 I'm here with my co-host today, Stu Miniman. This is the Cube Silicon Angles Continuous Production. We're here two days live at IBM Edge, at the Mandalay Bay. This is the second year of Edge. More than doubled from last year, we were in Orlando and we've got about 5,000 people here this year. A lot of good buzz, a lot of good technical talk, a lot of good business talk. The flavor between hardware and software, systems and storage and software and really showcasing IBM's new vision, vision for the future, what they see as this new type of IT, the storage as a platform. Alex Yost is here, he's the Vice President of Business Line Executive within IBM's server business. Alex, welcome to the Cube. Thank you so much for having me here guys, good to see you. Yeah, so what are you doing here at Edge? What are you talking to customers about? What are you hearing? What's the buzz? Our clients today are investing in their data centers, but more importantly, what they're investing in is their business. So if you went to the main ten session, one of the things you heard about is when we talk to CEOs and CIOs, the importance of IT to customer businesses. Because what customers are looking for is how do they run their businesses more efficiently and more effectively? How do they use IT to do that? Well, the fact of the matter is it's not by putting out server RFPs, it's by running those applications better. And so what they're after from us is, guys, how do you make our IT more effective for us and for our business? And so we're spending a ton of time talking to people about exactly that topic. You know, I'm always dissing Nick Carr, right, when he wrote the IT, does IT matter? And you remember that seminal article and book, always saying he got it wrong. But for a long time, Alex, it felt like he got it right. Because nobody was buying anything back in the post-911 days. What changed? Because everywhere you go, you're seeing what you just mentioned, is people are trying to get more competitive advantage out of IT. What has changed to flip that switch? Well, what changed is that customers are recognizing the value of mobility, they're recognizing the value of workforce enablement, they're recognizing the value of big data. You can't do that without the IT systems to make it happen. And so getting those things online for your company, whether that's on-premise or off-premise, is a big priority for customers because you think about it. Every single industry is looking for it. How did they out-innovate their competition? And IT plays a huge role in that. Yes, okay. So those are some of the factors that are driving IT decisions today. How is that affecting your strategy at IBM? Well, the way it affects our strategy at IBM is, you know, you heard Tom Rosimilia talk about it. The money that we're spending on innovation is all around helping clients to get the most out of their IT spend. So clients are looking for how do they optimize big data? Well, Flash technology plays a big role in that. Optimized systems play a big role in that. Customers are coming to us and they're saying, we know we have to adopt this or that application set. How do we do that with the staff that we have on board today? Number one, our staff is overworked. Number two, our staff isn't expert yet in doing that. So if we can provide them with reference architectures, if we can provide them with systems like an SAP HANA offering that give them the capability to get up and running more quickly, then they can devote their IT staff to innovation for their company instead of keeping the lights on. I met with a client not too long ago and they said, you know what? 70% of our staff is eligible for retirement right now. Well, the fact of the matter is when they look at that, what they see is, holy cats, how are we going to innovate if our IT staff is ready to retire? What's our strategy? Another guy said to me, you know what? It burns me up when I see a senior engineer in my staff replacing a hard drive. Senior engineers doing tasks like that instead of innovating, enabling mobility, enabling social networking, enabling business innovation, changing a hard drive is not where technology needs to be driven in the company. Well, when you guys announced your expert integrated systems, I thought Mills did a very good job of laying out the IT labor problem, I'll call it, the percentage of time that people spend in systems and storage management. And I think somebody at the main tent yesterday showed some IDC data in that regard as well. So the numbers are quite astounding. So talk about that a little bit and talk about how and if you guys are able to move that needle. We can absolutely move that needle and you move that needle with innovation. Some customers are looking to build all new data centers. Terrific. But that's a minority. Those customers are looking to take the data center that they own and make it more productive. So if we can give them systems that offer fabulous performance, but offer performance and capability to get up and running quickly, that's where the innovation really matters to them. So the combination of terrific hardware with the investment that we're making in flash, with the integration of tiered storage capability, with simplified management so you can go to a single management console and manage multiple devices and make them work well together to integrate power and UNIX systems with x86 systems, giving them the capability to do more with less time investment. That's innovation that matters for clients and makes their staff more productive. Innovation that gives them the capability to run applications more quickly is also important to them. So just faster systems. We've got great innovation around that. And then finally the other piece is how do I acquire quickly without having to go through training my staff on how to size for this application environment or that? So for example, reference architecture for a VDI type environment that tells them if you want to deploy 100, 200, 500, 1,000 VDI desktops, what's the architecture that IBM recommends that is pretested and qualified with the VDI vendor of my choice? That gives them real innovation and capability. So how are you spending your time these days, specifically with customers, what product lines? Talk about that a little bit. I spend a ton of time with customers because clients are the most important source for telling us where their business problems are. So number one is obviously with clients. Number two is spending time on innovation. Whether that's innovation with our own firm and the work that IBM is doing or innovation with partners and taking the best of what they offer. And then the third piece is spending time with business partners because business partners deliver terrific value for customers. They're experts on industries, they're experts on applications. Bringing that value with IBM to customers is a tremendous advantage for those customers. Alex, I wonder if we can talk a little bit about the MSPs as a big focus on the show here. I look at the enterprise market, of course, BladeService help drive, a lot of the adoption of infrastructure, virtualization, now you've got the pure systems model. So you said most customers aren't going to build a new data center, but the service providers have such a growth pattern that it's almost like they're building a new data center every six months or a year. So how is that discussion going between the enterprise and the service providers and even the cloud solutions and how do you go between those two? The MSP market is very vibrant and what we're seeing is that clients are adopting MSP service providers application as a