 From London, England, it's theCUBE. Covering Discover 2016 London. Brought to you by Hewlett Packard Enterprise. Now, here's your host, Dave Vellante and Paul Gillin. Come back to Excel, London, everybody. This is theCUBE. We're accelerating the information flow with a worldwide leader in live tech coverage and Paul Gillin and I are here covering HPE Discover 2016, wall to wall. The always articulate and interesting Flynn Malloy is here. He's the vice president of services marketing at Hewlett Packard Enterprise. Great to see you again, my friend. Great to see you. Thanks for coming on. So, I want to start you off with a comment that Antonio made to one of my questions. I said, well, it's interesting to see the reorganization and the new focus and really your pure play infrastructure company. And he said, oh no. And I said, I know where you're going. Services. Absolutely right. And he said, it's a huge part of our strategy. So we don't see ourselves as a pure play infrastructure company because of services. Well, very much so. I think for the last few years, we've basically approached our largest customers as with the run conversation. We've got the enterprise services business, which is a really strong, very excellent business for our customers, outsourcing, applications business. And with the announcement last year of the spin out of ES with CSC, that really changes our profile in the market. And so we've always been a services company, but now as we move ES out of the company, this is an opportunity for us to approach our customers with an advise and transform message. Very different than a run message. So what's happened? Since you made that announcement in the summer, right? July? Yeah, June of last year, yeah. June of last year. So how did that conversation change? Well, so, as we say, for the last five, seven years when after HP acquired EDS and became our enterprise services business, this was the tip of our spear. And so as we approached our largest customers, the conversation was, let's take over your IT, let's outsource your business. And a lot of specialty applications business and a lot of specialty ways of doing IT that in an outsourcing business were better economics for those customers. And that's a run conversation. And those were the largest customers we had. And that was the way, from a services perspective, we approached the market. And the outsourcing business and the market has changed over the years, it is, we won't call it a niche business, but it is a very important business for some industries. Public is very exciting. But the combination of ES and CSC is very exciting for that business and for those customers. And as that separates from Pula Packard, in a way that frees the rest of the company to approach with a different mindset. So this is where we go in instead of a, let's talk about running your IT for you. Now let's talk about how you can transform your IT. We're bringing forward, of course, our great infrastructure capabilities and technology, but it's about digital transformation. It's about how can we help you get where you want to go? And we believe in HB, and we've said it before, that we believe hybrid IT wins. We believe that everything computes from core to edge. We believe everything's going to be software defined, push button simple and instant on. And these beliefs are really how we built our advice, consulting and services business, with what's staying with Pula Packard Enterprise. Digital transformation, probably the biggest buzzword of 2016. What are you doing differently? How are you defining this differently to be distinctive? Well, I think it all starts with what, why is digital transformation important? That is a buzzword. But go to what the customers, what our customers want to do for their customers. So what can the modern technology do for customers today? So let's take for example, Meg talked about yesterday, customers want to digitally transform their customers experience, right? So for example, Levi Stadium, that's something that Meg touched on yesterday. Ordering popcorn from your seat in the stadium is an exciting thing. Being able to see how long the queue is for the bathroom, while sitting in your seat in the stadium, that is a new experience for those customers, right? That drives revenue streams, more popcorn from your seat in the stadium, it's a better customer experience. The venue of Levi Stadium, that's what they want to do for their customers. So that is a digital transformation. Not to be difficult, but that strikes me as an incremental improvement. There's nothing transformative about seeing how long the restroom lines are. Tell me why that is. I totally disagree. I think that getting up out of your seat, walking over and ordering food when you can get it right from your seat, I think, and that's just one example, think about all the rest of the connectivity that you get from watching all of the live streams, from having a better IT experience in the venue. You can live stream, you can Google, you can Facebook, you can order your food from your seat. Yeah, you can see the bathroom. The attendance is declining, and they have to do something. But I'll give you a perspective of that. Maybe, but that is just an example. Just to say, that is an example of improving and changing your customer's digital experience with your company. There's like, every industry can come up with an example of how digitization and digital transformation can change the customer's experience. But Jeff Frick had the CIO of the 49ers on, I'll give you a little insight here. What he said is, and this is right after Jerry Jones built that big stadium with the big screen