 Okay, we're back again live here at IBM Pulse, IBM's premier cloud conference. This is Silicon Angles theCUBE, our flagship program. We go out to the events extracted similar from the noise. Exclusive coverage of IBM Pulse. I'm John Furrier with Dave Vellante. Our next guest is Chris O'Connor, VP of strategy and engineering for the cloud and smarter infrastructure group at IBM. Welcome to theCUBE. Thanks. So I got to ask you, service management has been kicked around. We talked about it yesterday. IT service management, really growing area, changing area significantly with cloud. So I got to ask you, what is IBM's definition of service management? It's a lot broader than other vendors, which might be narrower. Give us quick, we'll start there and then we'll jump right in. So when I think of service management, I think of a full process life cycle around the necessary components to support your total production environment. So whether you're a retailer or distributor or a phone maker, whatever you do, it's being able to manage your servers, your life cycles, your people, the automation that goes along with it, the virtual processes around things like your databases and your stores and your applications, as well as being able to run the continuity of all those things together. I, at VMworld, I asked Pat Gelsinger, the CEO of VMware, is Hybrid Cloud a halfway house to a final destination of some sort of implementation? And he said, no way, it is the destination. So that's clearly the case now. Hybrid Cloud is the strategy for enterprises, for that balance we were talking, not just migration, that's going to be a reality. There's a challenge there, there's stuff all over the different clouds, you see how the stores are all around, you got on premise, that pulling it all together is a challenge. What do you guys do on the service management side to make that easier and describe that dynamic? So the first thing that Hybrid Cloud has to do is I think you had to embrace it. And that's one of the big steps we're taking here at the show today is we are embracing the notion of Hybrid Cloud. And that's a huge challenge that many can't do or won't do, though they'll try to take you down a path of talking about why it sits on site or why you buy it only as a service. What we're literally introducing is the ability to understand what you need to optimize, where you need to innovate, and then look at the CapEx-Opex trade-off of blending those different capabilities together. So we're adding as a service capabilities to the portfolio, not replacing things. We're actually taking everything we do with service management, we're adding the as a service capabilities to go with it. So you can decide when you want to just hand out control to that line of business that needs to move quickly and agilely. And when you need to optimize around maybe systems of record that are core assets for your business, then you want to do that due to either privacy or data protection or other things onsite and on-prem and have those work seamlessly together. So we're embracing it. I think the biggest challenge is to get that embrace done when you look around at what you're doing. So Chris, would you agree that it's been hard historically for some CFOs anyway to justify an investment in service management specifically within IT? So that's the first question, and is that changing? So I think where people have been caught is they've understood they need to make the investment, they've been looking at the speed of value that they can get back. And then that becomes the struggle. And they compare it to other things, right? That's right. And other things pop up and it always gets put to the back burner. That's right. So one of the things that we're doing is that service management becomes an as a service delivery to let them innovate very quickly. Means you don't have to go onsite, you don't have to run the POC, it means you don't have to buy extra servers, it means you don't have to heat, chill, run, manage, patch manage, the environment just to get ready to do service management. You can get started and you can implement it quickly so they can include it. And because you can do that CAPX-OPX trade off, they can rent it for a little while while they experiment and they can decide whether they want to purchase later on and that gives us a beautiful blend for them to move gradually. So by as a service, you mean software as a service? Or... I do. Okay, and they can eventually choose to whether or not they want to put it on-prem or in a SaaS or is your direction to go totally SaaS? So our direction is to support both models. And to support also the CAPX-OPX model, both of them, because we think that your budget is never going to be pure CAPX, it's never going to be pure CAPX, it's going to be a blend of the two. Depending on what you're doing for different projects, you're going to want to move very agilely and you may want to plug and run very quickly as a service offerings. You may choose as that hardens and becomes critical structure to bring that in-house or to regionalize or geographically orient that in some structure onsite and we're bringing out the ability to run seamlessly across our on-prem and our new Azure service offerings and you decide the balance and blend. And Chris, there are adjacent line of business disciplines that have similar dynamics to IT service management. Where is IBM at in terms of bringing that discipline out toward the business? So an affectionate term could be shadow IT. We see it all the time where somebody's trying to innovate quickly. They're out in a line of business. Sometimes not so affectionate too. They've got a budget that's out there that they can spend against and they're out there and they're implementing and they're bringing in programming talent and then they're trying to figure out how they're going to keep it up and keep it reliable from that paradigm point of view. Our Azure service offerings are designed for them to be able to plug it in. It can be given to them by the IT shop saying, hey, you guys go innovate and when you're ready, bring it back. It can also be direct purchased by them because we're enabling systems management to be credit card purchased by one of these shadow IT organizations