(upbeat music) >> Announcer: Live from Las Vegas. It's The Cube. Covering Interconnect 2017. Brought to you by IBM. >> Welcome back everyone. We are here and live in Las Vegas. This is The Cube's coverage of IBM's Interconnect 2017. Three days of wall to wall coverage. Day two here. I'm John Furrier with my co-host Dave Vellante. Our next guest is Harriet Green, General Manager of Watson IoT, a Cube alumni. Great to see you again. Thanks for coming on The Cube this year again, appreciate it. >> Oh it's my pleasure. I hope we're going to talk about Internet of Things, what's in customer engagement and education. Those are things that we hope to talk about. >> Congratulations. You guys have an IoT center now in Munich. You guys had that big launch there, but the real thing that's happening in context if you could zoom out on this is that we're seeing the trend of cloud and big data world being kind of accelerated together and IoT seems to be the center point of the action because it's industrial, it's business, it's people, it's cars, it's the world now. The data piece of it is really accelerating. Now combine that with machine learning, and the glam of AI, the sizzle of artificial intelligence and cognitive really kind of puts that at the center of the conversation. This is transformative. >> Oh totally and I mean you guys were at the Genius of Things so you know that there were 600 Cs: COs, Chief Innovation Officers, Chief Digital Officers from 400 different companies, accounting for about two trillion of revenues. You're exactly right. It's across every major industry, every major sector. I think there are kind of three critical elements. The first is that with the whole proliferation of sensors and the cost points, etcetera, the amount of data and information that is being created is absolutely suited for Watson. So all of those clients there, as you know, are working with us and we shared 22 major outcomes: things faster, cheaper, better, that clients are actually experiencing. Watson is the differentiator and from an IoT perspective, I think the other piece is for a very long time IBM has proven that we respect and keep people's data perfectly safe. We don't use it, we don't open it, we don't go into it, we're not taking it for a future world of knowledge graph. We consider client's data to be their DNA. People know that when you're doing IoT with IBM that deep level of security is imbued within our capability. Then thirdly, who's data is it? Which is a huge thing in Europe and we're able with our data centers to demonstrate if you want to keep that data within lower Bavaria, that's what we'll do. And those three elements, I think, are fundamental; cognitive, the protection of the data, and who's data is it? >> 'Cause who owns the data is really important. It's a big differentiator because the data informs the model. They're almost intertwined so who owns the model? The client owns the model? Is that correct? >> Yeah, but I think people have over-complicated this, those who perhaps do not have such a simple and clear answer to it. Who don't have written into their terms and conditions that it's actually their data and they can hang onto it for as long as they like. We have always to our clients said it's your data. It's absolutely your data. If we create something together with your data, it's still your data. People only start to confuse this when they have primary and secondary and tertiary levels of confusion to support their particular cause. There is no confusion with our clients. When you talk to the chief digital officers of Shaeffler, of ISS, of SNCF who are up on stage with us yesterday, people who are demonstrating amazing outcomes that they didn't have before with IoT, they will say to you there are three reasons why we went with IBM. The first, the platform. It is the best IoT platform. From an IDC, from a Gottner perspective that's what Forester, what the guys say. Secondly, our applications are very robust and help people get started on this IoT journey. Thirdly, that the digital transformation that is happening alongside this, back to your convergence point, we're also able to assist with our GPS IoT practice. >> And you're accelerating that too. Ginni Rometty on stage talking about how that Watson's learning faster by industry but it's not a silo thing. It's actually accelerating the transformation components. >> Well, you put your finger on that precisely because the amazing thing about the Internet of Things is it's not just consumer, it's not just one industry. We're interfacing 34 different industries who are represented at the Genius of Things. It's also affecting life. Yesterday you may have seen ISS and their amazing building that they've created, which now as you arrive at terminal five, wherever it is, a huge rush and suddenly the elevators don't work. Remotely these elevators are being fixed and the journey is absolutely amazing. It is kind