 From Las Vegas, it's the Cube. Covering InterConnect 2017, brought to you by IBM. So my first question for you is, as we digitize our world with business, the value chains and all the processes are changing, is a new value equation model around digital business. What's your view on the digital business value creation equation? Sure, John, thank you for having me here today and Dean as well, thank you for having me. So I think that automation in combination with cognitive computing, AI, machine learning is really going to revolutionize the way we work, the way we interact, and it's going to create new experiences for people. Experiences that we don't even know that exist in the future. There's going to be real value, and that value is not just about cost takeout, but that value is going to be around innovation. That value is going to be around the combination of blockchain, machine learning, ubiquitous computing, and I think that this is going to create new industries, new business models that we could take really advantage of in many different industries. One of the cool things that's happening that I like in the computer science and our society in general now is you're seeing cloud computing, which has been around for a while, getting full steam ahead, big data industry evolving very rapidly and what's kind of pulling them together in this gravity is machine learning, data, cognitive, internet of things, and AI is kind of the overarching sizzle, if you will. So the sci-fi aspect of AI, everyone can relate to some sort of mental image of AI. Robots taking over the world to automated things just to make us smarter, augmented reality, whatnot. But internet of things and data science that's connecting the power of the cloud with data is changing the game. So one little change in a value equation in a company could change their business model. Absolutely. How do you rationalize that with your customers? Hey though, you know, full steam ahead or slow down, it depends what's your perspective on that? So it's interesting you mentioned about science fiction, right? Because science fiction inspired robots and automation for centuries now. But the reality today is that we are already using automation. You know, it's been used ubiquitously across production lines, manufacturing, logistics. So we've started this journey already for many, many years. I think quite rightfully, like you described in the cloud world, what we are seeing now in automation, you're combining artificial intelligence, you're combining cognitive computing. And what that will do is it will create new value for companies out there, right? That new value is going to be about creating new industries, creating new data. And in the IoT space, it's going to create a new level of intelligence for us that's going to really change the experience that we could deliver. So I've said this before, the greatest chess play in the world is not a machine, it's not a supercomputer, it's a combination of humans and computers. And so to the point we were talking off camera, machines have always replaced humans. It's now cognitive functions are being augmented. And so it seems like the scarce resources, the creativity to combine innovations. For decades, we've marched to the cadence of Moore's law. The innovation's not coming from Moore's law anymore. Whether or not it's tapering, we can argue, let's assume it is. So where's the innovation coming from? Clearly the innovation curve's not slowing down. So what's IBM's point of view on that innovation and where it comes from? So you started by talking about robots and machines and how it's kind of changing jobs and let's say taking over jobs. The reality is that only a small percentage of work, five to 10% will be fully automated in the future. Because we've seen this throughout history. Technology advances in the last 20 years has created new professions. 25% of the work type and profession in the last 20 years are new type of work. John, you were mentioning about the ATM machine just a couple of minutes ago. The ATM machine actually is creating new economy. It was supposed to kill the teller. You kind of did, but they created more jobs because more branches are opening up. Exactly, more branches and new ways of interacting and new and so on. Now you have mobile apps, but actually you have to develop applications which you never had to do in the past before. And exactly the same with automation, we're going to have robotics and internet things, combine them together, we'll create a new economy. And the value of that economy is going to be in a couple of areas. One, I think one of the fundamental changes is that our work type, the type of work we do is going to be automated. About 30% of our work type is going to be automated in certain industries, industries which are highly task orientated, highly manual orientated, highly data orientated. They will change, that's the reality of it. But that's also going to create a new type of work, a new profession and people will be upskilling to that. But our prediction is that in the next few years we're going to see between one to one and a half percent of the GDP increase as a result of cognitive computing and AI. Incremental. Incremental, incremental. So yes, there will be some changes of job, change in profession, but incremental, there will be increase and that for the aging population issue that we know very well, it's going to really help to boost a lot of economy out there. That scares people too, this whole notion of job loss and maybe when we were talking about for camera, it's not so much controversial, it's more education, both educating people on what the narrative is of the future scenario. But also education for people to get the new skills. I mean, the stat after the stat, but it's high percentage of jobs aren't even created yet. So cross-disciplinary education in higher ed's changing, but the skills gap is a huge issue. So how do you talk to that point? Because certainly that's an area we heard on stage today, Mark Benioff and Ginny Rometti talking about having a societal impact and having a mission. Education is a big one. What's your thoughts? I mean, so I think it starts from, right from the way we teach. Because you can't necessarily always teach the future, but what you can do is you could prepare for the future. So we need to start teaching our children to our graduates who start in our companies with new skills around creativity, right? High emotional intelligence. I believe that a robot is never going to be able to manage emotional intelligence, right? So how do we do this more emotional intelligence? How do we provide more discipline around education? How do you provide them? Political thinking? Political thinking, absolutely, and science. But also