 Live from Las Vegas, it's theCUBE. Covering IBM Think 2018, brought to you by IBM. Welcome back to IBM Think 2018. You're watching theCUBE, the leader in live tech coverage. My name is Dave Vellante, and I'm here with my co-host Peter Burris. This is day three of our coverage, Mohamed Farouk is here as the general manager of Brokerage Services, GTS at IBM. Mohamed, great to see you again. Thanks for coming back on theCUBE. Thank you very much. Appreciate for having me here. You're very welcome. So, big show. All the clients come together in one big tent. What do you think? It's very exciting. I think we're doing some interesting things with our technology. We have learned a lot from our clients last two years. We are working very closely with our partners because we believe not one company can do everything in this massive transformation that's underway. So working with our partners, with our clients on new technologies to specifically accelerate enterprise adoption of the cloud model. And that's exciting for us. I mean, partnering seems to have new energized momentum at IBM. Right. I sense a change. Is it palpable? I mean, how can you comment on that? I think partnering is critical for everybody's success because the industry itself is transforming. And one company cannot achieve all the requirements that clients are asking for. And we have our core competencies, ServiceNow or VMware or Amazon or Azure, they have their core competencies. But IBM as a company is a company that enterprises trust to move them to cloud and operate them in the cloud. So what we are doing is to keep that goal in mind, we are saying, okay, we are going to take a client from point A, which is non-cloud, to point B, which is cloud native. And in that journey, we will take everybody or partners help to get there. So that's why based on client requests, we are leveraging our partners and it has a special meaning for us because it makes our clients successful. Okay, so describe exactly what brokerage services does. Is it your job to get people to the cloud? But talk more about that, that's in color. I think the brokerage has evolved since I last talked to you a year ago at this conference, right? Brokerage, a lot of people think brokerage is arbitrage. Is what? Arbitrage of services from one provider to other. That's a limited definition of brokerage. So what we're really calling it is hybrid cloud management system, not brokerage. Brokerage is one part of it. So the hybrid cloud management system is the go-forward strategy of IBM in 2018 and beyond, which includes three, four components. One is, how do you bring the entire cloud ecosystem into a federated management model? Which includes business management of IT and cloud or hybrid. Consumption, a standard consumption model through one point of access to all clouds, internal or external. Third, delivery. How do we deliver services, either automated or workflow, by model as Gartner calls it in one model. And fourth, operations management across public, private, hybrid, internal or external. Let me make sure I got this. So business services in terms of running IT more like a business. Right. A consumption model in terms of presenting this in a way that's simple and easy for a business person to use. A delivery model in the sense that it's very simple and straightforward and fast to deliver. And then an operations model, which makes sure that everything above it works well. Yes, and the consumers in this case are developers, IT operations, folks and dev-op teams. And from a delivery perspective, it is automated or people workflow. So you support both. So bringing this federated model together is a very complex undertaking. And IBM services is the strategic partner clients are asking to take them on this journey. Hey, bring this together for us. It's very complex at all layers. It's not a simple thing. And in that, bringing it together, partners have a big role to play. Azure, Amazon, Google, ServiceNow, VMware, Cisco. They all have critical pieces of it that make this model work. And clients have made choices. Clients already have VMware. Clients already have ServiceNow. Clients already have Amazon. Azure, but there is no system that brings it together and manages it on an ongoing basis. And the important thing is the clouds keep changing very fast. And keeping up with the clouds, leveraging the power of the clouds to the right teams within the enterprise to deliver new digital apps to deliver revenue is what IBM is enabling our clients to do. So Wikibon's actually done a fair amount of research around what we call the cloud operating model. We call the digital business platform. AWS has an example of that, Azure, as you mentioned. They all have their approaches to handle those four things that you mentioned. But when you get to a customer who also has to marry across these clouds, sustain some on-premises assets, perhaps some near-premises assets with a little cloud service provider, it's what you're trying to do is ensure that they have their operating model that is the appropriate mix of all these different capabilities for their business. We got that right? Exactly, you got it. So what we said was every cloud provider, internal or external or even hosting cloud providers, IBM is a hosting cloud provider with the judgment of business, they had their own model across those four things. Business, consumption, delivery, operations. Now, we cannot operate four silos. Every enterprise is using Amazon. Every enterprise has Google, every enterprise has VMware, every enterprise has IBM. We cannot have four models. So what we have done is we have created one standard consistent target operating model. We have integrated all these offerings within that so clients don't have to do it. We offer services to create extensions to it based on variations clients might have and then operate it as a service for them so that their path to cloud