 here with David Parsons, the CMO of CSC. Welcome to theCUBE. Thank you. Good to be here. And how you feeling? Are you feeling tired yet? What's your vibe here? Energy is good. It's first day. We're going until eight o'clock tonight, so we'll be really excited. First question I have for you is, what do you think of the show? Jeremy Burton, who's the CMO of EMC. First show, 100% owned by Jeremy. A lot of flair here, a lot of sizzle. Yeah, no, EMC does a great job with these kind of events. It's very hard when you mix the combination of technical community with the line of business and the C-level, and they do a good job of balancing the strategic relevance of the technology with the interest of the technologists that have to implement. So Dave, we were talking off camera. You've been in the business for a while. You were at Compact HP. We were talking about the integration. You went through a lot of interesting services transformations. What's different about today? The services industry has always done a good job of picking up on the latest trends, whether it was client server or, of course, not the cloud, and now we're seeing big data. What's changing in the whole service provider market? Well, for us, it's the whole capital intensity of the business. CSE has largely been an outsourcing, I've been a consulting SI company, and we have a big focus in the public sector area. So for us, the big change is the shift in the delivery models. And the appetite of clients to move assets off their books and to do everything as a service. So when you look at the OPEX orientation, and now the opportunity with these new cloud delivery models enabled by the new technology platforms, it changes the whole game for us. So for us as a company, Pat talked about disruption today. Joe talked about disruption and talked about the opportunity. This is a massive opportunity for us to really help change the game for our clients, and really fundamentally change our business model. So specifically, how are you working with EMC? What's that relationship like, and what's your go-to market there? Well, the relationship is very deep, and it really builds on the whole VCE coalition. You look at the three components, VMware, Cisco, EMC. Well, sometimes we call it VICE. We throw in Intel in there. John calls it VICE in Intel. Moving to the acronym words, not the letters of the companies. But I mean, the trust factor in the cloud is big. I mean, we were seeing two schools colliding here, and one of the things that we've been talking editorially out to our audiences, Dave and I, has been you have an innovation sandbox with software, Hadoop, and other application frameworks growing and nurturing, and then you get the big production companies needing to run their business, who the OPEX is attractive on the cloud. And then all of a sudden you got Amazon failing, PlayStation Network was hacked. So there's issues kind of coming together. So how do you guys view that next step? And obviously the clients will want to go there. Right. Well, it's funny, we were at an EMC advisory panel about two months ago, and the topic of Amazon came up, and we embraced that. They're basically have seated a whole market, of folks that have come in with test and dev type applications and other workloads. They really experiment with this whole delivery model. The point that you made around the security breach, it just creates, I think, and heightens the awareness. I don't think it's going to stop or prevent the adoption. We may see some temporary caution, but for us it creates an opportunity to really put the trust in the cloud. And this is where, as Pat and Joe talked about today, this whole notion of a trusted cloud, security availability, the ability to ensure that these workloads can move across public, private, hybrid domains. It's really the foundation of what we've done as a company through the old outsourcing model. So what we're simply trying to do now is take our experience, the lessons learned from 20, 30 years of outsourcing experience, and apply that to these new delivery models using these new commercial technologies. It's really relevant right now. I mean, it's probably the most relevant skillset outside of data scientists. Data scientists is a little bit trendy, but for the most part, your core competency in outsourcing is all about OPEX reduction. It is. Right, so now you have that OPEX reduction as a standard operating procedure for companies. So how does that change in organizations culture, their processes? Obviously they want to get consumer environments out there, the consumerization of IT. So how does all this change with the cloud really change the companies? And what are their challenges? Well, what we focused on primarily is this notion of workloads and identifying those applications that would be best suited for this kind of delivery model. And it's quite frankly, there's got to be a strategy, there's got to be a set of roadmaps and a set of priorities and criteria. And so we've got a whole consulting side of the business that is basically building services where we can go in and advise a client and kind of work through and walk through various workloads that are