 From around the globe, it's theCUBE with digital coverage of IBM Think 2021, brought to you by IBM. Welcome back to IBM Think 2021. And we're going to dig into the intersection of finance and business strategy. My name is Dave Vellante and you're watching theCUBE's continuous coverage of IBM Think and with me is Brian Hoffman who's the Chief Operating Officer of IBM Global Financing. Brian, thanks for coming on theCUBE today. Good morning, great to be here. Good morning. So I think we've heard a lot about the impact of hybrid cloud, AI, digital transformation. And I wonder as a finance person and a former CFO, what do you see and how do you think about some of the key considerations and financials and strategies that are supporting these major projects, right? We got to come to the CFO and say, hey, we want to spend some money and here's the benefit, here's the cost. How can CIOs and their teams work with CFOs to try to really accelerate that digital transformation? Right, great question. And actually that question, I think I might have answered it a little bit differently two years ago, a year ago before the pandemic. I think it's actually changed a little bit with the pandemic. In my experience as a CFO, people would come into me for projects and there was three ways that you could justify it. You could justify short-term immediate, quick payback kind of hitters. You could justify it with improving our efficiency or effectiveness, reducing costs in the long run or making the client experience better or more from a strategic point of view, growing revenue, getting to new clients, improving margins, right? And so the hybrid cloud transformation journey really still addresses those three things. And when we come in, a lot of people focus, like you said, on that third strategic point, but all three of those come into play. And what's really interesting now is as I'm dealing with it and I'm talking to other CFOs, the pandemic is really, if you will, thrown a wrinkle in here, right? So the clients that I'm talking to, the IBM clients, they have to operate their business very differently. And their business models, some of them are changing. Clearly their clients, their business models are changing, they're operating differently as well. So our clients have to react to that and hybrid cloud and that type of a structure really can support that. So there's really an emphasis here now to act with much more speed on this journey to get moving on it, to get there because you have to make these changes and doing those two things in concert really has a ton of business value. Yeah, I mean, the CFOs that I've talked to and the CIOs, it's really kind of industry dependent, right? If you're in airlines or hospitality, it's like, ah, we got to cut costs. A lot of organizations said, okay, we're going to support remote workers, put in VDI or deal with end point security or whatever it was, but we're actually going to double down on our digital transformation. This is, we're going to lean in, this is an opportunity for us to come out stronger. How did you guys approach it in terms of your own internal digital transformation? Yeah, we were working on our digital transformation, you know, a little bit before the pandemic and it kind of followed those three items. When they first started implementing it, they came in and said, hey, if we can move to a cloud platform, our infrastructure savings will be pretty significant. You know, the IT infrastructure savings will be 30 to 40%. So, you know, quick payback CFO types, love that. So, you know, we went forward with that. But then quickly we saw the real benefits of moving to a hybrid cloud strategy. So just as an example, as we were making some of these changes, we found a workflow tool in one of our markets in Europe that was a great tool. And if we wanted to implement that across the business in the old days, you know, we're in 40 countries. We've got 2,500 employees, three lines of business. It would have been very complex because our operating structure is very robust and very complex. And probably would have taken us a year to years to do that. But since we are now on a cloud platform, we got that rolled out, that workflow tool rolled out across our business in months, saving, you know, 20 to 30% of workload being much more efficient in getting to our clients and reacting quickly with them. And in fact, that tool got adopted across IBM because that cloud platform enabled that to happen. And then the great thing, which I didn't even realize at the time, but now thinking more strategically, my IT resource earlier was running at about 50-50. 50 people were working on maintenance, and see kind of things from 50 on development. As we've now transitioned to this cloud, my IT resource is now 70 plus percent dedicated to new development. So now we can go attack new things that really provide customer value. In the pandemic, you know, the first thing you look at is, can we get into more, you know, electronic contracts, e-signatures, things that would provide value to customers anyway, but in the pandemic is like really a significant differentiator for us. So all those things were enabled by that journey that we've been taking. Interesting. I mean, most of the CFI, in fact, every CFO I know of a public company took advantage of cheap debt and improving their balance sheets and liquidity is not the problem today, especially in the tech industry. And at the same time, I'm interested in how companies are using financing. They don't want to necessarily build out data centers, but they do want to fund their digital transformation. So what are you seeing in terms of how your customers are using financing? What's the conversation like? What advice are you giving? Yeah, so, you know, it depends a little bit on the type of customer, like you said, you know, we deal with a lot of the biggest, strongest customers in the world. And as we deal with them, financing really helps the return on their investment, right? Aligning the payments of those cash flows for when they're getting the benefits. And we see a real good value in improving the return on those investments and helping, you know, if it's something that's going to go to the board, that really makes a difference to them. So, you know, that's always been a value proposition. It continues to be. The other thing that's helping now, like you said, is even in this environment, people want to accelerate this transition, but it's a big time of uncertainty. So, you know, some of the smaller clients, some of the more, you know, the industries that are a little more cash constrained, airlines, et cetera, you know, they're looking for the immediate cash flow benefits. But many of the CFOs are saying, hey, listen, you know, I want to go as fast as I can, help me put together a structure that lets me, you know, get this in place as quick as possible, but not below my budgets, not make me take too much risk in this time of uncertainty, but keeps me moving. And I think that's where financing really comes in as well. And we're kind of talking much more