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98 percent of my 5, 600 Rackers, or employees, are AI trained.

We actually put a training plan together because if they are trained, they will help us to identify those use cases

Welcome to This Week [00:01:00] Health. My name is Bill Russell. I'm a former CIO for a 16 hospital system and creator of This Week Health, where we are dedicated to transforming healthcare, one connection at a time.

Now, onto our interview

(Interview 1) Right, here we are for another executive interview, and I'm excited today. We're going to talk with Amar Maletira, the CEO of Rackspace. Amar, there's a lot happening in digital transformation. I'm looking forward to this conversation. Absolutely, Bill. First of all, thank

you very much for having me over.

I've heard great things about these sessions and , I follow these recordings too, whenever I get some time. So very excited to be here, Bill, and looking forward to our discussions here.

Yeah the last time we met in person, I think you flew in from another country, you were flying out to another company.

This digital transformation thing, it's not just a U. S. thing. This is happening globally, isn't it?

listen, I think digital transformation has been a phenomenon for the last decade or so, Bill, or more. But the last four or five years, it's really picked up and the key [00:02:00] enablers of digital transformation like cloud and AI that's all coming together now.

And so it's a fascinating time in my world as we continue to help our customers go that digital transformation agenda. So you're right. It's been a lot of travel for me. And it's we're a global company and we'll come to that. And so we have customers all around the world. And I like to be in front of customers, partners and employees.

So it's been an exciting time in the industry, as well as at Rackspace.

what's your perspective on the next three to five years? We have had these massive hyperscalers, AWS, Azure, Google Cloud, whatnot. Do you think it's going to continue to evolve into more of a multi cloud kind of environment?

Absolutely.

Let me just, let's go back. I think the cloud wave started. About seven to eight years ago, it really picked up steam just around the COVID time, 2020, 2021. There was a mad rush of workloads moving to public cloud. There's a lot of lift and shift of those [00:03:00] workloads.

And what we are starting to see now is customers. And there was a reason why it was happening because Cloud gives you the flexibility the economics works out it has the scalability, security. So there were a lot of good reasons why people were moving to public cloud. It's all about workloads, right?

We have a very view, and I'll come to this whole journey, but let me talk to you about how we look at the world. We look at the world from a workload centric perspective, Bill. We believe that workloads with its application data, and now you can add AI and whatever other workloads are there, those workloads will move out of a customer data centers because customers, it's very tough to manage data centers today, okay.

It's becoming very complex and the power density requirements are going up, security reasons and requirements are going up. And customers really don't want to be in the data center business. And we have about 34 data centers around the world, and we know what it takes to manage and operate these data centers.

So workloads will move out of the customer data center. [00:04:00] I think 50 to 60 percent of the workloads will land in public cloud, and about 30 to 40 percent of the workloads will move from on prem into a hosted private cloud environment because customers will not be able to manage a data center at about 30, 40 percent capacity.

It doesn't make sense economically. So you can see the workloads moving in both the direction public and private cloud. Say about four, five years ago, there was only one thesis. All the workloads will move to public cloud. What is now customers have started realizing, all the CIOs, that the workloads that they move to public cloud, it is very difficult to refactor certain workloads.

because it's very complex. They are starting to see it's not working out economically. The expenses are going up. They also, there's a skill gap issues, a talent issue. And so now customers are more mindful, CIOs around the world. Big enterprises, mid market companies are more mindful on how they move the workloads and where they move the workloads.

So what we are starting to see is definitely multi cloud. Workloads will be in [00:05:00] Google, AWS etc. But those workloads will also be, some of the workloads will be at the edge, and a lot of workloads will be in a private cloud hosted environment. And so now we are really looking at a hybrid multi cloud environment.

going forward. And that increases the complexity for the customers, but the customers have also realized it makes economic sense and operational sense to do

so.

that's what I'm seeing in healthcare. I love the fact that you used the word workloads. I'm seeing them evaluate workloads and say, this one, this cloud makes the most sense.

This one, this cloud makes the most sense. But I'm also hearing on the back end, wow, we've created this pretty complex management challenge of automation between these various clouds and then managing them as one entity, because they still have security, privacy issues that they are responsible for regardless of where they move the workloads.

And so they're looking at that complexity going, How can a partner help us to get our arms around the whole thing?