cloud ready, if you will. And we've created tools, actually a tool that we're debuting at this event, which is a simple business calculator that allows companies to do self assessments on those workloads that are ready to move. The rest of the journey is really about taking those applications and as you may have heard, we just announced a new SAP infrastructure utility. SAP Oracle have huge workloads out there on premise. And so for us, it's simply a matter of identifying workloads that are ready to move, building the services, and then working with clients to pilot and then put in production. So what are you seeing there as far as taking SAP and Oracle? Actually kind of two different approaches, right? Oracle sort of dragging its feet when people want to go to VMware, let's say specifically. SAP may be a little bit more forthcoming. What are you seeing out there as far as people actually taking mission critical applications and putting them into the cloud? Isn't that kind of risky? Well, you know, there's risk if you don't know what you're doing. I mean, we took the first move. We announced this today, actually, that we were the first pilot, first to pilot, proof of concept, our own SAP benefits module, which is an HP or an HR module within SAP. And we've been working with the VCE community and EMC to move the benefits registration application, which is a great cloud type workload. Whereas at the beginning of every fiscal year, there's the benefit enrollment period. You get a huge spike in demand. And so that had a great set of characteristics to it. And we just finished a proof of concept. And what it really proved out is that from a resource utilization perspective, we were able to move the application over to this environment and in the proof of concept, use 60% less compute resource. And you translate that into cost and performance and scale and availability. We're using our own internal workload experience. And then we're working with thousands of SAP clients. We have a huge SAP practice. And so we're taking our experiences, the experiences we have working with clients and this new ACE factory that we just launched, which is a basically an automated factory for transforming workloads into the cloud for delivery purposes. And we're taking all three of those elements and really bringing that to the client to help reduce the risk and to really enable and accelerate the adoption of cloud. Yeah, SAP is, as I said, I think very forthcoming about wanting to virtualize the applications and supporting that. We're going to be at Oracle, sorry, SAP Sapphire next week, John. And... Oracle? Yeah, we'll be at Oracle Open World too. Sometimes we call it Oracle Close World. But that won't be until this summer. I don't think we're going to be invited there. But so Dave, you talked about the utilization improvements, the reduction in CAPEX and OPEX. Why was that? It was a test because you're putting in this single logical block of infrastructure and it's just easier to manage, easier to keep up to date with all the stuff that you have to manage. Or is it a different business model? Talk about that a little bit. Yeah, it's a different business model. I mean, if you look at the old outsourcing model for years, no matter who the player was, you're a mess for less kind of deal. If the IT infrastructure was a dollar, the outsource opportunity was to charge 80 cents and figure out how to reduce the cost to make margin over time. That was the operating model. In the new world, clients want to know, they don't want monolithic homogeneous, they want to be able to break these things down modularly by workload, by function, by department, by division. And so they're demanding now that the capital risk be minimized. And for us, from a service provider perspective, it burdens on us to bring that value to the client. And this is all now enabled by these new technology platforms, both on the application side and then in the infrastructure. So VCE is like the perfect partner for you, isn't it? Because they're really a technology supplier. They're not a services company. So, I mean, neither Cisco, VMware, EMC, they're not services companies. They come right out and say that you are and have a deep history there. So it makes a good partnership. I'm wondering, as the CMO, you own the brand, presumably, of the CSC brand. What do you want the stand for? And how is, or if it's changing, how is it changing? Well, again, CSC has always prided itself on getting it done. We've always delivered. And if you survey our clients, the thing you'll hear from Asia to Australia to the US, is that CSC delivers. We make a commitment, we follow through. What we're really looking at now, when you look at the portfolio of the company, a large government business, about 30% of the business, and the other two thirds are commercial orientation, is really this whole notion of really being a leader in delivering business solutions, largely through our vertical lines of business. So we have focus in five, six industry verticals, financial services, healthcare, manufacturing, chemical energy, natural resources, and public sector. And then this whole notion, and focus in the company, on