 From Las Vegas, expecting the signal from the noise. It's theCUBE, covering InterConnect 2016. Brought to you by IBM. Now, your host, John Furrier and Dave Vellante. Okay, welcome back everyone. We are here live in Las Vegas for IBM InterConnect 2016. This is theCUBE SiliconANGLE's flagship program. We go out to the events and extract the signal from the noise. I'm John Furrier, my coach Dave Vellante, our next guest is Laura Sanders. GM, GTS Systems Services at IBM. Welcome to theCUBE. Thank you, John. Thanks, Dave. See you, Laura. Thank you. We were just talking about OS2 and reminiscing on the old day. How have times changed? Going back, looking at what's happening now, it's pretty exciting. I think this show really kind of looks at getting away from the speeds and feeds to, okay, integrates a new game. I got to deploy stuff. I got to transform. I need developers. All this is happening kind of at once. What's your take on it? I mean, what's your view on this? Have you seen the trajectories? What's your take on the current market right now? Well, we always had a joke in OS2 is, we didn't form egg. So it's really changed a lot, I think, from, like you said, just the focus on the technologies really to how folks are really leveraging it. And I think the show, even today, having the users, the clients and the startup to come in and say, here's how I'm leveraging the capabilities as opposed to what we normally do is we stand up and say, let me show you 12 demos. And I think that's real reality for what the clients are going through and what our value is to them. I kind of did a keyword snapshot of the keynotes on our intro segment here on theCUBE and it was a hybrid cloud all in, cheap compute, VMware, open technologies, video digital and Apple developers. That kind of encapsulates essentially the keynote, but all those things are threaded together. What does that mean for the buyer of technology these days? Because digitizing everything, certainly someone we talked about on the intro is a goal of customers, that digital transformation. But now you have to maintain the existing base of the enterprise. That's a VMware touch point. Don't worry, nothing's going to break. But you got to bring in a new era of developing hybrid cloud. What does that mean for the customers? What's the impact to their business? Well, I think if you think about it from the customer standpoint of how they can help the business and or grow their business and how technology and the CIO can help the business do that is, first of all, I mean, what great technology and capability and all these forces coming together to get you to digitization faster. I mean, if you're a business and you're not paying attention to the value of hybrid and how it could support you in, you know, going to new channels, going faster to digitization, you're really missing the point. And then secondly, think about how all this helps the CIO and we say this helps them go from the integrator of systems. So really like the old, let me put all the piece parts together to a true integrator of services because people need to buy as a service to stay up with this and then move forward with it. But I would say the big thing I would say to clients is don't miss it because you probably won't be here if you do, you know. So who are the people that are actually creating those digital assets, the digital companies? Who are they? And let's start there and sort of work back as to how IBM, you know, connects to them. What are they trying to do? Who are they? How do you help them? Yeah, so I guess I have an interesting vantage point and we're the world's largest services provider and we have been integrating hybrid for years and years and years and years. I mean, we're, I always say we don't just have one of everything, we have a hundred of everything. We probably have a thousand of everything and what we see for the suppliers that come to us that want to offer things to the clients is it's about disruption. It's about the capabilities to do things. What we've always said, better, faster, cheaper but also more integrated. And that's really helpful for us as a service provider because we've always had the requirement to show visibility and openness and help people take advantage of their entire compute models and now the technology is helping us do that more and more and so I think they really see they see that they can make money doing it and they see they can do better if they work together and that's good for the industry. In our premises, they don't wake up saying I want hybrid cloud, the business people say I want services to create digital assets and allow me to transform my business. And so talk about, again, how IBM supports that connection, that integration. Yeah, so you heard Richard Holmes this morning from Westpac Bank. I mean, we started with Westpac and we managed the environment with Richard and we started with them quite a long time ago and they came in and said, you know, I don't want that traditional tower model anymore. I want to offer as a service to my client base and I want you to offer that to me and I want to take advantage of these different compute models and I want you to tell me which app to migrate, when they should migrate, how you're going to manage them and by the way, I still want that single throat to