gets accelerated and they start leveraging the power of what's good today inside the data centers and what's available outside in public clouds in a very secure way. So that is the business IBM is in, moving forward, which we are calling it, we are transforming our offerings portfolio, we are calling it hybrid cloud services business. Okay, so you've got this hybrid operating model, IT operating model that you're envisioning. You're letting the cloud partners do what they do best, including your IBM cloud partners. Including our IBM cloud partners. And then you guys are bringing it all together in a framework, in an operating model that actually can drive business value. Exactly, that's what we're doing. We are giving them ease of access from one place, choice of delivery platform, choice of delivery models from one place, single visibility into how they are running, performing health and diagnostics from one place. And then one billing and payment model, not four. So when I pay monthly bills, I pay based on usage, qualification of that usage across everybody and then reconciling with my ERP systems and making the payments. So the CFO has a standard way to manage payments. So that's what IBM is bringing to the table. How far can you take this? Can you take this into my SaaS portfolio as well or is that sort of next step? Right now we are doing infrastructure as a service and platform as a service. Our goal is in 18 and 19 to move to software as a service. Because software as a service is much easier because we don't own the infrastructure or the service. We just consume it as electricity, utility. So we have to discover the usage of SaaS and meter it for usage against our billing model that we have agreed to as B2B contract between a SaaS provider and an enterprise and then make sure we have done the license management right. So there's companies like Flexera and others who do that for SaaS management. There's companies like Sky High Networks that recently got acquired. We're bringing those companies in to give us that component. But doing that level of brokering amongst the different services, well, very useful, valuable, especially if you can provide greater visibility to the cost because this becomes an increasing feature of CODS in a digital business, right? You still got to do a lot about the people stuff. A lot of folks are focused on ITO, ITSM, automation at that level. Describe how you'll work with an IT organization and a business to evolve its underlying principles for how the operating model is going to work. I think that's probably a more difficult challenge than the technology itself. And if you look at our business, it's a people business with GTS. We're more than 90,000 employees babysitting infrastructure for major Fortune 500 corporations. And infrastructure is moving to software defined. That means we're moving from configuration skills to programming skills, where your programming API is in Amazon to provision infrastructure and deploy. So the skill sets have to definitely move. They have to move to infrastructure teams, now have to become programming teams, which they have not been used to. They used to go to VMware, vSphere, vCenter, and configure VMs and deploy VMs. Now they have to write programs to drive and provision infrastructure. So that's one part of it. Second, the process was you do development and then you throw it over to operations and they would go configure and deploy production. Now, one, you're programming the infrastructure. Second, you're doing it in collaboration with the developers, because developers are defining their own infrastructure in the cold. So the process is different. The skills are different and the process you have to operate in is not the same, is different. Third, the technologies are different, that you work with. So the exchange at all levels and what GTS has done is we have put a massive goal in place to rescale our workforce, to take our people and rescale them in the new process, the new technology, and the new roles. And that's a very big challenge. I think the industry is facing. We don't have enough people who know this. A lot of these people are in Netflix, Facebook, Google, in Silicon Valley. And now, it takes time, it has happened before. The training and the transfer of knowledge, all of that is going on right now. So right now, we have a crunch. And the second thing that is becoming more difficult is, there's a lot of data coming out of these systems. The volume of data is unbelievable. Like, if you look at Splunk and other tools and platforms, they collect a lot of log data. So all these cloud platforms spit out a lot of machine data. Humans cannot comprehend that. It's incomprehensible. So we need machine learning skills and data science skills to understand how the systems are performing. And tools. And tools. So we need the AI skills, the data science skills, in addition to the infrastructure design, architecture, and programming skills. So we really have a challenge at our hands, as an industry, to kind of effectively build the next-gen management systems. Right, and we've got, so we've got all these clouds. The ascendancy of clouds has brought cloud creep. All these bespoke tools along with them, all these different operating models. You're clearly solving a problem there. What's the go-to-market model with all these partners that you've mentioned? You've got cloud, you've got on-prem, eventually SaaS. Yeah, so our model is go-to-market is three ways. We see clients adopting cloud in three ways. One is digital initiatives. They want to go build new IoT apps or mobile apps, and they want to put it in production that drive revenue. Okay, so we are creating offerings around the DevOps model. We'll say like, look, the biggest challenge that DevOps folks have is how to put an app that you build in production. I built a new feature. How can I get it to my client as soon as possible? In