. That’s not how IT works. IT is very much a piece part-y industry. Customers do a lot of complicated things to try to make these IT systems work. I’m going to talk to you a little about that tonight. I’m going to try to give you some context for the industry, and then I’ll try my best to fit big data into it, and then we’ll have Q&A and talk. And I’ve got a few charts. I’m not really a chart guy. And I think as you see my charts, you’ll get a feeling about how I despise dense charts. But I thought I’d get us all on the same page.

Worldwide GDP – I’m in a business school – I’ve given you the answer already. Did everybody know this before I asked? Worldwide GDP? Does anybody know what it is? Does anybody know what GDP is?

Audience: (quiet)

Mark: Global Domestic Product. So it’s the total value of commerce around the world. You knew that Dean, of course, yes, of course. 71 Trillion dollars. A lot of money! So I’ll give you a pop quiz before I go on to the next one. Do you have any idea what percent of worldwide GDP IT is? The industry – the whole industry? What do you guess? Dean?

Dean: A fraction.

Mark: A fraction…

Audience: (laughter)

Mark: Wise Dean! Wise Dean! Could be anything, that’s very good. Coach? You know? No idea. You think it’s a lot. None. Okay, good, this is really helpful. It’s great to be at such a school of learning. So – IT is actually – go to the next chart – there’s the answer. 2 Trillion. Small. Say “Gosh, that seems like crazy stuff!”. Because the companies in the industry, let me give you an example, you take the market cap of Oracle, market cap of Google, market cap of Apple. Guess what those three companies are worth? 1 Trillion. How does this make sense? Because what this 2 Trillion does is let the other 69 Trillion happen. Without it, there’s no plane tickets, no stocks are traded, no gaming online, no getting on ESPN, no fun of any kind without IT.

Audience: (laughter)

Mark: Right? So IT is a big part of it. Next chart.

Break IT into two pieces. This has dramatically changed. So Dean Manus gave you this point about the smart phone. Let me give you more detail. When I got out of school, way after then when Dean got out of school, I’m much much younger, it’s at least a couple of years, so when I got out, the biggest computer on the planet was an IBM 360 mainframe. Anybody remember a 360 mainframe? Dean? Not many. This thing

(holds up cell phone)

is twice as powerful as a 360 mainframe. Twice as powerful. Now 2 Billion of them are in people’s hands. Consumer spending has skyrocketed on IT. And it’s all the stuff that you characters use. Facebook, search, mobility, I’ll talk to you more about that in a second, but a lot of money now being spent. And this is causing huge problems – or opportunities – depending on which way you want to look at it. So, 1 Trillion in consumer. 1 Trillion in companies. Next chart.

I’ve already said that. Sorry, I got ahead of the chart. I got too excited. Big increase in spending consumer IT. Next chart.

Big problem in company IT. Companies spent  82% of their money putting stuff together. Keeping the stuff they got working. Now quick math – can anybody do 18% of 1 Trillion? Dean? Judith? Our CMO is here, Chief Marketing Officer of Oracle – not math officer!

Audience: (laughter)

Mark: This is not a very friendly crowd. So – 18% of 1 Trillion, I’m not sure, I think I learned that even before I got into this building, is 180 Billion dollars. So you’re spending 180 Billion innovating to chase the Trillion. This won’t work! The consumer is out – innovating the company. I’m gonna talk to you about why this is going to get worse and worse and worse as a business problem. So I want you to start thinking about this as a business problem before I take you into all this big data and analytics stuff. So, a lot of money being spent keeping systems.

So today, you’re calling in and talking to companies, just to give you one little example, my daughter is here. But my youngest daughter, who is not going to school here, when she was a little girl was driving with me to the airport and I couldn’t figure out what date it was. And I’m used to calling into the call center. And I’m talking to that thing where it says “San Francisco” and it says “San Diego” and I said “no, San Francisco!”. So I’m goin through this whole process and my daughter who is sitting next to me, she can’t be 10 years old, she goes “what are you doing?” and I said I’m trying to find out what gate that Kelly is coming in. And she says “well, why don’t these guys just have Google?”, and I go, “no, it’s very complicated. They’ve got a res system and a flight tracking system and these are a lot of legacy applications,” and she’s like “what’s a legacy application?”, and so you get down this whole path and it’s unexplainable to people how complicated this is. So you’ve got very old systems trying to chase this opportunity. Next chart.

