 Live from London, England, it's theCUBE. Covering Discover 2016 London. Brought to you by Hewlett Packard Enterprise. Now, here's your hosts, Dave Vellante and Paul Gillis. The HPE Discover 2016, this is theCUBE, the worldwide leader in live tech coverage. Alistair Winner is here, he's the Vice President of Technology Services Support for Compute for HPE. Alistair, good to see you again. Great to be here. So, we were just kind of riffing off camera about the growth in services, two consecutive quarters of growth, it's powered. You know, a lot of the cash flow on HPE's income statement and a lot of the things that you've announced a couple years ago really starting to kick in. Give us the update on the services business. Yes, well thank you. We're really proud of the performance of the business, two consecutive quarters of growth and services being very much an annuity business takes a long time to turn around. So we've got the tanker turned around and we've got some momentum now. So really what we've been focused on of course is ensuring that we're wrapping our great products with the appropriate professional services and support. So, you know, very much a traditional support focus business, we're doing extremely well there. But also, we sort of diversified a little as you referenced a few years ago and we started to focus on developing new experiences that were maybe less associated with the product itself. So with our data center care solution and that's been extremely successful. So we've really focused on developing this experience which is all about helping customers drive success through IT. So it's not just about supporting them, it's about how they extract the value from that. And flexible capacity which you'll hear a lot about during the show and it's very, very visible here has been really the superstar performer for us. So that's really services leading products and allowing our customers to consume IT in a very different way. So it's a cloud-like experience but on-premises. And really, you'll see the tagline here is why choose. Why does the customer have to choose between public cloud and on-premises? Data center, IT with flexible capacity, they can actually have it all. So that's been growing hugely and we're very, very happy with the performance of that business. It was kind of you to point out, not to point out, my mistake in the introduction that I was saying HP was getting out of the services business, obviously clearly you're not, but you did do a spin-in transaction earlier this year, got rid of the former EDS business. Can you explain, I think there is some confusion over what exactly the services strategy is. Why did you do that transaction and what was the strategic, what have you kept strategically? Sure, that is a great question. Thank you for the opportunity to cover it. So the way I'd simply describe it is that we're out of the outsourcing business now, whether that's IT outsourcing or business process outsourcing, which is really the bulk of what EDS or EES had to offer. Clearly, given that there's now a focus on infrastructure, HP is very much focused on the infrastructure, there's an opportunity to wrap that with services, with advisory services, with professional services and with support services. So the business that remains is very large. We have over 22,000 professionals. We have great partnerships with our channel partners and with our technology partners. So it's a very vibrant, very active business. And I think with EES moving out, it gives us the opportunity to partner far more with the likes of Accenture and Wipro, who I know you've already talked to there. They're good examples of now where we can really step forward and engage with those in a much more active way. And so what are the swim lanes there, Alistair? Obviously, you've got your product-related stuff, you've got what you're calling non-product-specific services, like data center care, flexible capacity, but describe in more detail the swim lanes between what HPE services would do and what some of your partners would do. So I think, as I indicated, really our services are much more around the infrastructure itself. Whereas I think our big partners, they bring a level of industry vertical knowledge or some specific insight and value that we can't and will not recreate inside of our organization. So you'll see us, I mean, we'll bring some vertical expertise and products that will be appropriate in certain markets. But I think the opportunity really for us is to be the infrastructure partner for those SIs and companies. And there are certain services, value propositions that we can bring to them that actually differentiate them in the market. And again, flexible capacity is a great example of where, for example, in Accenture, which really doesn't want to get into the data center ownership business, can actually offer that type of solution to their customers using a flexible consumption model powered by HPE flexible capacity. Digital transformation is a big theme at this conference. It'll be the theme of today's keynote. How does your organization relate to transforming your customer's business? So absolutely and it really is key, key strategic area for us. I mean, what I would say is, and what we observe is actually as customers transform to a digital business, actually the IT experience becomes almost synonymous with the customer's own business or the experience of their customer or their partner or their employee. So whereas previously, really we were here to help the IT department provide a service to their internal users. Now actually what we're doing, especially as you get to the edge, the intelligent edge, actually what we're doing is really what the customer is experiencing. So a huge opportunity from a service's point of view to add some value and content there. We're really focused on, from an advisory perspective on four key swim lanes. We're looking at hybrid IT, so really the ability to manage this on-premises IT and cloud IT and really being able to help customers place their workloads correctly and being able to provide a support solution that covers both. So regardless of where they end up operating, they have one support provider that they can turn to. As part of that, we're looking at applications, not recoding applications, but helping customers modernize applications with technology like Bucca, which you saw. So really pushing on infrastructure automation and helping customers utilize things like microservices effectively, so those two. Then we focused on IT edge, really bringing value to the edge, bringing compute to the edge and really offering services that help our customers there. And again as part of that, we're looking at big data and really helping ensure that the insight that we're able to extract from devices at the edge is processed and brings value at the edge. So you'll see us very much focused on those areas in terms of advisory, and those typically resonate very well with our partners. Now several years ago, correct me if I'm wrong, but the technology services support organization was folded in under the enterprise group. And that was an attempt to sort of align things better, streamline the organization. You've always had obviously capabilities around product, but then you've extended beyond, as you pointed out, beyond product. Now with the EDS Spin Merge, the CSC, and of course the software division as well, going to micro focus, particularly the latter. Has that also sharpened your focus as a services organization? And how has it done so and affected other potential partnerships? Yes, I mean it certainly has sharpened our focus. I think you hit the nail on the head. Really what this is forcing us to do almost is explore new