of is industry. >> That social good angle is important is the cognitive for social good trend going on right now culturally. That's really important. But I want to ask you- >> But I do think on the ... Ginni announced in Davos our cognitive principle. There's no client working with us that doesn't know we're working from a cognitive perspective. We go to great levels to explain what we are doing, to whom it belongs and that charter is not something that we just came up with. That's IBM for 105 years. It's why I chose to come here around the Internet of Things. >> It's super inspirational for me personally and I want to ask you about a topic that's passionate for us as an organization. We've had the largest library of women in tech, going back to 2010, we've been interviewing some of the great leaders in the tech industry. This is really now going really amazing. You heard Mark Benning up on stage talking about all the goodness going on around equality and pay, everything else going on but there's more women now instrumental in all the computer science and business side. How are you continuing that? We talked a little bit about this last year with the mentoring. How do you attract the talent? How do you get that inspiration for the young women and girls out there from whether grade school, high school, college? What's the plan? >> Well, first of all I think IBM has on every level a proven history of diversity. 35 years before the equal pay act we were equal paying. We have an incredibly diverse cultural environment where regardless of your age, your sex, your color, your creed, your sexuality, or your physical ability if you're good you'll get on. IBM lives and breathes that in every sense. Now I think the challenge is in North America particularly, in the 80s 30% of young women were going into the STEM subjects and now it's dropped just below 18%. I think it's absolutely critical that investors in companies are thinking about this equality and measuring the power of diversity and innovation. That leaders inside of businesses do more than just pontificate on stage but live on breath it. as Ginni >> Walk the talk. >> Harriet: Does. And then also that all of us in our decision making, particularly, I did for International Women's Week last week a whole webx around inclusion and how we include, how we exclude, and I shared a particular story of a couple of weeks ago some said to me you're just such a left field candidate, Harriet. And maybe that's a compliment. He happens to be a very nice guy and maybe he's right but we want people to feel inclusive. One of the most amazing things that IBM has done for some time which is almost unique, up there with Watson, is we do this to attract millennials particularly, but anyone can participate. It's a program where we take people who go in a totally immersive six or seven weeks. It may be human trafficking in Thailand. It may be helping to train and educate in sub-Saharan Africa and they work with local bodies, local institutions, really helps build this collaborative capability. And then all of the work we're doing with Ptech around up-skilling and ensuring that the STEM subjects from a very wide range of young people are really embraced. >> Harriet, you're getting requested 'cause you got to move around the events so many places and your time is very scarce and you have to move to the next event. Thank you for taking the time to share that with us and also the awesomeness around IoT and Watson. Appreciate and good to see you. You look great. This is IBM Interconnect. Harriet Green the leader of Watson IoT Customer Engagement and Support. I'm John Furrier with Dave Vellante. We'll be right back with more after this short break. (upbeat music)

>> Commentator: Live from Las Vegas. It's theCUBE. Covering InterConnect 2017. Brought to you by IBM. >> Hello everyone. Welcome to theCUBE special broadcast here at the Mandalay Bay in Las Vegas for IBM InterConnect 2017. This is IBM's big Cloud show. I'm John Furrier. My co-host, David Vellante for the next three days will be wall-to-wall coverage of IBM's Cloud Watson. All the goodness from IBM. The keynote server finishing up now but this morning was the kickoff of what seems to be IBM's Cloud strategy here with Dave Vellante. Dave, you're listed in the keynote, we are hearing the presentation. We had the General Manager/Vice President of Data from Twitter on there, Chris Moody, talkin' about everything from the Trump presidential election being the avid tweeter that he is and got a lot of laughs on that. To the SVP of Cloud talking about DevOps and this is really IBM is investing 10 million dollars plus into more developer stuff in the field. This is IBM just continuing to pound the ball down the field on cloud. Your take? >> Well IBM's fundamental business premise is that cognitive, which includes analytics, John plus cloud plus specific industry solutions are the best way to solve