Hello everyone. And welcome to DataEndure’s June TECH Talk. I am Kirstin Burke, and I am delighted to be joined this month by our special guest, Tom Holt. Tom is DataEndure’s Chief Revenue Officer, and we’ve got a special time set out with him. So Tom, welcome.
Hey, thank you, Kirstin. I appreciate it. I know that Shahin normally fills this role, so happy to do a pinch hit now that it’s baseball season.
All right. All right. And being the Giants fan you are, you had to work that in early, right?
I had to. Absolutely.
So we’re going to be talking about something today that is in the headlines everywhere. Whatever news medium you use, everyone’s talking about the economy. What’s happening? What’s not happening? How it’s impacting businesses? What might happen? And we just thought – Tom’s got a long history of being in the tech industry, has served in a lot of different roles, has seen a lot of things. Has also seen a lot of these economic shifts.
Also he’s a history buff. And so in his, I guess, evaluating what’s going on today has drawn upon some of that. And I really thought it would be interesting to have him join us and really from a tech focus, from a client focus, really talk about the economy. And we’ve kind of put it into three areas of what we’ll talk about today. What’s happening? What’s really – what do we see happening? What are the facts? What’s happening on the ground?
And then to really talk about are there some similarities from what we’ve seen in previous economic – I’ll just say downturns. Is it a recession? Is it not? What are the similarities? And more importantly, what are some differences we’re seeing? And then really what are some best practices and what are some things we’re talking to clients about to really help them think smart about the investments they’re making. And we’re just going to chop it up into three sections. And so Tom, I’m going to let you lead off here. Let’s talk about facts on the ground. What the heck is going on?
Well, first off, how did you know I was a history buff? Let’s get that on the table because I kind of am. But I don’t know, maybe you saw my reading list or something. But no, it is true. Look, I do think that as you start to approach uncertain times, you look sort of like, hey, what are the trends and history has a funny way of repeating itself, both in life and in business.
So it did a little extra prep for this, kind of thinking through, I read your typical Bloomberg, Reuters. I get the occasional CNN news highlights, CNN financial. But I just looked at it from a more historic perspective. So thanks for that lead in. And obviously there’s been only two recessions in really the last 21 years, through the 2001 crisis that was brought on by a backing up of inventory, a Y2K letdown, and then dot.com letdown. Right?
Those were coinciding events. And then 9/11 put everything into a complete stall out, be it travel and things like that. Interestingly enough, if you look at the beginning of COVID, while not a recession, had some similar traits in terms of the slowdown of one portion of the economy, that’s the travel and entertainment world.
The other one obviously was the 2007, 2008, some would even say 2009 Great Recession. I didn’t know it was called the Great Recession. Just knew it as the recession brought on obviously by mortgage loans, housing crisis. And that one was interesting in that it affected every sector of business. So tech was not immune to it. Manufacturing was not immune to it. So there were a lot of factors.
Going back even as far as 1991, that was the other sort of slowdown. I hit it, happened to be a recent college graduate from Iowa State carrying my marketing degree around. And it was hard. It was hard to get a job in 1991, and that was much more rooted in manufacturing. So there’s been three real monumental since ‘91, two real big ones since 2001. Are we due, aren’t we?
Look, I think that there is a lot of opposing metrics. One is unemployment rate is just slightly above 3%. So that is very strong. Unemployment rates have been much lower as you enter into recessions. Job growth, while strong, has flattened out. So that’s going to be a leading indicator in terms of real true, let’s say the unemployment rate.
And then inflation obviously has peaked – not peaked, has spiked. Possibly not peaked. So I think that’s going to be the other factor. So continue to read, look at it from a historic perspective and then try to counteract the things, as I’m sure everybody is doing both in their personal life and their professional life, counteract the things that you see in terms of on the horizon.
I feel like there is a lot of decent information out there. And to the next idea, which is really not all recessions are created equal. So if we do indeed go into a recession, the cause and effect, the industry’s affected, they’re going to be different. So I don’t pretend to be a prognosticator of economic fortune. Jamie Dimon of JPMorgan basically said it’s going to be an economic hurricane.
Well, I don’t know. So in our world it would be the economic earthquake. But anyway, so yeah, I’ll turn it back over to you Kirstin.
Well, and I think to your point, uncertainty is because none of us know. And so I think being able to look at what does history tell us, and then what are we really seeing out there? And in our conversations about this, and we’ve been talking to customers about it, we’ve been talking to partners about it. You’ve mentioned several times that this feels different.
And I think all of us coming off of COVID, still have – almost some PTSD, right? It’s like we’re all poking our heads out of the gopher holes and ready to go and all of a sudden whammy. And there are indicators to be concerned about, but to your point, we’ve got some different things going on that may be telling a little bit of a different story.