TV, and they were building Levi's, and he said, we're not going to take a similar approach because that big screen TV that Jerry Jones just built is going to be obsolete in two years. Rather, what we're going to do is we're going to wire Levi's stadium, and we're going to send video to this device. There you go. So we're never going to be out of there. Or two or three devices. Yeah, so that. Now that you see a football team that people want to come out and see. Yeah, well, I mean, look it. A lot of businesses would love to have that kind of attendance. Okay, so that's just one though. So changing how your customers do business with you, creating new revenue streams, finding new markets from technology. I think those are other ways that a digital transformation, there's lots of those examples from Uber to others, finding new markets, and then don't forget the importance of digitizing the core business processes. That's a huge way to transform, whether it's better ways to move bags around the airport or not. Like that is a big, all of those things represent digital transformations that customers look at and say, I want one of those. I want to go do that. Which begs the question, it's a good point. Is digital, what are customers asking for now? Are they looking at digital transformation as being operational efficiency, cost reduction, or are they looking at it as, you know, the Uberization, disruption, all the big picture stuff? Where are they really focused right now? Well, I think it depends on the industry, it depends on the customer. You know, I think when we, so, you know, going back to the, you know, the way that we're approaching customers with an advise and transform perspective, you know, we talk about those types of digitizations, the digital transformations, and we've got, you know, advisory practices that are built around hybrid IT. So a lot of the hybrid IT conversations are around, you know, I need to improve my core operations. A lot of the edge conversations, it's not a core operations conversation. That's a Uberization. That's a, you know, I can see my competitors going faster than me. And, you know, they're using IT to do it. I want to do that too. You know, I think big data is a similar thing. When you think of the big data opportunity, you know, that's not about improving your core operations. The big data opportunities are about getting ahead of your competitors, digitally transforming, getting new information, new insights, you know, sharing that with your customers. So it depends, I think, on what you're trying to do. You know, another really hot area, which I think also is not around core processes, but is around new markets, you know, is around speeding ahead of your competitors is, you know, one of the important areas that we're spending a lot of time having conversations in around, you know, workload and application migration and modernization. All the dev ops stuff, you know, this concept, we call it a now to next concept with our customers. This idea of democratization of dev ops, right? Where before dev ops is a sandbox that central IT owns and plays, right? Well now, you know, with you bringing in that, you know, all the different business groups want to play. You want to put out, you know, cloud native apps. They want the open APIs in order to play in their own sandbox. And so being able to take dev ops out of central IT and, you know, democratize it, you know, allowing other business units or even branches in a campus branch environment to have their own sandboxes to play in, you know, that's a really exciting area. And you do that with hybrid IT infrastructure. You do that with, you know, building for cloud native, you know, being able to do both, manage both across the environment, build a dev ops environment that everybody can play in. That's a really exciting area. That's one of the areas that we're investing in. And again, that's not about improving your core operations. That's about, well, gosh, if we could make a dev sandbox available to everyone out there and all the business groups, well, they could go faster time to market, right? They could put that out there and grab that cloud native thing they want to do, make the changes and put it out to their customers. Everything speeds up. So that's something, that's an example of digital transformation changing how they're doing business, right? So four or five years ago, we had Scott Weller on and he's the first one that sort of said to us, look, we are moving beyond break fix and we're moving beyond pure product oriented services. Absolutely. And then you guys came up with data center care and we've seen flexible capacity. We've heard a lot of buzz at this zero. So what we're looking for in the context of digital transformation here is those kind of IOT services that next generation that's going to bring IT and OT together. You've got a Ruba, I always use the analogy, you know, why not instrument the windmill before I instrument that I want to connect it. And so I can avoid truck rolls, right? Okay, so you've got that piece in play. We're excited to see, and I know it's early days, sets of services that really drive that IT and OT transformation. I totally agree. Talking about DevOps. When can we expect something like that? I mean, it's, again, it's early days. Is it a year out, two years out, five years out? What should we expect? Well, no, I think you're going to hear a lot from us this year on that subject. You know, it's certainly one of the things that Antonio will talk about, you know, building out, you know, a practice, really codifying a practice around intelligent edge. And intelligent edge is not just the sensors in