 Live from San Francisco, it's theCUBE. Covering IBM Think 2019, brought to you by IBM. Hey, welcome back everyone. We are here live in San Francisco for IBM Think 2019. It's theCUBE's exclusive coverage. I'm Jeff right here with Stu Miniman Stu. It's been four days, we're on our fourth day, powering through a lot of interviews extracting the signal from the noise. Number one live event covers theCUBE. Got two great guests here, Ashutosh Mooney, Vice President of Application Services within IBM, and Gary Duluth, Chief Technology Officer at Nationwide Building Society in the UK. Great to have you guys. Thank you, John. So obviously day four applications, big part of the focus because the applications are now dictating the data strategy, the AI with IA, and you got cloud, multi-cloud underneath. So the changing market requirements around what apps are doing are super important. This is a focus that's dictating that the infrastructure, what to do. So this is the key to the cloud. Talk about what you guys are doing. Absolutely, absolutely. In fact, not just for IBM, for clients mostly, for them to be able to ready for their customers, they need to make sure that their applications are up there for their customer experience as well. What we are seeing is most of these clients today are saying that all the work that they have done in past for the last five, 10 years, that's the core that they have built. They're trying to look at how they can minimize the spend on that and maximize the spend on all the customer-facing applications like to enhance the customer experience. And they call that, and people call that the workload. Oh yes. Workload is code for applications. Gary, you're a customer of IBM. Take a minute to explain what you guys do first and then we can talk about some of the things you're working on. Sure, so we are a large UK-based mutual building society. We have about 15 million members in the UK. But you can think of us as a bank in many respects. Most people do. Challenge for us, as you said, is basically, we have 30 or 40 years of legacy technology. We need to transform that technology and also build the next generation of digital services alongside that technology. So for us, it's the combination of how do we transform that legacy core whilst also building for the new. And what are some of the use cases that the new technology is going to bring you because containers have been great with legacy because you don't have to kill the old to bring in the new. As you look at the modernization journey you're on, what are the guiding principles, what are the things you guys are looking at, how are you guys thinking that through? Okay, so a number of things. One is we've been on a 30-year journey towards looser and looser coupling and smaller and smaller microservices. So what you're starting to see is big applications, monolithic applications being broken down into services and then microservices. So for us, the key is the smaller and smaller of the microservices, the more agility we can create and more value we can create. And that loose coupling then becomes really important because that then allows us to deliver a high level of parallelism in development and change. So those are two key areas we're really looking for. And how's it going? Today, good. Scar tissue, you're learning. It's learning and it's iterating and it's failing and it's understanding but the main thing is, the more we do, the more we learn and the more we can then build that back into the next iteration. Ashu, I always love to hear, especially the financial services, ones that have been around a while, that modernization and how they do that. I couldn't help but notice you're both wearing the iHeart AI t-shirts. So I'm wondering if you can connect the dots for us between that application modernization and the wave of AI. Yeah, so I heard that term fail fast and fail regular. I mean, it's all good until you actually have at least one success, right? So failing fast is good but you cannot just keep failing. So where AI comes into play is primarily making sure that you are basing your those decisions on what have been proven right in fast as well. So what we have seen, especially for financial services, is even though the systems of engagement has changed, the fundamental principles on which the banking services or the insurance services are provided has not changed. So you're still providing the same set of services just in different ways. The expectation of the client has changed but the services remain the same. So our ability to be able to look at what we have been doing in past, which services make sense to be microservice enabled as Gary talked about, it's not that you just take all the functions and enable them. That's where we are able to bring value to our clients. Gary, what's the impact on this on your ultimate end user? Yeah, better value. So for us it's about helping our members, who are customers, to make better financial decisions and to do that they need data. So what we're trying to do is to really take that legacy estate which is really about locking data in at the core so we can use it, trying to liberate that data, get it out into the hands of our members so they can make better decisions. And AI is a really key part of that. Yeah, I mean that was, we think back to that wave of big data, it was the I should be able to have smaller companies, not take years and millions of dollars to be able to do that. Tell us what's different about today in AI that we might not have been able to do five years ago. There's a couple of things really. So one is compute power. So what you're seeing really is AI is not necessarily advancing massively in terms of the algorithms and the approaches and the methodologies. What you're seeing though is compute power and storage capacity growing at an exponential rate still. So what it's doing is enabling those algorithms to work in a way that they've never been able to do before. And we're getting to value quicker because the time it takes to reach that value is much shorter. I want to get your perspective on, you mentioned parallel, breaking down, decoupling things that the looser sets the services. This is certainly the cloud way, right? Big APIs and have microservices, big part of it. How is that going from a culture standpoint? Because this is one of the things we hear all the time is it's a cultural journey to one, get people lined up with that. And then what are some of the business benefits that you're seeing with this parallel? Is it efficiency? Is it innovation? Where do you see that culture? What did you do to change the culture? Share some, this is what people want to know about. Sure, sure. So in fact what we are seeing is majority of the clients have started to look into this because everybody else was doing it. Because somebody digital native out there was doing it. So some of them actually latched on too quickly. They have not been able to change their internal culture within the organization. While the customers were ready, but their internal organizations were not. But I think clients like NBS have thought out a fairly good strategy and it would be great, Gary, if you can share all that. What was your secret song that you're like, carrot and stick? He gets, hey, we got to go this way or you burn the boats as they say. How did you get people to go in the right direction? For us there's two really, really important related parts of this, the culture and the people. From a culture perspective, we've got teams of people who have been doing phenomenal pieces