 Wikibon practitioners tell us that 85% of their IT spend is very often non-differentiated. So CIOs are under tremendous pressure with the large megatrends of cloud, mobile, social and big data to transform their businesses. So how are organizations changing? What effects is the cloud having on organizations and how are companies responding to that and what's the industry doing to respond? Arun Darbal is here with CSC. We're going to have a conversation around these factors and other trends in the industry. Arun, welcome to theCUBE. Thanks for coming on. Thank you, thank you for having me. So when we have these CUBE conversations, we like to bring in technology experts, practitioners, like yourself, business technology folks to really talk about how organizations are transforming. So I want to start with what you're seeing with the big drivers. We've talked about the cloudification, the sassification of business. We're going to talk more about engineered systems. What do you see when you go around talking to customers as the big drivers of their business? There are a few that are going on. One is obviously the cloud and the emergence of the cloud and that in itself is a big topic and then mobility essentially taking over the technology world and the business world. And then the third one that I'm seeing is significant shift in the cybersecurity and cyber and all the security considerations that other companies are having. And the two other things is essentially in terms of apps, applications modernization, which is becoming a growing trend in the growing market in terms as companies shift from their legacy applications into this modern world of cloud and mobile. Last year at Oracle Open World, Mark Hurd said that the average age of the enterprise app is 19 years. So these application portfolios in your customer base are very complex, very diverse. How are they moving to modernize and what's happening to accelerate that move? So there are two or three things that we're saying. One is, number one, that the entire budgetary considerations within enterprise around IT and IT spent is shrinking. And number two, it's like as you said, 85% of their current budget is being spent towards the support and maintenance. And now the issue has become more of a business innovation and catching up with business innovation are the systems able to keep up with the business innovation and the pace of innovation, if you will. So now what is happening in the industries as we see it. Number one, a lot of the companies are actually doing, getting into a transformation approaches that we have never seen before, where they're basically moving lock, stock, and barrel, a lot of their business innovation, the business outside the enterprise versus within their own walls. So what we are seeing is more of a hybrid approach to the cloudification where you're looking at people basically running all their applications internally, externally, hybrid clouds, service clouds, and vendor clouds. And several of these clouds, what we term as a service-enabled enterprise, if you will, innovation outside in and essentially being managed and distributed from a central location across the hybrid clouds. So the service-enabled enterprise is sort of the externalization of services. It's not an insulated view of the world. Talk a little bit more about that. Let's unpack that. So what it is, is we are talking about, when we talk about business innovation and the IT innovation to catch up, we are unable to do that with the legacy applications that have been stitched together over many number of years. And that causes an alignment problem. That causes a strategic alignment problem between the business and IT. And as these two merge, as IT and business merge and performance, business performance being the singular driver within a company, what is happening is we are now looking at bringing applications and innovations external to the company, either essentially running it outside the company or within the walls of the company or a hybrid mix of both internal and external innovation driving towards performance. So this creates a brand new issue in terms of the ecosystem. How do we now manage? We had perfected, our IT had perfected the complete art of managing it internally, on-premise systems and on-premise applications and such. But now in a hybrid environment, in a hybrid cloud environment, where there's the vendor cloud, there's your public cloud, there's your private cloud, there's your on-premise application, how do you manage these things? How do you distribute the applications? And how do you pull not only the management, the distribution, but how do you basically ultimately get to a concept of an application store that is business related, business driven and singularly business focused? So you're seeing a lot of organizations try to sort of replicate the capabilities of let's say the public cloud within their own on-premise infrastructure. Many have been on that journey for some time. You're certainly seeing from a hardware standpoint the convergence of compute and storage and networking. You're also seeing organizations try to integrate the stack into that approach. How does that affect value and how does that affect that alignment discussion that we were just having? So as we get into that discussion, as you see the curves and the adoption curves in the cost versus adoption or the cost versus risk models with the advent of the cloud, the infrastructure costs have significantly come down or ramping down. And as you see the software, the enterprise software maturing, businesses are able to adapt to the software much better and much quicker than they've ever been able to adapt, which essentially allows them to basically come up with the concept of an application store where essentially clients can go in and essentially provision an application of sorts. So- App store. App store, true app store, an enterprise app store. Versus any kind of a mobile store, this is an enterprise app store as the software advances. And now the question really then becomes how do we integrate the entire stack? And how do we basically provide the value while de-risking any kind of a business imperatives? So the more I build up, ground up from an infrastructure, compute and storage and essentially any kind of the databases and the data storage and databases and data perspectives and then basically bring in the enterprise applications. All of a sudden what you're now seeing is a stack that previously had to be integrated. Now is already integrated and it's almost available to you in a box that can be provisioned just like you're provisioning any kind of a mobile application. So this concept is becoming a reality and this concept is becoming a part of any kind of a major business transformation that companies are undertaking these days. So CIO said to me the other day, I'm CIO, I don't want to be the chief integration officer, I want to be the chief information officer. Now of course a lot of CSE's business has been integration and now you're working an example with Oracle where a lot of that integration is what Oracle calls pre-engineered. So what does that do for CSE and CSE's business? How do you transform as an