 Welcome back everyone to theCUBE's continuing coverage of SuperCloud 5, The Battle for AI Supremacy. I'm your host, Rebecca Knight. We've got two great guests for this segment. We've got Bill Lobig. He is the VP of Automation Product Management at IBM and Eugene Kovostov. He is the CPO at AppTO. Welcome both of you to the show. Thanks, Rebecca. Happy to be here. Thank you. So we've got a lot of great topics that we're going to be delving into, including the acquisition, the outlook for hybrid cloud strategy. Bill, I want to start with you and ask about this acquisition which closed in August of this year. What made AppTO such an appealing acquisition for IBM? Yeah, Rebecca, it's very exciting. So let me start with what IBM strategy is. We are a hybrid cloud and AI company and we've been very focused on driving our hybrid cloud agenda since the Red Hat acquisition back in 2019 or so. And over that time, we've been continuing to focus on using artificial intelligence to optimize the management of dispersed IT assets across hybrid clouds. Hybrid cloud brings extraordinary complexity to the environments, the IT resources, the assets that need to be managed and understood. And AppTO is an amazing addition to our portfolio because now it allows us to not only help our clients accelerate the deployment of their hybrid cloud solutions, ensure they're always running, meeting the service level objectives that they are set out to meet the business KPIs. But this is all being done with a guarantee that you're getting optimal value and ROI from your IT spend. That's what AppTO brings to the equation and we're really excited about it. It's really a continuation of our focus on hybrid cloud and AI and it's expected to drive significant synergies across several key growth areas for IBM and consulting, Red Hat, Watson X is gonna play a big role here in generative AI and leveraging AppTO's anonymized IT spend data and as well as our ecosystem partners, Accenture, Deloitte, KPMG, EY, et cetera. It's a really exciting time. Well, Eugene, Bill has just laid out a very compelling vision for why this was such an important part to welcome it to the IBM family. From your perspective, why was this a good fit in terms of both the business but also maybe the culture of the company? Yeah, well, Bill covered a lot of the business aspects but we had been partners with IBM for a long time since early 2021 and really grew to admire the organization and kind of the approach taken and really focusing on customers, on users and making sure that they're having the best possible experience across their disparate ecosystems, footprints, so on and so forth. And as we grew into that, it became more and more apparent that AppTO's philosophy and approach to democratizing access to technology, IT resources, irrespective of where you're using them, how you're using them was aligned. And more importantly, we were very focused, yes, AppTO provides what we humbly believe to be the best cost management and optimization capabilities in the market but we very much pride ourselves on showing the value that technology brings through things like economics and really advanced capabilities. And IBM also has that same approach. Driving that forward, doing so in a world that's changing faster than ever before, using AI and ML techniques to do that on behalf of our customers are shared values that we all had and continue to have. From a team perspective, and it's just been a couple of months but you already seen some of the great partnerships becoming even more intertwined and interwoven and seeing some of the launches that I'm sure we'll talk about today but we're continuing to see that accelerate. And that's what we thought would happen. I think we've all been pleasantly surprised, I hope Bill would agree, at how quickly that's been able to come to fruition across different product lines and across different experiences for customers that we'll dive into here today. Bill, how does IBM plan to merge Aptio's products into its own line of products and services? Merge, that's an interesting word. So, to be clear, for the foremost, Aptio's product and roadmap is going to remain Aptio's. Now, there's tons of synergy and opportunity. In fact, my list grows every day on ideas of what we can do together. And as Eugene pointed out, we were working together even before the acquisition, we use Aptio within IBM. So we're focused on customer first market, sorry, customer first roadmaps and driving that forward, but we've got a lot of great ideas. For example, our IBM Turbonomic product brings IT asset optimization into the picture, which is a perfect compliment to Aptio's financial optimization, right? In a FinOps world, which we'll talk a little bit more about and I'm sure Eugene will elaborate, just like DevOps broke down silos between developers and operations people. FinOps is about breaking down silos between finance and operations people. And in the hybrid cloud world that IBM is leading in and driving in, the spend information in an OPEX world is completely decentralized to operations and engineering people. And this is about connecting all of those threads and getting teams to work collaboratively across IT and spend data. So, lots of great ideas. Our consulting practice is spun up. We're gonna