choke. So the way we're working with them today in very real time is using our brokerage capabilities to look at their application environment and see which ones make the most sense for which environment and put them over there and then also take them to a standard set of platforms. So the application providers, when we're doing DevOps, they know this is my platform and I can allocate it. I mean, you heard Richard say we went from 84 days to basically minutes and one of the reasons you're able to do that is not just because you have cool technology, it's because you have somebody like Richard that says, no, no, we're going to standardize on these things. And so we really see the capability to help clients do that in any industry, whether it's banking, insurance, retail, et cetera. But you also need a good force inside the client that wants to change. And everybody keeps saying, you know, disrupt or be disrupted, they're right. One of the things we hear a lot, certainly go to a lot of events with theCUBE, we talked to a lot of customers, your customers and other, your competitors' customers and there's a kind of a recurring pattern. So I want to get your taken, some patterns that you see out in the marketplace. One of them is that we see is, oh, I need a retail app or I need a financial services app that seems to be the conversation lead point, but it's not necessarily what the problem they're trying to solve. So you say, oh, a retail app or a bank, oh, here's by the software. It used to be the old way, that was a software, you come in, tweak it up and roll it out. But what they're really saying is, no, I want to change my retail component or my financial interface, but it becomes actually a DevOps problem. So it's a horizontal value chain. How do you guys see that one? And what are some of the patterns that you guys are seeing because a lot of people are trying to figure out where do I focus? Certainly the app will be an endpoint. Is it in the cloud? What are you seeing? So we see a couple of key things of folks that are doing it well. One is they focus on the data platform. If you don't focus on where and how you're gonna leverage your data across any of these environments, it'd be like saying, in the old days, I was gonna have my data in DB2, but only this tower and that tower could talk to it and this tower wouldn't know anything. It's like, oh wait, they did used to do that. Remember that? So now it's the ubiquity of that data both for systems of record and systems of insight because that being able to leverage that data quickly into those systems of insight which is what's creating a lot of those new channels. So we say, number one, have a data strategy. And the second thing is really think about the business problem you're trying to solve as opposed to I wanna buy a tower of technology or I wanna buy this capability. What is the business problem you're trying to solve? You're trying to get an application to market more quickly or you're trying to open up a new channel and then okay, let's make a selection not just around that but around your overall strategy for data and structure and then the introduction or the move forward of that application. I think the more the CIO can think of I'm behaving like a business person and I'm integrating services as opposed to I'm setting up new platforms the business will do better and better and they'll speak the business's language. So a lot of people when cloud started to gain popularity said, all right, deal sizes are gonna get much, much smaller. You guys announced on your earnings call for Q4 that you did 70 deals in excess of $100 million last year and 70% involved some type of hybrid cloud IT whatever you wanna call it. What's going on? What did people miss and help us peel the onion there a little bit? I think it's two things. One is there's a lot of really large international companies out there that are intelligently saying I don't wanna just do this in one place, I wanna do it similarly all around the world and so they're taking advantage of those capabilities. The second thing is for some reason people all thought cloud was the enemy of services management and I mean I just think it's absolutely funny. It's like because clouds don't have to be managed. I don't know, they're gonna, so anyway. So we've seen both ways, the very, very large deals as you just quoted, stay very healthy and active and the clients really wanting to take advantage of those models and wanting a single services integrator to do that but we've also seen great growth in the smaller deals where clients are working on I want this particular workload or I want this particular capability, I want to create this new channel, can you just take care of that for me? And being able to do that to manage anywhere for them is a really big load off their mind. I mean they're interested in the leap of faith, one they're motivated to do it on their business side but it's also the fear factor you brought up, the cloud threatens, I'm not just my words, threatens IT, I mean we've heard that before. Oh my God, my job security, when you automate away capabilities that's an opportunity to shift the resource, can you share your perspective on how those conversations go and where you've seen companies be successful because it's not so much about job elimination per