delivering technology-enabled business solutions. And so, across the service delivery continuum, of assessed plan bill, so I think technology, consulting, business consulting, and then the new world of managed services. We want to be an early and first mover in this new world, or it's highly disruptive to the business model, but we believe that bringing this innovation to our clients, you're being first there, particularly given the fact that we know their environments, both applications and infrastructure. And if you look at CSC, we're very uniquely positioned in the industry as a provider in terms of understanding both the application layer and the corresponding impact in relationship to infrastructure. And in the cloud area, you got to know both to have the most impact. And so really, we're placing a big bet and really leading out in this new world order. You mentioned track record in this market, with, you know, again, the top news. Again, Dave, looking at the logs, PlayStation, network still down. People are like all over that content. Track record matters, and this is really an interesting point because there is movement to the cloud. This hybrid cloud is irrelevant. Track record matters. Can you expand from, that's a good point. You guys have a good brand on delivery, being able to deliver. But track record matters. Talk about some of the things that people need to know about around what you guys have done in your track record. Because, you know, this SLA kind of vapor that's out in the cloud is elusive. For a lot of companies don't have a lot of delivery capabilities. There's a lot of cloud washing out there, or there's cloud washing essentially. People say they're cloud, but they're not. Can you talk about that track record and what makes that CSC formula work and how does that fit in the cloud and big data? Right. But one of the things people don't know about CSC is that within the $16 billion company, we've got a $2 billion software business. So one view of the Rubik's Cube, if you will, is we've got an SAP within the company where we have the business model is largely software license and maintenance. And these are vertical applications, predominantly in the financial services and the healthcare industry. So with that insight, think of an SAP and Oracle business model. We're actually transforming those businesses. The leaders of those businesses are trying to figure out how to deliver their business critical applications, which support mission critical processes. In a more effective model, i.e. through cloud. So we're living the business model transformation and we're also living the experience of using our own infrastructure and our cloud strategy to transform these business models internally. And as we do that, as we drive this enterprise transformation, we'll share those insights with our clients, with other ISVs, and this goes back to the, again, been there, done it, doing it. We don't do it arrogantly, but there's a lot of rich learning that we're able to share with our clients. And that's really what we're doing around the cloud, around applications, software as a service, and then business process as a service. In those models, just the final point is, we're actually been in this business for about five years now. We're on the BPO side, where we get paid by the outcome. So when you think about insurance claims transactions, you think about banking back office transactions. We're actually offering services to clients, mainframe based today, where, if we get SLAs and a quality of service, we're getting paid by the business outcome. And we think that's the future of cloud, and everything we're doing today is to take that knowledge and understanding of where the market needs to go, where it wants to go, and to begin to build their starting today. So it's clearly a journey. That's a real shared risk model. It is. And one that actually a lot of services companies would like to go towards, because this could be potentially very lucrative for you, I would imagine. Talk about agility a little bit. I mean, back when you were at HP, that was the big buzzword. It feels like it has more meaning today. And I know it's something that CSC has been pushing on. What does agility mean to you, and how is it different from, let's say, 10 years ago when you were at HP? Yeah. Well, you look at the world of agility in the context of infrastructure today. I'll just use that example. And the ability to provision workloads in a cloud using the notion of private public hybrid. One of the things that we just did in partnership with VCE and EMC and the team is launched a private cloud service that's delivered as a utility. It's built on a rate card basis, one of the first ever in the industry. And so what it does, because our public and our private cloud strategy are built on the common infrastructure, same infrastructure fabric, same management services, same SLAs, the ability for a client in the spirit of an agile infrastructure to provision a workload in a private dedicated environment. And yet, from a cloud burst perspective, to be able to move parts of that workload, either seasonally or permanently, to a public or semi-private