 Live from Las Vegas, expecting the signal from the noise. It's theCUBE, covering InterConnect 2016, brought to you by IBM. Okay, welcome back. We are live here in Las Vegas for exclusive coverage of IBM InterConnect 2016. This is SiliconANGLE's theCUBE, our flagship program. We go out to the events and extract the signal from the noise. I'm John Furrier with SiliconANGLE next week. She's the GM of cloud integration IBM. Great to see you again. Pleasure to be back, John. The game is still the same. The board shuffles around. Middleware's over here. Last time we spoke in systems, but you're seeing the flattening of IBM. You're starting to see, as Dave Vellante would say, the swim lanes start to form and the picture is starting to emerge. Yeah. So, Cher, you're in the middle of it. You know? We're right in the middle of the new IBM emerging, really focusing on how we are leveraging Cognitive for helping all customers transform with the cloud platform as the base. And the two are kind of two sides of a coin that we think are going to make a great combination. You know, Dave and I always joke, in fact, we were joking last night at dinner because I'm a software guy and he's an analyst and we always talk and I always say that the action on the middleware side is so really important. That is a big part of the software defined environment. And you have this notion of software being the center of the value proposition, but now Watson with Cognitive puts it everywhere, so almost like a horizontal integration one. But yet middleware is also in the cloud, platform as a service. So I always say it's a platform war because, but now you have open source in it. So, you know, customers are like, you know, not confused, but there's a lot going on. Help tease that out. What is, where's the action in the middleware was easy in the old days? Oh, middleware, it's just between the app and then the data and the data warehousing, whatever goes on and on. Now it's all over the place. What is this new software middleware paradigm? Well, I mean, the whole thing with a hybrid cloud strategy is you don't want to care where the software is. So our whole focus is really on making that hybrid cloud seamless. So whether you're running things on-prem, whether you're running things in the cloud, whether you want to dedicated a local variation in between, doesn't matter. We want to make sure you can get access to any of our software, any of our middleware, wherever you need it, when you need it, and with the right business models to support what you're trying to accomplish. And, you know, Bluemix uses the term local. And I was talking to Adam Gunther last night and getting a little briefing on some of the coolness around, you know, Compose.io, which we're very, we love that acquisition by the way. That's really, really good stuff with Bluemix. If I go, I go, I got confused, local. Is that like a local locale? Gee, I'm thinking consumer. No, it's on-premise. Okay, can just say on-premise. Is it the same in locals? Explain this whole Bluemix local thing. What does that mean? Is it just on-premise? Well, what we've really, what we've really tried, same principle that Bluemix is our innovation platform. If you want to create new apps, if you want to create compelling new content, whether it's for mobile, for Internet of Things, you want to be able to do that in one integrated environment, regardless of what kind of programming style. Java, Swift, Node.js, you've got them all right there. But we've seen a lot of customers that either because of regulatory or geo issues, regulation wanting data locality, that they want to do it on-prem. They may want to have a dedicated instance to really focus on their performance and their capabilities, or they want to let loose for all their developers and then they can use the public cloud. So it's not just a naming. And same model, same capabilities, taking it from public with Bluemix as the platform, or a dedicated and local environment. So the same code base back and forth, so it's from a run perspective? In fact, we just announced this week the ability to leverage our pure app capabilities, where we have the software, the service, and the system that give you flexibility to be able to support new open patterns and the ability to deliver Bluemix local. So that's the seamless thing you're talking about, seamless experience from a workload perspective across the boundaries. Okay, so the local thing has a nuance to it. So it's not a marketing thing or a label. Local has on-prem, but it's also, with data, locality is an issue. Correct. So with the Internet of Things, I can imagine driving a car from France to Germany. And it'll... That's an issue, right? Well, that's important. The data is now in Germany. And if that's required because you happen to be a financial services company in Germany, then that's important to you. A lot of other examples, like what we heard from WhatsApp or from Bitly today is having that public cloud access is what they really wanted to get the reach in all of the geographies. So it really is a balance. You hit Bitly on the cube yesterday and we've always loved their business because the short URL code is kind of like, you kind of get lulled into the thing and it's pretty trivial but there's an unlocked data potential in there. And then also now they have a platform for link of which is URLs as infrastructure. So abstracting away that complexity in some cases, rudimentary functionality. I mean, it's kind of like, you know, DOS, it's hangs around, but it's... It's another form of data that now you can mine and you can get insight from to know more about what your users are actually doing. And an ad-free environment where people are doing ad blocking and stuff. You can actually have a good measurement experience on that. So I'm very impressed with that Bitly. And it's another ingredient in folks' digital transformation. And what we see everybody doing is really driving to that digital engagement model and doing it in the cloud. And now with 80% of it being hybrid, we really wanted to make sure they have those choices on how they can engage. I really want to drill down on the hybrid cloud integration piece. I know that's your title, Cloud Integration. Actually, it's in the title. I mean, you can't get any clearer than that, right? And one of the things I was interviewed, the