partnerships and really looking at how do we construct an ecosystem that delivers an experience to a customer that where we can really overlay our capabilities and our global strength. So Docker is a good example and Mesosphere is a good example of where we've worked very actively to bring I guess a traditional support element to it. So we want to support their products, but also using solutions like flexible capacity, look at alternative ways for customers to consume. So you'll hear some news on main stage today about what we're doing in that regard. Some exciting news that really shows how we can combine the value that we bring with the value that some of these innovative partners can bring. And you'll see us do more and more partnership work. I want to take you back to something, a term used earlier, hybrid IT. We hear that term a lot these days. It's not the same as hybrid cloud. It's a different organization. It's a different way of delivering IT services. What is hybrid IT? So very simply for me, it's a customer and IT department having a number of sourcing options, whether that's on-premises, delivered IT, in a traditional delivery model or a private cloud, or really taking service from someone else's data center, is the way I would describe it, whether that's a public cloud or software as a service. So really what we're seeing are IT departments embracing the cloud as a sourcing option. I would say two years ago, they really saw public cloud as a threat and they were doing everything they could to really avoid engaging. And that actually forced a number of the business, lines of business or developers to actually go to the cloud directly by passing IT. I think we now see IT really viewing it as a strategic asset. And really what we're saying is, look, we need to ensure that placement of workloads is simple and it's agile and it supports the ball end to end. So we're saying, look, what we want to do is to create a support experience, a services experience that embraces that and ensures that as customers move workloads from on-premises to cloud, or they decide to continue to run on-premises, that it's a simple experience and they can consume it in a way that brings value to them, both operationally and financially. But that's a structural change. I mean, that's a cultural change. Is that within your domain? Yes, yes, it absolutely is. Do customers typically come to you saying we want to get to hybrid IT, we want you to help us? Or is that something that you will nudge them toward as you engage? So I would say two years ago, we were nudging. I would say today, every customer I talk to is already doing hybrid IT. And it's more about how do they refine that to a point where it's fully operational and really adding the value that or the potential value that it has to offer. So I'm hearing a story, Alistair, of sort of streamlined organization, focus. It's going to be kind of strange asking a services person this, but I see HP as a technology and product company first. Is that fair? No. Okay, so help me square that circle. Look, we're clearly very proud of our engineering heritage and we make great, great product. It's the roots. It's the roots, it's the DNA of the company and we're very, very proud of it. So maybe I was a little bit disrespectful to my product. But I think, as I've described really, what we're seeing is customers, a few years ago, what customers used to decide is, look, this is the gear I want. Help me decide how I want to buy it. Now customers are saying, actually I don't want to buy gear anymore. Help me consume it, whether that's on-premises or from the cloud. So what we're doing, what the services team are doing and the product team are doing is really driving to a common vision, which is about simplicity and agility. How could we remove some of that undifferentiated heavy lifting that we were doing many years ago when you were operating a data center? Many of these things really don't add true value or differentiation to a customer's business. They're important IT tasks, like backing things up or updating firmware. These are important things you have to do when you operate your own IT, but they don't really add differentiation to a customer. So what we're doing on the services side is saying, look, a customer has an existing investment. How do we work with them to simplify the operation of that investment? How do we take away that undifferentiated heavy lifting? How do we automate it? Because there is lots you can do with an existing investment. And then obviously our product teams are developing technology which brings additional simplicity and agility. So when a customer decides I want to continue to consume IT on-premises, when they roll in our new gear, their experience just gets better and better. So you really need these two things. They're very symbiotic. And it's all about this experience. And you cannot deliver an experience just through a product alone. It's a combination of the product and the service. How has the decision process changed? And in the days of outsourcing, it was very much an ROI decision. Buy my equipment and you're going to save me X% on my costs. How have those factors changed in this new world you're talking about? So I would say, I mean, you still, I mean, there are still lots of customers that buy through a traditional or procurement method like you described. But more and more our discussions are happening with the CFO or with the lines of business, especially the CFO actually with a flexible consumption model like flexibility. So really we're talking again, we're sort of leading with consumption as being the sort of the primary discussion point, really trying to look at how do we maximize a customer's cash flow? How can we explain the true cost of public cloud versus on-premises cloud? So I would say that the people that we're working with, the personas still exist inside of a customer the same as they always have. It's just that we've sort of elevated our discussion outside of procurement and classic IT to talk now with the financial organizations and also the lines of business to really understand what's the experience that they want to create for their customers. And through doing so, actually it makes what we have to offer much more valuable to IT. As infrastructure becomes programmable, we talk about infrastructure as code. We talk about heavy high degrees of automation. That's a whole new business model for not only HPE but for its customers. And it seems like the role of the services organization, the technology services and support organization is to facilitate that new business model for your customers. So last question is where do you see this going over the next 12, 18, 24 months? We're at Discover, let's say, two years from now. What's it going to look like? Wow, what a question. So I think you'll see us continue to be very much services centric and services led. Actually, if you walk around the floor today, if you go to the transformation zone one, transform to hybrid, this is a completely services led, services managed experience. So I think you'll continue to see us focus on that. As you say, automation, this notion of simplicity and agility is really critical to the company, critical to a digital transformation. So you'll see us continue to focus on that. And I really hope what you'll see over time is that it'll be very difficult to sort of spot the services guy from the product guy because these things are going to become one. And that's certainly our hope. Excellent. All right, Allison, thanks very much again for coming back in theCUBE. My pleasure. Okay, keep it right there, Paul and I will be back with our next guest as theCUBE. We're live from HPE Discover 2016 in London. Keep it right back.