business problems and IBM's trying to differentiate from the other cloud guys who David Kenny was on stage today saying, you know, they started with a retail business or the other guys started with search, we started with business problems, we started with data. And that's fundamental to what IBM is doing. The other point, I think is-- the other premise that IBM is putting forth is that the AI debate is over. The Artificial Intelligence, you know, wave of excitement in the 70s and 80s and then, you know, nothing is now back in full swing. An AI on the Cloud is a key differentiator from IBM. In typical IBM fashion for the last several Big Shows, IBM brought out not an IBMer but a customer or and or a partner. And today it brought out Chris Moody from Twitter talking about their relationship with IBM but more specifically the fact that Twitter's 11 years old. Some of the things you're doing with Twitter obviously connected into March Madness and then Arvind Krishna who has taken over for Robert LeBlanc as the head of the Cloud group, talked about IBM, AI, IBM's Cloud, blocked chain, trusted transactions, IoT, DevOPs, all the buzz words merged into IBM's Cloud Strategy. And of course, we reported several years ago at this event about Bluemix as the underpinning of IBM's developer strategy. And as well it showcased several partners. Indiegogo was a crowdfunding site and others. Some of those guys are going to be in theCUBE. So. You know as they say, this AI debate is over. It's real and IBM's intent is to the platform for business. >> Dave, the thing I want to get your thoughts on is IBM's on a 19 consecutive quarters of revenue problems with the business on general but they've been on a steady course and they kind of haven't wavered. So it's as if they know they got to shrink to grow approach but we just came off the heels of Google Next which is their Cloud Show. How the Amazon is on re-invent as the large public cloud but the number one question on the table that's going to power IoT, that's going to power AI, is the collision between cloud computing and IoT, cloud computing in big data I should say is colliding with IoT at the center which is going to fuel AI and so, it brings up the question of enterprise readiness. Okay? So this is the number one conversation in the hallways here at Las Vegas and every single Cloud Show in the enterprise is, can I move to the cloud? Obviously it's a hybrid world, multi-cloud world. IBM's cloud play. They had a Cloud. They're in the top four as we put them in there. Has to be enterprise ready but yet it as to spawn the development side. So again, your take on enterprise readiness and then really fueling the IoT because IoT is a real conversation at an architectural level that is shifting the-- tipping the scales if you will for where the action will be. >> Well John, you and I have talked in theCUBE for years now. Going on probably five years that IBM had to shrink to grow. They've got the shrink part down. They've divested some of its business like the x86 business and the microelectronics business. They have not solved the grow problem. Let's just say 19 straight quarters of declining revenue. But here's the question. Is IBM stronger today than it was a year ago? And I would argue yes and why is that? One is its focus. Its got a much clearer focus on its strategy around cognitive, around data and marrying that to Cloud. I think the other is as an 80 billion dollar company even though it's shrinking, its free cash flow is still 11.6 billion. So it's throwing off a lot of cash. Now of course, IBM made those numbers, made its earnings numbers by with through expense control, its got lower tax right. Some of the new ones of the financial engineering. Its got some good IP revenue. But nonetheless, I would still argue that IBM is stronger this year than it was a year ago. Having said that, IBM's service as business is still 60% of the company. The software business is still only about 30% into it but 10% is hardware. So IBM-- people say IBM has exited the hardware business. It hasn't exited completely the hardware business but it's only focusing on those high value areas like mainframe and they're trying to sort of retool power. Its got a new leader with Bob Picciano but it's still 60% of the company's business is still services and it's shifting to a (mumbles) model. An (mumbles) model. And that is sometimes painful financially. But again John, I would argue that it is stronger. It is better positioned. And now its got some growth potential in place with AI and with, as you say, IoT. We're going to have Harriet Green on. We're going to have Deon Newman on. Focusing on the IoT opportunity. The weather company acquisition as a foundation for IoT. So the key for IBM is that it's strategic imperatives are now over 40% of its business. IBM promised that it would be a 40 billion dollar business by 2018 and it's on track to do that. I think the