organization? So Oracle has the entire concept, basically I think Oracle has a pretty good name in the marketplace around the concept of engineered systems where they integrated compute and storage and some of the other basic storage software and such and these are high performance machines and we can talk about it in a moment about some of the examples we're using and now the advancement is around how do we transition engineered systems to engineered solutions? So engineered enterprise solutions. So now on the flip side, Oracle is basically coming up with the concept of cloud and the cloudification of their applications be it ERP, be it HCM, be it CRM, be it any number of applications and now how do we bring that down and basically integrate it into a stack that is engineered systems as well as engineered ERP solutions and how do I provision that in the cloud or basically in a delivery model that is flexible enough for the client. Some, in some cases, depending on the policy considerations, depending on the security considerations, they may want to have some applications if you will in-house, some applications on the public cloud, some applications on the vendor cloud. So how do you basically pull these three things together, initiate any kind of provisioning and how does the systems integrator now react to basically configuring these applications? The concept of systems integration where we had to pull all these little elements together, cloud, I mean the compute, the storage and the database, the middleware, the application now does not exist, fundamentally goes away. Now we are more focused on how do I make what is available work for the business? So you're basically saying that the CSC's value had really is bringing that industry and business process expertise on top of sort of a horizontal platform that's infrastructure and obviously applications as well. Is that correct? And applications, and essentially in addition to that, how do we bring business innovation and basically help our clients drive the performance metrics that they so choose to achieve? So I have to ask you, so for years there's been a debate about best of breed versus integrated systems, best of breed being okay I'm going to integrate bespoke components whether it's hardware or maybe middleware or maybe software and I'm going to rely on someone like CSC or maybe even my internal IT department to build that absolute best system. What you're describing is one that's pre-engineered using Oracle term, pre-integrated, pre-tested. Can I have both? Can I have best of breed and integrated? Absolutely. In certain, see this is where the innovation cycle kicks in and as you basically come up with this set of engineered solutions as we talk about, now that forms the core of any company's operations or any client's operations. And now as innovation kicks in from multiple angles, for example there's innovation, the next cycle of innovation and mobility and if you look at the next cycle of innovation and big data, if you will. And so there is always going to be component trees outside of this core stack. But as the innovation itself matures, it becomes a part of the core stack as you move forward. So people talk about big data and they say it's a big topic everywhere and we talk about information and the information doubling and tripling and whatnot. But I think a lot of the concepts that are being talked about are the talk about customer sentiment analysis or fraud or risk or any of these things that we talk about. Other than that, it is that we have disparate data elements now that are going into a big data heuristics engine. I think the next cycle of innovation there is how do I operationalize it? Yes, there is this big data engine, there's a lot of heuristics coming out. There's a lot of intelligence coming out. But what do I do with it? It's still, yes, instead of a spreadsheet that's still on a computer, now there's a lot of intelligence behind it and the decisions that are being driven based on these things, that's great. But how do I take it? How do I operationalize that intelligence in real time? How do I feed it to the core stack, the engineered solution? Which essentially runs the company, how do I do that? So there is always going to be that core. And if you look at the industry per se, the industry is consistently grappling with the cost, the cost of having such a system or the cost of driving such a solution versus the speed to market and while de-risking it. Is it possible to get all three things aligned at the same time? And that's an age old question. That's truly is an age old question and I don't think it is an age old question. Is it possible to align all three? No, see, it is possible that the apex between the three actually moves in one direction or the other. However, I can tell you that what used to be a significantly high or a longer, big pyramid and now the apex is moving more and more towards the core. But is it possible to basically optimize all three and pull it together any day? Again, there's a personal opinion, I don't see it. But however, innovation is going to be the key here in terms of driving this little apex towards any of these three factors. I like that mental model, but so, and if I have a system that is actually more agile and more flexible and more cost effective, if my business requirements change, I can change more quickly, presumably. So if I want to, let's say optimize on agility and then all of a sudden something happens, some external event that causes the general council to come in and say, wait, we have to de-risk the business. In theory, I should be able to respond more quickly. Is that what you're seeing? That is what we are seeing. We should be able to respond more quickly. And like I said, I mean, there's always going to be these two dimensions, if you will, where there's a mature core and then there's the innovation cycles merging. Talk about your relationship with Oracle. What's CSC and Oracle, the Alliance, what's that? We have had a relationship with Oracle for about 20 years now, 20 or more, 20 plus years. And we have a very, very big ecosystem, Oracle ecosystem within CSC and our client base. And in fact, we had a global partner for Oracle and we continue to basically grow our Oracle business, especially with the advent of Oracle engineered systems and the movement of all the enterprise applications into the cloud, into the cloud from Oracle. We have had numerous examples. This does not remain a theory anymore and we have had numerous examples of Oracle and Oracle kind of scenario or campaign. And hopefully it is going to be more than Oracle and Oracle going forward and we look forward to an Oracle box of sorts and be able to contribute an Oracle engineered solution of sorts that hopefully we can contribute to significant with Oracle. All right, everyone, we have to leave it there. Thanks very much for coming on Cube Conversations and we'll be tracking this trend and seeing how it evolves, so appreciate your insights. No, thank you, Dave. I sure appreciate you having me here and look forward to tracking those trends as well. All right, thanks for watching everybody and we'll see you next time. This is Dave Vellante. This is the Cube.