 Live from Las Vegas, it's theCUBE. Covering InterConnect 2017, brought to you by IBM. Welcome back to InterConnect 2017 in Las Vegas. We're here at the Mandalay Bay Hotel. This place is packed. I mean, we're right by the escalators, jamming all day. Roughly 20,000 people here. Muhammad Farouk is with me. He's the GM of the Cloud Brokerage Services under the GTS division of IBM. Muhammad, thanks very much for coming on theCUBE. Thank you very much. I appreciate for having me here. So you're welcome. So we were talking, having great conversation off camera about your history coming over from India, getting an education in Oklahoma, doing startups, selling companies and ultimately ending up at IBM. But let's start where you are today. Your role as GM of cloud brokerage services. What does that entail? What does that mean, cloud brokerage services? Two things here, right? My role at IBM is one part of the question and what is cloud brokerage is the second part. I'll start with cloud brokerage. Cloud brokerage is the concept that has emerged in the last five years, where as cloud services became one of the choices for consuming IT, the role of enterprise IT had to change from being a manager of technology to brokering what services businesses use, either from internal IT or from external cloud providers. So the CIOs and IT organization has had to take on the role of a broker. And effectively to play the role of IT broker, you need to really extend the current IT operating model which is people process technology. And that had to be automated into a new platform that gave birth to the new requirement that you need a broker type technology and a platform where you can connect demand to supply. So you can come, demand can come from any business unit either for infrastructure or applications or managed services. And you can connect it to the right supplier just like manufacturing, just in time. And the CIO would optimize the demand and supply and make sure the right services are available to be pulled at the right time for the right user. So this is what Amazon has done. This is what Azure is doing. This is what software has done. Give access to IT services on demand. But can you aggregate that and provide a standard consumption operating model for the enterprise? That is the new broker role and the brokerage platform from IBM basically enables that role for the enterprise. So is that software? Is that an abstraction layer, a manager of managers or is it people in process? It is both. It is an abstraction layer that connects to all cloud providers internal or external. It has automated new processes for consumption, service management and governance and it creates new roles in the enterprise for IT organizations and business users. So it's a complete rethink of how IT operates. But importantly, it connects to the current processes. So that's where you can run hybrid IT. You can connect to service now to the current ITIL processes in the enterprise. You can connect to the current governance dashboards and you can connect to the current data centers where your current applications are. So it connects to the current and it connects to the new world of automated self-service and brings it together. So, you know, you go back 20, 25 years, this business that you're in now is a break fix business that's totally transformed. Talk about the CIO. What's on his or her mind today? What should they be focused on? I think the CIO's role changes every two to three years. The areas of focus changes. Previously, they were in the business of building applications and managing it and managing the infrastructure. Then the packaged applications came, SAP Oracle. Then they were in the business of implementing it. Then they started building web applications again for a while and managing it. Now, we have SaaS, software as a service. So you can just rent an application, right? You're a pass, you don't have to build middleware. You can rent it. You have infrastructure, you can rent it, excuse me. So the CIO's role now, the CIO's role now is how do I govern it? That's the priority. I don't have to go build it. I need to govern what I have very effectively. Second, I need to provide access to services that my business needs. Man, I need to do that at speed. Third, I need to be able to manage it security-wise, compliance-wise, whether the data is staying in the right places, it's not being exposed because data breach is a big issue. My infrastructure doesn't have holes for security. It can scale. So the concerns of the CIO are now different. The risks are different. And that's a new role the broker is taking on. But the most important role for the CIO's right now is to give me visibility into where my stuff is. It's an Amazon Azure software. I've lost control of it. Tell me where it is. And it's very complex. Simplify this for me. It's interesting to hear you, Mohammad, talk about the CIO used to develop apps and then commercial off the shelf applications came and then the web apps, they started developing apps again, et cetera, that progression. And now there's SaaS. I wonder if I get your comment on this. The other sort of trend that we see, we talk about it all the time, is that the companies talk about digital transformation all the time. Part of that digital transformation is becoming SaaS companies. Every company's becoming a SaaS company. What's the role of a CIO in this new, I think Benioff said it, there'll be more SaaS companies from non-tech companies than tech companies. What's the role of a CIO in that world? If you look at it, the differentiation that a corporation has today is the digital experience it provides either on the supply chain side or its customers. And those applications are customs, SaaS applications that they're building. The CIO's role is to make sure it becomes the operator of SaaS apps. Yeah. Right? Whether internal or external. Internal or external. So if his business units develop custom SaaS apps, either mobile apps or social media apps or analytics apps, those apps should be available and running and scalable in the cloud 24-7. So basically he becomes a SaaS operator. When you're a SaaS operator, you're also a governor. And industry is calling it hybrid cloud, many clouds, multi-clouds. And the role of the CIO is to operate them and make sure they're governed. Third, that its business get access to the right services at the right time because that's time is very critical. So the characteristics of an operator and governor is real-time access to services, continuous innovation, and speed, and control. This is a huge skilling issue for CIOs. Is it not? I mean the skills transformation, you're going from provisioning lungs to being a cloud broker. How's that going for your clients? And how are you helping? That's where IBM comes in. IBM is saying for us to play a role in a digital world, we have to change the way our relationships work with our customers. So if the CIO is becoming a broker, then what is my relationship with a cloud broker in the enterprise? As that option is starting now, in the beginning, there's no skills in the enterprise to operate this model. So IBM has developed the technology and the skills and telling the CIO we can build this and operate it for you and when you're mature we can transfer this to you. So it's a