se. Yeah, I'll- If you have a programmable environment and all digitally data is a programmable data set, wouldn't it be an opportunity to where are those opportunities? So I'll use us as an example, I mean obviously as a very, very large services provider we have these great kind of skills that do this on behalf of clients and let me tell you, they are not sitting there going, oh my God I won't have to push that button anymore every day and retype all that in, that'll be awful, they're going bring it on, give me the API, show me how to do this and one of our fastest growing services is a managed service that allows our team to manage any kind of environment, hosted, software, Amazon, anything. And do it for you in a repeatable fashion and it's all about the value of common tooling, leveraging the cloud APIs and moving forward and let me tell you, they are excited about it. So those are your brokerage services? So that's our managed service? Some of that was through acquisition and you had some of your own and so you're bringing that together, is that right? Yeah, so we already have a very, very broad managed service both through our outsourcing and managed service business and we always say we can manage from anywhere to anywhere, it's a very powerful statement. And then now being able to say, through cloud models and these heritage models like VMware today, we can also help you plan, buy and manage that application, so basically IT brokerage on top of that full management system and orchestrated, et cetera. So it's very, very powerful because you have both the automation but you also have that awesome visibility for the client that says select where you wanna go based on the application attributes, decide how you're gonna do it and you have the workflow. But the other thing you have is you have total transparency in the operations and the billing. I mean, that's totally different than it used to be like, okay, here's my spreadsheet. And repeatability globally. That changes your whole economic model, doesn't it? I mean, it really starts to look more like software than it does services to a point. I mean, you still need a lot of people. Everything's more repeatable, you can make a service, everything gets better. You mentioned some cool things that I wanna get your thoughts on, the renaissance of areas within the enterprise or an IT or in the technology area. That's being reborn again. It's always the new stuff. So talk about, and there's always stuff that dies, if you will, if you don't pay attention to it, you're gonna die. But talk about the areas that you see that are new and compelling for IT and CXOs and CIOs and other areas that are being reborn with energy. IoT, for instance, really has been around for a while in the data center. Certainly IT service management, a lot of the kind of plumbing in the data. That's been an IoT problem from day one. That's kind of a random example of a new reborn kind of fresh perspective. Where are the areas that are being energized? That were traditionally kind of like Co-Hum or just blocking and tackling work in an enterprise. And what are the new areas? Wow, that's a big question. Wow. So I think, I kind of take it in two phases. One is there's a lot of things that are still the same. If you don't control your IT and don't manage it correctly, you're not gonna do very well with supporting your business and keeping up with it. And so things like integrated service management, things like understanding your compliance and control. And from a negative side, you think about like the old spreadsheet days. Remember when everybody had their own spreadsheet but the CFO really thought he knew what the financials were in the central system? So to me, that's kind of like the shadow IT. He's like, I don't have any shadow IT. Right. So you have all this great opportunity of all these models that people can use, whether it's software as a service, infrastructure as a service, platform as a service. And they go out and use them. And the central business doesn't know about it and they're getting all these issues with security, et cetera, and certainly burgeoning costs. But now if you flip that around and think about that as an opportunity, the fact that you can actually use those models and use those channels to go to market faster is a great opportunity for the business. And I do think for areas and industries like industries that can use internet of things, they're really having to understand the value of IT to differentiate their business. I mean, who have ever thought you'd be monitoring a washing machine? But you can make a lot of money monitoring a washing machine. I don't mean just being the monitoring, but if you know I'm out of detergent, just think of all the 12 ways you can monetize that model or send me the right part or whatever. And so we really see the whole advent of the capabilities of IT coming directly into the boardroom over and over again, not just cost optimization. And Arie, what do you guys see about IoT out there? Well, we see it certainly proliferating inside the network, but there's always this edge of the network. If you have power and you have connectivity, everything's IoT already. It's true. Outside of that, it's a little bit dicey, but you know. If there's connectivity, then instrument it. And we're seeing all