 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. My name is Dave Vellante. I'm pleased to welcome onto theCUBE our next guest, Michael Pereira, who is the general manager for IBM Technology Support Services. Hello Michael, good to see you. Hey Dave, how are you? Thanks for having me. Yeah, my pleasure. Look, everybody wants to talk about transformation and we're going to talk about how to do that while at the same time running your business. So Michael, you talk about some of the challenges that businesses are facing today. They got to keep the lights on. They got to deal with remote workers. They got to continue to bring new products and services. They're dealing with cloud migration. They got new security that has to worry about endpoint and identifying their own workers in a different way. Budgets are depressed. Our numbers were right between four, minus four, minus 5% last year. We've seen a big uptick this year, but you guys, TSS right in the middle of all that. What are you seeing? Yeah, so we're kind of in the boiler room, so to speak, supporting our clients across the board, hardware, software and everything else. And ultimately ensuring that our clients keep the lights on while they also transform as they go forward. For me, the last year has really just accelerated with the pandemic, all of the challenges and it really brought shining light onto those challenges that you just mentioned that all of our clients are trying to deal with. Not just how do they keep the lights on, but how do they transform at the same time, this world of hybrid cloud and what do they choose to keep versus what do they move? How do they integrate those things together? How do they carve out budget as well as time in order to make all those things happen, which those are generally conflicting forces of the universe. And then on top of all that, you take COVID and the pandemic and the shift from many of our clients, 100% face-to-face to 100% remote, almost overnight. From 80% face-to-face, 20% digital sales model to the reverse, almost overnight. Our retail clients, many of which in May had transaction numbers far exceeding cyber Monday and Black Friday, not something that they plan for, but they need to be able to adapt to it and for it while minimizing everything that they've known historically, which is counting on lower volumes at certain points in time of the month or of the year. And all of that adds up to just a tremendous number of challenges for the infrastructure of our clients. We've jumped in arm-in-arm with them, being able to answer things like, how do we help their teams who no longer have physical access to a site, be able to go and fix things when vendors are not allowed. So leveraging technology like augmented reality as an example, gaining visibility into those environments to avoid outages ahead of time based on these huge peaks that they hadn't expected or seen before. And then also bringing up brand new digital services. And what does that mean to the broader infrastructure and how they extend it and expand it in a way that is constrained physically and from an access perspective. So definitely an exciting time to say the least. And we've been weaving and bobbing and dodging and sprinting with our clients along the way. Well, let's talk about that a little bit more because you had this tight budget climate that we both talked about and had basic infrastructure. You had to buy laptops, you know, secure the endpoints. I had to maybe spin up some VDI and do some things that I hadn't planned on. And maybe, you know, HQ, maybe there's a pent up demand there. I'd be interested in your thoughts. I mean, it's been sort of, you know, neglected over the past 12, 14 months. And then I've got this, you know, maybe we talked about digital transformation pre-pandemic and, you know, there was some movement, of course, but there was also a lot of complacency. And then you had this forced march to digital. It wasn't planned at all, wasn't planned full, wasn't strategic, it was just like, oh, so what do you tell clients who are facing those budget pressures? They still got to get stuff done. And they really need to rethink or think through their cloud and digital transformation strategy. What do you, what's that conversation like? Well, the first part is we can help and we can help very clearly by saving them 30% on average on their IT spend in terms of maintenance. So we've done in conjunction with Forrester, we've done a study of almost 300 of our clients over the last year and 30% is the number that they have spent. And that's 30% OPEX straight to the bottom line or straight to reinvest directly back into their business. So it's companies like McKesson who's a healthcare services provider who's been swamped, distributing COVID vaccines across the US and enabling them to scale on IBM power and storage along with Cisco networking software, including Linux, what they do around hard drive retentions as they're swapping things in and out and expanding in order to meet regulatory requirements. It's Vodafone New Zealand adding 3,000 network devices due to increased traffic from COVID where we could save them 20% right off the bat as part of our overall umbrella maintenance agreement and being the single point of contact for them. It's Banco Santander in Chile who have their own custom branch infrastructure and giving them anywhere between a two to 24 hour response time depending on the location, the ones that are in the Andes that takes a little bit more time to get there sometime by helicopter versus road but nonetheless, providing that kind of support. So those are the types of things that we've been seeing and how we've been helping our clients. They take that money, reinvest it back in but also they start to work better and smarter as they go. So we've also introduced a cloud-based support insights platform which has helped clients like Maple Leaf Foods in Canada give them access and visibility into what does their network look like? What are the devices that they've got? Where do they have security vulnerabilities and identifying hardware and software bugs? So giving them the ability to work smarter so that they can also not just save on OPEX and the money that they're paying somebody else for maintenance but also so that they can put their resources to work more efficiently and as a result be able to go spend more time on other things. So I want to double click on that. So, you know, this gain sharing idea does IT get any of that? Or does it all go back to the CFO? In other words, you know, can they reinvest that in technology or is it part of that? What are you seeing there? Is that pie in the sky thinking the CIO is going to be able to take that gain share? No, I don't think it's pie in the sky at all. CIOs in my experience have a budget and they're responsible and have control of that budget. So if they can clear headroom from that existing budget in OPEX of which maintenance is a big piece of that, then, you know, generally that's their money, so to speak, to go spend in other places and redirect that investment so that as they're reporting to the CFO then that number is ultimately