big data. The intelligent edge is moving compute out to the edge, is bringing the edge, you know, into the rest of your environment in a way that has never happened before. And so we think that, you know, we've got a lot of big brains in our consulting business today around how to do that and compute at the edge, you know, which is, again, not exactly the same thing as I think the IoT conversation that's going on today. It's taking IoT and bringing that more into the IT side. So as you say, you know, the operations in IT together, we've got a lot of methodologies, a lot of thinking around that. And I think we're going to be talking more and more about our practice around that in 2017. Okay, another question. So what's always been missing to me anyway in the HP ecosystem is the big SIs, Accenture, E&Y, PWC, Deloitte, you know, you go to places like Oracle Open World, those guys are driving so much business. How has the conversation with those organizations changed since you announced the sort of EDS spin merge? Well, it's a great question. And, you know, some of the first phone calls we got, you know, once we made that announcement, we're from, you know, our big SI partners who are very excited about doing more business. You know, a lot of those guys look at HP as really being technology leaders. And we are, you know, when it comes to the bottom of the stack, while we'll work with anybody's stuff, we're not agnostic. We believe we've got the best bottom of the stack in the industry. We're inventing the future of software to find, you know, we're passionate about that. With ES moving out, with the applications business moving out and software, you know, a lot of the software, you know, businesses we have, the non-core assets moving, you know, and going out with micro, you know, this allows us to be top stack agnostic in a way that we haven't been in the past, which is, you know, Meg talked about the Pathfinder program, you know, bringing in Mesosphere, Docker, Chef, you know, all of these top stack, you know, which changes, you know, immediately. Every month, you're getting different, exciting top stack. Bringing those guys in, building an ecosystem that is top stack agnostic, you know, that's a very attractive, you know, set of capabilities and, you know, offerings to the SI partners who, you know, are in the business of teaching banks to be better banks. And you know, we're not in the business of teaching banks to be better banks, but we will teach banks how to be better banks with IT. And so those guys, we're having, you know, our conversations with, you know, the system integrator partners, the big guys, Cap, Deloitte, Gem and I, you know, even the small ones, they've increased substantially because of, you know, we're out of the outsourcing business now, you know, with ES moving out, out of the applications business, which makes us top stack agnostic. And a real strong technology powerhouse and we're having a lot of conversations about getting deeper into some of those bank conversations, for example, but with, you know, our bottom stack and our understanding. So there's still a line you have to walk though, especially as you jettison those businesses from a services... Well, they're still partners. They're not, we're not jetticing them per se, but... Okay, but you don't own them anymore. Actually, you do kind of own them. We do. And your shareholders own them. They're our best partners in the industry. You're right, there's nuance to these spin merges and they're quite an interesting vehicle. But nonetheless, it's different, right? It's not like they're going to be a fundamental part of your marketing message and you're not going to be marketing those brands nearly as much as you had before. They're going to be part of the partner ecosystem. My point is from a services TAM standpoint, it sharpens your focus, which is a good thing, but I would think whomever is the head of services is going to be thinking, all right, well, I could seep into that business. You've got a swim lanes conversation that you have to have with those partner organizations. My question is, are you a product company or are you a services company? We're an IT company and yeah, we're a services led company. Antonio will be a first to say, if you want to digitally transform, all due respect to the amazing technology that's coming out of labs in our R&D, if you want to, as a customer, if you want to get where you want to go and you need to digitally transform to do it in all the ways we talked about, that's more than buying a server. You need to go through a process. It starts with, let's understand what your outcomes are, what do you want to do? Let's take a look at the management of change. What are all the processes that need to change inside of your company? MOC, management of change, big part of our secret sauce of our consulting business, well, we'll sit down and we've helped 30 other companies change in the exact same way. Here's our learnings. Here's the blueprints for how to go from where you are to where you need to go. And then includes management of change and includes all these other elements. And as you, we put that blueprint out there, we will take you on the journey from where you are here to where you go and plug in the best technology in the industry in the process. But that's a journey and that is a services led journey. As Antonio will say, that's the company that we are and that we will be in the future. The weakness of systems companies being in the services business has always been that fundamentally, you know, you're there to try to sell your hardware. Right. How do you get around that? Or maybe you don't, maybe