question John is, is that business as profitable as its old business? And can it begin growing to offset the decline in things like storage, which has been seeing double digit declines and its traditional hardware business. >> So Dave, this is to my take on IBM. IBM has been retooling for multiple years. At least a five year journey that they have to do because let's just go down the enterprise cloud readiness matrix that I'm putting together and let's just go through the components and then think about what was old IBM and what's new. Global infrastructure. Compute networking, storage and content delivery, databases, developer tools, security and identity, management tools, analytics, artificial intelligence, Internet of Things, mobile services, enterprise applications, support, hybrid integration, migration, governance and security. Not necessarily in that order. That is IBM, right? So this is a company that has essentially (mumbles) together core competencies across the company and to me, this is the story that no one's talking about at IBM is that it's really hard to take those components and decouple them in a fashion that's cloud enabled. This is where, I think, you're going to start to see the bloom on the rose come out of IBM and this is what I'm looking at because IBM had a little bit here, they had a little bit here, then a little stove pipe over here. Now bringing that together and make it scalable, it's elastic infrastructure. It's going to be really the key to success. >> Well, I think, if again if you breakdown those businesses into growth businesses, the analytics business is almost 20 billion. The cloud business is about 14 billion. Now what IBM does is that they talk about as a service runway of you know, 78 billion so they give you a little dimensions on you know, their financials but that cloud business is growing at 35% a year. The as a service component, let's call it true cloud, is growing over 60% a year. Mobile growing, 35%. Security, 14%. Social, surprisingly is down actually year on year. You would thought that would be a growth theory for them but nonetheless, this strategic initiatives, this goal of being 40 billion by 2018 is fundamental to IBM's future. >> Yeah and the thing too about the enterprise rate is in the numbers, it speaks to them where the action is. So right now the hottest conversations in IT are SLA's. I need SLA's. I have a database strategy that has to be multi-database. So (mumbles) too. Database is a service. This is going to be very very important. They're going to have to come in and support multiple databases and identity and role-based stuff has to happen because now apps, if you go DevOps and you go Watson Data Analytics, you're going to have native data within the stack. So to me, I think, one of the things that IBM can bring to the table is around the enterprise knowledge. The SLA's are actually more important than price and we heard that at Google Next where Google tried it out on their technologies and so, look at all the technology, buy us 'cause we're Google. Not really. It's not so much the price. It's the SLA and where Google is lacking as an example is their SLA's. Amazon has really been suring up the SLA's on the enterprise side but IBM's been here. This is their business. So to me, I think that's going to be something I'm going to look for. As well as the customer testimonials, looking at who's got the hybrid and where the developer actually is. 'Cause I think IoT is the tell sign in the cloud game and I think a lot of people are talking about infrastructures of service but the actual B-platform as a service and the developer action. And to me, that's where I'm looking. >> Well comparing and contrasting, you know, those two companies. Google and Amazon with IBM, I think completely different animals. As you say, you know, Google kind of geeky doesn't really have the enterprise readiness yet although they're trying to talk that game. Diane Green hiring a lot of new people. AWS arguebly has, you know, a bigger lead on the enterprise readiness. Not necessarily relative to IBM but relative to where they were five years ago. But AWS doesn't have the software business that IBM has yet. We'll see. Okay so that's IBM's ace in the hole is the software business. Now having said that, David Kenny got on stage today. So he came out and he's doing his best Jeremy Burton impression. Came out in sort of a James Bond, you know, motif and guys with sunglasses and he announced the IBM Cloud Object Storage Flex. And he said, yes we have a marketing department and they came up with that name. You know, this to me is their clever safe objects tour to compete with S3, you know several years late. After Amazon has announced S3. So they're still showing up some of that core infrastructure but IBM's-- the (mumbles) of IBM strategy is the ability to layer cognitive and their SAS Portfolio on top of Cloud and superglue those things