still tied back to whatever their budget is. So where are they spending those dollars? I mean, are there any patterns that you're discerning in terms of how they're applying them? I mean, people always say we're going to shift it to more strategic areas. What specifically does that mean? Well, so, you know, we're seeing a number of places which are not, you know, unique to say the least when you look at security as one example, if you look at the move to public cloud for certain workloads as another, enterprise agility is a third, resiliency is another. So those tend to be the top areas that we're seeing clients prioritizing and taking those savings that they get from working with us and then applying them other places from a technology perspective, but then you also have the workforce aspect and where are they investing? And workplace safety is one, training and skills, being another, and then ultimately, employee engagement and satisfaction is the third. Now, this might be a little bit out of your swim lane, but because you're in the boiler room, I'm going to ask, I mean, we talk about organizations, you know, shifting the focus of their teams to these more strategic initiatives to really try to get differentiation and build moats. A lot of times there's skills gaps. So how are clients dealing with that challenge? Also, there's a couple of things that we're participating and co-creating with our clients on. So one of them is you're right, they're based on that skills gap, training is one aspect, but you can also leverage technology in order to fill some of those skills gaps around technology, somewhat ironic. So open source as an example and looking at what open source packages are compatible or not compatible. And people who have not necessarily spent a lot of time in open source may spend a ton of time trying to debug something, which is just a matter of a mismatch on packages from different open source run times as an example. So that's one where we've got assets that we've developed that holds a full library of those interoperabilities between open source packages. Vulnerabilities is another one where if you're highly skilled, you know where to go to find those vulnerabilities, you understand how to assess them, you understand which ones are important or which ones are not important. But if you're not, then having something that you can go use as a quick guide can be very valuable. And again, another asset that we've developed and it's enabled clients to move very quickly and bring brand new applications to market. So as an example, national telecom in Thailand who have developed an application for specifically for the COVID pandemic based on open source in order to track COVID testing and vaccine status for tourists and essential personnel. All built on open source, given the critical nature of it, they needed it supported in a way that they could get immediate responses and fixes not something that they have the skills to do on their own. So we ended up partnering them in order to do just that. Okay, so the training piece, you're teaching them to fish and then you're automating the catch where possible. So let's talk about, you know, a lot of talk about cloud, public cloud, on-prem, cross-cloud edge. I'm interested in hearing more about the integration challenges. The more this universe grows, the more complex it gets across all these locations. How are you helping clients address these integration challenges? Yeah, so, you know, I think that the ultimate promise of cloud was, oh, you just put it all in the cloud and poof, everything magically happens. But the reality is only 20% of the workloads are sitting in a cloud, which means 80% of them are sitting somewhere else and the vast majority of those workloads need to interact together. And you can ask yourself, so why is it only 20% and there's a litany of reasons why, ranging from security to integration with data sources, regulatory requirements, which is why we, IBM, released the financial services, public cloud, in order to deal with that for our clients and with ISVs, end-to-end visibility and scalability. So how do I know where the bottlenecks are? How do I know where the problem point was in an end-to-end application that's built of microservices that are running all over the place, architectural flexibility and complexity across multiple vendors. So if I've got all of these moving parts from all of these different OEMs or sources, how do I actually get support and know which part is broken and who to call and when to call? And then, you know, ultimately it boils down to skills which we talked about before and time and money. So again, you know, for us, this is about taking the holistic approach, a heterogeneous approach, a hybrid approach, if you will, and being able to provide our clients with the end-to-end support for that hybrid environment. All right, last question, big question, but we're not much time, but you know, we call it the new abnormal. Look, bring out your telescope. We're not going back. Where are we going? What do you see? Well, so I agree 100% that we're not going back and the pandemic has certainly done nothing to change that perspective. In fact, it's just accelerated it from my point of view and it's driven the adoption and more acceptance really of digital everything compared to where it was. We see it today all the time with clients who may have been hesitant in remote support as an example, but now they're embracing it with arms wide open areas where they would have asked for us to provide technical personnel to come in and fix something. Now, because of access to data centers or limited access to data centers, we're supporting them remotely, leveraging augmented reality and they're using their own people. We ship the parts, they use their own people, we walk them through it and in doing all that, we've actually seen our industry leading net promoter score go up, which is somewhat counterintuitive because historically without a pandemic, you would have thought if we would have tried to push that type of technology on clients who are not really ready for it or accepting, our net promoter scores would have gone the other direction, but in practice, they're already outpacing industry by 20 points and they've actually been going up significantly over the last year's time. So for us, this is about embracing digital, it's about embracing the hybrid cloud and hybrid environments. It's about partnering with our clients in order to give them what they need and when they need it and be flexible and agile along the way to help them scale. So definitely an exciting time, no doubt of where we are as well as where we're going. I love the story, Michael, I mean, it's bread and butter. Maybe you guys don't get a lot of the headlines, I guess unless something goes wrong, but so you don't get a lot of the headlines, that's good news, but congratulations, by the way, on the NPS, that's awesome. And thanks for coming on theCUBE. Great, thanks for having me, Dave. You're welcome, and thank you for watching everybody. Keep it right there for more great content from IBM Think 2021. This is Dave Vellante for theCUBE.