This, I don’t know that you can read, because I’ve gone from a really big chart to a lot of data at one time. So let me try to take you through this because this is important to get the context of what’s happening around the planet. And these aren’t all tech problems. These are sort of secular problems, or opportunities, or just realities that are affecting us. One is this thing (holds up cell phone). This whole thing of people now moving around globally. There are 9 Billion devices hooked to the internet today. Everybody heard of this internet thing? So, this internet thing has become really popular. It’s got a lot of data, and these 9 Billion devices are almost driven by all of us. PC, iPod, Telephone. This thing is about to explode to 50 Billion devices. And if you ask me how I know that – I don’t. But I’m sure I’m close. And what you’re goin to have now, is a whole set of things hooked to the internet that are not driven by a human. Examples, I’m going to show you examples in a second, but they could be farmers who are worried about their hydration systems and want to deal with them from an automated perspective. Appliances. Healthcare devices. All now with the ability to have intelligence that will report back lots of data. 9 Billion devices, going to 50, kicking out data – data that will come out in an automated fashion, non-human-driven. Which is going to mean lots of data, a lot of repetitive data, that’s going to come off of the internet. Point one.

Point two. Big data explosion. Now, I’m going to talk to you about that in a second. I think that this year, there will be almost as much data created as in the history of the planet. That’s the growth in data. By the way, not all of this is good, not all of this is good. We now have lots of data, by the way, not all of this data is valuable. I’m going to talk to you about this in a second. In fact, a high percentage of this data is absolutely worthless. But you now have the opportunity and cost effective way to look at a lot of it and get through it. I’ll talk to you about that in a second, but a lot of data.

I’ve talked about the rise in mobility. There’s now 87% of the world that’s got mobile capability of one type or another. Almost 100% penetration. Now you have some people who have two phones, but you’re to the point now where there’s roughly a device now for everybody on the planet. This huge rise in mobility. Lots of data, globally, non-human devices connected to the internet, people moving around globally. Now, get to the bottom of the chart. Have you heard of this? You’re probably all involved in this social thing. This is an amazing thing. When I was in this building, some guy, who was a professor, taught me this thing that 95% customer satisfaction was perfect. Has anybody heard that? Let me tell you the thesis around this – it’s a thoughtful thesis. That you will have customers, and there will always be lunatic customers. You will never have all good customers. There are some customers who are just plain ornery, some that are just angry, some that just have problems in their personal life, and you will just never have all perfect customers. Once you get to 95%, trying to get to 96%, 97%, is un-economic. So once you get to 95% you’ll over-invest to get them happy. It made perfect sense to me! And let me tell you, back in my day, when I got bad service, and I didn’t think I was a lunatic customer – I’d call in and I’d yell at my supplier, or I’d use whatever style I thought would get me, you know, something better. And, you know, what did I get back? Coupon? I’d get something that would try to placate me, right? This is all changing because I had no power other than what I could threaten. I could write a nasty letter, I could tell people I had friends, but now – before I even call you – I might Tweet it. Now, before I call, I might put it on Facebook. Now, before I call, I might make a YouTube video. The power has now shifted, from me the seller to the buyer. I’m goin to tell you this from a company perspective, this is a problem. This is a problem. Because, now lunatics have a chance to run my life. Don’t laugh about this, because it’s a big deal. If you want to run a business, let’s pretend that you’re Oracle. Pretend you’ve got my job. We’ve got how many customers doing business with us this year? 400,000 people will do business with us this year – 400,000 companies. Let’s use my rule. 20,000. 5%. Let’s pretend I was in the consumer business. Do you want 20,000 people Tweeting? Do you want 20,000 people on Facebook? You want 20,000 YouTube videos? I think not. Because people will perceive it’s not 5%. People will perceive it’s 90%. And the power shifts now because of these social tools. Big change with these massive amounts of data. So you’re going to find companies, not like us, but more in the consumer environment, that are now highly threatened by the fact that a bad product launch, a bad product, has a chance to reflect on my brand before I can even change the trajectory of the bad news. So social is a huge impact on everything that we all do, B to C, Business to Consumer or Business to Business. Next problem.

Sophisticated consumers. That would be you. Me, I’m a non-sophisticated consumer. Okay? I’m old. So I grew up with old technology, sort of the way the Dean went through it.

(holds up phone)

Whoops! I’ve actually, mistakenly called somebody while I keep touching this.

Audience: (laughter)

Mark: Sorry! Let me not use that anymore as a device. Embarrassing. He’s probably wondering “what’s he doing?”. He probably thinks I’m at my house practicing!