cloud data center, either secured multi-tenant or, again, private dedicated, is something that we're able to do now. And so that's probably the best example of agility. So that's interesting. So in that example, CSC would own the infrastructure on its books, is that right? Correct. And so, and EMC obviously now position its infrastructure as a service. Are you purchasing from them on a pay-as-you-go basis or how's that business model work? Well, this goes back to the partnership dynamic, right? And the business model change for all the players, right? So if you look at the three components of these new conversion infrastructures, and obviously CSC has a broad partnering portfolio. We work with a lot of different players and we support a lot of different platforms. Clearly, we've created a very strong go-to-market focus with the VCE Coalition. But if you look at the software players, the licensing models have to change, right? So whether you're a Microsoft, an Oracle, an SAP, even a VMware, we're having a lot of rich discussions around licensing and how do you license in the new world order, particularly pay-as-you-go. Because it can't be where the provider bears the burden of capitalizing the license cost. It just can't work that way. It's not cost-effective. Same on the hardware side, right? There's got to be new provisioning models for providers. And so we're working hand-in-hand. This is part of the partnership, not only joint development, joint investment, but how do we innovate on the business model together? And how do we share risk together as we stand up these new services? And that's at the forefront of a lot of the work we're doing today with EMC and the VCE Coalition. Okay, so I'm inferring from that that you're saying EMC is being somewhat flexible or maybe very flexible in the way in which it prices to you the service provider and recognizes that there's a changing business model there. Is that right? Yeah, there's clearly shared risk. There's shared reward. And for all of us, this is the Wild West time in terms of the market. That is pretty innovative. You don't hear a lot about that. I mean, you hear maybe one company doing it on their own, but you don't hear that a lot in a service provider context. There's a lot of moving parts with VCE. They seem to have done a pretty good job. Confirm that, if you would. What is it like working with the sort of three-headed monster that has the single throat to choke? And what could they be doing better? Well, there's challenges, obviously, and they'd be the first to tell you that. Any two-way, three-way, I mean, two ways hard enough. And I've been at the partnering profession for many years now. But there are challenges, but there's transparency. And the key with any relationship, as you know, is to have your people that you trust and respect and then a transparent dialogue. And we're just working through those kind of things together. The biggest challenge in terms of the things for improvement is you've got to go faster. You've got to go faster. You've got to get more aligned faster. But when you're working with that many groups and that many people, it just takes time sometimes to get the right kind of consensus. But that's improving as well. That's good. Well, we've seen a massive transformation of EMC as a company. We've seen a massive transformation in the industry with HP acquiring EDS. You see Dell acquiring Perot. VCE becomes a much more friendly to service provider company. We're talking to Dave Parsons, CMO of CSC, one of the premier service providers on the planet, very well known for its outsourcing business. What I didn't know as well is you've got a lot of software businesses and vertical markets. That was sort of new news to us. But talking about the cloud, how that's changing, it's new opportunities for users. Dave, my final question is, what's your advice for the user community that's going through these? Huge upheavals, they're used to it. They've seen them before, but yet again, we have another one, cloud, the big data's coming down the road. What's your advice to them to sort of maximize their value and minimize their risk? Yeah. Well, first step is to work with companies that have been there and done it. And have an experience base in and around the fringe areas of cloud. I mean, cloud is new to everybody, but it's very easy in the early process to separate kind of the week from the chat in terms of talk from the walk. So that's job one. I think job two is the partner ecosystems that are building up around these opportunities are key as well. And so working with companies and multiple companies in a partner ecosystem that are aligned to meet your objectives as a client and are willing to go make those commitments, share that risk is a big first and important step. I think those are the two big items. The third item obviously is to make sure that your unique business needs are being appropriately addressed in a very focused manner. And those are really the three that I would lay out as key. All right, Dave Parsons, CMO of CSC. We're hearing about new business models today. Dave, thanks very much for coming on theCUBE. It was great to have you. Thanks, Dave.