CEO of Oracle Mark Heard, I asked him the direct question, you know, talking about startups and the ecosystem. Integration is now the new table stakes. And I said, you know, integration is important outside of your native environment. So Oracle does Oracle, you guys have IBM. But IBM is taking an open approach. So integration is probably a little bit easier from a barrier to entry from a partnership standpoint. But it's still complex from the customer standpoint. So there's now a higher bar, if you will, on integration. Talk about that dynamic because this is the new competitive advantage. That's our opinion on theCUBE. Do you agree and what's your thoughts on that? Absolutely agree that it's all about integration. No company today in a digital environment is going to do everything themselves. Whether it's their mobile app, the solutions that we build with Apple have an average of 18 to 12 different APIs that are called from somebody else to enrich the experience and make it better. Or whether it's your own enterprise systems, you're still going to rely on a lot of things from outside your organization to complete an end-to-end experience for a customer. So starting with us as the number one provider of integration already, we think we bring that to the cloud now to make connecting your systems a record, to systems of engagement, connecting to other clouds, connecting to other apps. But probably most important, connecting into the API economy, which is growing like a crazy rate. And that forces the customers to look at the integration points because now you have all kinds of potential security, you have to have now real-time information. And so that's kind of a native into the stack. And that's a new thing, whether it's IoT or mobile or user. And really defining what your services are and whether you want to use them in a freemium model to get folks started, or whether you really want to monetize those, or if it's really, and the interesting thing we see most often now is people want to get them to developers because a lot of the innovation is centered on the developer. So if you can tap into this 150% growth in the API economy, tap into that whole notion of a $2.2 trillion market, then you're really starting to participate. And that's where the ecosystem play, I think it's going to be really an opportunity for IBM is because you guys have an opportunity, you can see it with the Watson there. It's you're selling the Watson dream, but now it's a reality. Sandy Carter called it the catnip for developers. Herding cats, I love the, kind of connecting to, I said herding cats, but she said catnip. But it really does get the developers focused because there's a monetization. And to today's marketing climate, market climate, unicorns are kind of dropping in value, seeing so startups and developers need a partner that can help them monetize when ready. And is that part of the conversation that's more of a side benefit? No, I think it's a really important part of the conversation. I mean, at the end of the day, we see clients who are doing hybrid cloud, who are doing digital engagement, doing one of three things. They're either creating brand new content and they want to rely on as many new and innovative services as they can. Watson is a great leverage. They want to integrate and connect to other parties. So they connect their ecosystem. They connect to developers. They connect to all of the expertise that they have in their enterprise already. And they want to optimize both their operational dynamics. How much does it cost them to do all this? As well as how does it drive better productivity? We interviewed yesterday morning, Kevin Egan, who's the new head of digital. And it's interesting, he's got a digital transformation vision internally to IBM, but he used the term digital builders. We call them practitioners or doers or the folks who have to actually get the job done. So I want to ask you the question around from your customer standpoint, the ones that you guys sell to, they're out there looking at solutions. And there's not a lot of playbook information out there. And digital transformations is kind of an intoxicating concept because of course, yeah, well, let's get digital. And so it gets focused on the app. So it could be retail app or some in some, you know, line of business and there's some development going on, UX, all that good stuff. But to implement the new hybrid cloud, it's a horizontally integrated model. So they might be solving for the wrong problem or engineering, architecting the wrong side. It might be actually a DevOps or databases as a service opportunity. How are you guys talking to those customers are, what is, what, because they have the pain out there. Yes, absolutely. They got to go out there and do the, not the five year architecture, the one year architecture. Things are changing much more rapidly than they were. And we did a study of customers on that kind of digital transformation journey, what sets apart the trailblazers from the rest. And everybody talks about a compelling client experience, creating that value, you know, a market of one with a compelling new mobile app. Definitely have to do that. Definitely important to check. Yeah, yeah, table stakes. But once you've done that, if you're back end systems and if you can't operationalize your business model to now deal with thousands of markets, because that's really what you're doing when you're talking in individual marketing, then you have to have all your back end systems to be able to scale and automate at that same level. And typically you really need a transformational agenda to change your business processes to connect both of those gaps. And we see all three of those dimensions being really critical. And it comes back down to those three entry points. Are you creating that compelling new content? Are you really integrating it with the rest of your systems? And are you optimizing it so that it really fits in your business model? Those are the three major on-ramps to value, the digital value. But okay, let's get back to it. Outcome is really what we're trying to focus on. The business outcome is the destination of that whole process. But now under the hood though, it's not easy. It's complicated. Not, I mean, it's not, you guys try to simplify it. And I don't want to make it sound like it's really crazy