be driving this to market through them as well as our ecosystem partners. I would say it begins with Turbonomic and our IT automation but we've also got great ideas around how we can drive quantifiable perspectives into business and work management and really make everything that IT does a value driver, not a cost center. Eugene, how does this acquisition relate to AWS and its customers? Yeah, I mean, I think what I will start with is ever more excitement for the AWS ecosystem and its customers. AWS and IBM are also partners, I'm sure Bill will collaborate on that. We're adding kind of that third leg of the stool and what we've seen is a desire to create and deliver better experiences for that AWS ecosystem. And we've done so even since the acquisition. I talked about accelerating innovation, we've done it, right? One of the first things we brought to market around the acquisition time was the ability to manage and look at the cost associated with your Red Hat OpenShift clusters on running on AWS. You're gonna see more of that. You're gonna see more on the automation side. Cloudability savings automation allows you to go hands off with your AWS reservation portfolio and have us take on the task of managing that, optimizing that, converting your reservations. I'm excited to see that in partnership and coexisting and not just merging with but interwoven with Turbinomic and the incredible work that they do on the performance assurance side. I love that wording that I've learned from Bill and the team because Turbinomic is really intended to help AWS customers ensure that their applications running on the AWS footprint that they have continue to be performant and cost effective. So what I will say or close with is there's going to be increasing opportunities for AWS customers and AWS partners to layer into that platform that we've built and create those applications and products that will change the game for how you as an AWS customer will manage your resources. So does AppDeo's relationship with AWS, it doesn't change now that it's part of IBM or how would you define it? Oh, I think yes, it changes in the sense that there's ever deepening partnerships and more that we can do and that we're going to do together across different channels as well. Obviously with being part of the IBM family, there's just lots more markets and geographies and places that we can operate which previously, we couldn't really, we worked with AWS in a lot of areas but when we wanted to go into the federal market, for example, we needed to invest in that and with IBM where we're excited to be able to go deeper than ever before into those areas. So I think if there's going to be any change you notice it's going to be a deepening partnership and a richer set of things that we are able to do together across the business and ecosystem. Yeah, go on. I was just going to add to that. IBM signed a strategic partnership with Amazon early in 2022 and we've got several dozen SaaS properties on Amazon now. As I've been describing, we're focused on hybrid cloud and these things but Amazon is our control plane for our FinOps strategy. Turbonomic runs there, Apdeo runs there and this is the other synergies that we're exploring and thinking about are there. So Amazon is an extraordinarily important partner and this is just frankly another thing that led us to do this acquisition which is we're both strategic partners with Amazon, we are running our technologies there and we're going to continue to deepen and strengthen that. I want to go back to what you were saying Bill about breaking down barriers and breaking down silos between financial and the operations folks and sort of what you've learned from DevOps. Are there any best practices that have emerged when you are trying to encourage support and foster this collaboration between these different teams which can have similar objectives but sometimes maybe competing priorities? Yeah, I think the key is being data-driven and fact-based and being collaborative, right? And really helping engineering and operation people feel accountable. Like engineers no longer just need to understand technology and programming languages. They need to understand when they're building SaaS and cloud-based applications in particular, how the technologies they're choosing, the architectures they're defining and the implementations of those technologies to products drive costs in their operations and make no mistake, this is not all about costs, take out and savings. This is about optimal value for your technology spend. Eugene touched on it. Turbonomic is a performance-aware optimization engine. It will also make recommendations where you need to spend more to ensure that your application is gonna deliver to the KPIs you've set forward. So back to your point about how we break down those silos. It's about giving engineers a sense of accountability and empowerment with the data they need to make smart informed decisions and bringing finance into the picture so that we can have conversations about what trade-offs we wanna make about quality, performance and spend to really deliver the optimal outcome. It's as much a culture as it is a technology movement and frankly, and I'll maybe this is a good segue to give Eugene an opportunity to elaborate here, this