service across their business and it's interesting to see the adoption patterns. We recently had a customer advisory council and I asked the clients, you know, what is your adoption of cloud service provider content and capability? And one guy said, well, we're not going to be going to a public cloud because our industry is highly regulated and we can't do that. The next guy to talk says because our industry is highly regulated, we're adopting a cloud service provider because they're experts in providing applications for our industries and staying compliant in our industry. And so what we're seeing is there's a lot of firms that are aware of it and evaluating it, they're adopting at a different pace because it's what's relevant to them and to their business. So IBM strategy is to help clients by enabling them to adopt cloud internally or to adopt an internal strategy or to go entirely to it as a service type environment. But we've also got terrific offerings for the MSPs. A lot of those MSPs provide content that is specific to an industry. That content may be based on IBM I, may be based on x86, may be based on power systems. A lot of those MSPs are looking for how quickly can we go from the investment is onsite to we're monetizing that asset. So we've got programs for MSPs so that they can monetize assets, IBM assets, very quickly from the time that they decide that they need it to the time that they're up and running with it. And so those programs are very valuable to MSPs. Okay, can you talk a little bit about kind of that transition from kind of the Blade system to the pure system, pure flex architecture. A recent industry number shows that Blade server revenues are down in general. So Blade Center's been a great workhorse for IBM for many years, but it looks like this is really IBM's bet on the next generation architecture. And how does that kind of fit to the cloud models that we were just talking about? Well, clients today are looking for more value than just great hardware. And so I'm here to tell you that the flex system and pure flex hardware offering is based on over 15 years of innovation and development in the Blade server marketplace. It has the fastest backplane. It's got the most power and cooling. It's got the ability for the most memory processors in the industry. It's unsurpassed in terms of technology, but that's not enough. Clients are looking for how quickly can I get up and running? How do I simplify the management deployment in a cloud environment, in a virtualized environment, or in a specific application environment? And so with pure systems what we're offering to customers is a variety of offerings that give them the ability and whether it's an application as a service or whether it's a platform as a service, giving them the capability to specify their operating environment and get up and going very quickly. Because if we can minimize the amount of time that skilled IT staff spend on the rudimentary tasks of up and running and deployment and management and maintenance and get them into innovation, customers get value. And that's where we think they'll choose us. Absolutely huge trend on convergence. I'm wondering if you can talk to kind of the blurring of the line between server and storage that we've been seeing over the last few years. And where do you think that trend is going and how does IBM address that? Well, you probably saw in some of the main 10 sessions the increasing demand and requirement for storage. I think Tom Rosamilia said that 90% of the data in the world was created in the last two years. And so the incredible demand for storage is super important. But if you think about big data, if you think about accessing that information, it's the interaction between the server device and the application running on the server and that storage that gets people access to that data quickly and easily so they can really do something with it. Because having the data, having the storage without being able to use it is a lot less valuable. And so what we offer to clients is the capability to manage the server and the storage together using our FlexSystem Manager so that you get a truly integrated system that gives clients not only that integrated system, but it gives them the control from a single point of management and simplifies their job. So Alex, we were talking before about the labor component. Talk a little bit more about what customers want to spend their time on. We talked a little bit about how they're spending their time today. Talk a little bit more about that because you said it burns one of your customers when they see a senior systems engineer changing it out of disk drive. How are they spending their time patching whatever they're doing today and how do they want to spend their time? Well, you're right. A lot of the time today is spent on what many customers will say, keeping the lights on. Where they want to spend their time is on innovation. The big tasks that IT managers have been given by their executive management are enable mobility, enable clients to access us and our business easier and more quickly, enable us to use big data, enable us to use technology to differentiate us in the marketplace. And so whether it's oil and gas and doing exploration, whether it's an automobile manufacturer looking to shorten the cycle time to produce or manufacture an automobile, or whether it's a retailer looking for better information about their customers, they're all looking to use technology to innovate, use technology to give them a business advantage. They can't do that if they're spending the time keeping the lights on in the data center. So we give them the tools to run their systems with less effort so that they can use those valuable IT staff to do something else. So how are customers re-skilling? And are they? Is that an organizational challenge for them? I mean, just can't flip a switch overnight and say, okay, all of a sudden you're going to do these higher value tasks. Can they? I mean, how does that all go about? Well, at the end of the day, most of our clients have very skilled IT staffs and they're skilled in their specific industry. They're skilled at the things that their business does, but they're caught up doing a lot of those maintenance tasks. If we can free up that time, frequently what we find is that those customers have plenty of skills and capabilities to do the innovation. They just need the time to get it done. Do they get a raise? I think they get a raise in terms of their own personal job satisfaction because I don't know about you, but keeping things running is not nearly as cool as bringing something to the business that will add value. I met with a customer in the financial industry the other day and that customer told me that when they bring a new application forward, they actually monetize each of those applications and they say, this is a $5 million application. This is a $4 million application. And what they mean is, our company is going to make $5 million in profit once we get this thing out the door. You know what? That's a heck of a lot more job satisfaction than, I kept the server farm running today. Well, and then you can quantify the value you're bringing to the organization. If you can get it in a month earlier, it starts to get big. Exactly. Excellent. All right, Alex, well listen, thanks for stopping by theCUBE and sharing your insights about what customers are doing. I really appreciate your time and good seeing you again. Great to see you guys, thank you. All right, keep it right there, everybody. We'll be right back with our next guest. We're live from Edge. This is theCUBE and we'll be right back after this word.