you are there to try to sell your hardware. Well, you know, I think, if you asked me that question five years ago, that was a touchy thing. I think a lot of the big customers would be like, well, you know, we want to have a conversation with you and you're brilliant consultants, but you guys just want to move your technology, right? I think that you are not technology agnostic five, six years ago was a topic that came up a lot in our big pursuits. You know, well, you know, we're not a pure HP shop. We've got a lot of HP, but because you're not product agnostic, that used to be an issue. I think that if you were to sit on, you know, as a fly on the wall in our last, you know, 50 big services pursuits in the company, not the ES side, I think you'll see that that is not an issue that it used to be. What people are more interested in, what customers are more interested in now is not the bottom of the stack. Are you agnostic? Are you not? I have my own preferences. It's all top stack. You know, it's what are the applications? This is my baby. These are the things that I want. You know, that top stack agnostic is, you know, we think a much more powerful differentiator and a reason to choose us than bottom of the stack. Most customers don't, if you're delivering that fluid infrastructure, I don't care if it's all HP, you know, the bottom of the stack, make it look better. That's fine. I don't have preferences there. What if it's all Amazon? Like GE says they're moving large, most of their organization to Amazon. Is that going to be your sweet spot as well? Well, you know, I think as we said before, we believe hybrid IT wins. We don't believe moving everything to Amazon or moving everything to public. We don't think that that's where the end solution is. I think what you're seeing in the industry with all of the tool sets that are coming out, replicating what you find in pure public cloud. I think what you're seeing in the industry is the price points, the tool sets, the efficiency is starting to get, you know, what public cloud used to have. It's starting to be replicated in the on-prem environment and more and more and more and more. This cost points are converging. And if you take that totally out, if you take the efficiency, the tool sets, the cost points, totally out of the conversation, where do you want to land your workload? That is the question. And if all of those other things being equal, they're not going to put it all out over there. We don't believe that's the answer. I don't think you guys do either. Well, no, and IoT is the other reason because we've, you know, our analysis clearly shows that if you're going to put stuff at the edge, you can't go IoT all in the cloud. It's just way too expensive. You're moving too much data. Absolutely. And it's just not going to be real time enough. And you're right. Our data is about two thirds going to be on-prem, about a third in the cloud. Obviously the public cloud is where it's growing very rapidly. Oh, there's some great innovation. Everybody wants to take advantage of that innovation. We encourage our customers. Absolutely. That's where so much innovation is coming from. But your data, whether it's your regulations, your data, your crown jewels, you know, there's a hundred things that customers, if given the choice, that they're going to put it here. They're not going to put it there. Well, the interesting thing that's jump ball there is the other part of our analysis we show about $200 billion in IT labor that's today doing a bunch of, you know, provisioning of LUNs and servers going away. Absolutely. And that creates some really interesting opportunities for digital transformation, how to apply those resources, and it frees up budget. I totally agree. That's what's exciting for your business, I think. Well, and I think, you know, going back to the technology, another really important why people choose us and why they're going to continue to choose us is that technology insight. Really taking a look at where the puck is going and what you've seen this week from, you know, synergy, the composable infrastructure, you know, the next rev, you know, we're really excited about, you know, some of the innovations that the machine is bringing to market, you know, it's changing. You know, the puck is going in different directions and a lot of why customers are choosing us and will choose us is related to that innovation that's coming. And so I think, you know, that is going to continue to change. The dynamic on how all of that, you know, what goes there, what goes here, how you can use it, you know, how you take labor out of the equation, how do you build out software defined, you know, push button simple, I can do it in my pajamas at home data center. You know, the more you can get there, the more people are going to have the, they can choose where they want to land their workloads. And you're, and that's why, with that technology moving, if everything stayed the same now, you could make the argument that there's a lot of public cloud out there, but everything's not standing the same. You know, as software defined moves, as it changes, as all those price points converge, it really will be where do you want to land your workload? Everything's going to be equal and you can take your choice. Well, services, exciting business, a lot of energy. They put in an executive with energy in charge of the marketing. Flynn, thanks so much for coming to theCUBE. It was always a pleasure to see you. My pleasure, guys. I look forward to it. Thanks for coming out. Keep it right there, but we'll be back with our next guest. It's theCUBE, we're live from London. HPE Discover, right back.