a secure way that can scale and perform. That is the biggest problem with the developers. I can develop anywhere. It's all open source. And I can spin up a VM or a container in Amazon and develop a service in two days. But to put it in production, it takes a long time. How can we make offerings that accelerates that through our DevOps CI CD automation process I was talking about? That's our revenue plan. So our go-to-market is driven by how we can generate revenue for our clients through agile offerings for DevOps. That's one, go-to-market. Second go-to-market is CIOs are saying, look, I'm spending a lot of money managing my current infrastructure and my current app portfolio. And I can take money out of the system through cost reductions. So what is my migration and modernization path for my existing portfolio? Well, slightly differently. I used to get my eight to nine percent that I gave back to the business every year simply by following hardware price performance. That's exactly right. That's not available in the same way. I have to do it through process and automation. All automation, right? So then we have to look at everything. What part of the portfolio can move to Amazon or cannot? What are the refactoring I have to do to microservices and containers to build portability to move to the cloud? So we have created global migration practice in IBM in a factory in India and in US where we have created offerings to work with the CIO right from planning, cost planning, portfolio planning, application design planning and design review to lift and shift, to deploy on cloud and operate it. So we have a series of offerings that track the life cycle of migration. So that's our second go-to-market path. Our third go-to-market path is, hey, my business units are shadow IT. They're already in the cloud. Now my CEO is telling me, hey Mr. CIO, you make sure they all work and they're secure. And there's no loss in data. And this infrastructure is now in cloud and on-prem. So how do I provide managed service to manage your infrastructure and workloads in the cloud? IBM has offerings that will directly provide you multi-cloud management as managed service. So we are taking three client journeys and we have built go-to-market offerings around those three and we have built, we have redesigned the IBM portfolio to operate on those lines. So digital initiatives, Chief Digital Officer, obviously a target there, CIO, portfolio rationalization, optimization, and line of business doing the shadow IT. And you bring those together with a consistent operating model. Exactly. So all three journeys lead to one operating model. But going back to what Dave said, and I think we have time for just a little bit more is, there's no offense. There's no way you can do it all by yourself. You cannot. So what are some of the most important partnerships that users need to be looking to? I think we have defined what's core to us. You have to always go back to, if you are clearly going to market, what is the core competency of IBM? Okay. With Luke Gassner, we were a services company for a long time, right? We made sure we bring the complexity in control and we managed the complexity. That's our core business. We had mainframe business, we had software business and a very profitable software business. So we've done all three, hardware, software and services. As we go forward, cloud services, cloud managed services or IBM services is a core competency for us, which is planning, design, managed services, and services integration to bringing this tool sets together from different partners and operationalizing it and babysitting it and offering it as a service. So services business is our core offering. Now in the software space, which is the management software, which is ServiceNow and Neuralic or AppDynamics or Cisco, there is many layers to it. As I talked about the four things, consumption, operations management, business management, and service delivery. And in service delivery, we have three choices. We have VMware, we have Microsoft and we have IBM. We have stitched it together in a federated framework. The stitching together is our core competency, okay? Operations management. We have created a federated data lake because data will drive everything going forward. So we own the data lake as our core competency and Watson driving intelligence. But some of the monitoring tools like AppDynamics, Neuralic, Splunk that collect the data, those are our partners. We are integrating that into our Watson framework. So we're looking at core versus non-core in all four layers. And wherever there's an overlap, we are creating unique vertical go-to-market strategies. Hey, for this segment, we overlap with you. We agree to compete. To your clients, you can lead with that. For our clients, we'll lead with ours. So we agree to disagree, but we are going to stick to the target operating model so that our clients are successful. So there's no confusion we are creating in their minds. So it's a very complex dance at this point. But you laid it out and it's coherent. Right. It's got to start there. The most important thing is we need to tell our clients what is our core and what is the core we are going to stand behind. And that core delivers them bottom line value to move from point A to point B and be successful in the cloud. Well, Mohamed, you think you've defined those swim lanes. You obviously trust, you get the trust of your partners, trust of your customers. Like you said, you agree to compete where it makes sense and you bring core competency and value to differentiate from your competition. So congratulations on laying that out. Really appreciate you coming on theCUBE. Thank you very much, I appreciate it. You're welcome. All right, keep it right there, everybody. Moving back with our next guest, you're watching theCUBE live from, think, 2018. We'll be right back. Thank you very much. Thanks.