kinds of action at the edge, right? I mean, that really is where there's a lot of innovation. Well, I wonder if you could, because you've got a good historical perspective here. You've seen the ebb and flow of IBM. What gives you confidence generally for IBM and specifically for the services business that you're in a good place now? Last four or five years, Ginny's orchestrated this massive transformation, changed the organization around, feels like you guys are now hitting critical mass, you got your swim lanes back in place. What gives you confidence going forward? I think there's a few things that give me confidence. First of all, we have a tremendous client set, and they are the most important thing in the world. So waking up every day and supporting them, and I don't know if you guys have seen the new commercial that says, hey, my dad's company didn't get hacked today, or hey, my whatever. When you're managing all these environments, you wake up in the morning and you go, oh my God, all this stuff that's running, we're making it happen, and the value of that to the client, I think sometimes is lost because it's lost in the hype of all the technology because it's behind the scenes, but you know what? You want it to be behind the scenes. It's like electricity. It's always on, it's always available, and let me tell you, we are one reliable source. We're running your operation, or we're doing part of your management, or we're in charge of your network, or we're doing your mobile, or we're doing your resiliency. We're accountable, and we take it very, very seriously, and that client base and the advent of that client base to help other clients understand why they made that decision, that makes me very proud and also very comfortable that we can go forward. Now the second thing is, this is a very, very strong global business. I mean, you brought up the large accounts, but it is a business that actually operates around the world, and it is very consistent around the world, so you have all the values of economies of scale, et cetera, but you can work in the client's own market, so you can work in, you know, whether it's Italy, China, or whatever. And the third thing is our ability to take advantage of these new technologies. I mean, that integrated service management layer and putting us on the top of the stack that says, let me tell you, Mr. Client, how your environment is running, it's very, very important, and now being able to do that with brokerage and providing them the speed and the flexibility along with the control, but most of all, the visibility, because at the end of the day, it's a business decision on behalf of the client. We are there to serve the client, so I wouldn't even use the word hopeful. This is an awesome business, and it's a really great part of IBM, and it's great to have all this technology to hang out with, and we help each other. Hey, that didn't work quite right. Okay, why don't you guys try this and back and forth? My final question to end the segment is, what's your advice to your clients when they hear things like open technologies, Apple, APIs, hybrid cloud? There's an era of openness, which in the perimeter of security is no longer there. You got APIs, and you have to balance that notion of running things reliably. At the same time, putting in new technologies, it's a real integration challenge, whether it's from a startup or from an open source project. How do you guys advise your clients? Is there a playbook? Is there an IBM way? What's your approach? When you think about crawl, walk, run, and crawl doesn't necessarily mean go slow, but you don't start with a five-year architectural strategy. You'll be older. Start with the business value that you can get by iterating and taking something to market or trying something, because don't forget, a lot of this isn't just what's outbound. It totally changes the way your people work internally, and you have to get them used to that as well. So my view is you'll never learn if you don't start, and everything's scary. I mean, there's nothing that's new that's not scary the first time and can't break, but you have to crawl, walk, run, and do it in a fashion where you can provide business value on the way, otherwise, just like every other project, it'll die. Laura, thanks for coming on the queue. Really appreciate it. Any vibe of the show so far that you can share with the folks watching, the vibe here so far? I think it's terrific excitement in the show so far. I think I really love the fact that we started with the three external speakers this morning, and I'm really, really thrilled with all the capabilities that we announced that were ours, but also weren't ours. It was great to see VMware, Apple, et cetera, up on stage, and so I hope we're putting across the, we're open and we are definitely about a hybrid future. Laura Sanders here inside the queue. I'm John Furrier, Dave Vellante. Thanks for watching. Go to siliconangle.tv for all the coverage. Now, of course, go to youtube.com, so I have Silicon Angle, and you get all the footage. Oh, go to Twitter and search Cube Gems, hashtag Cube Gems. All the footage is going to be on the net. We're spraying the digital assets everywhere. We possibly can. Thanks for coming on. Really appreciate it. We'll be right back with more after this short break.