And so, I think our listeners might be interested in your perspective, and clearly, while we come from the tech industry you’ve had 25 years in your roles. I’ve had 25 in mine. We’re serving customers all across different industries. And so the things that we see and the things that we learn are not tech focused. They are industry-wide. And so, share a little bit about what your spidey senses are saying, as you are saying, you know what, there’s something different about this.
Yeah. Yeah. Beyond just the recession talk, beyond just sort of the financial reading that you do, GDP is going to be out in July. And if it’s another quarter of negative growth, we’re technically in a recession. I think you can forget that. I think that there is a lot of cash in the system. I think you got to look more closer to home. And what closer to home is, is the tech industry is starting to have layoffs.
And there was an article out today, I think in USA Today , that Uber, Lyft, Twitter, a couple other companies had to go and tell new college graduates that their jobs were not being honored. So that’s a tightening of budget. That is the leading indicator that says we are going to have to do more, or we are going to have to maintain with less. And that starts to filter down into budgets.
Every CFO is going to come to the IT department eventually and say, hey, we need to conserve cash. What are some things you can cut? So that’s budget tightening. And I feel like it’s going to hit more of the small size to midsize enterprise harder, in that those dollars are more meaningful if this is a prolonged slowdown.
If this is a two year, let’s call it economic malaise – get 2007 housing bubble burst, but 2008, 2009 were horrible growth years. And they prolonged sort of an economic recovery. So I do feel if I had to put a pin on one prediction, I would say slow GDP growth, if not flat, if not even some bumps in decline, and basically budget tightening. But the one budget you can’t tighten is going to be security.
And that leads us into why I believe DataEndure is so well positioned for an economic downturn, why managed services in general are well positioned, and why a client would look to those services, those solutions in these uncertain times.
Sure, sure. Well, and we know just in the conversations that we’re having, I think people have already been trying to think creatively or think different with the supply chain challenges. And so if I’m normally doing this and getting equipment from here, how do I think different to stabilize or ensure I’m getting what I need to get, to the best of my ability. Some of these things we can’t control.
I think that discussion already started, and now to your point, I think we’ve got organizations saying we’ve got the whole CAPEX conversation. So if there are ways that we can move CAPEX to OPEX, check, good. I think in tech we’re always over provisioning. We’re always over procuring. We have so many licenses, we have so much, and it’s often hard to bring it together and figure out can I centralize it? Can I streamline it?
And then we’ve got staffing. And playing in a condition like this, you start thinking about staffing. So do I pause hiring, do I freeze hiring? To your point, you can’t freeze what your business has to do. Data protection, data access, data security. So talk to us a little bit about some of the recommendations that you’ve been making.
Yeah, it’s interesting. So yeah, you just triggered something. And if I look at it, COVID was a bit of a dress rehearsal for what we’re going through. And I hadn’t come up with that little point in my notes. But it is very true in terms of we’ve already seen the push to outsource, the push to move employees into a remote workforce. Where does that end? And I think that we saw more creative ways and better solutions to address that.
So the maturity of that move and the ability to manage your environment remotely, outsourced, is only going to get better and grow. And again, I think we are so well positioned for that move, in terms of the labor force. An elastic labor force is the operational model people will look for. In 2001, I happened to be at IBM at the time, and outsourcing, that was – and we rode outsourcing for five years. And then it swung back and it became insourcing.
But it is that elastic labor force and getting cost off your books. Cost can be licensed cost, cost can be labor cost, but it’s still all cost. I hosted an event last year. We had two CIOs, I think I can reference Mark Grimse. He’s a friend, he’s at Robert Half now. He was CIO at Rambus at the time. And then Mandy Huth, who is the CISO of Kohler. And then I don’t think I can name the other one, but they came from a company that managed retirement homes.
And they all individually – and it was at the start of COVID. So it had some economic twinge to it, let’s say in terms of the commentary. And every one of them was it is a consolidation of tools and solutions, and an integration, and an automation. That’s everything that they have to do. And as I look at the technology stack that is out there in a typical client, midsize enterprise client, just take log management, incident response, threat detection, all of those is probably ten tools. And yet DataEndure can consolidate it down into one solution, one bill. You’re not paying a license cost. You’re not doing the ten different renewals all timed differently. There’s no pro terming.
And at the end of the day, providing you a better service, allowing you to not have to hire those resources. Better yet, not have those resources hired away. And so there is direct benefit that we can provide a client in terms of not only the financial model, but then the solution and solution delivery model.
Right, right. Well, and I think we saw this in COVID, to your point. And unfortunately, maybe it was a test run for our adversaries too. They never waste a crisis. And so you take a look at how cyber adversaries took advantage of the fear or uncertainty or opportunities of COVID. And I think we’re going to start seeing that, if we haven’t already. There are going to be opportunities, because I think the assumption is companies, maybe might necessarily let their guard down.