So, when you get to sophisticated consumers, you get to a point now, where remember the demographic, I’m don’t know if you’ve learned this here or not, but roughly 40% of Americans can retire in the next 8 years. Alright? So, everybody who can retire in the next 8 years raise your hand. Yep, yep, Dean, a lot of us are in that bracket that we’re going to go away. We’re going to be replaced by you. You’re now going to be the ones doing the selling. You’re now going to be the ones doing the buying. Your loyalty – materially lower than mine. Your tolerance for lack of data – significantly lower than mine. Your sophistication and expectation of immediate gratification – extremely high. So the expectation on customer service goes from here to here (raises hand for emphasis). You now have GDP as millenials, about 2 Trillion of the 16 Trillion buying power of the US GDP. That’s going to quadruple just over that next 8 year period. So now these doing the selling and doing the buying have to deal with all this social nonsense and I’m going to explain to you in a second why this is so relevant. So I’m just trying to again, present the backdrop to you.

Now, the companies that many of you here want to go to work for, average applications, so let’s think of this now, applications, these are the applications that run companies. Customer applications, general ledgers, etc, they, on average, are 20 years old. 20 years old. Judith? What’s 2014 minus 20. Very good. So, 1994. So imagine you wrote an application in 1994. What wasn’t invented in 1994? The internet? Social? Consumer search? I could go on and on and on. Nothing of what we’re talking about today. All of these applications built with no preparation for this timeframe. Lots of globality. Data explosion. Everybody running around mobile. Social. The ability to communicate in real time with anybody you want to about anything you want to. Total transparency in the customer and employee environment. Very sophisticated customer and employee coming, with a very aging infrastructure trying to deal with all of this. Next chart.

I already said this – lots of data. Doesn’t matter whether this is true or not. It’s a lot. Whether it’s double, 90%, it just doesn’t matter. It’s very expensive to house this data, there’s a lot of it coming, and it’s going to dramatically affect how companies and how all of us deal with it. Next chart.

I don’t know if this is right. This source is from one of the biggest research companies in IT. And whether it’s 50X, I just want you to get some context for the implications. Just to give you an idea – does anybody know – everybody’s heard the term terabyte of data? Does anyone know what a terabyte would look like if it was physical? You would take a filing cabinet in Washington, DC – and you would line it up from DC to LA. That’s a terabyte. That’s a terabyte. Do you know how much storage JP Morgan Chase has? Over 300 hedabytes. That’s the problem we’re starting to deal with – the collection of these unfathomable amounts of data that have to now be dealt with that are very, very difficult to get through and I’m going to talk to you about the implication of now turning that into something meaningful. A lot of data. Next chart.

You can use these stats as your own. I collect these from disparate sources. But this is the amount of social data that’s now generated every minute. 204 emails a minute. Now, I don’t know who is sending all of these, right, but there are a lot of them. Of course, I send some of them. 571 new websites generated every minute. Who is working on all this stuff? But it’s also telling you now how global the world is becoming. Because most of us think about this as a U.S. phenomenon. This is a global phenomenon going on in near real time. 2 Million search queries a minute. I just only give this to you just so you have context for the size of what is this worldwide infrastructure now all trying to deal with these problems we described. Next chart.

Let’s talk real life use of this data. So now, all I’ve tried to tell you so far is size of the data, size of the problem, change in the demographic, change in secular trends. Does everybody understand first off all I’ve tried to do so far is tell you is this is hard? This is hard. I don’t know if I’ve accomplished my task, but it’s hard. So anybody who starts telling you again “let me tell you, your problem will all be solved by big data” – they’re lying to you. Anybody who tells you “your problem is going to be solved by cloud” – they’re lying to you. This stuff is hard. This is really hard stuff. Really old infrastructure. Very quickly changing consumer who is very sophisticated. You’ve got to deal with a lot of issues here. Let me give you some real examples. First chart.

(sigh)
Let me give you a change in how people are now starting to use data. A company down in Houston, National Oilwell, right now puts sensors – any idea how many sensors go into an oil well now? 10,000 sensors in an oil well. Hooked to almost every moving part of that rig, with an objective to send back to Houston how the rig is performing. And almost all that data is worthless because it comes to a network operations center to say “drill bit fine”. But now it’s economic enough that if you were to find that drill bit at the bottom of the Gulf of Mexico before it broke and saved 20 Billion dollars and saved the Gulf, is it worth collecting and analyzing the data? These are the kind of issues you’re going to see. Next Chart.