together. Along, of course, with its analytics packages. That's where IBM gets the margin. Not in volume infrastructure as a service. >> I want to get your take on squinting through the marketing messages of IBM and get down to the meat and the bone which is where is the hybrid cloud? Because if you look at what's going on in the cloud, we hear the new terms, lift and shift. Which to me is rip and replace. That's one strategy that Google has to take is if you run (mumbles) and Google, you're kind of cloud native. But IBM is dealing a lot at pre-existing enterprise legacy stuff. Data center and whatnot so the lift and shift is an interesting strategy so the question is, for you is, what does it take for them to be successful? With the data platform, with Watson, with IoT, as enterprise extend from the data center with hybrid. >> Well I think that, you know, again IBM's (mumbles) is the data and the cognitive platform. And what IBM is messaging to your question is that you own your data. We are not going to basically take your data and form our models and then resell your IP. That's what IBM's telling people. Now why don't we dig into that a little bit? 'Cause I don't understand sort of how you separate the data from the models but David Kenny on stage today was explicit. That the other guys, he didn't mention Google and Amazon, but that's who he was talkin' about, are essentially going to be taking your data into their cloud and then informing their models and then essentially training those models and seeping your IP out to your competitors. Now he didn't say that as explicitly as I just did but that's something as a customer that you have to be really careful of. Yes, it's your data. But if data trains the models, who owns the model? You own the data but who owns the model? And how do you protect your IP and keep it out of the hands of the competitors? And IBM is messaging that they are going to help you with the compliance and the governance and the (mumbles) of your organization to protect your IP. That's a big differentiator if in fact there's meat in the bone there. >> Well you mentioned data, that's a key thing. I think whether doing it really quickly is getting the hybrid equation nailed so I think that's going to like just pedal as fast as you can. Get that going. But data first enterprise is really speaks to the IoT opportunity and also the new application developers. So to me, I think, for IBM to be successful, they have to continue to nail this data as value concept. If they can do that, they're going to drive (mumbles) and I think that's their differentiation. You look at, you know, Oracle, Azure, Microsoft Azure and IBM, they're all playing their cards to highlight their differentiation. So. Table stakes infrastructures of service, get some platform as a service, cloud native, open source, all the goodness involved in all the microservices, the containers, Cooper Netties, You're seeing that marker just develop as it's developing. But for IBM to get out front, they have to have a data layer, they have to have a data first strategy and if they do that well, that's going to be consistent with what I think (mumbles). And so, you know, to me I'm going to be poking at that. I'm going to be asking all the guests. What do you think of the data strategy? That's going to be powering the AI, you're seeing artificial intelligence, and things like autonomous vehicles. You're seeing sensors, wearables. Edge of the network is being redefined so I'm going to ask the quests really kind of how that plays out in hybrid? What's your analysis going to be for the guests this week? >> Well, I think the other thing too is the degree to-- to me, a key for IBM success and their ability to grow and dominate in this new world is the degree to which they can take their deep industry expertise in health care, in financial services and certain government sectors and utilities, et cetera. Which comes from their business process, you know, the BPO organization and they're consulting and the PWC acquisition years ago. The extent to which they can take that codifier, put it in the software, marry it with their data analytics and cognitive platforms and then grow that at scale. That would be a huge differentiator for IBM and give them a really massive advantage from a business model standpoint but as I said, 60% of the IBM's business remains services so we got a ways to go. >> Alright. We're going to be drilling into it again. There's a collision between cloud and big data markets coming together that's forming the IoT. You can see machine learning. You can see artificial intelligence. And I'm really a forcing function in cloud acceleration with data analytics being the key thing. This is theCUBE. We'll be getting the data for you for the next three days. I'm John Furrier. With Dave Vellante. We'll be back with more coverage. Kicking off day one of IBM InterConnect 2017 after the short break.