build, operate, transform relationship that we are building so that the CIOs in Fortune 500 can strategically partner with IBM and take this journey together because the role of a broker will be different in every enterprise, customized to that enterprise, based on its priorities. So IBM is basically redefining the experience and the relationship to its customers. And in turn, we are enabling our customers to transform faster, deliver value to its business faster, and become digital faster. So let's talk about IBM's business, GTS specifically. I mean, I set off camera and I'll say it again, many people may not realize 60% of IBM's businesses still services come by GTS and the consulting services. About 30% of software, only about 10% is hardware these days, including the operating systems. So it's quite a transformation that Ginny has affected. I certainly remember the days of John Akers when IBM was splitting apart and trying to focus on different parts of the industries and Gerstner said, no, single point of contact for the customer, we will become a global service provider, very successful strategy. And now we're entering this cognitive age. What's the strategy specifically with regard to GTS? Are you trying to codify that deep expertise and put it into software like that abstraction layer we talked about? Is it sort of a hybrid model? I wonder if you could summarize. Two things, what was true when Lou Gassner said, we are going to provide a single point of contact and we are going to put this together, that was systems integration business. We would take all the peace parts for the customer and we would take the responsibility to deliver it reliably and make sure it's available and it's performing. And the large corporations would depend on us to run their enterprise IT systems. Fast forward 2017, we are now a service integration business. We are integrating services from cloud providers, either internal or external. We're still playing the same role. We are the single point of consumption and integration and delivery for the new supply chain. And the supply chain now is 100 times more fragmented than it was before. It's way more complex. It's more of a complex. Yeah, this is a huge opportunity. This is the biggest opportunity again for IBM and we are practically going after that opportunity. Hey, our role is the same. We are the single point of consumption and delivery and governance for service integration and service delivery. That's how IBM is defining its role again in the services era, from a systems era. Second, how does it impact our revenue? We have a massive opportunity. Every dollar spent on cloud services, customers will have to spend money on managing it. Integrating it, operating it, enhancing it. And we are building offerings that provide value on top of the cloud providers in all these areas. And we manage it. So we see significant revenue opportunities. The way you distributed the revenue structure of IBM, we see a 10X opportunity for us doing that. Well, so there was a while where people thought that, to the extent that you could automate, it would eat into the services business. That's not happening, you're saying. Right, so two things are happening, right? That is happening, but we see a tremendous opportunity there for IBM, because IBM has invested significantly in automation and big data software and cognitive. Basically, what we're saying is, yes, our core business is getting commoditized or basic business, but we are adding higher value at the services in software. So we are becoming a software plus services business, practically. So from our software side, on GTS, we will drive higher margin revenues and differentiation and higher value added services that are digital. And we'll complement that with our services business that can scale at volume. So in effect, we are creating a hybrid business model for the software plus services era for IBM. You're becoming a software company like everybody else. Yes, right. And IBM has seen it and IBM has responded to it. IBM has invested in it. So we are building the IT as a service platform. We have invested in it. We are delivering it to the market. We are re-skilling our workforce and we are creating a superior method of delivery for the cognitive era, using a cognitive technology services delivery platform. So you actually have as a service component of software in your P&L, is that right? Exactly. And that's a growing part of your business. And we are tracking that line item as software as a service. We have to break, but I just want to spend a minute on your personal story. You came from India, you were highly educated, both in India and in this country. And now you're a senior executive at IBM. Quick story about your journey, because I love it. My journey started in India. And I was always fascinated with technology in the United States, because when I grew up, United States was the country that put the man on the moon. So we always looked at, I always looked at United States as the pioneer in technology. And I wanted to see how I could learn from it. How could I professionally grow from it? But I did not know how, but a life is a journey. It got me to Oklahoma on a scholarship to form a master's program in operations research and computer science and then an MBA in finance. I moved to Austin looking for a job from Oklahoma. I work for the government, governor's office for a while, almost three years. And then in the dot-com way, I wanted to be in giving birth to new technology. I joined a startup in Austin that got acquired by Commerce One. From there, the journey took me to working with SAP to building their middle-med platform. And then brought me back to Austin as a CTO for Texas again, where I work very closely with IBM for managing the state's data centers and building the software platform using the SOA product line and the software portfolio from IBM. But what I realized during that time is really the nature of IT services, consumption and delivery will change with cloud. And it needs a new operating model for CIOs and CTOs. So I created a company by CIO for CIOs of how they would operate in a new utility model which combined CAPEX and OPEX and which unified consumption across a very diverse supply chain. And this is 2007 timeframe, right? 2007 timeframe. Just before the downturn. Right. Perfect timing. Right. So I leveraged the tailwinds of cloud to build an operating model for hybrid, which is now being called hybrid, but was really a consumption-centric model and a supply chain model for manufacturing that I learned at Commerce One in SAP. I said the supply chain concepts are very true for IT now because every unit within the supply chain is a service. The vision was to transform IT consumption. The transform IT consumption delivery and governance in the enterprise. And that led to Graviton and the brokerage platform that IBM acquired in 2015. And currently my role at IBM is to drive this transformation into the enterprise and in turn transform the delivery model for GTS. Well, that's where we started. We'll have to leave it there, Mohamed. Thanks very much for coming on theCUBE. Thank you very much. It's a pleasure to meet you today. Okay, keep it right there, but we'll be back with our next guest right after this short break. This is theCUBE. We're live from Interconnect.