of work for 30, 40 years. They're coming to the end of their career and the technology that we're using again, we're looking at end of service life. So how do we get away from that world where we're constantly focusing on the legacy to start focusing on new technology? So it's bringing in new people with new ideas. It's changing the way we work. So we started to focus on things like agile, dev ops automation, new ways of working to allow people to really sort of liberate away from the old ways of working and to give them new ideas and new opportunities. As part of that as well, there's a couple of things in there for us which are really important. So one is bringing new technologies in and bringing new people in that can use those technologies. We also have to make sure we keep our own people trained up as well. So we can't forget the people that we've got. So it's a set of different things. I mean training is critical. We've got open source out there. It's like every year is like a dog year and you got to keep up to date, keep learning. And all these aspects of co-creation, right? So you cannot do it in isolation. If you're doing it together, I mean whether you use design thinking or not, right? That's a way to do it. But I think the aspect of co-creating it with your end stakeholders and your own stakeholders who are involved is critical. Talk about more about that because this is a big theme, co-creation. We love doing it with content. We're in the queue. We're doing it here with content. But when you get into development, this is a new psychological dynamic but also it's a productivity opportunity. Can you just share what you're seeing there and explain co-creation a little bit deeper? Yeah, look, so let me talk hypothetically, right? So from a hypothetical perspective, if we were able to look at organization or a platform where we are able to access an amount of computational power, computational skills or programming skills, our ability to be able to do the most creative aspects for any use case, any industry would be enormous. We just don't have that. We are limited to specific partners that we are working with. We are limited to the specific employees that we have and we are limited to the customers that we are catering to. I think if we expand, so while we don't have handle of all the things that we have in play, but if we are able to bring in our customers or internal stakeholders, as well as our partners that we are working with and are able to build a common theme and one of those common themes could be that I need to get you those services quickly and then figure out how the three can actually work in tandem, we'll be able to make. How does that change your engagement model? Because I might be, let's say I'm a naysayer, I'm a skeptic. Whoa, we used to do that before. We used to partner and understand their needs and bring solutions to the marketplace. Is it more software driven? So what's changed from the old way to the new way? Because, well, I agree with you by the way. I'm not a skeptic, but that was what skeptic might say. Yeah, no, I think earlier what was happening was they were, it was more offering led. And what I mean by offering led is these are the assets I have and let's make these assets find the solutions. So what people will do is they will say, this is the banking solution I have in this specific case and let's figure out what 15 things I can do with those solutions. The approach now is different. The approach now is this is what the customer is demanding and the reason they are demanding is because customer's expectation is based on their most recent experience that they had somewhere else not necessarily with the bank. They may have experience in Uber. So when they have experienced that experience there, they want the similar services from the bank. So now the co-creation model is actually starting from the other side of the equation rather than coming from asset out. So that's- So it's flipped. The old model was, here's what we got, here's what you can do, we're limited. And now it's like, here's what we want to do, program the infrastructure and focus on software defined, agile, so this seems to be the new way. Yeah, let me add to that as well because I think one of the things that we've done over the last year is really focusing on what's our technology strategy? How is technology going to change our business? What we've done is created a strategy where our ambition actually exceeds our ability to execute. So from a co-creation perspective, we actually need really good partners that are going to work with us in that context and be strong challengers, be our critical friend in that process. So it's more efficient and more productive. You get best of both worlds and the outcomes are more aligned via agile, be more acute and on target. Pretty much the value of that. Kerry, I'd love to get your perspective on what does it mean to have a cloud strategy today? We heard this week, Ginny said, we're entering chapter two of the cloud. We took care of the 20%, that was a little bit easier. We're getting 80 harder. Lots of customers I talk to, it's changing all the time and things like hybrid and multi-cloud don't really mean much to them. I'm curious in your shop how you think of things. Great question, I think it's changing and it's different from industry to industry. So in banking, the challenge for us has always been regulation. It's been the regulators pushing back on public cloud and saying, we're nervous about that. Have you managed the security of the controls around that? So a lot of banking is focused on private cloud and can we adopt the technology and those styles of technology delivery in the sort of private cloud way? But we're now starting to see the shift towards public cloud with the economic advantage that public cloud has and the innovation that's going on in public cloud, it's becoming really attractive. So the strategy for us is about how do we make that happen? How do we build that multi-cloud model? And then how do we move that sort of hybrid model from private to public and get the advantages of the different styles of cloud compute? Guys, thanks for coming on and giving the insight. Love this DevOps co-creation model and really the applications are driving the requirements now with programmable infrastructure. This is changing the procurement, it's changing the culture, hiring strategies. This is really disruptive. This is really the digital transformation it's all about. Very true, very true. Great job, thanks for coming on. I really appreciate it. Final question while we're here. Thoughts on Think this year in San Francisco, a little bit rainy February, but it's okay. But all tightly together. What's your thoughts? What's the themes? What's your, what's the top story here? Getting your thoughts first. The weather makes me feel like home. It's fantastic. So no, it's been an amazing week. Lots of innovation, lots of great conversations. So we've really enjoyed it. Yeah, no, absolutely. I think we've gone around myself even though we are definitely aware of what's going on in here. But I think there have been a lot of partner ecosystem that has been here. And I think that collaboration has been great. So thank you. Well, it's been great show. A lot of insight, customer perspective. Thanks for sharing what your journey's on and some specifics. We appreciate it. It's theCUBE coverage. I'm John Furrier, Stu Miniman. Stay with us for day four. We're four days of coverage. We're here on day four. Stay with us for more after this short break.