Chicago. NATO Summit. This was what, last time we had the NATO summit a year ago? Roughly a year and a half ago? Chicago Police – these are all – by the way, I am shamelessly advertising for Oracle customers, so just so you know this. Chicago City Police Department, great customer of ours, what do these guys do? They got a problem. Last thing you want in your city is to have all these guys, starting with your President, who is in Chicago, and something bad happens. So the whole issue is to protect the Summit. Nobody wants something to happen on their watch. What do these guys do? They start listening, not just to their police force deployment, but to all social media. What do they find? They find in advance, on Twitter, where people are amassing to go find Obama. And it’s not good. But they find out in advance where they’re going to be, re-deploy from an operational system where the force is going to be, and get there before the crowd, and they disperse the crowd. You could never have done this even three or four years ago, but because you were listening, and getting what would be called big data, you get the opportunity to now redeploy resources in advance of a problem and stop the problem. Next chart.

This is one of my favorites, this is my personal issue. This is – I’m in Abu Dhabi. Anybody been to Abu Dhabi?

Student: yeah

Mark: Do you like it? Yeah, it’s pretty nice, isn’t it? Anyway, I’m there. I’m in Abu Dhabi and I’m going to Australia. And my wife is going to meet me in Australia. I have one problem, I’m out of shirts. I tell my wife, very thoughtful of me, “Please bring shirts to Australia”. She says “sure”. End of conversation. I get to Australia before her. When I get to Australia, what’s waiting for me at the hotel? Shirts. And I think to myself, “This is interesting. How did this transpire?”. She has a personal website at Neiman Marcus. She gets on her iPhone, has my measurements, and has the ability to order those shirts online with a personal shopper and Neiman Marcus buys them in Australia and delivers them to my hotel. I’m telling you that story a year and a half after it occurred, and I am loyal forever. I have no idea what she paid, and to be very blunt with you, I don’t care, because she…they saved me. She got ahead…they got her…they put her in a position to absolutely thrill me. Because they took advantage of granular data and they were able to do three things. They were able to connect to her, they were being able to dialog with her, they understood her problem, they solved her problem and they transacted with her, all in the same session. All using what would be defined as big data. Alright, next chart.

And then I have one more, two more charts and then I’m done…talking. I think I’ve really said this.  I’m part of this thing. The PC generation. You know, 10 years ago I thought I was pretty cool cause I could do PC and, you know, knew how to do emails and all that stuff. That’s changing. I’m now on the old side of this. This Netscape generation is really the people that, you know, report to me, are more and more part of that browser generation. And frankly, all of you that are about to hit that workforce, these millenial groups, as they’re sometimes referred to, are what’s going to be the new workforce. Next chart. I think that’s my last chart.

I would tell you that this whole thing…I think you should be great on this big data and analytics, but I want to put it into business context for you. As you go into the next ten years, this is going to be all about people. If you are running a business, my best advice to you, is it’s all about people. Their customers and their employees. And the reality of what’s going­ to hit you is now, which never had to hit me, and it’s a word called transparency. When I had a company, running a company, you didn’t know everything about…most of what you found out as a potential recruit to our company came from me! I told you about Oracle, you listened, and maybe you had a friend who was going to work at Oracle. We have some very young Oracle employees here, and maybe you knew somebody.

Now there’s no chance for me to hide any of the warts of the company. They’re all on Facebook. They’re all on Twitter. It’s easy to find out. It’s transparent 24 hours a day, 7 days a week. Now, the really good news – is so is everybody else’s warts. The same thing is true with the customer. You have a bad restaurant? I’m going to find out about it on Yelp! You can’t hide. So this era of transparency is going to change the way we work. It’s going to change the way we think. It’s going to change the way we represent ourselves. The biggest way you’re going to get employees, as I try to recruit, is going to be how? From other employees. Where am I going to get more customers? From other customers. So this whole issue about data is going to turn to the business problem of how we operationalize tremendous amounts of detail really quick, so that in the end, we make better decisions faster than anybody else. So it’s all going to be about who has got, not the most data, but who is able to get at the data in a thoughtful way so that in real time – I only get a few chances in life to differentiate our relationship. And then when I get that opportunity, I nail it! I nail it when I’m on the phone with you. I nail it when I’m at the ticket counter with you. I nail it wherever we are. Whether you’re an employee or whether you’re a customer. And all of these secular changes, these are real, by the way I think they’re not going away. I don’t think…if you think social is a fad and it’s going away, I hate to be the one to disappoint you. This thing is not going away. So this is going to cause a problem for all of our customers which is they have to retool their infrastructure to get prepared for this next wave of activity.