is another amazing aspect of APTIO which is their participation in the TBM Council, the Technology Business Management Council and the culture and the ways of working that are really collaborated and driven through that that make APTIO such a great product to use for this problem space. Eugene, I'd love to hear more about that. I'm a future of work journalist and so I get really jazzed to hear about how companies are using technology to change the future of work and the way that people are working together. Do you wanna talk a little bit about this council? Yeah, absolutely. TBM Council is an amazing community of practitioners and they need technology business management space all about understanding, again, not just the cost of your technology estate but also the value it's delivering to your business, whatever business that is, manufacturing, financial services, technology, software, so on and so forth. And it's been around for over a decade, it's been growing tremendously and to your point about partnership and how we bring not just technology but also people together, AWS and IBM were exhibiting partners at TBM conference which is the annual conference TBM Council hosts in Austin just a couple of weeks ago and are working together, of course, for re-invent. As far as where the technology goes and where the people go, I'm also excited to see and hear that AWS has officially joined the FinOps Foundation, another incredible community dedicated to advancing the people who work on FinOps but really cloud cost management optimization or value realization, IBM and App Gear are of course part of that ecosystem as well. And those are the people that really bring the technology up there. So we'll probably get into a little bit more but where we wanna get to is for engineers and developers, you talk a lot about or hear a lot about shift left and empowering them to make the best possible decisions with the best possible data available both from a cost and optimization perspective but also that value realization journey. So when you see an engineer deciding which technology to use, well, it would be really helpful to understand what are the outcomes that that technology would deliver. Maybe it will lower my cost per ride served. AppDeo can give you that information in near real time and give you options to tweak up or down that cost per ride served. In the example of a ride sharing company, there's many of these examples where you get into that unit economics bit. With Turbinomic, you can actually automate some of those actions that you can take and see the results of them again in near real time. We just lowered our cost per ride served or we see that we're having a lot more claims processed if we're in insurance claim because there's a natural disaster somewhere. Well, Turbinomic allows you to, as Bill mentioned, it's possible indeed in some cases, I'm very much likely that the recommendation of the automation action is to scale up or add more costs but cloudability and AppDeo One and the AppDeo platform can show you the results of those costs. And as we grow and develop that partnership, I think you're gonna see even more examples like that that will come to life and empower, I like that we're empower folks to make the best possible decisions. Right, and just have more visibility into what's really going on. Bill, it does look like the future for public cloud will be hybrid for many years to come, which of course, underscores customers' needs to make sure that their applications are aligned with their infrastructure. Tell our viewers a little bit more about what you're hearing from customers and what trends you're seeing right now. What I'm hearing is hybrid cloud drives an extraordinarily high degree of complexity that didn't exist before. I mean, this ranges from security to infrastructure management to cost to optimal workload placement. I mean, in the on-prem data center, there was a single security team that managed the perimeter. There was a single IT team that managed the data center. There was a financial team that was a hard gate on CAPEX to buy, procure software and hardware. Now it's completely decentralized. Security is at the edge, at the container level, at the virtualization level. Spend goes up one day, down the next. It's all very decentralized to the engineers. So the amount of collaboration and insight and sophistication that needs to be managed is extraordinary. And I think a lot of folks have jumped into this public and hybrid cloud world and then they realize this. And now they're starting to kind of catch up in how to deal with it. And what we want to do through these synergies of AppDO and IBM is make optimal financially responsible, value-driven, performance-aware technology part of the fabric of your applications from the onset. Not something that you react to and solve for when your budget's already gone to the red. We're not there yet, the industry's not there yet, but that is the North Star we're driving at. And our customers applauded this acquisition and this coming together. We have a world-class performance assurance, application performance assurance suite of products. And now we have a world-class financial assurance capability to add and really round that out. Well, it's your sense that we're gonna