these artificial intelligence is going to aid human being. It's going to help us to discover new remedies for problems that we have today in our society, problems that we have in healthcare, problems that we have in political systems, which we are seeing now, and hopefully provide more confidence in our system because of the data and intelligence that we're seeing. So now I've got to throw in the augmented reality because AI is obviously kind of a concept people aren't getting. It's not clear yet what that is. What really is AI? Well, that chapter will be written, certainly as it evolves. But augmented reality is happening. So IOT, you can have goggles on that look at meters and get all the new data if that's not even there. You can do automation around, getting predictive analytics around machine, industrial IOT, these kinds of things. You're seeing consumer devices having augmented reality. That's here, right? That's here and now. So how do you advise your clients and customers, the big IBM customers you service, to prepare for augmented reality? Because is there a playbook? Are they not in their heads? Are they going, oh, face palm? I mean, what's happening? Yeah, so augmented reality is here and it's here to stay. The difference between augmented reality now and if you looked at, let's say, five years ago when we had Google Glasses, one was hype versus reality. One was a use case now where actually it's transformational and it's having real impact in ROI. Like the example you gave around manufacturing or how you use it in logistics when you are looking at airlines and how you look at training people. Now you could train people using augmented reality and speed the level of adoption required at a time required to skill people. And then in the past, we never had that. Is there a playbook? I don't think there is a playbook, John, because I think the use cases are so diverse. But I think what we really need to do is go back to the fundamental of consulting. What do we look for in business problem solving? We look for problems. We analyze that problem through design thinking or whatever methodology we use. We look at what the impact is. Is it speed, quality, and cost? And if we could answer this question, speed, quality, and cost and the human impact onto it, those are the factors that are going to determine what are the use case of augmented reality that's going to really transform and have impact in industries. I find it interesting too, you mentioned that the old way of doing things, you're not going to be there, but the old way of doing software was general purpose computing and software, buy a shrink wrap package, load it, does some function. Now the composability of APIs and microservices allow for common building blocks. So now essentially every solution is custom. So you have a diverse use case. Remember, beauty's in the eye of the beholder. So that's how it is in the enterprise. So that's a reality. So with that, it's kind of a backdrop. What are some of the cool things that you're working on now that you could point to and say, these are examples of the kinds of journeys customers are going through. It could be a crazy idea that's implemented or some of a great idea. Share a story about something that highlights some of this new way of building apps, new way of being agile, new way of discovering value creation. Sure, so you're absolutely right. We're moving into a world of consumer services, if I could describe it that way. API services, microservices, pulling data from different sources, augmenting your data source, having functions that you get from your comparators even to augment the capability you want and create new business processes. And I think we'll see more and more of this. And I was speaking to a bank even last week in Abu Dhabi where they're saying, what's the future of a bank? Do I need a processing bank? Do I need a back office anymore? Do I need a branch? Can I not just be a virtual bank? Can I not just connect to a fintech to provide my services? And I have the customer and own the customer. So I think there's an advancement in terms of thinking now. And that thinking is possible because the possibilities are endless. And we have never seen more access to technology at relatively low cost even than ever before. And also open source is making it possible, I think. Open source is giving power to the people and companies to have world-class technology combined with IBM technology to provide real, great, great value. So- Okay, please carry on. And just in terms of use cases, another example is that I recently seen a use case around know your customer. One example was opening up accounts for high-worth customers who take months and months to make sure the security checks and so on. You may have an account, but in terms of fully transacting, it takes months. Now, using machine learning, you go and search over a million databases, look for million different patterns, and make a recommendation to your work advisor to see what kind of customer you're going to be. By analyzing movies, watching four movies that you watched that you love, we could predict by 95% what are all the movies that you're going to love in the rest of your life. Those are the use cases I've seen, I just find it fascinating. Netflix is doing, they're getting all the data from me. Yes, yes, yes. And arbitraging out the back door. Recommending books. I mean, it's getting going. I want to own my data. That's what Ginny was saying on stage. We should own our data. Yeah, I mean, and there's certainly consumers out there who want to own the data. And I think there's going to be this shift where you could have digital identity in the future where you own the data and you could start trading your data. So instead of just giving your data, you could start monetizing your own data and saying what kind of information do you want? What kind of experience do you want? How do you want to trade? Who do you want to trade with? Do you want to share the data with your family, with your friends, with your business partner, and you become the owner of data? And that certainly is an area that we're seeing and moving to, but also it's going to help with the identity. Your identity will be known only to you, not to service providers. I think you're on to something. And one of the things we just talked about with Don Tapscott was with Blockchain, the Blockchain Revolution is a new book, is when you get the transactional cost of business reduced, you mentioned that virtual bank, makes total sense. Why should I spend all this money to have a company that can reduce my transactional cost of doing business and still provide great value? Well, I don't know. I mean, you talk about the future's hard to predict sometimes, but the bank in Abu