and they can bring it in and they can use that as a way to get started with their innovation as well and have performance management and ticketing and job scheduling and other things, be reliable services they can just subscribe to. So okay, so these would be line of business driven. As you say, shadow IT. What about developing apps on top of the core service management platform? Is that where Blue Mix comes in? Maybe you could talk about that. That's absolutely correct. So what we see is that people are moving to a composable application development environment. Blue Mix launched here at the show. It's a perfect example of that. The new capabilities we made software as a service developed on Blue Mix. We used our own cooking to make the apps that went out as a service. We see that the Blue Mix environment is going to need composable management elements inside of it as well. So things such as our collectors, our APIs and things like that are included in the IBM Blue Mix environment. So as you build your app, you're pre-instrumenting for service management to be applied right on top of that as that app goes into runtime state. So how should we look at the marketplace for service management? It's clearly evolving into line of business. You're talking about application development on top of Blue Mix and things like that. How big is this space? Even in rough terms, is it growing and how much more potential is there beyond core IT? So a couple of flavors that discuss it here. One is it's a growing market. In the traditional IT space, it continues to be a growing market. There are pockets of it where the evolution is taking place and it's changing and it's evolving but the entire need for the structure of being able to manage components as a service, as a catalog that become part of this composable environment, that's a tremendously growing market in the IT arena. And then you took it an extra step. And this is one of the areas that we invest in as IBM as well, which is the internet of things, which is the digitalization of everything that you see taking place from your camera to the yellow truck that's bringing ore out of a mine to things that you might have walking down the street. All of those things are emitting tremendous amounts of digital information and they become part of the same life cycle of being able to understand whether your assets are delivering value and really service management sits at that core simple definition. It's about ensuring the assets of your business are delivering the value to what it is you produce and the internet of things connectivity is there. It's real. We have a component of our portfolio. It's called the Maximo components. It's where we bring in all of those other asset types and literally we're in jet airline engines. We're in yellow trucks coming out of mines. We're in things that are around delivering telco class services. And we use the same service management paradigm to manage those devices, keep them up, keep them running, keep them healthy, know when they're about to break, use analytics to look in advance of what they're about to do as we do inside of the data centers at the same time. It's a shell. That's what I was going to get right there. That next question, you nailed it. I wanted to just get your point on the analytics. The big data piece obviously you're going to have things that's sensor data, it's little data, it's fast data, it's all kinds of data on the analytics side. Critical piece. How is that changing the game? You got gamification, you got analytics, you got predictive analytics. How does all that integrate into the service management portfolio relative to some of the things you were mentioning about cloud? It's a great question. The world is instrumented like you can't believe today. And so we have buckets of data sitting all around the place that people say, yeah, I collect that. I don't quite know what to do with it yet and I don't know how it relates to other pieces of data around it as well. We're here launching some of the capabilities that we took out of the IBM Watson capabilities that allows us to reduce that to a math problem. Being able to take your buckets of data, compare them in real time, do your other buckets of data and tell you the correlations, the relationships, the analytics, the anomalies, taking place inside of that. And we use that in a service management construct. So we've oriented what was in Watson instead of answering jeopardy questions. We're answering IT questions with what's inside of our predictive insights capabilities. And those predictive insight capabilities take all of your buckets of bits. They align them in real time, build your historical baseline and do anomaly detection on top of that. And when you want to go deep, we have log analytics that allow you to go deep into an area and go search and find. It takes, we got the big data SV, this two weeks ago we were talking about, it was called not a data lake, a data landfill, because it's essentially buried data that they store what you're referring to essentially turning that landfill into a on demand asset. That's right. And the model is that Watson advises humans or Watson in some infrastructure takes action. Watson in this case is what it's doing is we took the predictive capabilities out of it and it builds the anomalies. So it watches what's going on in your data landfill and it builds you a set of anomalies that you might want to go look into. Those anomalies can be automated triggers into your existing automation. You have an event or alert, stop here, go here or they can be human causes for you to investigate. It takes that landfill and turns it into energy and so we'll take the new paradigm of clean energy and call it clean data, Dave. It's kind of a new buzzword we can call clean data. It's whole new industry developing. Chris, thanks for coming on theCUBE. Really appreciate it. I know you're tight for time. Love to spend more time with you. This is great clarification on a couple things and to drill down on some others. We appreciate your time. Thank you. This is theCUBE, exclusive coverage from theCUBE and Wikibon here at Silicon Angles theCUBE. Live in Las Vegas for IBM, Paul's IBM's premier cloud conference. We'll be right back.