bad, but it's really a great opportunity. So people are working on this problem. So where do they get the data? What do you guys offer them? What are you seeing? What patterns can you share from your customer visits that generally speaking, it's this area they should be working on. Is there like a sequence? Can you share? Sure, and that is something we're really trying to make much simpler. And with many of the connect series of offerings that we announced this week for the IBM Cloud, we think we do just that. But a center point is this whole notion of API integration. And we really think that the ability to unleash all of the apps, all of the services, all of the data that they already have, and do it in a very simple and easy way, whether it's with WebSphere Connect off of that entire state, we have over 200 million licenses of WebSphere out there. If you can unleash all of that and take that power into some of your new services, really good news. The same with the mainframe. Is there a Watson app for that? Just a Watson, give me the answer. Where do I start? I mean, where do they start? I mean, if there was a Watson for integration, what would it say? What would it say? It would say API Connect. Start there. API Connect. Absolutely a center point of really making it simple. You're going to take an API and a microservice and use that as the glue between your mobile app, your internet of things, your capabilities in terms of social engagement, your Twitter feeds, all the information that we've been talking about just here today and connect it to the entire enterprise resource that they already have. It becomes the glue. So I got to ask you, I was talking to Brian Gray, so he's our analyst on DevOps and in this area in particular, he calls them self-proclaimed hoodie analysts. But he's really digging into the whole blue mix and all that stuff, composed Ios, you know. We love data science ourselves. We eat our own dog food. But the issue is, okay, he said, it's everything as a service for IBM. So I said, I asked him, what's your theme for IBM? He's like, it's everything as a service. Is that kind of the approach? I mean, digitize everything is what I was saying because it would be digital. But the services, you mentioned microservices. Explain that everything is a service philosophy from a customer standpoint. But what should they know about what that means? Well, really taking the core business logic, you know, what is it that you're trying to accomplish with a task, with a piece of work, you know, creating an API is the doorway to that and having a microservice where you can execute it is really all it's about. It's just trying to make small units of work easy for people to access and doing it all on the cloud. So now you have an as a service notion and we've taken all of our middleware, all of our software and made it available on the cloud by decomposing it as services into Blumex. Now you've got one platform, one place to go is your innovation stop and you've got all of those services that you can now connect to. And it's not just ours. You said it before, I think the real important thing is that it's an open ecosystem. Doesn't matter what kind of developer you are, whether it's Java, whether it's Node, whether it's Swift, doesn't matter where you're coming from in terms of your background, you can reuse what you've had. So you're, I don't want to say the glue person because middleware is about gluing things together. It always has been in software paradigms. And now you have a modular kind of omnidimensional effect, whether it's languages and or use cases. So there's a lot of glue out there you mentioned in microservices. I want to bring up the container story because you know, you're going to see Swift, you're going to see these developers. There's a real push for the standardization of it onto the Docker standard. So one of the kind of the undercurrents in the developer community that we're tracking is that conversation. Hey OpenStack, hey Cloud Foundry, hey everybody, let's just standardize around the Docker standard container and then things get easier. That's a real kind of sore point in the kind of like the back smokey room of the developer world. Are you following that? What's your thoughts on that? Do you agree? Well, how would, what's your thoughts? Having an enterprise container strategy and approach is one that we think is fundamental, that people are breaking down work into smaller chunks, making a more portable, our whole notion of choice with consistency wherever you need it. That's exactly what we've done in Bluemix is providing a Docker supported container service and we provide all our runtimes in that model, whether it's Liberty or Node, those are there as container images ready to go. We also support it on-prem with WebSphere. So whether you want it on your enterprise, your local discussion before, whether you want it in the cloud on Bluemix, that is something we're supporting. Pick your preference, basically it's a menu. Whatever your mode of business operation is. Exactly. With any technology, with any standard, there's always going to be an evolution. There's always going to be new ways to work on it. We always want to make that easier and we want to do it in the open. That's why we've been driving all of this. You guys have been running hard. So I gave props to the Bluemix team because we've been following from, we were at Pulse when they launched. That was the old show that we're interconnect. So I remember Adam came on theCUBE and we had Meg Swanson on. Exactly. Great, grateful. They did an amazing job. We've watched them work. They've worked hard. They're running hard. So now you've got some real accomplishments under your belt with Bluemix. You've got the integration piece. So I got to ask you out in the field from a customer standpoint, where are the areas that are being hardened now? So you got this foundational stuff built with Bluemix. Moving fast, some differentiation with Watson and other APIs like I mentioned, Compose.io and other things. Where's the hardening? Where are you guys working to harden the stack now? I think you're seeing an evolution of the cloud stack all across the board. So I think there's going to be more and more integration and more fusion between infrastructure as a service and our soft layer capabilities with Bluemix, because it starts