need a whole new breed of managers with different skill sets to manage the complexity of what you're talking about here. I'd love you both, as we're wrapping up, to just talk a little bit about what we're going to be seeing next year in terms of this acquisition and new products and services and what you're related, what you're working on related to AI-enabled products and services. Eugene, do you wanna start? I'd love to. So we've talked about some of the integrated experiences, so I won't belabor that point. But what you will see is an expansion of the breadth of services that we support and provide visibility and value realization metrics for, whether you're using, irrespective of the infrastructure you're using, but past services that you might be taking advantage of. The folks that work on your applications, you can see, understand and optimize the costs associated with those aspects. And you can also start understanding, we're gonna talk about how we're gonna use and have already been using AI and ML techniques to more rapidly classify your data, get you insights faster. But the other element that we're hearing from our customers is, help me understand the costs that I'm going to incur as a result of my own use of generative AI or LMS and how is that gonna impact my business? How can I optimize that? We've already been working with a few customers on piloting that, we're gonna be bringing that to market in 2024, helping you understand what that cost might be and also helping you understand what that value will be if you are able to use it well. So look out for that. And the other elements you're going to see is that increased focus on automation that I talked about. We have seen that there's lots of great use cases for AI, but some of the most powerful ones are in the digital labor, automation of labor. And that doesn't mean replacing people, that just means replacing activities that are not value add or are not core to that particular person, manager, individual contributor and making it so that you don't have to worry about deploying that or managing your reservation portfolio. Again, it's not the people necessarily, it's the activities that we want to automate and remove the burden of so that those people can focus on what they do best, serving right sharing customers or processing insurance claims or growing their business, whatever that might be. So you'll see some of those come in 2024 across the suite of Apdeo products, Apdeo One cloudability and Apdeo target process. But I'm sure there's some other things that Bill is in the hopper that love to talk about. Yeah, Bill, you've been talking a lot about the synergies. Tell us some about what we can expect next year. Yeah, well, first and foremost, you're going to see acceleration. IBM is investing heavily, Apdeo, I think Eugene's already, he's on a hiring spree. We're pumping investment into this amazing asset and company that we've brought into the family. And that's going to result in a number of things. So strategically, I'm looking forward to seeing us continue to shift left in our application these technologies. And what I mean by that is, if we're in the operation space and we're measuring and optimizing, how can we make infrastructure decisions, deployment decisions, application workload placement decisions, and do those in a cost effective way, performance that are performance aware before they're even deployed, right? Really, if you think about GitOps and infrastructure as code and cloud native development principles, 12 factor applications, how do we bring cost and performance awareness all the way into the beginning of that pipeline? That's something that we're very focused on. The other thing is our Watson X announcements that we've made recently and we're driving hard on generative AI. We've got the most secure governed responsible approach to that we feel in the market. And we're using Apdeo and generative AI to apply to the four to 600 billion I've lost track at this point of anonymized spend data that Apdeo has to get insights to drive real business decisions around, what does good look like? How do you look relative to your peers in terms of spend and value management? Is something we're going to be focused on? And then from the synergy points, how can we bring efficiency scoring and efficiency benchmarking into that equation? How can we bring quantifiable business value to digital transformation and process optimization? In the last few years, I spent a lot of my time in workflow and business process. We talk about, you mentioned future of work, digitally transform, be more efficient, be more, what is the real quantifiable benefit in terms of hard dollars to the business who funds these programs, including the IT tools and systems they depend on and the clouds that they depend on? How do they really get clarity and line of sight to where the best decisions are to place those dollars? That's what we're going to be driving forward in 2024 and beyond. Lots of exciting stuff. Bill and Eugene, thank you so much for coming on theCUBE. A really fascinating conversation. Thank you. Thanks for having us. Thank you. Stay tuned for more of theCUBE's live coverage of SuperCloud 5. I'm Rebecca Knight. You're watching theCUBE, your leader in enterprise technology coverage.