And [00:06:00] that's where you have companies like Rackspace. Thank you very much for leading me to that because that is exactly why we are in the business. So we are a pure play hybrid multi cloud and AI solutions company.

That's all what we do for 3 billion of revenues serving about close to 10, 000 customers is helping customers manage that environment across hybrid and multi cloud. and offering them managed services and managed operation services through a single pane of glass. And so we remove that complexity and help customers to operate and manage their environment very effectively, efficiently, and in a secured way.

And that's why we are in the business. We'll meet the customers wherever they are in their cloud journey, whether it's public or private cloud, right from giving them a full lifecycle solutions from designing to delivering. Workload assessment, you pointed out, all work, you have to figure out which workload is suited for what cloud to all the way to migrating those workloads, modernizing those workloads, [00:07:00] and then also managing and operating it on a go forward basis across multiple assets, whether it's public, private, or on prem.

knew we weren't going to get through this conversation without talking about AI . It's interesting. We just had a City tour dinner in Miami and there's 15 CIOs sitting in the room and we talked about security and AI came up. We talked about IT operations and AI came up.

We talked about workflow within the hospital and AI came up. there's this belief that AI is going to be applied to all these things. How is AI being applied to The management of these workloads, and how are you helping organizations to adopt AI? You talked about one of the challenges, we just don't have the staff that has the knowledge level to adopt some of this stuff.

Yeah, so I think AI will be pervasive. It will impact every single function, every single industry, period. And AI is not a new thing. Gen AI is a new thing, and AGI is a new thing. But AI has been there for quite some time, [00:08:00] Bill. 70 percent of our workflow that we use to manage and operate an environment is automated today through AI.

We have spent a billion dollars over the last eight years in automating our workflow. So 70 to 75 percent of our workflow is automated using AI. So we've been using AI at Rackspace for quite some time. Machine learning and AI has been there for quite some time. Okay. Now, where it's making a difference now, AI is becoming more and more prevalent in other functions.

Other activities, etc. For example, where, we also launched an organization called FAIR, Foundry for AI by Rackspace, about one and a half years ago, with the sole focus on driving thought leadership industry and with our customers. By the way, Koic, who has been part of your show and who came and you interviewed him is the founder of that fair within Rackspace.

Okay. So what we are doing with our customers, let me tell you how we help our customers, right? So we are saying, listen, [00:09:00] right now there are hundreds of use cases, hundreds of use cases. So we help the customers in what we call as an ideation phase. We help them to go and identify the use cases. That are very relevant to their function.

As an example, we have a library of 500 plus use cases that we have developed over a period of time across 12 domains. But we are finding newer and newer use cases as we work with our customers. So we go, we help them during the ideation phase. Then we incubate it. For example, those use cases We have to pick the LLMs or SLMs that have to be trained.

So we help them to pick the large language models or the small language models, then help them to train those models. And then finally, we help them to figure out, okay, where will you run this day two plus workload? And basically productize it and operationalize it. So we take the customers to that journey.

We have about 62 engagements across multiple industries. By the way, out of the 62 engagements, 40 are new logos, right? They were not our customers before. So Rackspace is there to help [00:10:00] customers in that AI journey. We have also created a private AI architecture working with NVIDIA. So we believe that, the AI workload, especially the inferencing workload.

So you have training, then you have fine tuning and inferencing. We are focused on the fine tuning and inferencing workload, which is the day two plus workload. And we believe that workload will either operate at the edge, or in public cloud, or in private environment. But that AI will have to go close to the data, as opposed to data coming close to AI, because data is the main fuel for AI.

And so we have created a private AI architecture where we help the customers to stand up a private AI environment. In their data center, or in our data center and then manage and operate that private AI infrastructure for them. So not only will they help them from the design and incubation phase, but we also help them as they land this workloads and to move it into production and support those workloads either on private AI infrastructure or on the hyperscalers.

[00:11:00] So a lot of activity on AI and internally. We are using Our CHRO was on Amazon's panel talking about how Rackspace is using AI to help in recruitment. CLO, Chief Legal Officer, is doing the same. Every single function within Rackspace has started using AI and Gen AI. 98 percent of my 5, 600 Rackers, or employees, are AI trained.