So maybe I won’t update my old antivirus tool. Or maybe I can’t staff everything 24/7, so I’m not going to be able to catch what maybe I could. And so, if they’re not letting their guard down, we can’t. And so as an organization, to your point, one area that has to remain solid is security. Because if you’re already looking at an economic situation that you’re wrestling with, the last thing you want is a data integrity crisis on top of that.
Yeah, look, the security by CIO admission, I can even go back to Mark Grimse, was reactionary. This was five years ago. Very reactionary. Problem exists, plug hole, to remediate. And it was budget constrained. It wasn’t top of mind, but it was crawling up the stack. Now with – the actors are bots. The actors, the malicious actors are programs written to find a hole, to find some intrusion, some way in. And then, basically, take the information.
So that’s going to create more opportunity, not less opportunity. There will be more bad actors because of that vulnerability, the sense that companies will have to let off the gas in terms of their investment. This isn’t doomsday stuff, this is just the tough reality of where our data is, what kind of data, all of the regulatory compliance that basically goes into that data and the need to have it absolutely secure, which has come full circle.
Now it is all proactive. And basically, the tool stack in terms of best of breed, that’s the other thing that I look at DataEndure and we’re able to put best of breed in, because we’re not your typical MSP. A typical MSP is client buys license, I manage license for client. Maybe we co-manage. But at the end of the day, there is a client owns a license and then we manage it for them. So you’ve pushed your IT staff out maybe one click.
We’re different. We basically own the license. We’re an OEM. And we can basically sell you that license on a per month basis. We can turn it up and turn it down. We can increase it. There is no renewal charge. There is just a service level agreement. And basically we’re off and running. So that gives so much more flexibility that basically is spot on for the economy that is approaching us. And then – actually not even approaching us, that we’re already in.
Right, right, right. Well, and to your point, you brought up the regulatory situation. Those aren’t changing.
So if you’re in healthcare, wherever you are, the checks and balances and regulatory demands that are made of you don’t change. And more importantly, if you are an organization that is in a regulated business and supply chain, maybe you’re not regulated, but your customers are. So none of those change. So how you –
Met with a client yesterday, it’s so timely, right? Let’s tick through some boxes. Spoke about the advantage of the OPEX model, 100%, and the flexibility. Talked about regulatory. Talked about audits and acquisitions and data. All of those things are so well positioned for DataEndure to help a client, and it’s timely. And those conversations are happening right now.
Right, right, right. Well, and to your point, we’ll kind of start wrapping up here, but one of the things, and you’re leading me right into it, the conversations that we are having and ones that we would like to offer to our viewers are to have this economic assessment conversation. To really understand where are you today, what are the areas that you’re looking at and saying either, okay, do I have to renew this or maybe I don’t do this and I know I can’t go another year deferring this.
So let’s have a conversation about that. Let’s show you what good might look like if you had to do it yourself. Let’s show you what great looks like doing it through DataEndure. Because to the point, with the benefits of aggregation, with the benefits of the training and the staff that we have, not only are we able to give you a very healthy and mature security posture, we’re able to get you from zero to 60 very quickly.
So there is a time to market benefit that you got, which as we go through these next months, years, that can greatly benefit these organizations. So we would like to offer that to anyone listening. If you’d like to have that conversation, just like the one Tom mentioned he had yesterday, let’s inspect certain areas. Let’s understand maybe the economic objectives you have. Let’s understand the business and security outcomes that you need to deliver.
And we’ll be very candid. If there are areas where we can help, if there are areas where we can help you get to great, then we absolutely can do that. But at least we can help you bubble those up, help you understand what’s available and to have a good choice to make.
No, absolutely. And I would be remiss, and I’m filling in, got big shoes to fill in today, but Shahin has built an amazing TCO model, an amazing view of what a typical client would spend versus what they would spend with us. And then obviously the layer on that, the services that they would get. So I would strongly encourage anybody, either listening or that we will forward this to, that basically that is a call to action for sure, is to engage us on that conversation, because that’s an important conversation.
Right, no strings attached. Just we really do with this digital resilience, mantra and mission that we have for organizations, we really do enjoy having these conversations. We enjoy helping organizations understand where they are, and revealing any gaps or vulnerabilities. That’s our job. That’s what we enjoy. That’s why we’re all here.
So please do feel free to take us up on it. You can go to our website, you can send something to firstname.lastname@example.org. And Tom, any parting words?
You made it easy. I will say that. So thank you. This is not my normal venue. I’m much better in front of a client, not talking to a YouTube app. So now I will be forever on YouTube. I avoid those things, but that’s okay. And thank you, Kirstin.
Well, Tom, thank you so much for joining us. I say this with Shahin and I echo it with you, I always learn something sitting down and talking to you guys. I love tapping into your experience and history. So thank you for joining us. And everyone else we will see you next month.