getting more seamless when you talk about containers and when you go beyond, if you've seen any of the open-wisc technologies that we announced, you're really getting even more granular. Some call it serverless. How do you just fire up a resource when you need it, when an event occurs, and shut it down? That was a big announcement. That was a big announcement. They got that out in really good time, so very impressive. So you're going to see that gradual that the resources just fit with the workload that you want to see. But we're also focusing on what are the new services? You saw a whole slew of new IoT services. You saw new cognitive services. theCUBE is a service coming soon. Yeah, there you go. We're going to plug into Watson. We are, we're going to plug in. Well, we want to find out what our tone is and day three, come on, bring in the energy. The energy, and we're launching a whole set of other new capabilities. Look at Blockchain. We just announced Blockchain service on Bluemix available for developers in addition to putting the code into the Linux Foundation hyperledger project. So, and we're announcing the connections. If Watson's catnip, what is Blockchain? Heroin? I mean, it's really intoxicating and addictive. I mean, people love that Blockchain because it's a very disruptive opportunity for developers. It really... Anything you can share on things you've seen. I'm actually open sourcing for the folks out there. They've open sourced the Blockchain source code, open source. Any new things you've seen come out of that one? I think the most important thing, you know, a lot of people immediately equate Blockchain with Bitcoin, right? And the whole notion of a cryptocurrency isn't what we're interested in. It's the Blockchain technology and what it opens up itself. Because it really allows you to have peer-to-peer ecosystem relationships that has security, that has consensus, and you can put things on the chain, which means anything that involves an asset transfer, anything that involves a transaction, anything that involves an ecosystem extension. An identity tied to a beautiful thing. It can be. It solves an identity problem and solves all kinds of validations. Exactly. Interesting in this Omni data world. Now, what are the possibilities in supply chain and healthcare to get different experts for different parts of your medical needs involved? That's what the focus is for you guys, if you can comment on that, because I think that's a transactional mindset. Is that talked about internally? Is that how you guys think about it? Well, it's not just the transaction. Again, we try to come back to what's the business value, what's the outcome? And if you can now make marketplaces more frictionless. And that's really what you're talking about, because you have the opportunity to eliminate a middleman in a transaction by having a peer-to-peer model. We're coming back to marketplaces again. We had B2B marketplaces before, now we've got B2C, B, everything. Everything's now a marketplace. But if the marketplace is represented by a chain for those people that all have an identity on that and can share information, you have some very different dynamics than everything going into a single point. It's a new mindset, absolutely. It is absolutely a different business model. So we're excited. We're looking at a number of different areas, whether it's peer-to-peer lending, whether it's how you could use it in supply chain, just simple asset transfers and IP, even software. I mean, IBM's getting in early in a lot of these things. Jamie Thomas, I asked her about open source DNA that's in IBM goes back to generations. And I said, if you can get a mulligan, not really a mulligan, because you did a good job. It's not implying you did a bad job. But knowing what you know as having seniority, if you will, I asked her, what would you do differently in open source? And she says, we talk about that internally. And she says, get in early. And we're trying to be the creators of these new areas. You never do any of it alone. It's not us. It's how do you actually get the community at large to participate and do it together in the open? And when that happens, you get the best innovation. We know that from all walks of life. You have the most diversity of thought. You have the best creativity. And speed's a new thing, too, dynamic. Speed to value, speed to get stuff out there. Developers want things now. You got this agile mindset, new changing from waterfall to agile developer mindset. Get the minimum viable product out there as quickly as you can and iterate it in the open. And you're gonna get better results. So as GM, your role, you have go-to-market, product, engineering. I really leave the whole focus. I do M&A. Business development of all kinds, whether that's partnership or not. M&A, come on. That's never something we talk about. Come on. But we're always looking. It's a ripe market, especially with the downturn and the people overfunded, AccuHire markets are booming right now, certainly in Silicon Valley, where I live. If you're a startup, IBM's moving. She's got the checkbook out. What we really want is that whole ecosystem to be doing it with the cloud connection and driving that. And also, you do have your checkbook out. I can tell by your sentiment. If Watson was here, yeah, she's writing big checks. But organic growth is also part of a growth strategy, not just by companies. So ecosystem is a part of that. And you're enabling people to make money. That's the point that we heard all through theCUBE this week is that enabling people to make money, I don't make it sound like it's greed, but if you're successful, you should have a monetization. Horizon Tide raises all boats. So if you really have a robust ecosystem that's addressing problems that customers care about, you're going to continue to see more value. Marie, great to see you on theCUBE. Always good to geek out because you can talk about the business side of it. You can get down and talk blockchain. Great to see you. Thanks for coming on theCUBE. Go to Twitter and search the hashtag CubeGems, our new innovation where we put out samples of theCUBE in small, snackable bites native on Twitter. Check it out. They autoplay, go to the hashtag CubeGems. Or just check out IBM Interconnect and go there. 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