Dhabi, right? I mean, you see banks, you talk to them all the time, reimagining the banking experience, but not necessarily eliminating the physical. Absolutely. And so, you know, to me it's fascinating. Like the list of things that machines can't do that humans can, changes seemingly every year, whether it's climbing stairs or even autonomous vehicles five years ago, nobody thought was, I was at an IBM conference, not that long ago, five years ago, they said it's 25 years before you'll see that and then, wow, just overnight. So, see you. Still driving cars is another one prediction. Yeah, so do your clients, how much do they try to, you know, skate to the puck, which seems to be a harder endeavor versus saying, okay, we can apply this today and save money or tap a new business opportunity. So, you made some great points here. The first point I'd like to just elaborate a little bit more, which you mentioned about the physical and the digital, right? Which you might, and your example was the branch. What's the role of a branch if you have a fully digital bank in the future, right? We still need a branch. And why do you need a branch? Because in the branch, the branch's going to be different in the future. We all hate queuing up in the branch. We all hate going to a generic person that says, can I help you buy a... What's your account number? What's your account number? Exactly. No, I'm John. Come on, you should know me. You should know, as soon as I walk in, you should know, you know, what are the three things that I'm looking for? You should know how long I've been a customer, what my family is. How many Twitter followers you have if you're an influencer. Exactly, exactly. And more importantly, you should know that I love speaking to experts. I don't want to speak to a generic person. So the future bank is going to be when you walk into your bank, you're going to sit there in a room, in a very nice room. You're going to be in a screen. You're going to talk to someone who is an expert who knows anything about you through video conference. You could even order a coffee that someone comes into your room so you don't feel that it's just virtual. You have some emotional connections as well. You have digital printers in there. You could connect. You have a different experience. And by the time you go out, your app has already been updated with the loan that you wanted or the mortgages that you wanted. And then coming back to the point that John and I were talking about, the consumer services, well actually I might want my loan from one bank, my mortgage from another bank, and my current account from one bank, but I should be able to trade between that. So there's that connection between physical, digital, and then different service providers. I think there will be a mashup. I mean, there's that level of intimacy that has been lacking for so many years in that example of financial services, which it seems like cognitive can help close that gap. Yeah, yeah. And Cogniz absolutely can because Cogniz now, the technology is here. I think it's advanced so much as here. The use case is amazing. And you heard about the use cases on healthcare and customer services and Aging Assist, which is helping people with self-application repair. So I think the advancement is here. I think the possibilities are huge. We just need to connect those dots together in order to create those new use cases. And the data model that's come out of that conversation is that it's domain specific data. And you guys talked about it as verticals, but that's important because you need the specialism of the data. That's correct. But you also want the horizontally scalable cloud as well. So that's the data challenge right there. Absolutely, absolutely. And one thing that's going to be critical, I think even in the future, is that industry knowledge and how you use that industry knowledge to augment your data. How do you find that computers always give you those patterns? How do you interpret that pattern and how do you create that new experience? That's where the human value is. So we talked yesterday, you're in a consulting side of the business, but the 60% of IBM's business remains services. But a key value that you bring to the marketplace is the ability, at least in concept, to codify those services to software. Talk about how you're doing that and to the degree to which you're succeeding. So we started a conversation in automation. So if I go back to that. In automation, every client is thinking about automation. Every client is experimenting with automation now to some level. And what we have done with our services is that we created frameworks, maturity assessments, business component modeling. So now what we can do when we go into a bank, we can make an example bank, we can say, hey, Mr. Kasim, I've done it with these 30 banks. I know what this best-in-class bank look like. You might not necessarily, and to answer your initial question, what's that roadmap look like? You may want to go over here, but your level of maturity is here. So how do you get to that level of your aspiration? And we could help with those tools and methods and our assessment capabilities and a strategy engagement framework that we bring with the clients. Also, we don't just look at banks, because if you're a bank, banks are interesting, but you may want to look at retailers. You might want to look at pharmaceutical companies. You might want to look at Starbucks and all the people that around here, what are they doing in terms of innovation? So you could bring all the innovation onto this and look at business functions. Now, what does a best-in-class logistic look like? What does a best-in-class back-office function look like outside of my industry? And that's the kind of codifying that we have in our consulting business which we bring to the market. And do I even jump industries because digital allows me to actually traverse horizontally, as John was saying. And the threat is there. The threat is live today to be Uberized or be an Uber. You decide. So you are going to jump through these industries because you have now a global platform which will allow you to transform your industry and jump from one to another and monetize what you have very, very fast. And the barrier to entry is lower than ever before, not just because of technology, but because how industry works and the consumers demand. Shemaya, thanks so much for coming on. Great insight. Thanks for sharing. Love that content. Really good insight and futures here. Thank you very much. Yeah, absolutely. Futures here now. This is theCUBE bringing you all the action here live in Las Vegas. Stay with us. We've got a lot more today to come and all day tomorrow, we'll be right back. I'm John Furrier with Dave Vellante.