We actually put a training plan together because if they are trained, they will help us to identify those use cases. And AI has its own perils. So we are working on both sides. It is advantageous, but also remember big risk if not used correctly. So let me pause there. I think there's a lot to talk about AI.

I think we can go on for the entire day here.

We have about five more minutes. want to hit on, do want to hit on some other things. We could talk about AI for a while. Every time I see Jensen NVIDIA CEO Jensen give a talk I'm like, Oh my gosh, like everything's changing again, [00:12:00] every time he introduces a new chip, it's amazing.

I want to talk about security. So security. remains a top concern for health systems and enterprises. We had a couple of significant events last year. is Rackspace differentiating its security offerings space and how are they helping health systems with regard to that?

Yeah, I think security core to our offering.

Anything we do, whatever we offer our customers, because it's very important for us. Because we manage and operate the workload in our data centers and they depend on us to keep that workload secure. So there's one is endpoint security that is also a joint responsibility between Rackspace and the end customers, but it's also security at the core, which is important for us.

So we offer a very comprehensive portfolio of security services to our customers. Again, goes to the entire life cycle, including working with partners like CrowdStrike. With CloudFlare even with Palo Alto [00:13:00] Networks. And we want to make sure that we =bring in a very comprehensive security solution to our customers.

In healthcare, of course, but in all the regulated industries. Very comprehensive offerings, right from the core of the infrastructure all the way to the endpoint, but working with the ecosystem of partners. Because we cannot deliver everything together, but we will integrate everybody's products and offerings and give them a comprehensive solution.

One of the things I appreciate about Rackspace is the fact that you have a healthcare vertical. We've found so many companies don't have that healthcare vertical. So when you're having those conversations with the solution team or whatnot, they're like this is what they do in banking. And that's helpful.

It's good to know what they're doing in banking. It's good to know what they're doing in manufacturing and other industries. But it's also refreshing to sit down with people and have a conversation. They understand HIPAA, high tech, they understand the clinician workflows and the different modalities that we're trying to serve and be a part of.

Explain how your healthcare vertical [00:14:00] engages with health systems. How are they working with health systems? Maybe there's a success story you can talk about.

Yeah, so there are multiple success stories here, but let me start by saying I think we are starting to see three or four challenges that the healthcare IT is facing today, right?

One is there's a massive tech debt and skill and talent debt in the IT organization, and it's prevalent everywhere with healthcare IT more number two, post pandemic era, Bill, We have started seeing that patient revenue is going down, cost per patient is going up, and this is creating a big wedge between revenue and cost efficiency and doing more with less.

is becoming the motto of all the CIOs, healthcare CIOs that we talk to. And number three you basically talked about it's security and resiliency. So these are three challenges that we are seeing healthcare IT face. And we go and help customers address those challenges right we are one of the largest, EPIC hosting provider outside of EPIC in the world today.

And we are managing [00:15:00] mission critical workloads for 25 years. There can be no bigger or more severe mission critical workload than an EMR EHR workload. We are very good at doing that. So we do that for AdventHealth. By the way, we manage their EPIC system for 50 hospitals.

And for 36, 000 concurrent users. We do the same for another healthcare system, and we're not publicly announced yet. We are managing their EPIC workload bill. Then they said, we also want to go drive data center transformation. So now we are helping them to move all their workloads from their current data center into our data centers, modernize it, put it in the next generation infrastructure, and then we'll manage and operate it for them for the next 10 years.

Driving massive amount of CapEx reduction and very high levels of efficiency for the next 10 years. We are very good at doing that. We are a very good cyber recovery practice and also service that we offer. So this is how we are helping customers across those three challenges that they have.

Tech debt, people do not have enough [00:16:00] invest invest in CapEx. And modernized infrastructure. They have this cost efficiency issues and also they have the security and resilience issues. So we saw this and healthcare is one of the largest vertical, fastest growing vertical in Rackspace.

And we are actually not just the US health system, we are getting invited to NHS in the uk to health systems in the Middle East that we are talking to large health systems there. We're also talking to a health system in Australia. We are getting very much recognized as real good healthcare IT provider in the industry today.

Amar, I want to thank you for your time. I know you're very busy traveling around the world. Hopefully we will get to see each other in person another time this year.

Absolutely. I'm looking forward to by continuing this dialogue and thank you very much, Bill, for having me over.

Thanks

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