about that value proposition than just, if you will, the improved ROI proposition that we've had all along. I want to talk a little bit more about IBM Global Financing. I mean, people, a lot of times people misunderstand it, you know, when you look at IBM's debt, you got to take out the piece that's IBM Global Financing, because that's a significant portion and that's sort of self, you know, self-fulfilling. But what do people need to know about IBM Global Financing? We actually run three different businesses and we've been transforming our strategy over time. So, you know, right now with IBM being all in on hybrid, we are very focused on helping IBM and IBM's clients on this digital journey, on IBM growing their revenue. You know, we in the past have been more of, if you will, a full service IT financer doing a lot more than just IBM, but we are really focused now on helping IBM. So I think the best thing for IBM clients to know is as you're talking to IBM about the total solution, the total value prop that IBM brings, that financing, that cashflow solution should be embedded in what they're looking at and can provide a lot of value. You know, the second thing I think most people know is we provide financing for IBM's channel. So, you know, distributors, resellers, et cetera. If you're an IBM distributor or reseller, you know about us because just about 100% of IBM's partners use us to provide that working capital financing. You know, we have state-of-the-art platforms where we're just so integrated with them. Again, I don't have to do a sales pitch on that because they don't know us. And the third one just because people might not realize this is we do have, we call it an asset recovery business. It's a pretty small business, you know, it's bringing back equipment that comes off lease or that is used by IBM internally. And while, you know, it's not as well known, I'm pretty proud of it because it really does help with the focus that the world that IBM has on sustainability and reuse and making sure that, you know, we're treating the planet fairly here. So that's a small but powerful piece of our business as well. They're quite broader than leasing mainframes in the 80s. That's for sure. So talk more about, maybe we could double click on that sort of hybrid cloud and obviously machine intelligence is a big piece of those digital transformations. So how specifically are you helping clients really take advantage of things like hybrid cloud? So yeah, so what we have typically been doing and I can give you a couple of different examples, if you will, for larger clients, what we tend to be doing is helping them, like I said, accelerate their business. So, you know, they're looking to modernize their applications, but they still have a big infrastructure in place. And so they'll run into, you know, budget constraints and, you know, cash is still be careful to be managed. So for them, we are much more typically focused on, you know, if you will, a project-based financing that allows those cash flows to line up with the savings. Again, those are tend to be bigger projects that often go to boards, that return benefit is very important. A little bit different value proposition for more mid-market customers. So, you know, as I was kind of just looking recently, we have a couple of different customers like Forum Engineering or Novi Steel. They're too smaller compared to some of the other customers we use. They are, again, much more focused on how do I conserve and best use my cash immediately? But they want to get this transformation going. So, you know, we provide flexible payment plans to them so they can go at the rate and pace that they need to. They can align up those cash flows with their budgets for their business cycles, et cetera. So, again, we're smaller customers where timing of the cash flow in their business cycle is very important. We provide that benefit as well. You know, I wonder if I could ask you. So, you remember, of course, the early days of public cloud. One of the first tailwinds for public cloud was not the pandemic. The financial crisis of 2007, and a lot of CFOs said, okay, let's shift to an OPEX model. And now, you could always provide financial solutions to customers, but it seems like today, you know, when I talk to clients, it's much more integrated. It's not just public cloud. You can do that for on-premises. And again, you always could do that, but it seems like there's much more simpatico in the way in which you provide that solution. Is that fair? Yeah, absolutely. And this might be a little too finance geeky. I don't know. No, bring it on. If you go back, well, if you go back to the financial crisis and all that, and at that time, a lot of people were looking to financing for, you called it OPEX, but if I was talking about off-balance sheet transaction, right? And, you know, between regulation, et cetera, et cetera, that off-balance sheet thing. First of all, people are seeing through it now much more clearly, but second, you know, the financial disclosures say you kind of have to show that stuff. So that, if you will, window dressing benefit has gone away. So now, which is great for me, we really get to talk about what's the real benefit? What is the real benefit of, you want to make sure that you have known, timed expenditures. You know that if your business grows that your expenses can grow evenly with those, with that business growth, you don't have to take big chunky things. And so, you know, financing under the covers of an integrated solution, and IBM has a lot of those integrated solutions, allows businesses to have that, you know, known timing, known quantities. Most of the benefits that people were looking for from that OPEX cloud model, with that, you know, some of the problems that you have when you try to have to go straight to a public cloud for very, you know, big sensitive businesses, confidential data, et cetera. Right, thanks for that. So, okay, we're basically out of time, but I wonder if you could give us the bumper sticker and key takeaways, maybe you could summarize for our audience. Yeah, for those that know IBM Global Financing or deal with IBM, my view would be in the past, we might have been a little more, you know, out there with our own banner, et cetera. In the future, I think that you should expect to see us very well integrated into anything you're doing. I think our value prop is clear and compelling and will be included in these hybrid cloud transformations to the benefit of our clients. So, that's our objective and we're well on our way there. Great, anywhere I can go for more information? Obviously, IBM.com, you got some resources there, but is there any? Absolutely, .com. There's, I think there's probably a slash financing, but yeah, there's, loaded with information that people need. Excellent, Brian, thanks so much for coming to theCUBE, really great to have you today. I appreciate the time. Yeah, my pleasure. And thank you for watching, everybody, this is Dave Vellante for theCUBE and our coverage of IBM Think 2021, the virtual edition, right back.